According to s 26D of the Heavy Vehicle National Law (HVNL): "If a legal entity has a safety duty, an executive of the legal entity must exercise due diligence to ensure the legal entity complies with the safety duty."
This means that for any business entity subject to any Chain of Responsibility (CoR) safety duty, the executive for that business entity must ensure that the business is doing the right thing.
Who is an executive?
Section 26D of the HVNL defines 'executive' as:
- an 'executive officer' of a corporation, being:
- a director; or
- any person who is concerned or takes part in the management of the corporation – typically not extending to just any 'manager', but only those very senior people who can effectively set the direction that the company takes
- a partner in a partnership
- a management member of an unincorporated body.
Executive due diligence
Section 26D of the HVNL expressly sets out what executives must do in order to discharge their obligation of 'due diligence'.
Executives must take reasonable steps to:
- understand what 'transport activities' their business engages in
- understand the hazards and risks, including risk to the public, arising from those activities
- maintain an understanding of how 'transport activities' can be conducted safely
- ensure that their business has and uses appropriate resources to eliminate or minimise those risks and hazards
- ensure that their business has and implements processes:
- to eliminate or minimise those risks and hazards
- for receiving, considering and responding in a timely way to information about those risks, hazards and any incidents
- for complying with the business's CoR safety duties
- verify that the resources and processes referred to above are in fact being provided, followed and are effective.
Executives must be aware of the risks that can result from their business's transport activities. They must know how to reduce those risks and ensure that their business is appropriately resourced to address any risks that may arise. In addition to this, executives must make sure there are adequate systems in place aimed at preventing CoR breaches, which they regularly monitor and review.
The executive obligation is not passive – it is very much active. It is also personal to the executive and cannot blindly be delegated. So, even if the executive delegates CoR compliance to the safety team, the executive must actively check in to ensure the job is being done properly.
Executives need to ensure that their business receives, considers and responds in a timely way to information about risks, hazards and any incidents. It is therefore essential that executives receive some form of CoR safety compliance performance reporting – in much the same way as they would already receive work health and safety (WHS) reporting. Without it, how can an executive know what has been implemented and whether it is working, in order to discharge their duty?
Penalties for executives who fail in their duty
Sections 26F, G and H of the HVNL set out the maximum penalties for executives, as follows:
- category one offence (conduct that recklessly exposes a person to risk of injury) – a maximum of $300,000 and/or up to five years in jail
- category two (conduct that exposes a person to risk of injury) – a maximum of $150,000
- category three (conduct that breaches the executive duty) – a maximum of $50,000.
CoR awareness in the boardroom
The executive liability provisions of the HVNL make it clear that CoR safety is a boardroom and senior-management issue as well as an operational issue. If executives don't discharge their duty, they can be prosecuted and fined, even if no incident or accident has occurred. Executives must proactively ensure that their business is complying with the HVNL – the consequences of failing to do so could be costly and, in some cases, may even involve a mandatory five-year holiday.
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.