Conviction provides timely reminder of director duties

25 March 2014 – Company directors are far more likely to be in the gun over liability issues under New Zealand’s tougher health and safety regulations.
This was highlighted with the recent conviction of Gloria Davis, the sole director of the company that owned the ill-fated Easy Rider fishing boat which sank last year, killing eight people.

Stephanie Grieve, a health and safety specialist lawyer with Duncan Cotterill, says the Easy Rider case illustrates the trend towards imposing greater liability on directors of companies involved in health and safety breaches.

“Under the new regime, we expect more cases of directors who are not operationally involved being found liable for health and safety breaches, in circumstances where they have not obtained key knowledge on health and safety performance in order to ensure it is adequate.

“The current regime allows prosecution not just of the company but also of those individuals responsible for health and safety implemenation.“

Even though Ms Davis had no involvement in the direct decisions made the day the boat sank, she was charged with failing to take all practical steps to ensure the safety of contractors (vessel deckhands) working on board the vessel. That was because she had (or ought to have had) knowledge about health and safety issues relating to the vessel.

Ms Davis was charged under s 56(1) of the Health and Safety in Employment Act 1992, which allows charges to be brought against directors of a company in their personal capacity for their acquiescence or participation in the health and safety breaches of the company.

“Charges under s 56(1) have historically been relatively rare, and successful prosecutions have tended to involve small owner-operated businesses. Section 56 is to be superseded in the new health and safety regime, which will instead impose direct obligations of due diligence on company directors and officers,” according to Grieve.

She says the case also illustrates what has been a problem with s 56(1) from the outset: it has generally only applied where a directoris close to core operations (compare, for instance, the Pike River case, in which no directors were charged).

The new due diligence provisions intend also to capture directors in larger enterprises, who are less likely to have as much direct knowledge and involvement in the day-to-day business.

ENDS

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