Australia: The six biggest Chain of Responsibility changes and how they affect your business

Last Updated: 15 March 2018
Article by Nathan Cecil
Most Read Contributor in Australia, October 2018

Under the Heavy Vehicle National Law and Chain of Responsibility (CoR) rules, every party in the heavy vehicle supply chain is responsible and may be held liable for safety breaches committed anywhere along the Chain. The governing principle is that all parties in the Chain are responsible for any breach if they did or could have exercised any control or influence to prevent the breach from occurring. The CoR laws are changing, with amendments expected to come into force in mid-2018. Here, we canvas the six biggest changes and how they affect your business.

Change 1 - Vehicle standards (maintenance) is being added

The current CoR compliance components are:

  • Mass
  • Dimension
  • Loading
  • Speed
  • Fatigue

In recognition of the fact that vehicle construction and roadworthiness play a key role in road safety, vehicle standards is being added as a new CoR compliance component. Vehicle standards effectively relate to design, construction and roadworthiness standards. Much of the commentary refers to this as 'maintenance', as a proactive preventative maintenance and inspection program is generally considered the best way to monitor vehicle standards and roadworthiness. This means that all parties in the Chain will have some responsibility in relation to the roadworthiness of vehicles used in their supply chain.

Change 2 - The standard of legal duty is changing

Currently, a business can only be prosecuted where a breach of a CoR component occurs. The current test is whether a business took "all reasonable steps" to prevent that breach from occurring.

The new standard will require all parties in the Chain to take "all reasonably practicable steps to ensure the safety of their transport activities". It is forward-looking, rather than incident-based. This means that businesses could be prosecuted for failing to put in place CoR control structures and practices, even if a CoR accident/incident has not arisen. The new laws therefore place increased focus on the CoR management system framework that must be put in place in order for a business to be said to be taking all reasonably practicable steps – what we call the 'Big 5'.


Change 3 - Executive liability is changing

Currently, a member of the Executive can only be prosecuted where a breach of a CoR component is committed by their business. The current test is whether an Executive exercised "reasonable diligence" to prevent that breach from occurring.

The new standard will require Executives of all parties in the Chain to exercise "due diligence" to ensure that their businesses comply with all duties under the CoR. It is forward-looking, rather than incident-based. This means that Executives could be prosecuted for failing to put in place CoR control structures and practices, even if a CoR accident/incident has not arisen. The new laws therefore place increased focus on the CoR management system framework that must be put in place in order for a business to be said to be taking all reasonably practicable steps – see the 'Big 5' above.

The Executive duty cannot wholly be delegated. The new laws expressly require the Executive to:

  • obtain and keep up to date knowledge about what the business is doing to ensure that its transport activities are safe
  • understand how and in what capacities the business engages in transport activities
  • understand the hazards and risks, including risks to the public, associated with the business' engagement in transport activities
  • ensure the business has, and uses, appropriate resources to eliminate or minimise those hazards and risks
  • ensure the business has, and implements, processes to minimise and manage those risks and respond to incidents that do arise
  • check that the resources and processes referred to above are in fact being provided, used and implemented by the business, its management and staff and are effective in eliminating or minimising identified hazards and risks.

Change 4 - Your CoR management system will more closely align with your WHS management system

The changed standards of duty for businesses and their Executives brings them into line with the well-known tests under WHS law.

This will mean that many aspects of existing WHS management systems can be adapted as part of your CoR management. For example, existing WHS risk assessment, safe work procedures, training needs analyses, incident registers and compliance reporting frameworks can be equally applied or applied with a little adaption to CoR management. The CoR and WHS management systems could be integrated, or at least run in parallel. This should streamline the way that businesses deal with CoR management.

However, CoR and WHS do diverge in two important ways. Under CoR, you have a greater responsibility for the conduct of other parties within the Chain and a greater responsibility for the conduct of persons off-site. Under WHS, you are essentially responsible only for your workers and visitors/contractors on your site. Under CoR, you can be held responsible for the conduct of any party in the Chain – and those people won't necessarily be your workers or visitors/contractors. So, CoR responsibility is not site-based, it is supply chain-based. CoR responsibility is not employee/contractor-based, it is supply chain party-based.

Change 5 - Industry codes are coming

The new laws mandate that any registered industry codes must provide much greater compliance substance than those in the past, in order to be accepted for registration. The new breed of industry codes will be designed to identify the common CoR risks faced by an industry and canvas the available range of suitable control measures that could be adopted to respond to those risks, as well as giving individual industry participants guidance on how to conduct risk assessment and analysis tailored for their own individual business.

Businesses which adopt a registered industry code will be able to rely on the code to prove the range of risks and controls faced by that industry in any investigation or Court proceedings. However, businesses will still need to demonstrate that they have appropriately applied any industry code and assessed the particular risks in their business and designed and successfully implement suitable controls within the range of controls contained within the code. So, industry codes are not a 'get out of jail free' card.

Change 6 - Penalties are increasing

Penalties are being increased to align with those under existing WHS law and in order to ensure that businesses and their Executives give greater attention to CoR compliance management, as follows:

Offence Category 1 offence - recklessly engaging in conduct exposing an individual to a risk of death or serious injury or illness Category 2 offence - contravention exposing an individual, or class, to a risk of death or serious injury or illness Category 3 offence - other contravention of the duty
Penalty Corporation - $3,000,000 Corporation - $1,500,000 Corporation - $500,000
Individual - $300,000 and/or 5 years imprisonment Individual - $150,000 Individual - $50,000

No fixed date has been set for the commencement of the amended laws, but the key government stakeholders continue to advertise them as commencing in "mid-2018" – so there is still some time to ensure that your business is up to speed before the new laws commence.

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.

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Nathan Cecil
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