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Maritime New Zealand v C 3 Ltd [2022] NZDC 2106 (1 March 2022)

Last Updated: 1 May 2023


IN THE DISTRICT COURT AT WELLINGTON

I TE KŌTI-Ā-ROHE
KI TE WHANGANUI-A-TARA
CRI-2019-085-000247

MARITIME NEW ZEALAND
Prosecutor

v

C 3 LIMITED
Defendant

Hearing:
4 February 2022
Appearances:
B Tantrum for the Prosecutor N Logan for the Defendant
Reasons:
1 March 2022

REASONS OF JUDGE N J SAINSBURY ON SENTENCING


[1] The defendant, C3 Limited (“C3”), has pleaded guilty to a charge under section 49 of the Health and Safety at Work Act 2015 (“HSWA”). It breached duties, as a person conducting a business or undertaking (“PCBU”), under the HSWA. The exact nature of the duties breached will be discussed in the course of this sentencing decision. The charge carries a maximum penalty of a fine not exceeding $500,000.

[2] This sentencing was heard before me on 4 February 2022. I had the advantage of reading the written submissions filed in advance of the hearing. I am grateful to counsel for the careful and comprehensive way they covered the points in issue. There was an opportunity for counsel to make further oral submissions when the matter was called.

MARITIME NEW ZEALAND v C 3 LIMITED [2022] NZDC 2106 [1 March 2022]

[3] I had intended to give full reasons on 4 February 2022 for my sentencing decision. Unfortunately, time constraints precluded that. I stated the sentence imposed. I now include the full reasons for that decision.

The factual basis of sentencing


[4] I start with the facts surrounding the charge. I take these, largely verbatim, from the agreed summary of facts.1

[5] C3 is a stevedoring company. It undertakes log loading operations at five ports in New Zealand. One of those is CentrePort Wellington, located in Pipitea, Wellington (“CentrePort”).

The incident


[6] On or about 1 June 2018, the MV Crystal Island (the “vessel”) docked at CentrePort in ballast. On 2 June 2018, stevedores employed by C3 proceeded to load a cargo of logs into the vessel’s cargo holds with the assistance of a Volvo EC140C excavator, commonly known by the C3 stevedores as “digger 531” (the “excavator”).

[7] The excavator was transported into the vessel’s cargo holds by crane, using the lifting procedure approved by C3 and contained in the Standard Operating Procedure: Heavy Machinery Load and Discharge dated 7 May 2018 (“SOP”).

[8] The lifting technique set out in the SOP required for chains to be attached to four lifting lugs, which are affixed to the front and rear of the excavator’s tracks. The chains are locked in place by two “D” shackles. Two chains are then attached to each side of a single spreader bar, which is then attached to the hook of the ship’s crane and positioned above the excavator.
  1. The agreed summary of facts names various employees of C3 who were involved in the events leading to this charge. Because the essence of the charge is failings by the company, such as failing to properly train staff, rather than the fault of the employees themselves, I will anonymise the names of the employees involved by referring to their occupation rather than their names, e.g. as a “stevedore” or a “crane operator” etc.
[9] At approximately 12 pm, the excavator in cargo hold 1 was due to be lifted to hold 2. The lifting procedure used to move the excavator was that set out in the SOP. The vessel’s crane lifted the excavator free of hold 1. The crane operator then began to swing the crane arm over the seaward side (port) of the vessel. During the manoeuvre, the excavator made contact with one of the vessel’s stanchions and began to spin. Shortly afterward, the excavator fell from the chains, made contact with the port side bulwark, and entered the water (the “incident”).

[10] The excavator was later salvaged from the sea floor.

[11] On 3 June 2018, Maritime New Zealand (“MNZ”) inspected the excavator. All four of the D shackles at the base of the lifting lugs were warped and had been forced open during the incident.

[12] Following the incident, MNZ launched an investigation into C3 under the HSWA. As a result of that investigation, MNZ identified the following breaches of that Act.

Development of the SOP


[13] Between March 2018 and May 2018, C3 developed the SOP and approved it for use. Development of the SOP followed communication of the “Safety Alert – Lifting Excavators – March 2018” by MNZ on 23 March 2018, which prohibited the use of log wires with immediate effect. A copy of that notice was attached to the agreed summary of facts. I have not reproduced it as part of this decision. It helps explain why it was necessary to develop the SOP but is not part of the incident.

[14] The SOP prescribed the actions to be taken by stevedores when lifting heavy machinery, including excavators, by crane, for the purpose of moving it from place to place. That included during loading and discharge of the vessel.

[15] The method for lifting excavators as described in the SOP was developed internally by C3’s stevedores. It was reviewed by C3’s national stevedore manager and approved by C3’s general manager of forestry services on 7 May 2018. Neither

the stevedores involved in the development of the SOP nor other C3 employees involved were qualified engineers. C3 relied upon the experience of its employed stevedores. At no point, either prior to the SOP’s approval or afterward, did C3 seek or receive advice or input from a qualified engineer for the purpose of developing and implementing the SOP.

Certification and maintenance of the lifting lugs


[16] Four lifting lugs were welded to the front and rear of the excavator’s tracks. Lifting lugs are metal appliances in a hook shape, which enable a chain to be passed underneath, and locked off at the bottom by a D Shackle. The lifting lugs were designed and installed by Active Engineering Solutions Ltd (“Active”).

[17] Best practice requires modifications to machinery such as these to be certified by an independent engineer. The certification process includes approval of the design of the modifications for the intended purpose, inspection of the quality of the workmanship and materials, and post installation testing, including load testing.

[18] The Ministry of Business Innovation and Employment: Approved Code of Practice for Load-Lifting and Rigging recommends that:

[19] On 7 June 2018, Active confirmed that they had installed the lifting lugs. They sent documents to MNZ purporting to be a certification of the installation. On 8 June 2018, MNZ determined that the documents provided by Active did not relate to the excavator. MNZ requested that the correct documents be provided. On 12 June 2018,

MNZ requested from C3 a copy of the valid certification for the lifting lugs affixed to the excavator. On 15 June 2018, C3 provided a document to MNZ confirming that it had been unable to locate the requested documentation.


[20] Other C3 owned excavators examined by MNZ during its investigation had been certified by an independent engineer in accordance with the best practice set out above. But C3 failed to maintain a current certification of the lifting lugs that were affixed to the excavator involved in the incident.

The training of the hatch man and the excavator operator


[21] On the day of the incident two C3 employees working as a hatch man and the excavator operator had primary responsibility for attaching the excavator to the crane for removal from hold 1 to hold 2.

[22] The only training the hatch man had in relation to the modified SOP was having the SOP read to him and engaging in a single training exercise using the SOP to lift an excavator using a forklift. The hatch man did not see or read the SOP at any time prior to the incident.

[23] The excavator operator did not receive training from C3 on the SOP, nor did he have the SOP provided to him to read or have it read to him. Rather, he observed wharf staff attaching the excavator to the spreader bar from the vessel at the beginning of loading on the day of the incident. His observation lasted “a couple of minutes”.

[24] The SOP was not mentioned to staff, including to the hatch man and the excavator operator, in the briefing held on the morning of the incident. In addition, neither the hatch man nor the excavator operator receive specific training from C3 addressing how to maintain stability of the excavator during lifting in accordance with the SOP. The hatch man had completed C3’s slinging and rigging course in December 2007. C3 failed to adequately train both the hatch man and the excavator operator in the requirements of the SOP.

Stevedore medical testing


[25] Prior to their employment with C3, stevedores are subject to medical testing to assess suitability for the role. C3 does not require stevedores to undertake further medical testing subsequent to the initial pre-employment checks.

[26] At the time of the incident, joint guidance material published by MNZ and Worksafe in relation to health and safety in port operations recommended testing of vision and hearing the crane operators and operators of mobile plant every three years. It was reasonably practical for C3 to have in place a system for the testing and monitoring of stevedores hearing and vision to ensure that they were fit to operate cranes and mobile machinery.

C3’s explanations to issues raised during the investigation


  1. Development of the SOP
[27] On 13 July 2018 C3’s stevedore supervisor, stated that:

[28] On 10 August 2018 C3’s stevedore supervisor stated that:
  1. Certification of the lifting lugs
[29] On 15 June 2018, C3 provided a document to MNZ confirming that it had been unable to locate the requested documentation.
  1. Training
[30] On 13 July 2018, C3’s stevedore supervisor stated that:

[31] On 10 August 2018, C3’s stevedore supervisor stated that:
  1. Medical testing
[32] On 10 August 2018, C3 is stevedore supervisor stated that:

Breach of duty as a PCBU


[33] As a PCBU, C3 had duties under s 36 HSWA including to ensure, so far as is reasonably practicable:

[34] C3 did not take any of the following reasonably practicable steps:

Previous history


[35] C3 has previously appeared before the court. That was for an offence occurring on 17 June 2017 where another excavator was dropped into the water while being transported under C3’s control. I refer to this incident further on in my decision.

The breaches


[36] The failures by C3 referred to in paragraph [34] above are those identified by the prosecution as constituting the breaches of its obligations under s 36 HSWA that are identified in paragraph [33] above. These breaches are accepted by C3.

The prosecution and defence positions on culpability


[37] The prosecution submit that the factors set out in Department of Labour v Hanham & Philip Contractors Ltd, and referred to in Stumpmaster, are relevant when assessing C3’s culpability. I agree with that approach. Both prosecution and defence submission focused on these factors, as far as they apply factually. The factors are:2

2 Department of Labour v Hanham and Philp Contractors Ltd [2008] NZHC 2076; (2008) 6 NZELR 79 (HC); cited in

Stumpaster v Worksafe [2018] NZHC 2020 at [36].

(e) The availability, cost and effectiveness of the means necessary to avoid the hazard.

(f) The current state of knowledge of the risks and of the nature and severity of the harm which could result.

(g) The current state of knowledge of the means available to avoid the hazard or mitigate the risk of its occurrence.

Steps C3 could have taken and the availability or ease of taking those steps


  1. Training
[38] The first submission by the prosecutor is that the hatch man and the excavator operator should have been properly trained in the SOP. The hatch man only had the SOP read out to him and had only previously engaged in one training exercise. The excavator operator received no training from C3 on the SOP. He had observed wharf staff attaching the excavator to the spreader bar from the vessel for “a couple of minutes”. Further, the SOP was not mentioned to staff, including the hatch man and the excavator operator, in the briefing held on the morning of the incident. That is significant where the SOP is the main procedure used for the safe loading of heavy machinery.

[39] In response C3 submit that there is no evidence that the hatch man, the excavator operator or any of the other C3 stevedores did not comply with or not understand the SOP.

[40] One of the identified and accepted breaches was the fact that the hatch man and the excavator operator were not adequately trained. That is the focus of the breach rather than an express requirement that they understood the SOP. In these circumstances there is little real distinction between those propositions. Here, the excavator operator he had never been trained by C3 on the SOP at all. It is hard to see how it could be inferred that he understood it. The available inference from the accepted facts is that the inadequate training means there was inadequate understanding and compliance.
[41] C3 should have taken appropriate time to educate the relevant staff on the SOP. As the prosecutor submits, this may have taken extra time, but it would have been at no additional cost other than the cost of time used for that training.
  1. Certification of the lifting lugs
[42] C3 also did not maintain a current certification of the lifting lugs that was affixed to the relevant excavator. Other excavators owned by C3 had been certified by an engineer in accordance with best practice. But the one that is the subject of this incident did not.

[43] C3 submit that this is an administrative error only. It is no more than a result of C3 and Active, the engineering company who designed and installed the lifting lugs, not being able to locate the documents showing certification on the relevant excavator. In other words, in reality there was a current certification it was just that the paperwork wasn’t where it should be.

[44] The agreed starting point is that there was not a current certification of the lifting lugs affixed to the relevant excavator. But further, in the absence of that, C3 were not able to demonstrate that they maintained a current certification of the lifting lugs on the relevant excavator. Those were facts accepted in the summary of facts to which the guilty plea was entered. I accept that the identified failure is maintaining a current certification for the lifting lugs that was affixed to the relevant excavator (my emphasis). But this is not merely a pedantic bureaucratic obligation about where paperwork should be located. I consider the underlying purpose is to ensure that, through certification by an independent engineer, the lifting lugs are fit for purpose. Having the current certification visible on the piece of equipment it relates to helps ensure that certification happens. It helps provide an assurance of safety for workers and other persons. I do not assess this to be a minor technical breach only.
  1. Development of the SOP
[45] C3 did not obtain expert advice and input from a qualified engineer when creating the SOP. That was a reasonably practicable step required in compliance with

s 39 HSWA. The SOP prescribed the actions to be taken by stevedores when lifting heavy machinery, including excavators, by crane for the purpose of moving it from place to place. That includes during loading and discharge of a vessel.


[46] The method for lifting excavators as described in the SOP was developed internally by C3’s stevedores. It was reviewed by C3’s national stevedore manager and approved by C3’s general manager of forestry services on 7 May 2018. They were not qualified engineers. Instead, C3 relied on the experience of its employed stevedores. C3 accepts that input or advice from a qualified engineer may have led to enhancements or changes to the SOP, but state that there is no evidence that the SOP was not fit for purpose or that it did not set out a safe method of operation.

[47] In relation to the availability or ease of taking those steps, C3 further assert that they may not have been able to obtain expert input on the development of the SOP immediately. The difficulty with this argument is that C3 do not know how long this actually would have taken. That is because they did not in fact seek this advice. It is not a case where they had sought the advice from an independent engineer and were in the process of waiting for that assessment.

[48] I consider that it is clear that C3 should have sought advice from a qualified engineer in relation to the SOP.
  1. Medical testing
[49] At the time of the incident, joint guidance material published by MNZ and Worksafe in relation to health and safety in port operations recommended testing of vision and hearing for crane operators and operators of mobile machinery every three years. Prior to their employment with C3, stevedores are subject to medical testing to assess their suitability for the role, however, C3 did not require stevedores to undertake further medical testing subsequent to those initial checks. C3 submit that this issue is unrelated to the incident in question, as they say there was no evidence that any workers’ hearing or vision was not sufficient to operate cranes or mobile machinery.
[50] Despite this submission by C3, it would have been reasonably practicable for C3 to have in place a system for the testing and monitoring of stevedore’s hearing and vision to ensure they were fit to operate cranes and mobile machinery. I accept that there is no direct demonstrated link between the incident and poor hearing and/or eyesight by C3’s employees. Nevertheless, the failure to have this system of testing in place is a breach of the obligations under s 36 HSWA.

Nature and seriousness of harm and the realised risk


[51] The prosecutor submits that it was through luck that the incident did not result in any death or injury. This is particularly so as the excavator weighed close to 18 tonnes. They submit that while the risk or existence of death and injury is not an element of the charge that C3 has pleaded guilty to, the failures that led to this incident did in fact expose workers to such risks.

[52] The prosecutor further submits that there was a risk of significant damage to the ship, and possibly to its water tightness. This would be so, had the excavator fallen while it was being swung into the hold.

[53] C3 submit that there is no factual foundation for the assertion that death or injury could have resulted from the incident. This is because an exclusion zone was in place while the excavator was lifted, in accordance with the SOP. C3 notes that the prosecutor has accepted that the SOP was complied with on the day of the incident.

[54] There is an inherent risk to safety whenever heavy machinery is being moved within a ship, as was happening when the incident occurred. That said, the HSWA distinguishes between offences where there was risk of death or injury and those where that is not a feature. MNZ has chosen to charge C3 with an offence that does not include the ingredient of risk of death or injury. I am reluctant to read into this offence an aggravating feature that forms part of an available alternative offence with which C3 is not charged.

[55] In any event, I am of the view that there was a highly reduced risk of injury or death, due to the exclusion zone in the SOP. The realistic potential harm by way of

injury or death to an individual is demonstrated by what actually occurred. I accept that there was a risk of more serious damage to the ship depending on where and when the excavator fell. But that acknowledged, I am reluctant to speculate on that in assessing culpability.


[56] As noted, there will always be inherent risk of injury or death when handling heavy machinery in circumstances such as this. But I do not consider that has weight as an additional aggravating feature in assessing culpability in this case. Those inherent risks that do no more than emphasise the importance of the purpose of the Act in promoting safe practice. I take it into account to that extent, but that extent only.

Degree of departure from prevailing industry standards


[57] The prosecutor submits that as joint guidance material published by MNZ and Worksafe in relation to health and safety in port operations recommended testing of vision and hearing for crane operators and operators of mobile plants every three years. The procedures that C3 had in place in relation to these were a significant departure in terms of prevailing industry standards.

[58] C3 read the fact that the guidance stated that the assessments “may also include tests for vision and hearing” meant that the guidance does not go as far as to recommend vision and hearing checks every three years.

[59] I am satisfied that due to the wording of the guidance, the departure from prevailing industry standards in this respect was not significant. That said, it clearly was a departure from the standards, as there was no evidence of any form of ongoing hearing/vision tests undertaken by C3 at all.

The obviousness of the hazard


[60] Both the prosecutor and C3 agree that the hazard arising from lifting heavy excavators is obvious.

The current state of knowledge of the risks and of the nature and severity of the harm which could result and of the means available to avoid the hazard or mitigate the risk of its occurrence


[61] C3 have reviewed the old SOP. They have implemented a number of new processes. They have enrolled workers in training, completed installation of single lifting points, reviewed and updated the asset management system, implemented hearing and vision checks and designed a new grapple system.

[62] The prosecutor commended C3 on these efforts to improve work health and safety. I agree that these are mitigating factors in favour of C3.

Approach to sentencing


[63] The sentencing criteria under s 151 of the HSWA is relevant in relation to the current offending:

151 Sentencing criteria


(1) This section applies when a court is determining how to sentence or otherwise deal with an offender convicted of an offence under section 47, 48, or 49.

(2) The court must apply the Sentencing Act 2002 and must have particular regard to—
[64] The parties agree that the approach in Stumpaster (a sentencing decision under s 48 of the HSWA) is relevant in this case, where the Court outlined a four-step approach to sentencing:3
  1. assess the amount of reparation;
  2. fix the amount of the fine;
  3. consider orders under ss 152-158 of the HSWA; and
  4. make an overall assessment of the proportionality and appropriateness of the penalty.

[65] Both parties agree that reparation is not payable in the present case.

[66] Under Stumpmaster, the step of fixing the amount of the fine under step two is done with reference to four “guideline bands”:4

Low culpability : $0 – $250,000 Medium culpability : $250,000 – $600,000 High culpability : $600,000 – $1,000,000

Very high culpability : $1,000,000 – $1,500,000


[67] There is no tariff case for offending against s 49 of the HSWA. Offending under s 49 is less serious than under s 48. That is obvious from the nature of the offences and the respective maximum fines. The parties have submitted differing approaches to fixing the appropriate fine in this case.

3 Stumpaster v Worksafe [2018] NZHC 2020.

4 As above.

Prosecutor’s position


[68] The prosecutor acknowledges that Stumpmaster, was determined by reference to a charge under s 48 HWSA carrying a maximum penalty of $1.5 million. The prosecutor starts by calculating the percentage values of the bands as follows:

Low culpability: $0 – $250,000 (16 per cent);

Medium culpability: $250,000 – $600,000 (16 to 40 per cent); High culpability: $600,000 – $1,000,000 (40 to 67 per cent);

Very high culpability: $1,000,000 – $1,500,000 (over 67 per cent).


[69] The prosecutor has then used those approximate percentage values and applied them to the lower maximum penalty in this case, being under s 49 HSWA . This “amended Stumpmaster approach” is the same as used in East by West Company Limited v Maritime New Zealand. It is also the approach used by C3.5

[70] In fixing the appropriate fine, the prosecutor has referred to Worksafe New Zealand v Tasman Tanning Co Ltd (decided with Stumpmaster in relation to a charge under s 48 of the HSWA) and MBIE v KLS Roofing Limited (decided prior to Stumpmaster).6 The prosecutor came to a starting point fine in the range of $200,000-

$250,000, explaining that the starting point is 40 to 50 per cent of the maximum penalty. This level of culpability was explained as applying because the present offending was more serious than in the cases to which they referred. This was submitted as being because there were failures in the lead up to the incident, coupled with failures on the day of the incident. In particular, the SOP, which was relevant to the work being undertaken, was not covered in the briefing that morning. These failures included matters relating to the machinery as well as systemic failures.

5 East by West Company Limited v Maritime New Zealand [2020] NZHC 1912.

6 Worksafe New Zealand v Tasman Tanning Co Ltd [2017] NZDC 24398; MBIE v KLS Roofing Ltd

[2014] NZDC 9.

C3’s position


[71] The defence refer to a sentencing decision made under s 49 of the HSWA, East by West Company Limited v Maritime New Zealand. That decision was an appeal to the High Court.7 The defence submit that the High Court decision, made under s 49, should be preferred over any approach that takes into account s 48 sentencing decisions.

[72] In East by West, the High Court adopted the culpability bands first articulated by Judge Kellar in the decision WorkSafe New Zealand v Alderson Poultry Transport Ltd for the purposes of determining the start point of a fine.8 Those bands are:

Culpability
Range

Low
$0-$85,000

Medium
$85,000 - $200,000

High
$200,000 - $335,000

Very High
$335,000 - $500,000

[73] I find it helpful to set out the approach of Clark J in endorsing those bands. It explains the way the bands were calculated, and the reasons for doing so:

7 East by West Company Limited v Maritime New Zealand [2020] NZHC 1912.

8 At [90].

at each band level, the percentage of the maximum which the midpoint of the band represents.


Section 48 Stumpmaster Bands


Culpability
Range
Midpoint
% of Maximum

Low
$0-$250,000
$125,000
0%-16.7%

Medium
$250,000-$600,000
$425,000
16.7%-40%

High
$600,000-$1 million
$800,000
40%-66.7%

Very High
$1 million - $1.5 million
$1.25 million
66.7%-100%

Proposed s 49 Bands


Culpability
Range
Midpoint
% of Maximum

Low
$0-$87,000
$42,500
0%-17%

Medium
$87,000-$200,000
$142,500
17%-40%

High
$200,000-$335,000
$267,500
40%-67%

Very High
$335,000 - $500,000
$417,500
67%-100%

[89] The appellant notes the bands were adopted in WorkSafe New Zealand v Alderson Poultry Transport Ltd in which an employee was struck by a forklift and died. The incident gave rise to charges under s 48 and s 49. These s 49 bands were agreed by counsel for WorkSafe and counsel for the defendants.

[90] I endorse the s 49 bands adopted by Judge Kellar in sentencing the defendants in WorkSafe New Zealand v Alderson Poultry Transport Ltd. The proportionality across bands emphasised by the Court in Stumpmaster is maintained and, by analogy with the Stumpmaster bands for s 48, migration downwards at all levels reflects the lesser maximum penalties under s 49.

[74] I note that the Court was aware of the implications of their approach insofar as setting useful precedent:

[2] The key question raised by the appeal concerns the starting points adopted by the District Court in relation to each charge. As this is the first occasion the Court has considered s 49 of HASWA, counsel for the appellant suggests the

appeal presents an opportunity to provide guidance as to the approach to be taken to sentencing under that provision.


[75] I now turn to the cases referred to by the defence.

[76] In WorkSafe New Zealand v Alderson Poultry Transport Ltd, Alderson had pleaded guilty to a charge under s 49 of the HSWA.9 The charge related to failure to ensure suitable PPE was worn, failure to develop implement and monitor a system to manage worker fatigue, failure to monitor the health of workers and conditions in the work environment, and failure to provide information, training, instruction and supervision to workers.

[77] The Court set the starting point at $70,000, near the top of the band for “low” culpability. The Court noted that there was no proof beyond a reasonable doubt that there was a risk to human health or of actual harm to the workers.

[78] In Worksafe New Zealand v AsureQuality Limited and OneStaff (Queenstown/Invercargill) Limited, AsureQuality was contracted by MPI to provide cleaning and disinfection services. 10 OneStaff was contracted to provide temporary workers for the cleaning and disinfection work. A group of the cleaners were cleaning a shed using a sodium hydroxide based cleaner. Seven workers suffered minor or superficial burns as a result of contact with the cleaner. Five were taken to hospital for treatment.

[79] The failures by AsureQuality were found to have been: a failure to provide, maintain and monitor compliance with a safe system of work; a failure to provide and monitor the use of controls such as PPE to workers involved in the disinfection work; failure to ensure workers were given adequate training, information and instruction; and a failure to ensure adequate supervision of the workers carrying out the cleaning and disinfecting work.

9 WorkSafe New Zealand v Alderson Poultry Transport Ltd [2018] NZDC 25090.

10 Worksafe New Zealand v AsureQuality Limited and OneStaff (Queenstown/Invercargill) Limited

[2020] NZDC 23107.

[80] OneStaff was held to have: failed to follow written policy for new assignments related to cleaning and disinfecting work in this area; failed to ensure workers were provided with adequate training, information or PPE; failed to give completed an inspection to see if workers were undertaking their task safely; and failed to consult, co-operate and co-ordinate activities regarding a safe system of work with AsureQuality.

[81] The Court found the culpability for both companies to be in the low-medium range. Further finding that OneStaff had less control as a subcontractor over day-to- day operations, and therefore had a lesser culpability. The fines were set at $120,000 for AsureQuality and $70,000 for OneStaff.

[82] It was noted that the failures of both defendants did not impose a risk of death and primarily involved inadequacies around training, lack of training and appropriate PPE, and monitoring and supervision.

[83] In East by West Company Limited v Maritime New Zealand, East by West were charged under ss 48 and 49.11 It pleaded guilty to the charges. I am concerned with the analysis of the s 49 charge. In pleading guilty to that charge East by West accepted that it should have taken the reasonably practicable steps of ensuring that it did not operate passenger ferries faster than 5 knots within 200 meters of the shore and implementing adequate processes from preventing its vessels from doing so.

[84] East by West admitted that on over 3,500 instances, its ferries travelled above 7 knots within 200 meters of shore. Further, it admitted that it travelled along paths that could bring the ferries into areas used by other harbour users (including divers, swimmers and kayakers) which led to a risk of collision. East by West accepted that there was a risk of serious harm, including serious injury or death, in the event of a collision.

[85] The High Court, when dismissing East by West’s appeal, found that the risks arising from the offending were high. The fact that the company had knowledge of routine breaches and took no steps to remedy them in accordance with their obligations

11 East by West Company Limited v Maritime New Zealand [2020] NZHC 1912.

was noted. The High Court approved the District Court starting point of $200,000, right at the top of the medium culpability band.


[86] In light of these authorities, C3 submit that a starting point for the fine should be in the range of $80,000-$100,000. This is submitted as appropriate because there was no risk of death or serious injury from C3’s omissions, they were relatively limited and despite them, it had a safe system of work. Further, the omissions were in relation to a method of work that was not in place for long.

Starting point


[87] In terms of starting point, I am of the view that C3’s failures in terms of training the relevant staff, not having the SOP checked by a qualified engineer and not keeping the certification of the lifting lugs on the excavators up to date was in the medium culpability range. It was similar to the failures in AsureQuality. Maritime New Zealand v East by West Ferry Company Ltd, was very useful in terms of the principles, but the more repetitive nature of the offending and the accepted risk factors made it more serious.

[88] It is significant in making my assessment, that there was no significant risk of death or injury, as C3 had ensured the exclusion zone was in place. However, there is an obvious inherent hazard that comes with transporting an 18-tonne excavator and this must be recognised.

[89] In light of this, I am of the view that a starting point of $120,000 is appropriate.

Aggravating and Mitigating factors

Previous similar offending


[90] The previous offending involved a very similar incident where an excavator was dropped into the water while being transported under C3’s control. This offending occurred on 17 June 2017. It is accepted as being more serious than the current offending. C3 submit that as a result of the earlier offending, the exclusion zones were

put in place, which shows that a key failure from the June 2017 incident was not repeated in the June 2018 incident.


[91] The prosecutor submits that an uplift of 20 per cent is appropriate to take into account the previous similar offending. C3 accepts that an uplift is appropriate to take into account the previous similar offending but submits that a 10 per cent uplift sufficient.

[92] In line with the authorities that C3 have submitted in relation to uplifts, I am in agreement that a 10 per cent uplift is appropriate to take into account the one instance of previous similar offending.

Guilty plea


[93] The charge was laid on 23 January 2019 and C3 entered its guilty plea on 27 August 2021. Clearly a significant period of time has elapsed between those two events. The prosecutor submits that a discount of 15-20 per cent is appropriate for this guilty plea. While C3 submit that the full 25 per cent discount is appropriate.

[94] C3 initially made an application for an enforceable undertaking, which would have resulted in the charge being dropped. This was declined by the prosecutor. Once this had been declined, C3 and the prosecutor entered into discussions which resulted in an amendment of the charge and summary of facts. C3 immediately pleaded guilty to the amended charge band on the basis of the agreed summary of facts.

[95] Due to this, despite the time that elapsed between the original charge being laid and C3 pleading guilty, I am of the view that C3 is entitled to the full 25 per cent discount for their guilty plea to the amended charge.

Remorse, co-operation and remedial action


[96] C3 submit that they are entitled to a 20 per cent discount to take into account their remorse, their co-operation with the prosecution and the remedial actions they have taken.
[97] I am of the view that a 10 per cent discount is more appropriate to take into account both C3’s co-operation with the prosecution, as well as the remedial steps they have taken, which I have previously mentioned. I do not believe that a separate discount for remorse is warranted in this instance. At best, corporate remorse is difficult to assess. Co-operation and practical steps to put right what has happened so as to avoid a repeat make for a better assessment of mitigating factors.

Final sentence


[98] In terms of the overall sentence, the starting point is a fine of $120,000. In accordance with Moses v R, the adjustment for aggravating and mitigating factors will be applied at the same time.12

[99] It is somewhat unfortunate to drop two excavators off a ship in short order, but the uplift of 10% for previous is offset by the mitigating factors of co-operation and remedial action.

[100] The guilty plea discount of 25% stands. This leaves an end sentence of a fine of $90,000.

Costs


[101] Both parties have accepted that there should be a contribution by C3 towards the costs of the prosecutor, pursuant to s 152 of the HSWA, is appropriate.

[102] The prosecutor states that they incurred $53,793 in legal costs in relation to this proceeding. The prosecutor seeks a 50 per cent contribution to these costs, being

$26,896.50, and submits that this is a just and reasonable contribution.


[103] C3 submits that a reasonable contribution to the prosecutor’s costs would be in the range of 10 to 20 per cent, between $5,379.30-$10,758.60. C3 states that there is nothing about the nature of the charge that justified a 50 per cent costs contribution.

12 Moses v R [2020] NZCA 295.

[104] I agree that there should be a contribution. I accept is that in considering a contribution to costs, I have to factor it in to the overall picture in terms of the penalty. I note that C3 were very generously treated in not having to pay costs the last time they were in Court and here they are back again with MNZ having to investigate another excavator dropped into the harbour. I consider MNZ are entitled to a significant contribution. But it must be a contribution that is reasonable and that does not inappropriately inflate the overall penalty. I assess that contribution at $20,000. The total monetary cost to C3 is $110,000. I do not consider that an unjust outcome or an inappropriate outcome.

Ability to pay


[105] Section 151 HSWA, requires me to take into account the financial position of the party and whether they will be able to pay the fine imposed. There is no evidence that C3 would not be able to pay this fine and costs.

Judge NJ Sainsbury

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 01/03/2022

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