First prosecution case of an officer under WHS laws

By Alena Titterton and Alice Winter-Irving of the occupational health, safety and security practice at the law firm, Norton Rose Fulbright

On Tuesday, 10 June 2014 in the Australian Capital Territory Industrial Magistrates Court, an early mention in the Kenoss Contractors case was heard.  Some matters raised in the 10 June mention were canvassed in a further hearing on 17 June 2014.  In this article, we canvass the developments in both hearings.

This case includes a prosecution of both an organisation for allegedly failing to meet the primary health and safety duty and an officer for allegedly failing to exercise due diligence under the Work Health and Safety Act 2011 (ACT) which commenced on 1 January 2012. This case is ostensibly the first officer prosecution under the new harmonised WHS laws.

Background

In March 2012, Kenoss Contractors Pty Ltd (Kenoss Contractors) was conducting work at a site in Turner in the Australian Capital Territory (ACT) and a 48-year-old worker/truck driver was electrocuted when he tipped his truck trailer to offload gravel at a dumping station at the site and the trailer touched a power line (Turner Incident). It is understood that WorkSafe ACT in investigating the Turner Incident identified that the power line was low and alleges that a properly conducted risk assessment would have eliminated the risk by putting the dumping station in a different location (such as across the road out of the reach of the power lines).

In the ACT, Kenoss Contractors and one of its officers have been prosecuted for alleged breaches of their respective duties under the Work Health and Safety Act 2011 (ACT) (WHS Act) arising from the Turner Incident. This fatality was one of the four fatalities (three of which had been in the ACT construction industry) in a 7-month period which led to the Getting Home Safely Report being commissioned by the ACT Government. The facts all arose prior to the appointment of liquidators and receivers to various companies and assets in the Kenoss group.

The charges under the WHS Act

Charges against Kenoss Contractors

Kenoss Contractors has been accused as the person conducting a business or undertaking (PCBU) with allegedly breaching the primary duty under section 19 of the WHS Act to ensure the health and safety of its workers while at work in the business or undertaking by failing to provide and maintain a work environment without risks to health and safety.

Kenoss Contractors has been charged with a category 2 offence under section 32 of the WHS Act as the matter relates to an alleged failure to comply with a health and safety duty where that failure exposed Mr Booth to a risk of death, serious injury or illness. This offence carries a maximum penalty of $1.5 million for a PCBU that is a corporation and $300,000 for a PCBU as an individual.

Charges against the relevant officer

The individual officer has been accused of allegedly failing to exercise due diligence under section 27 of the WHS Act to ensure Kenoss Contractors complied with its work health and safety duties under the WHS Act.

The officer has also been charged with a category 2 offence under section 32 of the WHS Act as the matter relates to an alleged failure to comply with a health and safety duty where that failure exposed Mr Booth to a risk of death, serious injury or illness. Category 2 offences carry a potential maximum penalty of $300,000 for individual officers.

The prosecution of the officer

The individual officer is being prosecuted as a result of alleged failures in due diligence in relation to his role as Project Manager at the site at Turner. The officer pleaded not guilty and the hearing has been scheduled for 17-19 December 2014.

The prosecution of the PCBU

The 10 June 2014 mention

Kenoss Contractors is currently in liquidation and was unrepresented at the 10 June 2014 mention. A legal issue that arose is whether or not Kenoss Contractors can be criminally prosecuted whilst insolvent, a matter that the liquidators had raised on a previous occasion.

Section 471B of the Corporations Act 2001 (Cth) (Corporations Act) provides that a person cannot begin or proceed with a proceeding against a company that is being wound up in insolvency, except with the leave of the Federal Court of Australia or the ACT Supreme Court. The Office of ACT Director of Public Prosecutions (DPP), however, submitted that section 471B does not apply to criminal proceedings.

Section 500(2) of the Corporations Act provides that after the passing of a resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except with leave of the Federal Court of Australia or the ACT Supreme Court. The DPP also submitted that that does not apply in criminal proceedings this being supported by the plain and ordinary meaning of the language of the section and the purpose of the legislation.

The DPP submitted that sections 471B and 500(2) did not apply to Kenoss Contractors in the event respectively, of either a court-ordered winding up or a voluntary winding-up and that therefore it could proceed with the prosecution of the company.

Chief Industrial Magistrate Lorraine Walker listed the matter for a further hearing on 17 June 2014, but limited to determining whether it is appropriate for the prosecution against Kenoss Contractors to proceed in light of the Corporations Act issues outlined above, so that the Liquidators of the Company could appear.

The 17 June 2014 hearing

On 17 June 2014, the liquidators appeared before her Honour Chief Industrial Magistrate Walker on the point of whether Kenoss Contractors can be criminally prosecuted whilst insolvent.

Counsel for the liquidators did not advocate a particular position in relation to whether leave to proceed with the prosecution was required and limited its submissions to assisting the Court by outlining that the liquidation was by way of a creditor’s winding up after the process was initiated by the members (not an uncommon practice) thus resolving the issue of whether section 471B or section 500(2) of the Corporations Act was the relevant section for Her Honour’s consideration, in favour of section 500(2).

In considering section 500(2), the DPP submitted that for both policy reasons and also the plain meaning of the words used in the section, ‘no action or other proceeding’, only civil proceedings are prevented from being commenced without leave of either the Federal Court or the Supreme Court. It is the word ‘other’ before ‘civil proceeding’ which seems to suggest that commencing criminal proceedings is not intended to be prevented by the section. The historical meaning of ‘action’ involving a matter commenced by writ also supports the DPP’s interpretation. The purpose of such a provision (to avoid creditors from commencing claims when the winding up process is being conducted) would also lend itself to the interpretation that criminal proceedings are not intended to be prevented by the section.

Chief Industrial Magistrate Walker held that leave to proceed with the prosecution of Kenoss Contractors was not required and adjourned the Kenoss Contractors case to commence with the officer prosecution on 17 December 2014.

It is understood that at this point, the liquidators do not want to appear in the matter. It may be that no-one appears for Kenoss Contractors in the hearing that will commence on 17 December 2014.