Most Read Contributor in Australia, September 2016
Executive officers (EOs) have a duty to ensure that their
business does not breach the Heavy Vehicle National Law (HVNL)
– and being informed about the business's Chain of
Responsibility (CoR) performance is a crucial part of this. This
article explores the duties of EOs and looks at how effective board
and management reporting can ensure these duties are met.
Executive officers are directors and "any person, by
whatever name called and whether or not that person is a director,
who is concerned or takes part in the management of a
corporation". This may include those who exercise the
functions of a manager, even if they do not hold that title.
Executive officers may be held personally liable if their
business breaches the HVNL. Directors are the third highest
prosecuted category of CoR party in NSW, with 698 prosecutions of
directors (and counting) being commenced in NSW since 2006.
Exercising reasonable diligence
EOs have an 'active duty' to exercise reasonable
diligence in relation to CoR compliance. This means that EOs must
be actively and meaningfully engaged in CoR compliance and cannot
delegate their obligation. To be in a position to exercise
reasonable diligence in relation to CoR compliance, directors and
managers must be:
alert to the CoR breach risks faced by the business, including
ensuring that a CoR risk assessment has been undertaken;
informed so that they can sufficiently identify risks, breaches
and performance – specifically, they need information
the business's CoR activities;
the business's CoR performance; and
any breaches and subsequent remedial action; and
active, including developing and implementing a CoR compliance
policy, monitoring its implementation and effectiveness and
responding to any incidents.
Board and manager CoR briefings and awareness seminars, given by
independent lawyers or consultants, are an excellent tool to:
increase awareness about CoR compliance; and
demonstrate that by seeking advice, the business and its EOs
have taken steps to exercise reasonable diligence in relation to
It is crucial that EOs are given only relevant and meaningful
information. Anecdotal evidence suggests that information is
submitted to the EOs even when there is doubt about its relevance.
The board ends up with pages of figures and tables, which board
members can't properly assess in context, either within a
reasonable timeframe or at all.
Caution: A common thread in CoR prosecutions is
there were no systems or checks in place; or
information was being collected, but was not properly analysed
and acted upon.
Three tips for effective reporting
To help ensure that your reporting is effective, there are three
things you need to remember:
The CoR is directed at safety, not business
Your CoR compliance reporting must reflect this. Further
anecdotal evidence suggests that the majority of EO reporting is
financial. But figures are unlikely to give any insight into CoR
compliance and performance on a day-to-day basis. At best,
financial information might reveal the totality of fines or
penalties imposed after the event. That's why CoR compliance
reporting should primarily concern incidents, not dollars.
You must avoid CoR breaches
EOs are under a duty to exercise due diligence to avoid CoR
breaches. CoR compliance reporting that is limited to information
on breaches and remedial action following CoR breaches only goes
halfway to discharging this duty.
Ideally, CoR compliance reporting should also be used to
forecast non-compliance trends, so that compliance measures or
further information, supervision and training can be put in place
to prevent breaches before they occur.
CoR compliance reporting should focus on the bad, not
CoR compliance reporting, especially at board level, is not a
school awards night. The number of road movements that have been
conducted without any compliance issues might deserve an accolade,
but does little to assist in identifying areas of concern.
CoR compliance reporting should mainly be exception or
non-conformance based, to focus attention on potential or actual
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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