First Prosecution Under New Health and Safety at Work Act 2015 Brings Increased Fines

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WorkSafe New Zealand v Budget Plastics (New Zealand) Limited [2017] NZDC 17395

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Budget Plastics (New Zealand) Limited pleaded guilty to failing as a PCBU (person conducting a business or enterprise) to “so far as reasonably practicable” ensure the health and safety of its workers.

The Accident

The victim was operating an extrusion machine that processes plastic materials into a re-usable form.  Plastic is put into the hopper at one end of the machine.  An auger pushes the plastic along a heated tunnel and then through smaller openings at the other end where the plastic is extruded in a similar form to spaghetti.

On 6 April 2016 the victim was feeding plastic waste from a large bag into the machine.  When there were only scraps left in the bottom of the bag, the victim picked up the bag and tipped it into the hopper.  Part of the bag got caught in the auger, sucking the bag and the victim’s hand into the machine.  Another worker saw the accident and hit the emergency stop button but not before the machine had amputated the victim’s hand, leaving only his thumb and half his forefinger intact. 

Health and safety failures

After taking into account the findings of the health and safety investigation, the Court found Budget had failed to ensure the health and safety of its workers by failing to:

  • fit the extrusion machine with proper guards and barriers (the barriers had been deliberately cut down to facilitate the operator’s ability to push waste into the auger);

  • install an appropriately located emergency stop button on the machine (the button was out of the operator’s reach);

  • have adequate systems in place for identifying hazards in the workplace and adequate systems to safely operate the extrusion machine; and

  • have adequate policies and processes for training staff in the safe use of the extrusion machine in accordance with settled standard operating procedures.

Approach under the new Act

The judge commented that the approach to sentencing under the old health and safety legislation remains generally applicable., That is, to assess the amount of reparation, assess the amount of the fine and then make an overall assessment of the proportionality and appropriateness of the reparation and fine. 

After saying that the new health and safety legislation does not affect the reparation guidelines in the Sentencing Act 2002, the judge did not go on to consider the consequences of the incident on the victim’s life and did not provide any reasoning behind the fixing of the reparation at $37,500.

Turning to the fine, the judge declined to create any sentencing guidelines, saying that it was not the job of the District Court to do so, but instead limited himself to adapting available authorities.

WorkSafe argued that the most principled approach to sentencing would be to depart from the standard culpability bands in order to incorporate “the full quantum of fines available” under the new legislation i.e. a tenfold increase: 

Low culpability                  up to $500,000

Medium culpability           between $500,000 and $1,000,000

High culpability                between $1,000,000 and $1,500,000

WorkSafe submitted that Budget’s offending was at the high/medium level and proposed  a starting point of $900,000.  However the judge commented “it is possible [the regime submitted by WorkSafe above] is inappropriate in light of the increased maximum and that this means the starting point proposed by WorkSafe is too high.”

Budget submitted that sentencing under the new Act needed to “produce results consistent with the experience and guidance provided by the Australian Courts” and on this basis proposed a starting point of $200,000.  However the judge did not adopt this approach either.  After pointing out the differences between the Australian and New Zealand legislative frameworks, including the presence of ACC in New Zealand, the judge said “the framework of the [Australian Health and safety legislation] was intended to be adapted for the New Zealand context.  Appellate courts are in a better position to consider the influence of Australian case law on any sentencing guidelines issued under the HSW Act.”

The judge considered Budget’s culpability to be moderate and that the appropriate starting point under the Act was $400,000-$600,000.  Both parties agreed to a 30% reduction for reparation, co-operation, remorse, remedial steps taken and Budget’s prior good record.   They had also agreed to a further 25% reduction for the early guilty plea bringing the starting point down to $210,000-$315,000. 

The Sentencing Act requires that the financial capacity of a business be taken into account when imposing a fine.  WorkSafe highlighted case law to the effect that health and safety penalties must ‘bite.’  However the judge determined a fine above $100,000 would be outside the defendant’s means and thought “this case is not so severe to justify a departure from the need to impose a fine within the defendant’s ability to pay.”  The fine was accordingly set at $100,000.

Comment

Craig Langstone, partner at Fee Langstone says:

 “Unfortunately the Budget Plastics decision is not the leading edge decision that those involved in the health and safety industry were hoping for.  Clearly fines will increase but we already knew that before the release of Budget Plastics.  Perhaps the most interesting point to be considered moving forwards is quite how often PCBUs will be trying to limit the fines imposed on the basis of their financial capacity to pay them.”

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