Headline: No excuses for not toughening up law
ADDRESS TO
RESPONSIBLE CARE NEW ZEALAND INC
11 JULY 2013, 11AM
WAIPUNA HOTEL & CONFERENCE CENTRE, MT WELLINGTON
Andrew Little, Labour Party Spokesperson on Justice
Thank you for the opportunity to speak to you today.
I have been asked to speak about corporate manslaughter and my Members’ Bill on that issue which is presently sitting in Parliamentary ballot waiting to be drawn.
The sentencing last week of the Pike River Coal company for its failures in health and safety practice, and the fact that the more than $4 million in fines and reparation will go unpaid, has focussed attention on how meaningful the accountability is for those whose actions and inactions kill and maim at work.
It has never been clearer that we need a step-change in our approach to workplace health and safety, and other forms of human endangerment. I suggest our failure over the last 20 years has been in enforcement and driving home accountability.
I come at this issue from nearly 20 years as a union lawyer and union leader, someone who has been actively involved in the enforcement of our health and safety laws over that time, and someone who was closely involved with the aftermath of the Pike River tragedy and in preparation for the subsequent Royal Commission of Inquiry.
It is self-evident that everyone in the workplace and everyone involved in activity that has the potential to endanger others has a responsibility to take due care.
But our workplace accident statistics tell us we are not taking due care in too many workplaces.
So, let me start with the case for a charge of corporate manslaughter.
The case for a criminal charge of corporate manslaughter
New Zealand has one of the highest rates of workplace fatality and workplace serious injury in the developed world. We have been reminded of this in two recent excellent reports, the Report of the Royal Commission of Inquiry into the Pike River Mine tragedy which came out last October, and the Report of the Independent Taskforce on Workplace Health and Safety which was published in April of this year.
The Royal Commission’s report showed our workplace fatality rate increasing during the 2000s from around 3 per 100 000 workers to nearly 4 per 100 000 workers today.
Our workplace fatality rate is higher than the OECD average and considerably higher than countries such as the UK and Australia.
One of the interesting findings of the Independent Taskforce was how ropey our workplace injury statistics actually are. The sudden, catastrophic death in the workplace can be readily accounted for. What is more difficult are what are estimated to be the 500 to 800 people who die each year as a result of chronic diseases caused by workplace exposures.
We also know that professional drivers killed in the course of their duties are counted as traffic fatalities as opposed to workplace fatalities. So, our fatalities attributable to work are likely to be understated.
We know that a small number of industries account for a large proportion of serious injuries and fatalities. These industries include manufacturing, construction, agriculture, forestry and fishing.
To be blunt about it and put real numbers to it, we are killing a New Zealand worker around about once a week.
There are many more serious injuries. Around 200,000 claims are made each year to ACC for work-related injuries and illnesses.
And yet we are 20 years on from the last major overhaul of our workplace health and safety legislation. The Health and Safety in Employment Act 1992 came into effect in 1993.
The claim made of this legislation is that it would make health and safety at work simpler, it would shift employers from tick-box compliance exercises and would generally lift health and safety performance. It has been accompanied at various stages in the last 20 years by other measures, notably ACC experience rating which was meant to give employers a financial incentive to improve health and safety.
The reality is, when it comes to workplace health and safety, we’ve failed.
Some individual workplaces and enterprises do well. Too many don’t.
Before the Health and Safety in Employment Act we had a multiplicity of legislation covering different workplace types; the Construction Act covering construction sites, the Machinery Act covering industrial machinery; the Boilers Lifts and Cranes Act covering that type of equipment; the Coal Mines Act covering that type of workplace; the Mining Act covering quarries and metalliferous mines, and so the list goes on. Each of these pieces of legislation had specific requirements and duties relating to their specific area.
The problem with this very specific and detailed legislation was that as technology changed and work practices changed, the legislation needed to be changed to keep up.
It was right that we changed our health and safety law.
But what we did was a half-baked half-measure.
Back in 1974 the United Kingdom had already adopted a more open-textured style of legislation specifying generic duties on employers and workers, much the same way as our present Act provides. But what they also did was they supplemented general duties with industry-specific codes and regulations.
They did something else, too. They saw that effective health and safety required a three-way partnership between employers, workers and the government regulator. This became the “three legged stool” of workplace health and safety. Take away one leg and the stool collapses.
The “three legged stool”, or tri-partite approach, was institutionalised with employer organisations, unions and the government with a stand alone body for health and safety (the Health and Safety Executive).
Our 1992 Act was meant to be modelled on the British version. But we only did half the job. We legislated for the general duties. But we did nothing about industry-specific regulations.
As for the three-legged stool, or tri-partitism, that was never going to happen in 1992 with the Employment Contracts Act and its inherent anti-union and anti-collective approach barely a year old. So, that part of the British model was ditched. It was literally politically incorrect.
So, what is the difference in results between the two countries? Today, Britain has the lowest fatality rate per 100 000 workers in the OECD. We rank 17th.
It is possible for us to do better. But we need to change.
I should add that the UK added a corporate manslaughter law to its health and safety arsenal in 2008. I will come back to it shortly.
I want to look quickly at the Health and Safety in Employment Act to provide a context to consider a corporate manslaughter law against.
Under the Health and Safety in Employment Act, generally speaking, the test is whether “all practicable steps” have been taken in relation to a duty to provide a safe working environment or to ensure the safety of oneself or others. The test requires an examination of available knowledge at the time of the accident.
The Act looks at the actions of the owner of work premises, the employing entity, supervisors (including managers), and employees themselves. For a business, it is not just their direct employees for whom they may be liable; the Act will hold them liable for harm caused to contractors.
There are two categories of offence and two corresponding categories of penalty to go with each type of offence. The first type of offence is that where the “person” (including a corporate entity) does something, or fails to do something, knowing, in either case, that either doing that thing or not doing it is likely to cause serious harm. This sets a very high bar for prosecution, and so few, if any, prosecutions have taken place under this provision.
The other type of offence is a failure, without knowledge of the consequences or likely consequences, to fulfil one of the duties provided for in the Act (providing a safe system of work, undertaking hazard identification, providing proper supervision, etc.). The Act, section 53 to be specific, says it’s not necessary to prove any intention in relation to this type of offence. Since there is no knowledge or intention requirement in these types of offences, the penalties are correspondingly lower.
The Report of the Independent Task Force points out that 50 percent of the successful prosecutions under the Health and Safety in Employment Act result in fines of 12 percent or less of the maximum penalty provided for in the Act, and 92 percent of prosecutions have resulted in fines of 20 percent or less than the maximum provided for in the Act. And this for a piece of legislation that has been in place for 20 years.
Our present health and safety regime has seen an increase in our rate of workplace fatalities. It has seen an incident like the Pike River disaster. And after 20 years, the penalties actually being imposed by the courts clearly do not reflect the seriousness implied by the maximum fines possible.
The call for a specific law on corporate manslaughter reflects on-going concern, if not despair, at our persistently high workplace fatality rate.
PIKE RIVER TRAGEDY
The Pike River tragedy in 2010 has highlighted how deficient our workplace safety regime is. This includes how bad the oversight by our main regulatory and enforcement body has been. And it has shown up how unaccountable company owners and directors are under the system.
Change is needed.
Make no mistake – Pike River was nearly 20 years in the making. It started with the loss of specific codes and regulations governing coal mining activities in detail, and their replacement with general duties of safety. Then there was the downgrading of the mines inspectorate, which involved moving it from the department responsible for crown minerals to the general health and safety division of the Department of Labour, then reducing the number of mines inspectors (eventually to two), and then permitting a lower level of qualification and experience for appointing mines inspectors.
The work practices at Pike River were clearly abysmal. Statutorily required reports from underground deputies and managers went routinely unanswered and unacknowledged by management. Serious incidents, such as a mine heating, went unaddressed. Worker input into health and safety systems and processes was non-existent. Some of these things are just unfathomable for a mining company.
At the governance level there were failures. A risk assessment committee of the board was meant to be established but never was. Health and safety reports to the board consisted of reports on the number of lost time injuries, and not much else. When asked by the Commission why they didn’t ask for more detailed information on health and safety in the mine, a director told the commission that the board saw that as a matter for management, that governance had to stay separate from management, and that the separation of governance and management was like the separation of church and state.
An independent audit of mine safety commissioned by the board months before the fatal explosion appears to have been largely ignored.
The Royal Commission report also records that the company was two years behind its production target date, had used considerably more capital in its development than investors planned for and that an ambitious financial bonus scheme for the workforce had been put in place to get production going, but over the objection of the union.
It is clear from Pike River there were systems failures and a failure of workplace and governance culture.
It is here where, in my view, a law on corporate manslaughter is justified.
A corporate manslaughter law, as opposed to ordinary manslaughter as it is presently provided for under the Crimes Act, deals with collective failures of governance and management. It deals with systems failures. And it deals with poor culture at all levels. The focus is on the organisation.
I will come to the Independent Taskforce’s comments on corporate manslaughter shortly, but they make the comment that existing crimes may be available for serious workplace health and safety failures.
And the present Minister of Labour, Simon Bridges, last week seemed to accept this view, that all that is needed is a modification to the present criminal statutes. His comments suggested he is reluctant to see directors of companies held personally liable for corporate health and safety failures, so it isn’t clear what changes to our existing criminal law would do.
Under the Crimes Act, the crime of manslaughter requires an unlawful act or omission resulting in death, but without death being intended. It can be committed as much by a corporate entity as an individual.
Putting aside the reality that the police generally regard workplace deaths as the job of OSH, under the Crimes Act, two difficulties arise. The first is that even though a corporate entity can be prosecuted now under the Act, it is difficult to identify what an act or omission by a corporate, as opposed to an individual, looks like. It’s easier to go after the individual failure, so the police do just that. And that is what they do best, so why try to cram the actions or inactions of a corporate into the way they approach serious crimes.
The second difficulty with a conventional manslaughter charge is the need to establish that a specific unlawful act or omission by the corporate is causative of the death. Proving causation between the actions of an individual and a death is easier than proving causation between the actions of a corporate and a death.
Another crime that could be considered under the Crimes Act might be the duty to avoid omissions dangerous to life (section 157, Crimes Act) but would it would need to be shown that the specific omission at a corporate level is dangerous to life.
It is difficult under the Crimes Act for the aggregate failures by a number of responsible people, any of whom may be regarded as culpable, to be called to account.
I believe this was the case in Pike River Coal. It was the aggregate failure at a number of levels – the directors, senior management, OSH – that led to that tragedy.
In fairness to the Pike River company and its directors, it wasn’t just the directors and management of the company that failed in that tragedy. The other system that failed was our health and safety regulation, including the inspectorate. The regulators and inspectorate should equally be held to account through a corporate manslaughter law.
Put another way, Peter Whittal isn’t the only one who should be in the dock when that case goes to trial.
CORPORATE MANSLAUGHTER BILL
The corporate manslaughter law I have drafted requires a standard of gross negligence to be established. Gross negligence is not minor carelessness or miscalculated risk. It requires a very high degree of failure of care – a conscious, deliberate or reckless disregard of the need to take care which is likely to cause foreseeable serious harm.
This is a deliberately high threshold. It has to be if we want to label a person’s actions (or inactions) criminal.
This language of gross negligence is different to the language of section 150A of the Crimes Act which refers to the standard of care applicable to people under a legal duty or performing unlawful acts. In this section, the Crimes Act refers to the unlawful act or failure of duty to be “a major departure from the standard of care expected of a reasonable person to whom the legal duty applies or who performs the unlawful act”. However, the two definitions may not be far apart. “A major departure from the standard of care expected of a reasonable person” sounds like a fairly high degree of negligence.
In relation to penalties for corporate manslaughter, my member’s Bill provides for a fine on the company of up to $10 million, a publicity order (requiring a company to publicise any conviction in a way approved by the court), and imprisonment for any senior manager (including a director) whose acts or omissions contributed materially to the offence.
I accept that the penalty of imprisonment sits uneasily with a crime that is meant to focus on corporate or organisational failure. It sheets home a collective failure of systems to an individual.
My justification for having a penalty of imprisonment in my Bill is this. Firstly, the offence of corporate manslaughter is one of gross negligence. This description includes deliberate recklessness and total abandonment of any standard of care. Deliberate recklessness and abandonment of (or “a major departure from”) care describes a human failure. Someone has to have done something or not done something they should have done.
This is culpable conduct at the high end of the scale. Where death has resulted, it should be met with a severe sanction.
The second reason for imprisonment as a penalty is to deal with the situation where by the time of any prosecution the company no longer has significant assets. It would be unconscionable if death were to result from a serious failure of corporate conduct, and on conviction no meaningful penalty follow because the company no longer had the means to pay a fine.
This, as we know from last week and the sentencing of the Pike River Coal company for its breaches and failures, simply creates another injustice.
Of a total of more than $4 million in fines and reparations imposed by the court, it looks like not a single dollar will be paid.
It is interesting that the sentencing judge noted the failure of the company to offer even a token amount of reparation and to show some remorse in doing so. It was this that led her to suggest the directors and shareholders pay. She said:
I am satisfied the company has the means to pay either by existing shareholders or a combination of the shareholders and directors.
She said:
It seems morally unjust that this company, within months of this incident occurring, can shut up shop without doing anything to provide for these men’s families.
This is quite remarkable. Here is a judge who, having heard obviously harrowing evidence about the impact of the tragedy, basically challenged the fundamental principle of the limited liability company and said the owners should be liable for the penalties.
So, there is a third reason why the law must, in appropriate circumstances, hold directors to account. A strong signal must be sent that directors and senior managers, those who act as the controlling mind and force of a company, will face personal consequences if their failure to take due care falls woefully short of any acceptable standard.
Looking at overseas examples of corporate manslaughter laws, Britain has one. The ACT has one (and theirs includes imprisonment as a penalty). And Canada has a law which also has imprisonment as a penalty.
Britain’s law took effect in 2008, and five years on there has been one successful prosecution. The British law is notable for the fact that it has no upper limit on any fine.
ACT’s law excludes government departments, the biggest employers in Canberra, so we shouldn’t be surprised the law has been little used.
In Canada, the law has been in place since 2005 and there have been nine prosecutions. Some have been plea-bargained down to lesser offences and there have been three guilty pleas. The one conviction secured after a trial resulted in a term of imprisonment of two years, but this was commuted to a community sentence on appeal.
INDEPENDENT TASKFORCE REPORT
Let me turn to comments in the Independent Taskforce’s report.
I consider the Taskforce’s report a very good one, and it provides a great foundation for the government to overhaul our health and safety regime.
The one area where the report is a let-down is its discussion on corporate manslaughter. In the section on that issue, the report says:
- The taskforce recommends extending the existing manslaughter offence to corporations and revising the corporate liability framework that applies to all offences
- The taskforce does not support the introduction of a new law on corporate manslaughter [because of limited success in other jurisdictions]
- Merely extending the existing manslaughter offence to corporations would have very little impact in practice … because it would be subject to existing corporate liability rules
- [under the present manslaughter law] the acts or omissions of more than one individual cannot be aggregated to establish the necessary ingredients of the offence.
The difficulties the taskforce poses for the existing manslaughter law is precisely the reason why a specific corporate manslaughter law should be created. It will allow those very difficulties to be addressed.
As I said earlier, the Minister of Labour seems to be steering away from anything that looks like it will hold directors and senior managers in any way personally liable. It would be disappointing if that were the case. If we want a step change in health and safety performance, and if we want health and safety to be taken seriously in every boardroom in the country, then sheeting home liability, where necessary, to individual directors is essential.
In this regard, I acknowledge the work of the Institute of Directors, and their useful material they have produced for directors on health and safety. Their summary of the relevant “Good Governance” guidelines is a good framework, but it needs to make clear that directors must be probing and comprehensive in holding management to account on health and safety.
Conclusion
It is clear a new approach is needed to improve our workplace health and safety performance, and the approach of many corporates to safety generally.
The limited liability company is a concept created by statute to allow a legal fiction to operate, namely that owners’ and shareholders’ liability for its failures are limited to the value of their ownership. But this legal fiction should not be allowed to stand in the way of proper and appropriate accountability when grossly negligent corporate failure has resulted in the loss of life.
Actors in the corporate world, including government departments, must know that society expects to call to account and condemn unjustified acts or omissions that end up killing people.
A corporate manslaughter law will enable us to do this.
Thank you.
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