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Whakaari: What Are The Implications For Company Directors?

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On 9 December 2019, when Whakaari/White Island erupted, 47 people were on the volcano, including many tourists and tour guides. Tragically, 22 people died, and many others were injured. Subsequently, WorkSafe New Zealand laid Health and Safety charges under the Health and Safety at Work Act 2015 against 13 defendants, including tour operator companies, island owners, and Government agencies.

Although no party can prevent a volcanic eruption, questions remain about what mitigating factors the parties involved should have considered to reduce the health and safety risks. This article discusses the implications and repercussions for company directors in these situations.

Health and Safety Implications

Under health and safety law in New Zealand, company directors, partners or a person occupying a position in a body corporate are considered “officers” and must exercise due diligence to ensure that their organisation:

  • has the appropriate Health and Safety systems in place;
  • monitors the performance of those systems; and 
  • ensures that sufficient resources are available for Health and Safety activities to protect the workforce and other affected parties. 

These Officer duties include an oversight responsibility. Accordingly, this means that the company directors do not have to be out on the ground completing risk assessments, but they do need to ensure that these activities occur safely.

Repercussions of Whakaari

Whakaari is owned by Whakaari Trustees Limited and managed by Whakaari Management Limited (WML). WML had agreements with multiple tourism operators, with all access to Whakaari via helicopter or boat.

Inflite Charters Limited, a tourism operating company providing trips to White Island, was charged and entered a guilty plea. They were subsequently fined $227,500 and paid an additional $40,000 to the prosecution.

Four other tourism operating companies, Volcanic Air Safaris Limited, White Island Tours Limited, Kahu NZ Limited and Aerius Limited, subsequently entered guilty pleas and are awaiting sentencing. The Institute of Geological and Nuclear Sciences Limited also entered a guilty plea and is awaiting sentencing.

The National Emergency Management Agency applied to have the charges against it dismissed and was ultimately successful.  

Company Director Liability for Whakaari 

WML was responsible for managing the island on behalf of the owners of White Island. The island’s owners – Andrew, James and Peter Buttle – were also directors of Whakaari Management Limited. There were no employees, only directors. 

The individual charges laid by WorkSafe under section 44 of the Health and Safety at Work Act for each director were dismissed earlier in the year. However, this does not necessarily mean that directors will not be liable for similar issues in the future. 

The charges for the three WML directors were dismissed largely due to insufficient evidence proving that the directors personally failed to exercise their due diligence or to ensure that the PCBU met their primary obligations to those on the island during the eruption. It was determined that WorkSafe must bring evidence regarding each director’s:

  • knowledge;
  • role; and 
  • circumstances in making the decisions.

Ultimately, it was not enough to assign the actions of a company board to individual directors.

The Duties of an Officer Under the Health and Safety at Work Act

The duties that apply to officers, including company directors, include taking reasonable steps to the following:

  • retain up-to-date knowledge of work health and safety matters;
  • understand the nature of the operations of the business or undertaking of the Person Conducting a Business or Undertaking (PCBU);
  • understand the general hazards and risks associated with the operations;
  • ensure that the PCBU has access to and uses the appropriate resources and procedures to eliminate or minimise risks to health and safety from work;
  • ensure that the PCBU has appropriate processes for receiving and considering information about incidents, hazards, and risks and for responding promptly; and
  • ensure that the PCBU implements processes for compliance.

It is important to note that if a PCBU has an obligation or duty under the Health and Safety at Work Act, then the Officer must exercise due diligence to ensure they comply with the obligation or duty under the law.

WorkSafe is the Health and Safety Regulator in New Zealand, and they primarily bring proceedings against:

  • businesses; and
  • any other person or organisation that breaches the Act.

Other parties can also bring proceedings depending on the breach. Penalties for incidents involving death or serious injury can include a fine of up to $300,000 for an individual who is an officer of a PCBU and a possible fine of up to $1.5 million for companies.

For Officers, breaches of duties that amount to reckless conduct under the Health and Safety at Work Act are criminal offences. For these, there is a maximum penalty of $600,000 and a possible 5-year imprisonment for serious offences. For companies, there is a possible fine of up to $3 million.

You should ensure your company insurance or indemnity policies cover any legal indemnities and costs associated with defending any prosecutions.

The following table determines the maximum penalties for Officers for offences relating to officer duties. 

OffencePenalty for an individual who is PBCU or an officer of a PCBU 
Section 47: Reckless conduct in respect of duty that exposes an individual to a risk of serious injury, serious illness or death.Maximum 5 years in prison; and/or a fine not exceeding $600,000.
Section 48: Failure to comply with a duty that exposes an individual to a risk of serious injury, serious illness or death$300,000 fine.
Section 49: Failure to comply with a duty$100,000 fine.

It is important to note that Officers of a PCBU may still be found guilty regardless of whether or not the PCBU has been found guilty of an offence.

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Key Takeaways

The Whakaari incident is an important and tragic case that covers multiple parties, including companies, directors, and even the landowners, for what may amount to breaches of duty under health and safety law in New Zealand. Company directors need to understand that as Officers, even if they are not physically on-site, they are still obligated to ensure that any PCBUs adhere to the relevant health and safety systems. 

Although the charges against the directors of Whakaari Management Limited were dismissed in this case, the incident highlights the legal obligations of Officers to ensure workplace safety, with potential penalties, including fines and imprisonment, for breaches of New Zealand’s health and safety laws. 

If you have any questions about health and safety in the workplace, our experienced employment lawyers can assist as part of LegalVision’s membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

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