When the High Court released its decision in Stumpmaster v WorkSafe1 last year, it not only set new guideline bands for fines, but also commented on the level of discounts given for mitigating factors. This article considers the effect this comment has had on recent fines.
We also review the recent High Court decision on reparation awards in Oceana Gold v WorkSafe.2
Stumpmaster v WorkSafe
In Stumpmaster, the High Court decided to review the level of discounts routinely being given for reparation already paid, remorse, co-operation, and a previous good record. Decisions released under the Health and Safety at Work Act 2015 have discounts for mitigating factors mostly either 25 or 30 per cent, and occasionally higher. The Court decided that:
"Such routine standard discounts give cause for concern and have distorted the sentencing process by so reducing the starting points that outcomes become too low."
It has long been the court's position that a 1:1 credit should not be adopted for reparation payments. As it is now likely that a starting point of $500,000 to $600,000 will be common, a 10 per cent reduction for reparation is likely to be greater than the amount of reparation paid. Although not recommending an overall amount, the High Court said that:
"By way of general guidance, we consider a further discount of a size such as 30 per cent is only to be expected in cases that exhibit all the mitigating factors to a moderate degree, or one or more of them to a high degree. That is not to place a ceiling on the amount of credit, but to observe a routine crediting of 30 per cent without regard to the particular circumstances is not consistent with the Sentencing Act."
Discounts since Stumpmaster
The Stumpmaster decision created a general expectation that discounts for mitigating factors would significantly decrease. However, recent experience has indicated that this is not necessarily the case, particularly if detail of actions taken by the defendant is given to the WorkSafe and the sentencing judge.
In WorkSafe v Locker Group,3 Judge McIlraith reviewed all of the actions taken by Locker Group after the incident, and gave a discount of 30 per cent for mitigating factors. The steps taken were carefully set out, and included:
- flying the victim's family to New Zealand from France;
- formulating and establishing a new role for the victim at Locker Group, where he is still working;
- topping up the ACC shortfall, and assisting with non-covered medical costs, including transport for medical appointments for the victim and his partner;
- records of attempts to make the machine as safe as possible prior to the incident; and
- significant remedial steps put in place after the incident.
Similarly, in WorkSafe v Ron Frew Family Partnership,4 Judge Rowe discounted the fine by 40 per cent for mitigating factors. He considered:
- the defendant's 50 years of operation with no previous incidents warranted a discount of 10 per cent;
- the company's good character as a good corporate citizen and major charitable contributor to its community required recognition with a 5 per cent discount;
- the genuine remorse and immediate reparation paid was considered "exemplary and a model for others", and a 15 per cent discount was applied for those factors;
- the company's co-operation in every way required in the investigation was worth a discount of 5 per cent; and
- the remedial steps taken, which should be considered "within context of what can be properly and realistically achieved by a responsible employer" were worthy of a further five percent discount.
These cases have clearly shown that substantial discounts for mitigating factors can still be obtained in appropriate circumstances. As this will often involve actions taken in the immediate aftermath of an incident, advice on the steps that could and should be taken should be obtained as soon as possible.
The other aspect of health and safety sentencing is the reparation awarded to the victims of the incidents. The High Court recently considered the appeal of the District Court's reparation award in Oceana Gold. In that case, actuarial reports had been obtained to determine the future earnings that could have been expected from the victim, had the incident not occurred. The High Court decided that this approach was too wide, saying:
"in the case of loss of earnings the order for reparation (which in a number of cases will be in addition to reparation for emotional harm) should be restricted to the statutory shortfall in compensation under the compensation legislation. That shortfall is to be calculated as the difference between the pecuniary benefit the victim would have received and the compensation payable to them under the accident compensation scheme, in accordance with the entitlements set out in Schedule 1 of the Accident Compensation Act limited to the period that the payments are made under that scheme. That will enable the shortfall to be made on a basis that ensures a degree of consistency with the social contract confirmed by the Accident Compensation legislation. It should also provide a more straightforward basis for the calculation of reparation and, hopefully, a degree of certainty to sentencing Judges and the parties. It will also avoid the need for complicated and potentially contestable actuarial reports for sentencing hearings and avoid arguments concerning contribution."
The reparation award for loss of earnings in the District Court was therefore set aside (although Oceana Gold did not require it to be repaid).
This decision should clarify the amounts payable in future reparation awards.
1 Stumpmaster Ltd v WorkSafe New Zealand; The Tasman Tanning Company Ltd v WorkSafe New Zealand; Niagara Sawmilling Company Ltd v WorkSafe New Zealand  NZHC 2020
2 Oceana Gold (New Zealand) Ltd v WorkSafe New Zealand; Cropp Logging Ltd v WorkSafe New Zealand  NZHC 365
3 WorkSafe New Zealand v Locker Group (NZ) Ltd  NZDC 26802
4 WorkSafe New Zealand v Ron Frew Family Partnership Ltd  NZDC 20330 (disclaimer: Duncan Cotterill represented the defendant in this prosecution)
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.