Executive officers (EOs), which include company directors, are
exposed to criminal liability if their company is found guilty of a
breach of its obligations under Chain of Responsibility (CoR) laws.
Here we examine when this liability would apply.
There are two strands to that liability:
Under s 636(1) of the Heavy Vehicle National Law
(HVNL), an EO will be liable if he or she
"knowingly authorised or permitted" the conduct.
Under s 636(2), an EO will be liable if he or she knew or ought
reasonably to have known of the conduct, or that there was
substantial risk that the offence would have been committed.
Section 636(3) provides that it is a defence under s 636(2) that
the EO exercised 'reasonable diligence' to comply with the
provision, or was not in a position to influence the conduct of the
corporation in relation to the offence.
The company does not need to have been successfully prosecuted
before an EO can be prosecuted.
So what does this mean in practice?
First, all EOs need to exercise (at least) reasonable diligence
to ensure that their business is compliant with CoR laws.
While the 'reasonable diligence' defence is only
available to a charge under sub-section (2), it is difficult to see
how an EO could knowingly authorise or permit conduct in breach of
CoR if at the same time they were exercising reasonable diligence
In that case, what amounts to reasonable diligence?
The board must:
put in place a CoR compliance policy; and
monitor that policy.
While no cases have turned on this question in the past, these
two steps (in our view) would satisfy the reasonable diligence
Having such measures in place should significantly reduce the
likelihood of CoR breaches occurring.
That is not to say that lesser steps might not amount to
reasonable diligence. Being able to prove at least some awareness
of your CoR obligations and having sought to address those in
practice may satisfy the reasonable diligence requirement. But the
best way to protect yourself from personal liability will be to
produce minutes of a board meeting adopting a CoR compliance policy
and some evidence that that policy has been applied.
There are two further things to bear in mind. The first is that
some CoR offences relate to business practices. For example, under
s 204 an employer, prime contractor and operator will be liable if
they have failed to take all reasonable steps to ensure that their
business practices will not cause the driver to exceed a speed
Under s 205, an employer will be liable if they allow a driver
to drive before they have complied with s 204.
In other words, it is not necessary for a driver to be caught
speeding before the company might be liable if it cannot
demonstrate that it has taken all reasonable steps to ensure that
their business practices won't cause speeding to begin
This in turn means that an EO of that employer is potentially
liable if he or she has not taken steps to ensure that the
company's business practices will not cause speeding.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader's
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
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This decision will be significant to aviation industry participants in assessing whether claimants in the context of international or domestic carriage by air have commenced claims in an appropriate forum in Australia.
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