- Directors and other executive officers have personal obligations for safety and need to take active steps to discharge these obligations.
Safety is quite rightly a key concern in the energy and resources sectors. Legislation imposes high standards on companies and individuals to ensure safety standards are upheld in the industry.
In each State and under Commonwealth legislation, an "executive officer" (noting that specific legislation for the mining and petroleum industries may call these "executive officers" by different names) may, depending on the circumstances, be personally liable for the safety breaches of a company. In essence, executive officers must ensure that the corporation complies with the applicable safety regime. The focus is to make individual managers directly and personally responsible for the safety performance of a business, as an added incentive to create a culture of safety throughout an organisation.
An "executive officer" includes any person who is "concerned with, or takes part in" the management of a corporation. It is not necessary for the person to be a director, or to hold a position with a title of "executive officer" or "safety officer". It extends to persons with a management role or a role that allows them to influence safety. A court will look at the substance of a role and responsibilities.
As a result, anyone concerned in the management of a business, including company directors, operations managers, project managers, in house counsel, company secretaries, line managers, safety officers and site supervisors, is potentially at risk if safety is not an active priority.
Two recent cases illustrate the personal liability these persons may face.
Inspector Sing v Tony Laurence Atkins
Victor Bradbury, an employee of Presidential Seating, severed his hand while using a "Magic Beam Saw" to cut particle board in the course of his employment.
On the morning of the accident, Mr Atkins, a director of Presidential Seating, saw Mr Bradbury having difficulty with the saw. The grippers to hold the particle board during cutting were not gripping properly and on the third time they didn't grip, the saw threw Mr Bradbury forward. Mr Atkins heard a loud "clunk". He heard Mr Bradbury curse and say "It's got me" and turned to see Mr Bradbury's hand severed.
The saw had two safety switches, one of which was not operating at all, and there had been no regular maintenance or inspections of the saw. Mr Bradbury was not trained in the use of the saw, no assessment was made of his competence to operate it and he was not supervised when doing so. The entire safety system relied on employees reporting problems.
After the accident Presidential Seating replaced the faulty safety switch, began a program of preventative maintenance, trained the new operator in the safe use of the saw, and conducted daily safety checks that were recorded in a register.
Presidential Seating was prosecuted for safety breaches, but the prosecution was discontinued once an administrator was appointed. Mr Atkins was prosecuted, as a person who could influence safety within Presidential Safety while it had operated.
Mr Atkins pleaded guilty and asked the Court not to record a conviction, based on his poor health and financial position. The Court accepted that his financial position was "modest" and that the incident had "a profound and stressful impact" on him, but found that these did not allow it not to impose a penalty.
In the circumstances, the Court imposed a penalty of $9,500 and ordered Mr Atkins to pay half that amount to the prosecutor, plus costs (estimated to be a further amount of around $24,000).
Inspector Kumar v David Ritchie
The Atkins decision follows on from the 2006 conviction of the Chief Executive Officer of Owens Container Services (OCS). An OCS worker was killed in a workplace explosion while spraying methyl ketone to clean out a tank used to house a resin solution.
The company and the general manager of the container division were prosecuted and pleaded guilty. The CEO was prosecuted and he defended the charge. He relied on the recognised defences - of inability to influence and due diligence.
The CEO said he was not in a position to influence safety matters, because he relied on the general manager and was too removed from the day to day operations of the company given its size and because he operated out of New Zealand (the CEO oversaw the operation of the entire business, which consisted of over 1,600 staff across more than 80 worksites in six countries).
The CEO also said that if the Court found he was in a position to influence safety, he had exercised all due diligence to prevent the corporation committing the offence by being informed of safety audits and by making asking staff about safety when he visited sites.
The Court disagreed with each claim. In a powerful statement, the Court said "by the very nature of their roles, all directors are capable of influencing the actions of the corporation". It found that the CEO had not done enough to meet his safety duty. The statement need not be limited to directors alone.
All corporate counsel, company directors, and operations, project and line managers have a direct and personal responsibility to ensure that safety matters.
As a starting point, all such individuals must be able to show due diligence with respect to safety, and, to do so, show an understanding of what they are accountable for, the key risks to their area of responsibility, and how they know that the critical controls put in place to manage those key risks are effective.
Due diligence requires proactive management of safety and a demonstrated demand for information about "preventative medicine" such as frequency and content of safety audits, and for proof that employees are following basic safety procedures such as planning the day's activities before they start work.
A focus on lost time injuries - or other reports of how much time has been lost from safety issues that could have been averted from a proactive approach - will be of little or no value in showing due diligence.
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.