In a first for Australia, Queensland company Brisbane Auto Recycling Pty Ltd (BAR) was convicted of industrial manslaughter and fined $3 million dollars. Judge Rafter said, "A lesser penalty would not adequately punish Brisbane Auto Recycling Pty Ltd or adequately deter others."
The two directors of BAR were convicted of Category 1 offences under Work Health and Safety Act 2011 and sentenced to 10 months imprisonment, wholly suspended for 20 months.
Judge Rafter added, "The defendants had no safety systems in place, in particular there was no traffic management plan", adding "Steps to prevent the incident involved only minor inconvenience and little, if any, cost."
These convictions should ring alarm bells across the country for all those holding director positions. It amplifies the critical need to take work health and safety seriously in business.
Aside from being the first industrial manslaughter case, this is an unusual case in that the entire board of directors were charged.
The case
The charges followed a tragic incident where a worker was struck by a forklift in BAR’s Rocklea wrecking yard on Friday 17 May 2019. The worker subsequently died from his injuries on 25 May 2019. BAR had in place a system of verbal safety instructions to workers. Unbeknown to the directors, the operator of the forklift was unlicensed and unskilled. According to BAR’s system of work, he should not have been operating the forklift and following the incident he was charged with dangerous operation of a motor vehicle causing death. However, a safety consultant had described the system as no more than mildly inconvenient.
At the time the charges were brought the WHS Prosecutor said, “After careful consideration, I decided to take action against the company and its directors”. The Minister for Industrial Relations, Grace Grace said, “These laws are about saving lives and ensuring all Queenslanders return home to their loved ones after a day’s work. They are the first of their kind to be introduced by a state jurisdiction and leave negligent employers culpable in workplace deaths with nowhere to hide. Individuals guilty of industrial manslaughter will face up to 20 years imprisonment, with corporate offenders liable for fines of up to $10 million”.
In this case, BAR, had pleaded guilty to a charge of having negligently caused the death of a worker. The charge was that BAR caused the death of their worker by failing to effectively separate pedestrians from the mobile plant, and failed to effectively supervise workers, including the operators of the mobile plant. In its defence, BAR stated that it had no prior convictions and that any fine imposed would almost certainly send it bankrupt.
What is industrial manslaughter?
The offence of industrial manslaughter exists when a business or person negligently causes the death of a worker. To secure ordinary manslaughter charges against corporate defendants has proved very difficult in the past, which led to the introduction of industrial manslaughter offence.
It first came into existence in the Australian Capital Territory and was incorporated into Queensland’s version of the Work Health and Safety Act 2011 in 2017. The Workplace Safety Legislation Amendment (Workplace Manslaughter) came into effect in Victoria this month. Only New South Wales, South Australia and Tasmania haven’t introduced specific industrial manslaughter laws, but employers can be prosecuted for workplace fatalities under general workplace safety laws.
What is a category 1 offence?
The Board of BAR were charged with category 1 offences. The offence only applies if the defendant without reasonable excuse, engages in conduct that exposes an individual to the risk of death or serious injury or illness. The offence attracts maximum penalties of 5 years imprisonment or a fine up to $300,000 for a first offence.
The detail of why the directors’ behaviour was reckless is not entirely clear. At best it seems they failed to actively put in place a traffic management plan. The WHS Prosecutor argued that the failure of the business to put in place appropriate traffic management systems to ensure the safety of workers and customers, rendered the offence to be a serious one. Both parties acknowledged that it was relevant to take into account that the traffic management plan did not exist over an extended period of time. In terms of the actual forklift operator’s conduct, he appears to be have been unlicensed, unauthorised and his driving was sufficient for the police to charge him. The directors disavowed themselves of the operator’s conduct and both agreed to give evidence against him in the police proceedings. However, the conduct of the operator by imputation became the conduct of the company and the directors had failed to correct that conduct.
Although not addressed in the case, there would be many businesses in Australia that do not have a traffic management plan in place and for those businesses it is likely that the absence of a traffic management plan extended over the life of the business. This is an important consideration that should be noted by all observers of this case.
The Board members are two young men in their early 20s. Both came to Australia as teenage refugees. They have never claimed social security whilst in Australia and worked to build a successful business worth $2.5million a year, employing eight people. Both are married with young children. Unfortunately, the young men did not engage lawyers at an early stage and some of their conduct following the incident was viewed very poorly by the Court. The fine imposed of $3 million will most likely see the demise of the business.
This underscores of course the need to bring in experienced people, unaffected by the intense emotion of the situation, immediately following an incident.
In considering why the board members didn’t contest the charges, both directors have permanent residency, but neither is an Australian citizen. Under the Commonwealth Migration Act 1958, a head sentence of 12 months imprisonment could mean they could be deported out of Australia. Being refugees the prospect of being deported might have been deeply concerning. In submissions the defence counsel described this as extreme and exceptional circumstances, justifying an unusually low penalty. In addition, by pleading guilty at an early stage, by cooperating in the prosecution of the forklift operator and by cooperating with Workplace Health and Safety Queensland, they clearly were trying to minimise any sentence that was imposed upon them.
What this means for your business
Iain Rennie, Managing Director of ABLA’s Corporate and Commercial practice adds, “This case is an important reminder of the significance that most regulators attach to those who govern businesses. Taking a directorship or other senior office exposes the individual to many responsibilities for the actions of their company or business. Unfortunately, many Boards do not appreciate the width of their exposure to personal liability, nor that they may be held individually responsible for breaches of serious criminal offences arising from the conduct of their business. It is not just about the Accounts and the Corporations Act. Good governance requires vigilance, ongoing training and good operating systems that are constantly open for improvement.”
If you hold a director position, or play a role in managing your business, this matter should now make work health and safety your top priority.
Take action now
We highly recommend directors implement the following:
- Board briefing on industrial manslaughter and implications
- Conduct safety audit to identify risks
- Conduct a formal review updating documentation and communication
- Update policies, procedures and training based on findings.
As demonstrated by this case, a failure to have a simple traffic management plan put these directors in jail and closed their business.