Director prosecution and conviction in New South Wales

by Seyfarth Shaw LLP
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The NSW work health and safety regulator has brought a successful prosecution against a company director resulting in a criminal conviction and fines against the director and the company. An order was also made requiring the director to pay the costs of the prosecution. It appears that this is the first such successful prosecution under the harmonised Federal safety legislation in NSW. However, the fines imposed in this case ($15,000 against the director and $150,000 against the company) were low given the specific circumstances of the case.

What does this mean for me?

Directors and officers in a business must be able to show that they have taken reasonable steps to exercise due diligence in respect of their safety obligations. This decision reinforces these obligations and the importance of compliance with the positive duty on directors to ensure and verify that processes and resources are used and implemented appropriately.

What happened?

Austral Hydroponics grew greenhouse truss tomatoes. On 7 March 2013 Eang Lam, the sole director of Austral, directed one of his employees, Mr Nuon to remove plastic sheets from the roof of a greenhouse. No instruction on how this task was to be done was provided to Mr Nuon, nor was any fall arrest equipment provided. Mr Nuon used a ladder to climb onto the roof of the greenhouse. While standing on the gutter of the greenhouse and attempting to pull away the plastic sheets, Mr Nuon lost his balance and fell 2.5 metres.

Mr Nuon suffered a fracture to his spine which caused spinal cord damage and tetraplegia (also known as quadriplegia). Mr Nuon’s condition was considered catastrophic. He remained in high dependency care in hospital until he died in August 2014. It was not alleged that the death was caused by the injures received from the fall.

The Court found that Mr Lam failed to exercise due diligence by taking reasonable steps to ensure compliance with the Safe Work Australia’s Code of Practice on ‘Managing the Risk of Falls at Workplaces Code of Practice’. There was no risk assessment for the task and no safe work procedure. Mr Nuon was not assisted in undertaking the task and was not adequately supervised. Mr Lam did not take reasonable steps to ensure that workers were only directed to work on the roof of a hot house after a risk assessment had been conducted and control measures were implemented to minimise risks to safety.

What lead to the low penalties?

Mr Lam could have been fined up to $300,000 and Austral up to $1,500,000. However, the Court imposed low penalties because:

  • evidence showed that Mr Lam was suffering post-traumatic stress disorder and major depression, and had significant symptoms of anxiety
  • Mr Lam and Austral had limited capacity to pay fines
  • evidence showed the good character of Mr Lam and his community contributions in business since 1983
  • it was unlikely Mr Lam or Austral would reoffend, given the remorse and contrition of Mr Lam and that Austral was no longer trading, and
  • early guilty pleas from Mr Lam and Austral.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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