WorkSafe New Zealand v RH & Jury Trust: A Landmark Decision on Trustee Liability under the Health and Safety at Work Act

In a pivotal decision that could reshape the enforcement landscape of health and safety legislation in New Zealand, the High Court has provided clarification on the liability of trusts and trustees with respect to the Health and Safety at Work Act 2015 (HSWA). This case, arising from a tragic fatal accident where a child’s clothing became entangled in machinery on a dairy farm owned by the RH & Jury Trust, has brought to the fore the legal interpretation of "person" under the HSWA.

The central issue of the case concerned whether a trust, or rather its trustees, may be considered a "person" under the HSWA – an interpretation critical for assigning responsibility and liability for breaches of the HSWA. The District Court’s initial dismissal of the charge against the Trust, on the basis that it was not a “person” pursuant to the HSWA, was appealed by WorkSafe New Zealand.

In the High Court, Harvey J allowed the appeal in part. His Honour found that while the HSWA was unhelpfully silent with respect to whether a trust fits within the definition of a "person", the trustees of a trust, acting collectively as a "body of persons … unincorporate", do meet the criteria of the definition.[1] As such, trustees may be collectively prosecuted under the HSWA. 

His Honour noted that while a wide interpretation should be given to the definition of a person conducting a business or undertaking (PCBU) to achieve the purposes of the HSWA, there was no advantage to prosecuting a trust rather than the trustees collectively. Either way, the maximum penalty under s 48(2)(c) ($1.5m) remains available.[2] Any structural fault with the trust will be the responsibility of the trustees’ collective action and, as such, criminal liability will be apportioned jointly. This maintains some conceptual consistency with civil law, where liabilities accrue to the trustees rather than the trust itself.

Section 29 of the HSWA prohibits persons that are liable to pay a fine or an infringement fee under the HSWA from being indemnified pursuant to an insurance policy or contract. Harvey J considered whether s 29 applied to the indemnity of trustees from trust assets under a trust deed. His Honour found that s 29 does not prohibit such indemnification of trustees on the basis that the section specifically refers to “insurance policy” and “contract of insurance” and that a trust is not a “person” for the purpose of legislation. Therefore, a trust may indemnify a trustee.  However, His Honour did note that this will be subject to the specific facts in question, the wording of the trust deed and the general law of trustee indemnity.

 Comment (Bradley Alcorn)

This decision signals a clear message that health and safety obligations cannot be sidestepped through the strategic use of trusts. The collective liability of trustees as a "body of persons" underlines the importance of compliance with HSWA requirements, emphasising the collective responsibility for ensuring safe work environments.

Moreover, this decision should prompt a reassessment of how trusts are utilised in business operations, especially in sectors where health and safety risks are prevalent. Trustees, including professional trustees, should now closely consider whether their current involvement in health and safety management is adequate.

The broader implications for the insurance industry cannot be understated. This decision potentially affects the structuring of insurance policies, the adequacy of cover (trustees now potentially face a tenfold increase in their exposure under the HSWA to the maximum fine of $1.5m) and the assessment of risk for organisations operating as trusts. Insurance companies may need to consider the implications of this ruling when underwriting policies for such entities, particularly in terms of coverage for professional trustees.

In conclusion, WorkSafe New Zealand v RH & Jury Trust marks a critical juncture in the intersection of trust law and health and safety legislation in New Zealand. By clarifying the liability of trustees under the HSWA, the High Court has not only addressed a legal ambiguity but also reinforced the paramount importance of health and safety compliance across all business forms. This case serves as a reminder of the evolving legal challenges faced by businesses and the necessity for entities involved in health and safety to continuously adapt their understanding and application of the law to protect the wellbeing of individuals in the workplace.

We understand that the RH & Jury Trust is considering seeking leave to appeal the decision and we will update you further once we know whether it will do so.

Bradley alcorn is special counsel at fee langstone

[1] Section 17 of the HSWA provides a broad definition of a Person Conducting a Business or Undertaking.  While section 16 of the HSWA defines a person as: “person includes the Crown, a corporation sole, and a body of persons, whether corporate or unincorporate”.

[2] Section 48(2) provides for a fine of up to $150,000 for an individual who is not a PCBU, up to $300,000 for an individual who is a PCBU and up to $1.5m for any other person.