A much-anticipated first sentencing decision under the Health and Safety at Work Act 2015 (HSW Act) has failed to deliver hoped-for guidance on the sentencing approach that New Zealand Courts will adopt under the new regime.
Instead, the District Court has signalled that guidance will be left up to the appellate courts, which the Judge considered would be better placed to consider. The decision means employers will have to wait to see how a six-fold increase in penalties in the HSW Act will play out in sentencing.
Budget Plastics pleaded guilty to breaching its primary duty to ensure, so far as reasonably practicable, the health and safety of a worker. The worker had suffered a serious amputation injury to his forefingers after his hand was dragged into the auger of an extrusion machine. The machine was unguarded, despite the company having received a report identifying the risk of amputation to those using the machine.
The key issue in this case concerned the Court's approach to setting the starting point for a fine under the new HSW Act. Specifically, the question was whether the Court would adopt a starting point for the fine based on bands (low to high culpability) adjusted for the increase in penalties under the HSW Act, or whether decisions in Australian cases would inform the Court's approach.
Rather than fixing a starting point, the Court considered Budget's culpability was "moderate" and would have fallen within a "medium range" between $400,000 and $600,000. The Court expressly declined either to make sentencing guidelines, or to decide whether Australian case law would have any influence on sentencing guidelines, on the basis that these were issues for appellate courts to address.
Legal Approach to Sentencing
The Judge held that the three-step sentencing approach remained generally applicable under the HSW Act. That approach requires the Court to:
- assess the amount of reparation to be paid to any victim,
- fix the amount of the fine, and
- make an overall assessment of the total outcome.
First, the Judge considered a payment of $37,500 for emotional harm and reparation was appropriate. The HSW Act does not change the principles for assessing reparation.
Budget Plastics faced a maximum fine of $1.5 million upon conviction. WorkSafe submitted that Budget Plastics' culpability was moderate and submitted that a starting point of $900,000 was appropriate. Budget Plastics submitted a starting point of $200,000 was appropriate based on guidance provided by the Australian courts.
The Judge stated that while it was possible for Australian case law to influence the setting of fines in New Zealand, the appellate courts were in a better position to consider this influence on any sentencing guidelines under the HSW Act. The Judge also stated that it was not for the District Court to make sentencing guidelines generally, and that the Court can only adapt available authorities.
After assessing relevant factors, the Judge found that Budget Plastics' culpability was moderate and would have fallen within the medium band. The Judge considered the starting point for this offending could range between $400,000 and $600,000.
The Judge then assessed mitigating factors of voluntary reparation, co-operation, remorse, remedial steps and Budget Plastics' prior good record, concluding a 30% discount was appropriate. Both parties were in agreement that a 25% discount was available for Budget Plastics' early guilty plea. As a result, the Judge held that the fine should be reduced to $275,000.
The Court went on to consider Budget Plastics' financial capacity. As a fine over $100,000 was outside Budget Plastics' means, the Judge reduced the fine to the maximum fine it could realistically pay, the sum of $100,000.
Learnings for employers
The starting point for the fine in this case is lower than may have been predicted due to the six-fold increase in maximum penalties under the HSW Act. However, the decision does not provide employers with the long awaited guidance as to the sentencing approach to be adopted by the New Zealand Courts under the new regime.
Our experienced employment and workplace safety team regularly advises employers on how to comply with the HSW Act. If you or your business has any questions regarding any of the issues raised in our article, please contact one of our team or your usual Bell Gully adviser.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.