Focus on health and safety: Reparation for emotional harm – what is relevant and who is entitled to it?
/Ocean Fisheries Limited v Maritime New Zealand [2021] NZHC 2083
The High Court has recently dismissed Ocean Fisheries’ appeal against the amount of reparation for emotional harm imposed by the District Court following the death of three crew members of the Jubilee when it sank in 2015. The Court also allowed Maritime NZ’s cross-appeal against the District Court’s decision not to order emotional harm reparation be paid to a sister of one of the crew members.
The decision extensively considers the nature of the courts’ jurisdiction to order reparation including the quantum of such orders, who is entitled to an order, and the consequences of any voluntary payments.
Background
In October 2015, the Jubilee sank resulting in the drowning of three crew members. It was presumed that the vessel took on water while the crew members were asleep and so were unaware of the flooding until it was too late. Ocean Fisheries pleaded guilty under the Health and Safety in Employment Act 1992 for failing to take reasonable steps to ensure the safety of the crew members.
Judge Couch imposed a fine of $46,000 and ordered reparation for emotional harm be paid of $505,000. His Honour calculated the emotional harm reparation on an individual basis, rather than on a per family basis. In so doing, he referred to s 32 of the Sentencing Act 2002 which referred to the “person who suffered emotional harm” rather than to a family.
Ocean Fisheries appealed the decision on the grounds that the amount of reparation ordered was disproportionate to its culpability. It also argued that the order did not appropriately reflect that it had already paid $60,000 to the victims’ families. Further, it argued that the methodology used to calculate the reparation and the amount were inconsistent with comparable cases. It also contended that the Judge had erred in ordering reparation to three victims who had not provided victim impact statements.
Maritime NZ cross-appealed, arguing that a sister of one of the victims should have also received reparation.
High Court Judgment
Culpability not relevant to the assessment of the reparation amount
The Court referred to established principles that the assessment of reparation is compensatory in nature and must be distinguished from the fine, which was essentially punitive. The statutory framework relating to reparation referred not to culpability but instead to any offer of amends by the offender and its financial capability. Therefore, the Court did not accept that the degree of culpability should impact on the assessment of reparation.
The Court held that the only circumstances in which the degree of culpability may be relevant in assessing reparation was when there were several offenders and the appropriate reparation had to be apportioned between them.
Awarding reparation on an individual basis is appropriate
The Court considered Judge Couch did not err in awarding reparation by reference to individual victims rather than the whole family. This approach was consistent with the Sentencing Act and case law, particularly given the variety of family size and structures. The Court further said that an award was not unfair just because it may be beyond the range of what families had received in other cases on a per family basis. It was appropriate to award reparation on a case-by-case basis.
However, the Court did note that an assessment on a per family approach might be appropriate in some circumstances, and noted that the adoption of that approach may well mean it is easier to achieve consistency in sentences and in the awards of reparation.
Ocean Fisheries’ prior victim payments and insurance cover
The Court noted Judge Couch’s commendation of Ocean Fisheries for having paid $20,000 to each of the victims’ families ($60,000 in total) within weeks of the sinking of the Jubilee. The fact that Ocean Fisheries had insurance to cover the reparations was regarded as a positive.
The Court noted that Ocean Fisheries’ sole director wanted “reparation to be fixed on the most generous basis” but, because of the insurer’s right of subrogation, it was required to allow its “insurer to argue under its name that reparation should have been fixed on a significantly lesser basis than had actually happened.”[1]
Ocean Fisheries pointed to a number of cases where payments made to victims had been offset against the total emotional harm reparation decided by the Court and submitted that that should have been applied by Judge Couch in this case.
Maritime NZ accepted Judge Couch “did not engage in the normal exercise of adjustment.”[2] Nevertheless, Maritime NZ argued that no error had been made, or if there had been, that the reparation order was not manifestly excessive. Further, Maritime NZ submitted that for the payments to be taken into account when assessing the emotional harm reparation, Ocean Fisheries would need to show that the payments were made to the victims in order to mitigate their emotional harm, and not to compensate them for financial loss.
The Court accepted Maritime NZ’s submissions and noted that part of the payments had been made to financially assist the families, while the balance had been paid two weeks after the sinking. As such the payments were likely to have been made to provide continuing financial assistance rather than in recognition of the emotional harm they had suffered.
Voluntary payments discounted the fine
In this case, the payments had not been directly offset against the reparation awards. Instead, the Court noted the payments had been taken into account by Judge Couch when applying a discount for mitigating factors to the starting point of the fine.
As such, the Court found that the payments had been accounted for, albeit not on a dollar-for-dollar basis, and so the overall penalty imposed in this case was not manifestly excessive.
Victim impact statements are not necessary to award reparation to a victim
Thirteen victim impact statements were provided to Judge Couch. A further six victims did not provide victim impact statements. Judge Couch considered that the circumstances of three of those victims, who were siblings of the crew members, had been sufficiently described in the statements provided by other family members. Judge Couch considered it appropriate to require reparation to be paid for those siblings but at half the amount ordered for those siblings who had provided victim impact reports. He said such an approach was justified given he had “no information about the effect on any of them of their brother’s death”.[3]
Ocean Fisheries appealed this part of the decision and submitted that some evidential basis for finding there was emotional harm was always required.[4]
The High Court considered that there was sufficient information from the other family members’ victim impact statements to infer that the three siblings had been emotionally harmed, such that it justified a $5,000 award to each of them. It noted that to not award reparation would be to fail to recognise them as victims and result in inconsistency amongst victims.[5]
Comment (Brad Alcorn)
The High Court’s decision provides useful guidance for insurers and their clients with respect to the calculation of reparation for emotional harm.
Turning first to the relevance of the voluntary payments, the High Court affirmed that voluntary payments made to victims must be taken into account in any overall assessment of the orders made. This accords with established sentencing principles. However, the more important take-away is that the party making the payment should be clear as to the purpose of that payment when making it. While Ocean Fisheries’ prompt payments to the crew members’ families was commendable, the High Court attributed this to compensation for financial loss rather than for emotional harm.
Second, the decision also affirms that when an event occurs which may lead to a prosecution, an employer and its insurer should assess the likely award for emotional harm and who should receive such a payment. Consideration should then be given as to whether, and when, a voluntary payment should be made. As part of that process, identifying who are the victims is important, particularly when the matter involves the deaths of many people and the class of potential victims is broad.
One approach to identifying victims is to rely on the victims to self-identify by submitting victim impact statements. However, that approach is not sufficient given the High Court has affirmed that all victims are entitled to reparation for emotional harm, even those who choose not to self-identify. This means that insurers and insureds will need to do what they can to ensure all potential victims are appropriately identified. If they do not, the court will do it for them.
Bradley Alcorn is Special Counsel at Fee Langstone
