Director not guilty of WHS Due Diligence offences

On 8 March 2024 the NSW District Court handed down a decision which is one of the first cases to meaningfully consider the conduct of an officer charged with a due diligence offence under work health and safety (WHS) legislation (SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58 (the Doble decision)).

In November 2020, a worker was assisting a forklift operator load a truck and was hit by the moving forklift suffering serious injuries.

The company, Miller Logistics, was described by the court as a medium sized company which operated over 8 sites. The company was in voluntary liquidation by the time of the hearing, and there was no appearance on behalf of the company, which was convicted.

Mr Doble was the sole director of the company.

The court found that there was a clear risk of workers being struck by a forklift when they were loading vehicles in the workplace, and that the company recognised this risk, but the only precaution it took was to adopt a "3m rule".

The court found that the 3m rule was totally inadequate, and there was no clarity about what it meant. As described by the court it was a phrase that was used "from time to time" but there was no document to clarify what the rule was. The court said at best,

… it seems to have been an exhortation to workers on foot to stay at least 3m away from a forklift. That unsophisticated ‘rule’ amounted to little more than saying the workers on foot ‘look out for yourself’. This this is always an inadequate precaution to take, when there are reasonably practicable measures of ensuring safety. [239]

The charge against the company particularised that it was reasonably practicable for the company to:

• provide designated loading and unloading zones;
• provide designated and clearly marked forklift lanes;
• provide designated and clearly marked pedestrian exclusion zones; and
• install physical barriers in the loading and unloading areas to separate pedestrians and power mobile plant.

All these measures were taken after the incident and the court said that the company should have taken “each and every one” of those steps before the incident.

The summons against Mr Doble alleged that he failed to exercise due diligence in two respects. First, he failed to ensure the company had available for use, and used, appropriate resources and processes to eliminate or minimise risk. Part of the summons set out that Mr Doble should have carried out his duty of due diligence by "requiring, instructing or directing" the company to take the reasonably practicable steps which the company should have taken to ensure safety.

Second it was alleged that Mr Doble failed to verify that one or more of the resources or processes were actually provided, implemented, and used by workers when undertaking work for or on behalf of the company.

However, the court said that the allegations against Mr Doble did not set out what he should have done to exercise due diligence:

Having said that, the Doble Summons does not actually plead what Mr Doble should have done to discharge his duty of due diligence. To put it in terms of the legislation, the Doble Summons does not particularise the ways in which Mr Doble failed to exercise due diligence, beyond essentially saying that he should have done something to ensure that [the company] complied with its duty. What that something was is not elucidated… [261]

The court found that there were specific steps taken by Mr Doble that show he exercised due diligence. These included:

• weekly management meetings were WHS was an agenda item;
• if a WHS matter needed to be dealt with it was attended to quickly;
• Mr Doble was in contact with the staff member responsible for WHS, Mr Hayter, and kept himself informed about what was being done by him;
• new safety measures were raised and discussed at management meetings;
• if a safety matter was raised and a task set to address it there was discussion at the next meeting ensure it had been completed and the steps were minuted;
• Mr Doble attended different work sites from time to time and if he observed a problem he asked for it to be fixed;
• Mr Doble took an active interest in ensuring WHS was complied with;
• if there was an urgent matter Mr Doble would get involved; and
• there was evidence that there was no budgetary constraint to fixing WHS matters.

The court said that:

… a managing director in the position of Mr Doble cannot know everything that is going on at any given moment. To run a corporation there must be a level of delegation.

In the context of delegation, the court noted that Mr Doble was entitled to rely on Mr Hayter, who was specifically employed to deal with WHS:

The evidence in the case shows that Mr Hayter was specifically employed to deal with work health and safety. This required Mr Hayter to not only update policies and procedures, but to deal with any issues which arose from time to time. There was no suggestion in the evidence that Mr Hayter was anything other than conscientious. There was no suggestion in the evidence that Mr Doble had any reason not to place confidence in Mr Hayter carrying out his work health and safety duties. The engagement of Mr Hayter was the primary process or resource which Mr Doble used to ensure that the PCBU carry out its duty under the WHS Act. [265]

Ultimately the court said that:

• Mr Doble was not a “hands-off” director in relation to WHS and he took an active interest in ensuring that WHS and compliance were attended to;
• there was a system to identify and manage safety risks and to ensure that these were addressed; and
• there were resources and processes and verification steps to ensure that the system was followed.

The court held that these steps were sufficient to meet Mr Doble’s due diligence obligations.

The decision is interesting from several different perspectives when considering due diligence obligations under WHS legislation.

The extent to which an officer can rely on their health and safety personnel to demonstrate they are discharging their obligations under WHS legislation is a common theme in due diligence prosecutions.

For example, in the Western Australian Supreme Court decision, Morrison v Winton; Morrison v Atlas Group Pty Ltd (Unreported judgement BC9606040 dated 12 December 1996) the court noted that the managing director was entitled to rely on his “competent” health and safety manager, and the evidence was that when health and safety matters were brought to his attention, the manager responded to them.

In contrast, for example, in Inspector Kim Kumar v David Aylmer Ritchie [2006] NSWIRComm 323 (the Ritchie decision) the court found that the defendant could not rely on health and safety personnel.

The Ritchie decision involved an explosion of a tank that was being cleaned at a workplace and the evidence in the case revealed deficiencies in the safety management systems to address the risks associated with cleaning, including a failure of suitable auditing of the tank wash facility.

The court said that Mr Ritchie could not rely on the people who conducted audits of the tank wash facility as part of his demonstration of due diligence, because none of the people who conducted the audits were competent or qualified to do so, and the court said:

The defendant did nothing to ensure that persons employed as occupational health and safety officers were trained. [155]

Moreover, the court said that there was nothing in the safety management systems of the organisations that would bring this lack of training to Mr Ritchie's attention.

In another interesting case, the Canadian environmental decision, R V Bata Industries 7 C.E.L.R. (N.S.) 245, 9 O.R. (3d) 329 (the Bata decision) a manger also tried to demonstrate due diligence through their reliance on a health, safety and environmental officer.

However, like the Ritchie decision, this position was also not accepted in the Bata decision.

The court identified that the health, safety and environment officer had no environmental training or qualifications. Further, the court noted:

As Bata was “cut to the bone” by [the manager], the additional responsibilities fell on [the health safety and environmental officer] and grossly overloaded him. … the failings of health safety and environmental officer] fall on the shoulders of [the manager] … [172]

The cases are strongly indicative that having competent, well-trained health safety and personnel are an important element of exercising due diligence.

However, it should be noted that in all the cases, there was no real discussion about what qualifies a person as a competent, well-trained safety advisor.

Another interesting aspect of the Doble decision is the lack of discussion about “systemic failure” or assumptions. Often, when courts or inquiries criticise senior leaders in relation to their role in health and safety, the criticism focusses on when the leaders make assumptions about the state of health and safety in their organisation, and the evidence reveals long-term, systemic failures of health and safety management.

Referencing back to the Ritchie decision, the criticism was that there was nothing in the safety management system that would bring the lack of training and competence of personnel who audited the tank wash facilities to the attention of Mr Ritchie. The court also noted that:

… nothing was done over a long period of time to rectify longstanding shortcomings at the [workplace] [160]

and

The defendant's evidence, ultimately, relied upon a series of assumptions and reports he received from managers as well as audits in order to ensure the safety of the… Workforce. He assumed that the managers were doing their job. [157]

Assumption is a common criticism of managers in major workplace accidents. For example, in the Pike River Royal Commission, the Royal Commission noted:

the board did not verify that effective systems were in place and that risk management was effective. Nor did it properly hold management to account, but instead assumed that managers would draw the board's attention to any major operational problems.

and

the statistical information provided to the board on health and safety comprised mainly personal injury rates and time lost through accidents… [This] was not much help in assessing the risk of catastrophic event faced by high hazard industries.… The board appears to have received no information proving the effectiveness of crucial systems…

Similarly, in the Piper Alpha disaster, the inquiry observed:

The managers who had responsibility for the correct operation of the [permit to work] system were all aware that the safety personnel on the platform were expected to monitor the daily operation of the system. All of them assumed that because they received no reports of failing the system was working properly. However none of them checked the quality of the monitoring nor did they carry out more than the most cursory examination of permits…

In the Doble decision there does appear to be some evidence of possible long-term systemic failure, but this was not a focus in the case.

For example, the company received an improvement notice in 2017, pointing out deficiencies in traffic management but the discussion in the case does not really address the extent to which the requirements of the improvement notice were implemented and managed.

The case also seems slightly problematic given the criticisms by the court of the way that the charges were pleaded, and the fact that the prosecutor did not set out what steps the defendant ought to have taken to discharge their due diligence obligations, beyond a broad statement that they should have "done something".

It may be that a better particularised case with more direct evidence of long-term systemic failures of important safety measures in the organisation could have led to a different outcome.

The history of prosecutions against company officers in Australia for breaches of health and safety legislation (pre and post WHS) is almost universally against officers with day-to-day hands-on involvement with the work, close to the front line. However, the Doble decision represents a willingness by regulators to try and expand the reach of due diligence prosecutions beyond frontline company officers to executive management further removed from the day-to-day operation of the business.

If you would like any more information about this case for the application of due diligence principles generally in your business, please reach out one of our team.