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The Auckland District Court guilty verdict against former Ports of Auckland Limited CEO, Tony Gibson, for failing to exercise his due diligence obligations under the Health and Safety at Work Act has important ramifications for other officers in large organisations.
It is the first conviction against an officer under the governance reforms arising from the Pike River disaster.
We background the case, explore the principles the court applied, and identify some lessons for wider application.
The background
The litigation arose from the death in 2020 of Pala’amo Kalati, a 31-year-old stevedore and father of seven who was crushed when a container toppled on him during a separate cargo moving operation. Ports of Auckland Limited (POAL) had a policy that no worker should be within three container lengths of a crane but Mr Kalati, under instruction, was working within the exclusion zone.
POAL has pleaded guilty and been convicted of two charges under the Health and Safety at Work Act (HSAWA):
- Failure to ensure the protection of workers so far as is reasonably practicable, in particular by directing Mr Kalati to work within proximity to a crane; and
- Systemic failures in providing and maintaining a safe system of work, and failures of appropriate training, supervision and risk assessment.
The verdict against Gibson
The Court found that Mr Gibson “failed to exercise the care, diligence and skill that a reasonable officer would have exercised in the same circumstances”, by failing to take reasonable steps to ensure that POAL had developed and clearly documented, adequate and effective exclusion zones around operating cranes.
In making this determination, the Court observed that Mr Gibson knew that there were regular non-compliances on the night shift and was “on notice of POAL’s on-going difficulties in adequately monitoring work as done and of the need for improvement of the monitoring of the night shift”, as well as POAL’s lack of timely response to health and safety recommendations.
Mr Gibson’s lack of due diligence missed opportunities to reduce or eliminate POAL’s breach of its primary duty of care, thereby exposing lashers to the risk of being struck by falling objects. The Court found that there was a clear connection between Mr Gibson’s failure to exercise due diligence regarding exclusion zones and the three container-width rule, and the exposure of stevedores to the risk of death or serious injury.
If Mr Gibson had exercised due diligence, POAL would have had a system in place to provide management with insights into actual work practices, identify non-compliance, and prompt a review of safety controls and documentation. This would have significantly reduced the risk of lashers being struck by falling objects.
The Court held that Mr Gibson was aware of the shortfalls in POAL’s management of exclusion zones and should have used his position and influence to ensure that POAL utilised appropriate resources and processes to address those shortfalls. He was “hands on” in relation to health and safety issues and was tasked with a number of key health and safety responsibilities. His knowledge coupled with his failure to ensure appropriate action was taken is central to the Court’s finding of guilt.
Court findings in relation to due diligence
The Court accepted that the duty of due diligence of an officer to ensure the Person Conducting a Business or Undertaking (PCBU) is distinct from the primary duty of care applying to a PCBU. Simply because the POAL had accepted its breaches of duty did not necessarily mean that Mr Gibson had failed in his due diligence responsibilities.
The judgment sets the following general principles relating to the exercise of an officer’s duty of due diligence:
- In a large, hierarchical organisation, the duty to exercise due diligence is not limited to governance or directorial oversight functions. It applies with at least equal force to a CEO who is in a position to directly influence safety on the shop floor as to a director who is removed from day-to-day operations.
- An officer in a large PCBU does not need to be involved in day-to-day operations in a hands-on way but cannot simply rely upon others within the organisation. Officers must personally acquire and maintain sufficient knowledge to reasonably satisfy themselves that the PCBU is complying with its duties under the HSAWA.
- Where there are specialists operating within the PCBU, including in safety-specific roles, an officer must ensure that such persons have the necessary skills and experience to execute their roles and must regularly monitor their performance to ensure that they are properly discharging their functions.
- The officer must also acquire and maintain sufficient knowledge of the operations of the PCBU and the work actually carried out “on the shop floor” adequately to identify and address actual workplace hazards and risks.
- An officer must do more than put in place policies or procedures as to how work is to be carried out. Systemic and entrenched processes are also needed to ensure that the PCBU complies with its duties.
- An officer must ensure that there are effective reporting lines and systems so that necessary information in relation to health and safety, workplace risks, hazards and controls flows to all duty-holders in the organisation with governance and supervisory functions. Information flows are particularly important in large organisations.
- An officer must be proactive in assessing the PCBU’s compliance with its obligations and must be in a position properly to monitor, verify and interrogate the information they receive.
- Due diligence also requires the officer to engage upon, or arrange, an effective process of monitoring, review and/or auditing of the PCBU’s systems, processes and work practices to ensure that they are achieving their purpose and are being adhered to.
Take-outs
The decision highlights the active nature of the duty.
- It cannot be satisfied through a simple review function. Practical follow-up is required to ensure any weaknesses are addressed and that appropriate systems are in place.
- More is expected of a hands-on CEO given the position they hold and the influence they have.
- Officers must ensure that recommendations from audits, reviews etc are acted on in a timely way.
- The importance of monitoring cannot be overstated. Information flows are critical to addressing safety risks and there were communication gaps at POAL that Gibson had been aware of but had not remedied to the extent required by the PCBU’s duties of care.
