Proposed changes to the HVNL will see executive officers subject to a new primary duty of due diligence to ensure that corporations comply with their Chain of Responsibility (CoR) duties under the HVNL.
This change will mean that executive officers can be held liable for failure to exercise due diligence, even if the corporation does not first commit a breach of the HVNL. The changed standard of due diligence will also mean that executive officers must take a much more proactive, risk-based approach to HVNL compliance than the current prescribed compliance model. The new due diligence standard is intended to more closely align with current Work Health & Safety (WHS) and Rail Safety National Law (RSNL) standards and practices.
As part of the amendments, the number of executive officer liability offences will also be reduced from 129 to 58. Further, the current reverse burden of proof (where executive officers must prove that they exercised reasonable diligence) will be removed and replaced with the usual burden of proof (where the prosecuting authority must prove that the executive officer failed to exercise due diligence).
Draft laws are expected to be released in May 2016. If approved, they will be submitted to the QLD parliament (which is the host jurisdiction for the HVNL) in the second half of 2016 or early 2017. Once passed, a 12 month transition period is expected.
The extension of the new executive officer primary due diligence obligation to other safety provisions under the HVNL (beyond the core CoR mass, dimension, load restraint, speed and fatigue management provisions) is currently being considered and the subject of a Regulatory Impact Statement (Phase 2 reforms). Pending the outcome of that review, those offences will remain as is under the HVNL, meaning that there will be two duty and offence regimes applying to executive officers until the review process is completed and any further changes implemented.
Submissions on the Phase 2 Reforms close on 22 April 2016. A decision Regulatory Impact Statement and recommended reforms will then be prepared and submitted to the Transport and Infrastructure Council for policy approval, presently intended for its November 2016 meeting. If approved, a draft Bill is intended to be tabled in May 2017 and then submitted to the QLD parliament in the second half of 2017 or early 2018.
Under the HVNL, 'executive officers' of a corporation can be held personally liable, prosecuted and fined if the corporation commits a breach of the HVNL. Executive officers include the directors and any person who is concerned or takes part in the management of a corporation, regardless of their title and whether or not they are a director.
Executive officers can be held liable where an offence is committed by the corporation and the executive officer either:
- knowingly authorised or permitted the conduct constituting the offence; or
- knew or ought reasonably to have known of the conduct constituting the offence or that there was a substantial risk that the offence would be committed.
It is a defence if an executive officer can prove that they:
- exercised reasonable diligence to ensure the corporation complied with the provision; or
- were not in a position to influence the conduct of the corporation in relation to the offence.
Presently, an executive officer can only be held personally liable if the corporation first commits an offence. Presently, a reverse burden of proof operates, whereby executive officers must prove that they exercised reasonable diligence to avoid any offence.
As part of an ongoing reform of CoR duties, current CoR offences are going to be replaced with an overriding primary duty on CoR parties to exercise due diligence to ensure, so far as reasonably practicable, the safety of road transport operations. Consistent with that reform, the executive officer liability provisions will be amended to impose a primary duty to exercise due diligence to ensure that a corporation complies with its duties under the HVNL.
The new duty of due diligence will likely mirror existing WHS and RSNL standards e.g.:
"If a person [including a corporation] has a duty or obligation under this Law, an officer of the person must exercise due diligence to ensure that the person complies with that duty of obligation".
It is expected that the change in duty will ensure that executive officers are forced to adopt a more active hazard and risk identification and management approach focussing on safe work practices, ongoing compliance and continual improvement, rather than the current statutory compliance 'check-the-box' approach which is perceived to exist under the current very detailed and prescribed compliance provisions of the HVNL.
Importantly, the overriding due diligence obligation will apply regardless of whether a corporation first commits an offence. This means that executive officers can be charged for failure to manage risk even where no offence arises. This is directly contrary to the existing regime, where executive officers can only be held liable if a corporation first commits an offence.
Once passed, the new due diligence standard will immediately replace the executive officer liability provisions for all core CoR offences (mass, dimension, load restraint, speed and fatigue management provisions). The remaining non-core ancillary safety provisions which apply to CoR parties and 'any person' (e.g. person must not tamper with speed limiter, particular contracts posing risk of speed/fatigue rules prohibited) will continue as is whilst a further review is undertaken to assess whether the revised due diligence obligation should also be extended to them.
Businesses involved in the logistics and supply chain sectors need to review the draft laws once released in May, in order to start developing and implementing new practices which will protect executive officers once the new laws are introduced.
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 individuals listed.