The first sentence under the Health and Safety at Work Act 2016 (HSW Act) has just been handed down, in WorkSafe New Zealand v Budget Plastics (New Zealand) Ltd [2017] NZDC 17395. Most people interested in health and safety have been long awaiting the first decision, to see what effect the greatly increased maximum penalties will have on actual fines imposed.

The District Court judgment

This case, in the District Court at Palmerston North, dealt with an incident where a portion of a worker's hand was amputated after it was caught in the auger of a plastic extrusion machine. The employer, Budget Plastics, plead guilty to the charge.

Judge Large first assessed the amount of reparation to award to the worker. He noted that the HSW Act does not affect the amount of reparation that should be awarded, as that is assessed under the Sentencing Act. In this case he awarded reparation of $37,500.

Judge Large then went on to consider the level of the fine. WorkSafe asked the Court to set new bands for low, medium and high culpability, following the standard practice for sentencing under the previous legislation, but the judge decided that "it is not for the District Court to make sentencing guidelines."

The first step for assessing the fine is to determine a starting point. WorkSafe submitted that this was an offence with a maximum fine of $1.5 million, and that as the incident was of moderate culpability the starting point should be $900,000. Budget Plastics submitted that the starting point should be $200,000, in line with Australian decisions.

Judge Large made his own assessment of culpability for the offence, and agreed that it was moderate. He noted that:

"Under the HSE Act and Hanham & Philp this would have fallen within the second band. Under the HSW Act and the new penalties, the available starting point for this offending could range between $400,000 to $600,00

He went on to assess aggravating and mitigating factors, and said that:

"The defendant has no prior record. Both counsel have agreed that a 30 per cent discount is available for reparation, co-operation, remorse, remedial steps and the defendant's prior good record. Counsel were also in agreement that a 25 per cent discount is available for the defendant's guilty plea. The end sentence will therefore be between $210,000 and $315,000, depending on the starting point adopted."

In setting the final amount of the fine, Judge Large took into account the financial capacity of Budget Plastics, as required by the Sentencing Act. He decided that:

"There is clear evidence before the Court that a fine above $100,000 will be outside of the defendant's means. This case is not so severe as to justify a departure from the need to impose a fine within the offender's ability to pay (ie, not a case where the defendant should be put out of business).

Accordingly, the fine should be reduced from a fine in the range of $275,000 to the maximum Budget can realistically pay namely the sum of $100,000."

Conclusion

This decision has resulted in a large increase in the level of fines for breaches of the HSW Act. As insurance cover cannot be obtained for fines, every PCBU (person conducting a business or undertaking) should be aware of the potential effect on their business of breaching their health and safety obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.