By Harold Downes, Partner and Belle Sakrzewski-Hetherington, Lawyer

 

The Facts

Noting that this decision has already been widely misreported, it seems apt to direct readers to the full judgement at the outset of this article. You can view the judgement here.

Mills Oakley acted for all three defendants in this proceeding. His Honour Judge A J Rafter handed down his decision on 11 June 2020 and the defendants were sentenced as follows after they each pleaded guilty:

1. Brisbane Auto Recycling Pty Ltd (BAR) was convicted of one count of Industrial Manslaughter (IM) contrary to s 34 of the Work Health and Safety Act 2011 (Qld) (WHS Act). It received a fine of $3 million and a conviction was recorded.
2. The two directors, Asadullah Hussaini and Mohammad Ali Jan Karimi were both convicted of one count of reckless conduct – category 1, contrary to s 31 of the WHS Act. They were both sentenced to 10 months imprisonment, wholly suspended for an operational period of 20 months, and a conviction was recorded.

The monetary penalty for BAR was always going to be in the region of 1/3 of the maximum which is $10 million. The two directors are extremely relieved at the sentences they received. We do not expect the prosecutor to appeal however they have 28 days from the date of sentence to do so.

The defendants were charged under the Queensland WHS Act. It is important to observe that there are subtle differences in the various iterations of the IM offence which now appear in WHS laws in different jurisdictions. For example, whether the IM offence applies to officers or ‘senior officers’ and whether monetary penalties are available.

These are our observations on the implications of the decision, the IM offence more generally and its interaction with the original offences under the WHS laws, most relevantly the category 1 offence under s 31 of the WHS Act.

IM requires the prosecution to prove criminal negligence. It attracts maximum penalties of $10m for a corporation and 20 years imprisonment for ‘senior officers’ (with no option for a fine). Reckless conduct – category 1 requires the prosecution to prove recklessness and attracts a $3m penalty for corporations, 5 years or $600,000 for officers and 5 years or $300,000 for workers.  Does it seem odd that mere criminal negligence attracts a more severe penalty than recklessness?  It does to us.

Strategy just became very important

Recklessness requires foresight of the probable consequences of the accused’s actions and that they display indifference as to whether or not those consequences occur.[1] It requires the prosecution to prove that the accused made a conscious choice to take an unjustified risk.  

Criminal negligence on the other hand requires an objective test to be applied, of whether a reasonable person would have known that he or she was exposing others to an appreciable risk of serious injury or harm.[2]

The illogical result of the gross disparity between the severe penalties, particularly for individuals for the IM offence as against the lesser penalties for reckless conduct – category 1, is that lawyers will search for evidence of recklessness, to enable their clients to strategically plead to the more egregious offence of reckless conduct – category 1.

This was our strategy from the outset, particularly given our individual clients had the added, potentially catastrophic outcome of deportation given their permanent resident visa status. This was exacerbated by the fact that as refugees, noting the principle of non-refoulment, they would face indefinite detention pending, hopefully, resettlement in another country. This was the consequence they faced if they were to receive a custodial sentence of 12 months or greater.

Post incident conduct

As the media has thoroughly canvassed in its (frequently inaccurate) coverage of this decision, the directors’ conduct post incident was a prominent sentencing consideration for his Honour Judge Rafter.  This highlights the need to build a relationship with a good WHS lawyer and engage with them early post incident in order to manage communications with various stakeholders such as the police, the inspectorate, next of kin, medical support and workers.

When it became apparent to us that a breach of the WHS Act was obvious, the focus turned immediately to mitigatory evidence rather than exculpatory evidence. Given the potentially extreme consequences, this has become a critical part of incident response.

The IM offence

In her review of the model WHS laws, Ms Marie Boland provided the following justifications for the introduction of an IM offence into the model WHS laws:[3]

“While it is established law in both England and Australia that a corporation can commit the crime of negligent manslaughter, many legal experts point to significant hurdles for prosecutors to overcome to secure a manslaughter conviction against a corporation. Prosecutors must identify a grossly negligent individual who is the embodiment of the company and whose conduct and state of mind may be attributed to the corporation (identification doctrine).”

“Difficulties within the common law with regard to aggregating the negligence of more than one such individual (the prohibition on aggregation) have also been highlighted by UK legal experts—a prohibition which, they say, makes prosecutions of large companies for manslaughter almost impossible. The Queensland Government cited difficulties in its Criminal Code as a key reason for introducing its industrial manslaughter offence. Specifically, it said, ‘the need to identify an individual director or employee as the directing mind and will of the corporation … ultimately means that manslaughter prosecutions under the Criminal Code are only successful against small businesses and that prosecutions against large corporations are unlikely to succeed’. The identification of a grossly negligent individual who is the embodiment of a small company is not as problematic, as with small companies it is often the case that the director will be actively involved in day-to-day operations.”

“The ability to aggregate the negligence of more than one individual to a corporation would need to be provided for in the development of an industrial manslaughter offence within the model WHS laws.”

“A further limitation of the criminal manslaughter offence concerns sanctions. Traditionally, the crime of manslaughter is only punishable by sentencing an offender to imprisonment. Courts have interpreted such provisions to mean that a corporation cannot commit the offence of manslaughter because there will be no sanction that can be imposed in the event of a guilty finding. In New South Wales, this has now been addressed so that a court may impose a fine as an alternative sanction where a corporation is found guilty of a crime punishable only by imprisonment. But this is not the case throughout Australia, and the absence of such a provision in Queensland law was one reason cited by the 2017 Queensland Review as justifying the need for law reform.”

Ms Boland’s report was absent any suggestion that there was a need for the IM offence as against natural persons. Further, there is no evidence (before the introduction of IM) of any incident where a prosecution could not be brought against an individual or a company, or where the prosecution failed because its case was too hard to prove. Regrettably WHSQ does not publish acquittals, only convictions on its website. Consider for example the various prosecutions against Nathan Day, Maria Jackson, Claudio D’alessandro, Bill McDonald and Peter Colbert.

The reality is that the means to enforce compliance has always been available. The ability to issue prohibition notices is an extremely effective tool, but rarely used. Regrettably, Regulators have simply not been up to the task of effectively using the tools that are available.  That is not to be critical of the Queensland WHS Prosecutor, he is very skilled. The lack of skill exists within the Regulator. So, instead of upskilling the Regulators, parliament introduced IM in an exercise of intellectual laziness. No thought appears to have been given to the way in which corporations or line managers would respond. We discuss this below and, in our opinion, the outcome has more disadvantages than advantages for risk management.

It is not possible to postulate the offence’s effectiveness in targeting prosecutions of the controlling mind of a large corporation. This was not a useful test case in that regard because BAR was a small corporation and its directors were intimately involved in the day to day management of the business. What is important to mention here is that (at least in respect of the Queensland WHS Act) mid-ranking managers of corporations are exposed to the IM offence.

It seems to us that IM stands to predominantly benefit the prosecution by simply making their case much easier to prove. That was the objective and the objective has been achieved.

Section 244 implications

Section 244 of the WHS Act provides:

244 Imputing conduct to bodies corporate

(1)          For this Act, any conduct engaged in on behalf of a body corporate by an employee, agent or officer of the body corporate acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority, is conduct also engaged in by the body corporate.

The prosecution successfully argued that the conduct of the forklift driver (who operated the forklift when not licensed nor expected or directed to do so) was attributable to Brisbane Auto Recycling.[4]

The bizarre effect of this provision, is that a body corporate, that may (so far as is reasonably practicable) comply with its duties under the WHS Act, can still be exposed to IM, in circumstances where an employee’s conduct results in the death of a worker and that conduct is within the actual or apparent scope of their employment.

This highlights the importance for line managers both in their day to day activities, and in conducting workplace investigations to also be alert to identifying employee misconduct and expressly calling out anything which is not within the actual or apparent scope of their employment. If this is not done, then the attribution to the corporate defendant is made and that in turn exposes the ‘senior officers’ to IM.

So, not only has the union movement’s push for IM meant that WHS now operates in an extreme blame environment for line managers and officers, but the trickle-down effect is that this will also be the case for workers.

If worker compliance with safety management systems is not strictly enforced, then corporations, their officers and line managers are allowing conduct that will expose themselves personally to prosecution for IM and a sentence which would send them to prison.

Is there a winner?

Yes, those boards or leadership teams that need to see a ‘stick’ in order to engage seriously with WHS, will now be more likely to do so.  IM is certainly a big stick.

However, once they engage, the outcomes may prove to be worse rather than better for risk management. Boards or leadership teams who respond to the ‘stick’ are unlikely to suddenly adopt best practice. They are more likely to adopt the most legally defensive protocols available and, for example, maximise the use of legal professional privilege.

So, our fear is that even a win is pyrrhic.

The loser in this debate

The loser in this debate is safety.

Our forecast? With exposure for mid-level managers at an all-time high, post incident investigation methodologies that enquire into ‘organisational failure’ will be fiercely resisted by line managers occupying roles in the department that is said to have failed. Investigations, driven by the at-risk managers, will be scoped carefully to exclude findings that can send them to prison. Legal professional privilege will be overused, and slow or no release of information will be the order of the day.

Perhaps Charles Dickens anticipated the combined effect of s.244 and the IM versus category 1 illogicality when he wrote in the 1830s:

“It was all Mrs. Bumble. She would do it,” urged Mr. Bumble; first looking round, to ascertain that his partner had left the room.

“That is no excuse,” returned Mr. Brownlow. “You were present on the occasion of the destruction of these trinkets, and, indeed, are the more guilty of the two, in the eye of the law; for the law supposes that your wife acts under your direction.

“If the law supposes that,” said Mr. Bumble, squeezing his hat emphatically in both hands, “the law is a ass — a idiot. If that’s the eye of the law, the law is a bachelor; and the worst I wish the law is, that his eye may be opened by experience — by experience.”

And finally, here are a few things we suggest you consider doing to prepare for a potential IM event:

1. IM will have such a big impact on your post incident response that it should be put through a management of change process;
2. Revisit your post incident response protocols to ensure (so far as is reasonably practicable J) that they do not restrict your ability to be flexible in your investigation(s);
3. Brief your line managers/officers on the offence and what your organisation is doing to look after their legal wellbeing;
4. Make yourself familiar with the proper use of legal professional privilege;
5. Those workers / line managers who are exposed to IM (in fact all workers) should be very comfortable with the corporation’s position in relation to its “relationship” with the inspectorate and they should be thoroughly briefed on their rights during investigations, particularly the right to the privilege against self-incrimination; and
6. Find a good WHS lawyer(s). You are going to need them if you have an incident which has or could result in a death. The difference between a specialist WHS lawyer and one who dabbles in this area could be the difference between imprisonment or not.

Conclusion

If you have an incident at work, and you think you are exposed to a breach of the WHS Act, don’t avoid being identified as having been reckless. That way, you have the option of arguing about a fine versus imprisonment, and if you are looking at imprisonment, the term would be subject to a maximum of 5 years. That is a much better outcome than being merely criminally negligent and exposed to an offence where there is no option of a fine and your prison sentence is a portion of 20 years.

[1] R v Nuri [1990] VR 641 at 643.

[2] Wilson v R (1992) 174 CLR 313.

[3] See pages 120 to 122 of the Review of the model Work Health and Safety laws – Final report by Marie Boland published December 2018.

[4] R v Brisbane Auto Recycling Pty Ltd & Ors [2020] QDC 113 at [59].