Maritime New Zealand v Princess Cruise Lines Limited [2019] NZDC 523 (21 January 2019)

Last Updated: 7 October 2021

EDITORIAL NOTE: CHANGES MADE TO THIS JUDGMENT APPEAR IN [SQUARE BRACKETS].

IN THE DISTRICT COURT AT DUNEDIN I TE KŌTI-Ā-ROHE KI ŌTEPOTI

CRI-2018-012-000044 [2019] NZDC 523

BETWEEN	MARITIME NEW ZEALAND Prosecutor
AND	PRINCESS CRUISE LINES LIMITED Defendant

Hearing:	27 November 2018
Appearances:	D La Hood for the Prosecutor M Ferrier and B Davis for the Defendant
Sentencing date:	21 January 2019

SENTENCING DECISION OF JUDGE K J PHILLIPS

[1] The defendant company Princess Cruise Lines Limited (the defendant) has pleaded guilty to a charge laid pursuant to s 65(2)(a) of the Maritime Transport Act 1994 alleging that on or about 9 February 2017 at Port Chalmers it did “...cause or permit a Maritime product, namely a pressurised nitrogen cylinder forming part of a lifeboat davit stored energy system, to be maintained or serviced in a manner that caused unnecessary risk to other people”. Upon conviction, the defendant is liable to a maximum penalty of a fine not exceeding $100,000.

[2] The charge relates to an incident on 9 February 2017 and had its first call in the Dunedin District Court on 1 February 2018. Initially, a Not Guilty plea was entered but some four weeks later, that plea was vacated and a guilty plea entered.

[3] A sentencing hearing was conducted in front of me on 27 November 2018. I had received written submissions from both counsel and at the hearing further oral

submissions were made to me by both counsel. I reserved my decision which I now deliver.

Sentencing approach

The factual basis for sentencing

[4] The Summary of Facts was accepted by the defendant through Mr Ferrier. The defendant, a company registered in Bermuda, operates the vessel Emerald Princess as a cruise ship. At relevant times, the defendant was operating the Emerald Princess on cruises between and around New Zealand and Australia. As part of one such voyage, on 9 February 2017, the vessel was docked at Port Otago in Dunedin. The vessel had 3,115 passengers onboard.

[5] The vessel was equipped with lifeboats which operated on a telescopic davit system which pushed lifeboats laterally from the ship on arms which then telescoped, lowering the boats into the water. As a backup system for use if the vessel lost power, nitrogen gas cylinders were positioned at each lifeboat. The gas was used to provide the required pressure to the hydraulic arms so that the lifeboats could be launched without using the vessel’s power system. The Emerald Princess had 24 lifeboats and two rescue boats. Each lifeboat had four nitrogen gas cylinders. The two rescue boats each had five nitrogen gas cylinders.

[6] The manufacturer of the lifeboat davits was a company called Navilimpianti. As the manufacturer, it provided a “Technical Bulletin” to the defendant. The Bulletin (inter alia) stated that to ensure the working condition of the hydraulic “stored power system” nitrogen pressure gauge readings should be maintained at a set level. The same bulletin recommended that the crew of a vessel “regularly” check the nitrogen cylinder’s pressure gauges and refill the cylinders to re-establish the nitrogen pre- charge as and when required. Further recommendations from the manufacturer were detailed as follows:

• (a) Visual check pressure gauges weekly.
  
• (b) Visual check pressure gauges anytime the ship moves to colder areas.

• (c) Re-establish the nitrogen pre-charge if found under the above reading.
  
  • (d) File this bulletin within your operating and maintenance manual.
    
  • (e) Periodic inspections, services and repairs shall be performed by Navilimpianti qualified technicians.
    

Two other recommendations related to the use of parts supplied by Navilimpianti and the involvement of the manufacturer’s technical people for any form of modifications and retro fittings.

[7] It appears from the Summary of Facts and the submissions made, that the nitrogen cylinders were refilled on an “ad hoc” basis when required following inspections of the pressure gauges having indicated the nitrogen pressure had dropped below the required level. No records were provided by the defendant in regards to carrying out these duties and no records were given to me establishing when the tasks had been performed over the months preceding 9 February 2017. There had been no risk assessment conducted to identify the hazards or mitigate the danger of filling the cylinders, or working with pressurised vessels in general. Staff who did this work had not been given formal training or induction on the tasks, learning as they went along from other colleagues. It was not the subject of argument between counsel that annual inspections of the launch systems had been carried out by staff employed by the manufacturer. Industry standards required this to happen in addition to routine maintenance. The cylinders used in the lifeboat launch system were required to be inspected by a competent person annually and a hydrostatic pressure test was to be done on each cylinder every 10 years which was to include a visual inspection of the inside of the cylinder. The date as to when such major inspections were carried out was stamped on the cylinder. The cylinder that was the subject of an explosion as I detail later, had not had a major 10 year inspection of this kind since it had first come into use (5 September 2005). The most recent inspection carried out by the manufacturer, Navilimpianti, was on 21 January 2017, three weeks prior to the incident. It was noted to be a “five year inspection”. An addendum to the certificate issued was that the nitrogen bottles were “aged” and that consideration should be given to swapping them for newer ones. However, the inspection certificate provided that the davit system, which included the failed nitrogen cylinder, passed the inspection and were said to be fit for purpose in accordance with the relevant regulations.

[8] Again, it was not argued that the defendant had “initiated” a process to hydrostatically test, and where appropriate, replace the cylinders on the vessel. Purchase orders had been issued for seven cylinders, two of which were for lifeboat 24 in particular. The replacement process was to begin in Australia when the spare cylinders arrived. No reasons were given as to why the two particular cylinders at lifeboat 24 were to be replaced other than being “aged”.

[9] I note that the industry standards for the refilling of pressurised cylinders require the person carrying out such a task to ensure that the cylinder is within its due test date by the relevant inspection body and that the cylinder shows no sign of damage or external corrosion; that persons carrying out this task are suitably trained and have the necessary skills to carry out the refilling task safely.

The explosion

[10] On 9 February 2017 at 5.10 pm, two men (members of the crew of the vessel), [the deceased] and [the deceased’s co-worker], were doing maintenance on the nitrogen cylinders on lifeboat 24. The two crew members were filling the nitrogen cylinders to raise the pressure to the required level as detailed above. [The deceased] had a copy of the manufacturer’s instructions for refilling the cylinders to the required pressure level as part of the fleet maintenance manual. The cylinders were refilled. [The deceased] instructed [his co-worker] to start the hydraulic system. The system had been running for approximately one minute when one of the nitrogen cylinders exploded. [The deceased], who was standing in close proximity to that cylinder, was killed as a result of the explosion. One of the other three remaining nitrogen cylinders at lifeboat 24 was thrown by the explosion, from the vessel onto the wharf, where it spun around, releasing nitrogen gas into an area of the wharf where crew and cruise passengers were walking. Upon the explosion being heard and the cylinder landing on the wharf, the area was cordoned off by the vessel’s security staff. Passengers were taken to the terminal and the process of returning passengers by a safe access route was put in place.

[11] The inspections that followed showed that the damaged gauge for the cylinders from lifeboat 24 had not been pressurised beyond their normal operating pressure of

200 bar. In any event, the system was fitted with two release valves which vented excess nitrogen if the pressure had reached to 230 bar and 240 bar retrospectively. However, an inspection of the cylinders for lifeboat 24 showed areas of corrosion. On the failed cylinder, there was significant wastage and pitting near the area where the cylinder failed. This was visible to the “naked eye”. The thickness of two samples from the failed cylinder wall were tested; one from where the cylinder failed, and another in an area free from corrosion. The corrosion free sample measured 6.2 mm thick. The sample from the failed area measured 1.52 mm. The neck ring on the cylinder that landed on the pier was heavily corroded. Other cylinders inspected showed evidence of corrosion.

[12] [The deceased] was a qualified fitter. Whether a fitter is suitably trained and has the necessary skills to carry out the tasks relating to the refilling of gas cylinders is not further detailed. It is an accepted fact that [the deceased] had not received training by the defendant on refilling gas cylinders, nor had he received any training on the need for cylinder date stamps to be checked, or for cylinders to be fully inspected externally before re-pressurising.

Failures on the part of the defendant

[13] The informant alleges that the defendant permitted the nitrogen pressurised cylinders to be maintained and serviced in a way that caused unnecessary danger or risk to persons in or about the vessel, including crew and passengers. Particularisation is given in the Summary of Facts as:

• (a) That the defendant failed to ensure that a proper risk assessment was in place for managing pressure cylinders onboard the vessel. The Chief Engineer on the vessel (apparently) expressed “surprise” that there was no workplace risk assessment in relation to the maintaining of the pressure cylinders.
  
• (b) The defendant incorrectly managed the date that the cylinder was required to be hydro tested. This cylinder had not been tested within the required timeframe of ten years since the last inspection. As a direct

result of this error, the crew including [the deceased], were tasked with refilling pressure cylinders that had not undergone the required testing.

(c) The defendant failed to ensure that the crew tasked with refilling the cylinder were trained not to fill cylinders where there were visible signs of external damage or corrosion.

[14] As a result of these failings, the defendant allowed a risk of harm to exist to crew and passengers onboard the vessel and to persons in the vicinity of the vessel due to the risk of explosion or system failure. The system failure risk when the lifeboats were urgently needed at a time of emergency was a particular failing as was the fact that these failings caused the actual death of [the deceased].

Responsibility

[15] It appears to be the view of the Master of the vessel and was repeated in submissions made to me that the defendant relied on Navilimpianti to advise it on the condition of this system. It was submitted that this failure was one of the basic reasons for this incident happening, and that the manufacturer’s overall responsibility was high.

[16] In answer to that, it is my view that it was not for the manufacturing company to set up proper risk assessments and analysis that was required in relation to the carrying of a potentially dangerous gas in pressurised cylinders. That was for the defendant to do. The defendant had the primary responsibility to ensure that the tasks that had to be done in relation to this cylinder were done properly and appropriately, including a weekly pressure gauge check; the visual check required when the ship moved to colder areas (it is noted that the vessel was moving between Australia and New Zealand, and Dunedin could be said to be colder than a good number of destinations); and to ensure, overall, that if there were issues in relation to the cylinders that were noticeable, to make that known to the chain of command on the vessel and hence to the manufacturer. The most obvious sign and what I would describe as “alarm bells” would be the obvious visible corrosion to areas on the cylinders which appears to have gone entirely unnoticed by anyone or, if not unnoticed, totally unreported

through the “chain of command”. I draw an inference from the Summary of Facts overall, that the management of the defendant (aka the Master of the vessel) had not looked objectively at ensuring a proper control or management system was put in place in relation to these gas cylinders which would require proper, regular and recorded inspections, with defects being reported immediately. The danger of not having an adequate system and it being checked weekly, meant that the risks of something occurring if there was an emergency; the risks to persons in the vicinity of the cylinders; was high.

[17] The failure to ensure that persons topping up the cylinders were properly trained in the re-pressurising task, is aggravated in my opinion, by such persons not being trained as regards to inspecting each cylinder, its condition, and ensuring that the cylinder was within its due test date before starting the re-pressurisation.

[18] It is my view, that the defendant should not have relied upon the manufacturer to advise it on the condition of the system including the pressurised cylinders. The cylinders were onboard the defendant’s vessel, and were clearly available to be inspected. The cylinders were on a vessel travelling with a large number of persons aboard, at sea, in various conditions. It would be obvious that chances of corrosion and damage occurring would be high.

Sentencing methodology

[19] The position relating to the methodology of sentencing does not appear to be at issue between counsel for the plaintiff and counsel for the defendant. Quite simply, the approach set out in the Department of Labour v Hanham & Philp Contractors Ltd1 would apply in regard to the three step approach detailed in that case, namely:

• (a) The first consideration being whether to impose a reparation order.
  
• (b) Secondly, whether the Court should impose a fine from the quantum of such fine, having reference to aggravating and mitigating factors and the sentencing bands which were detailed in Hanham.
  

1 Department of Labour v Hanham & Philp Contractors Ltd [2008] NZHC 2076; (2008) 6 NZELR 79 (HC).

(c) Then thirdly, standing back and making an overall assessment of proportionality and appropriateness of the total payments required by the first two steps.

[20] In the authority of Stumpmaster v Worksafe New Zealand2 the High Court sitting as a full Court reviewed culpability bands for offences under Health and Safety at Work Act 2015. In that authority, there was discussion about what was termed the “...four-band approach...”. I accept the submission made at Para [19] of the prosecution’s sentencing memorandum, that the three-step approach to sentencing as detailed in Health and Safety cases should be applied to the regulatory offences under the Maritime Transport Act. The offences such as the defendant faces is only fineable. For the purposes of sentencing in this case, I use that three-step approach.

[21] In making the various assessments that I need to make, I must also have regard to the purposes and principals of sentencing as detailed in ss 7 and 8 of the Sentencing Act. It is the case for the prosecution that deterrence and protection of the community are paramount to the purposes of sentencing in this type of offending. Mr Ferrier for the defendant accepts the relevance of those issues but argues that there was not on behalf of the defendant, issues showing that the company did not care about the safety and regulatory obligations upon it, or that there was any decision made to avoid such responsibility for its commercial gain. In other words, the defence submission was that the defendant was not treating the law with scant regard as was the Court’s concern in the authority discussed by the prosecution at Para [11] of its written submission, namely R v Rackley.3

[22] I am satisfied that I am required to make a decision in respect of the culpability of the defendant, having regard to the aggravating and mitigating factors, and the purposes of the Sentencing Act, namely: accountability; denunciation; deterrence; the interests of the victims of the offence; and reparation.

[23] As to principles of sentencing, I am required to assess the gravity of the offending and its comparative seriousness having regard to the nature of the offence;

2 Stumpmaster v Worksafe New Zealand [2018] NZHC 2020.

3 R v Rackley DC Nelson, CRI 2005-018-740, 12 July 2007.

consistency; the impact of the offending on the victim; and having regard to the overall maximum penalty on where the offending lies within the continuum.

[24] I am required, however, to keep in mind the words of the Court of Appeal in Tell v Maritime Safety Authority4 where the Court confirms that the principal legislative purpose of the Act is to ensure public safety. As a result, in sentencing on this type of offence, deterrence has an important role to play.

Reparation

[25] The first step – should a Reparation Order be made? Section 32 of the Sentencing Act 2002 is discussed by the prosecution at Para [20] of its written submissions. Emotional Harm Reparation is able to be imposed where a defendant has, as a result of its offending, caused related parties to suffer emotional harm or loss consequential on physical harm. Emotional Harm Reparation is assessed outside the issue of actual Reparation for loss under s 32(1)(c). (That could be described as per s 32(3) as “consequential loss or damage”.)

Emotional Harm Reparation – defence argument

[26] The defence notes that the defendant has paid through its Manning Agent,

$65,000 USD, to the family of [the deceased]. The payments made were in the terms of the agreement entered into by [the deceased] with the Manning Agent. The payments so made were contractual payments. The payments were apportioned as to

$50,000 USD to [the deceased]’s mother, and a further payment of $15,000 USD in relation to [the deceased]’s daughter, [name deleted]. $65,000 USD amounts to

$100,517 NZD. Further actual expenses involved in repatriating [the deceased]’s body to his home and associated fees, amounted to $10,450.95 USD. The initial argument for the defendant, was that these payments sufficiently covers the defendant’s Emotional Harm Reparation liability. There is no argument that these funds were paid at the direction of the defendant very shortly after [the deceased]’s demise. The defendant’s mother was listed as the next of kin in the defendant’s records. The contractual payment was $7,000 USD per child. The defendant initially thought there

4 Tell v Maritime Safety Authority [2008] NZAR 306.

were two children and made the payments on that basis. The defendant’s counsel in his supplementary submissions, increased the Emotional Harm Reparation offer by a payment of $25,000 USD or a lump sum payment equivalent to wages sent for living expenses by [the deceased] to his family. It is my view, that the suggestion that the reparation i.e. consequential loss, should be dealt with as part of an Emotional Harm Reparation payment, is not correct. I do not intend to treat it in the way suggested by Mr Ferrier. I do have regard however to the offer as per Para [3](a) of the supplementary defence submissions, that a further $25,000 USD could be paid. Having had due regard to all the submissions made in regard to the issue of Emotional Harm Reparation, I am satisfied that the Emotional Harm Reparation assessment must be separated out and considered separately from any reparation itself. (For example, based on consequential financial losses.)

[27] For my quantification of Emotional Harm Reparation, I note that such reparation is payable on the basis of the emotional harm suffered by [the deceased]’s family, as a result of the actual harm caused by the defendant. I accept the submission on behalf of the prosecution that the use of the words “through or by means of” in s 32 of the Sentencing Act 2002, is to be approached in a broad and common-sense way and not looked at in relation to base causation arguments. Also, in order to make my assessment, culpability must be looked at and considered, taking into account the provisions of ss 7, 8 and 9 of the Sentencing Act 2002.

[28] For the purposes of such assessment, I consider that I need to have regard to the manner and nature of the failures by the defendant, assessing the failings and the culpability of the defendant on the factual basis that is put before me. In considering such culpability, I must take into account, aggravating and mitigating factors. To arrive at an assessment as to whether the offending can be categorised as high, medium, or low culpability. Although I note that is a task that sentencing Judges use in assessing the quantum of a fine to be imposed, it is also relevant to consider the culpability, when assessing Emotional Harm Reparation quantum in light of the loss of [the deceased] to his family. My task is to arrive at a sum which, overall, is just both in the circumstances of the case and taking into account, the position of the

defendant. An assessment of the “...anguish, distress and mental suffering...” and the level of such. 5

Causation assessment

[29] The defendant is a company operating the vessel as a passenger cruise liner. It is a large vessel, navigating areas between Australia and New Zealand (as relevant to the current case) which at times (the Court can take judicial notice and infer) can involve difficult passages in the oceans that it sails upon.

[30] The operation of the vessel as a passenger cruise liner, therefore requires the management of life boats readily available in an emergency to a large number of passengers and crew. The nature of the voyages that the vessel embarks upon put duties on the defendant to ensure that there are appropriate pathways, guidelines and instructions in relation to the regular and careful checking by experienced and trained crew members of life safety equipment such as life boats and their associated mechanisms. I see that duty is a high duty placed on the defendant.

[31] On this particular vessel, a back-up life boat launch system was provided which required the carrying of a large number of pressurised cylinders containing nitrogen gas. Overall, the vessel had 106 such cylinders. There were clear instructions issued by the manufacturer of these particular life boat davits in relation to the nitrogen pressure within the cylinders, and the checking of pressure gauges on such cylinders. It is noted that the recommendations included weekly pressure gauge checks and further checks when the ship moved to colder areas as it would have by travelling to Port Otago.

[32] Implicit in the checking of pressure gauges would be a duty in a general safety sense on the crew members to carefully examine the cylinders themselves. I see that the carrying of the cylinders in the areas of the vessel where the life boats were, would mean that persons aboard, either passengers and/or crew, would be regularly in close proximity to such cylinders.

5 Big Tuff Pallets Ltd v Department of Labour HC Auckland CRI-2008-404-322, 15 February 2009.

[33] Following the tragic incident that occasioned the death of [the deceased], the cylinders were found to have areas of corrosion, wastage and pitting. It does not appear that any record of examining the cylinders was kept of such inspections were kept or in fact carried out, or that there were any requirements for crew allocated the task of checking the cylinders in relation to the pressure gauges to examine the cylinders themselves, or to reporting on the condition of such cylinders. Rather, overall, it appears that other than the topping up of gas when the pressure gauge readings were low, and the inspections by the manufacturer, Navilimpianti, no one considered the need to address the safety aspects of the carriage of these cylinders.

Prosecution on culpability

[34] The prosecution’s submissions at Para [43] describe the situation as “a recipe for tragedy”. Paras [44] and [45] detail the risk generally to persons onboard the vessel or within the vicinity of the vessel. Further, the prosecution notes the inherent hazard of pressurised gas cylinders; the lack of training for persons such as [the deceased] tasked with handling and re-gassing the cylinders; the failure to identify the actual risks involved not only in such re-pressurisation, but in the cylinders themselves and their contents; a lack of training and a lack of record keeping, All this leads to a submission by the prosecution, that there was fault to a high degree and that the defendant’s failures are such that the Court should consider the gravity of the defendant’s offending to be high.

Defence on culpability

[35] The defence position is that the defendant accepts that there was no formal risk assessment and no formal training on the “topping up” given to [the deceased], but submits that the task was not unusual and that [the deceased] was a qualified fitter with experience and that the re-pressurisations were being carried out under a recommendation from the manufacturer’s Technical Bulletin. The issues as to the cylinder being overdue for hydro-static testing had occurred because the date by which the testing was required was incorrectly managed; the planned maintenance system had already initiated a process to carry out such tests and that had begun in December

2016. There were some errors suggested by the defence as to regards to the “10 year period” and the actual time the cylinder had been being used by the defendant.

[36] The defendant’s position is that the overdue hydrostatic testing should have meant that the cylinder failed the most recent inspection. The defendant’s position is that was a failing of the manufacturer; the manufacturer had issued the certificate stating all cylinders had been inspected and tested, including corrosion; that the cylinders were aged; and that the vessel should “start to consider” a swap did not indicate imminent risk. The defence argued that the manufacturer bears significant culpability for the death of [the deceased].

The position of the manufacturer

[37] In considering the situation relating to the manufacturer, the manufacturer is not before the Court and cannot be brought before the Court. The defendant must be dealt with on the basis of the defendant’s failing (or failings).

Decision on causation and culpability

[38] Having considered the submissions, noted the matters detailed in the Summary of Facts and other evidence including the affidavit supplied by the defence from Mr Debnam, I consider that an appropriate property management system in place relating to the regular examination of these cylinders would have meant that the defendant would not have accepted the manufacturer’s certificate because the corrosion was quite clearly there to be seen and a certificate to the contrary was obviously wrong. The defendant did not have the appropriate risk assessment/and management directions in relation to managing the obvious risk. As a result, there was a cylinder obviously to be seen in a dangerous condition by its corrosion, being refilled, by persons not adequately (if at all) trained to carry out the task in assessing the cylinder prior to re-pressurising it.

[39] In the terms of the charge faced by the defendant, the failure is that it did “cause and permit” the cylinder to be maintained and serviced in a manner that caused unnecessary risk to [the deceased] which resulted in his death, in my view, the

defendant has a high culpability. However, the factors that I have detailed in relation to the personal mitigation which are clearly detailed such as:

• Remorse – remorse is evidenced by the steps taken by the company to contact the members of [the deceased]’s family in writing and by telephone; the concern expressed and extended by the defendant’s counsel at the commencement of his submissions at the sentencing exercise; show a defendant that was remorseful and felt high levels of regret and concern.
  
• The company fully cooperated with the investigations of all regulators and entered into what it should have been in place from the outset, i.e. policy and procedural revisions. Using the knowledge gained from the incident, when its failure was apparent. The addressing of the underlying cause corrects the omissions that gave rise to this tragedy occurring. The Court does not accept that by addressing the underlying cause it is entitled to credit to a high degree, but does accept those efforts are deserving of recognition.
  
• The payment of reparation as such and relied to a large extent by counsel for the defendant, was a payment the defendant had to make contractually. When I consider the position overall as to the assessment of culpability, the fact that there was such payment and also other actual costs were met and is relevant.
  
• The Court can also take into account the company’s previous good character.
  

[40] I assess the personal mitigating features “in the round”. They clearly lower the overall culpability of the defendant in the Court’s assessment.

[41] When I have regard to Para [41] of the prosecution’s submissions, and its breakdown in relation to the banding, I consider that the culpability falls somewhere between subparas (b) and (c). The level of culpability that I assess is at slightly above a moderate level.

Victim Impact Statements

[42] Having carried out that exercise, I then have referred to the Victim Impact Statements that have been provided on the impact of the death caused by this moderate level of culpability.

[43] [The deceased]’s mother is extremely ill. She is 63 years of age; unable to work; living with her daughter and her granddaughter. She details the various health issues she has and notes that [the deceased] from his income, sent money home to pay for the living expenses of herself and his daughter. She tells the Court that her daughter [name deleted], had to stop work to look after the deceased’s child and his mother. The monies that were paid following [the deceased]’s death are to be used for supporting the family as a whole. She describes the loss of her son using words such as “shocked and hurt”; describing [the deceased] as “a responsible man, a generous son, a good brother and a loving father”. It is noted that she mentioned that he was working abroad to get the family out of poverty. She mentioned the need for safety measures to prevent such deaths. She speaks about the loss in the following terms:

I am used to having a son who will be there for me. Take care of me, making sure that I am safe and well, makes me miss him so much.

[44] A Victim Impact Statement was provided from [the deceased]’s sister. She is 32 years of age, working as a fulltime care giver for her mother and her niece. She has a child of her own. In her Victim Impact Statement, she talks about the decision her and her brother made about money being needed in the home for the medication that their mother needed. [The deceased’s sister] was working and someone was paid to take care of her mother, younger sister “and the family”. The death of [the deceased] meant that assistance was stopped. [The deceased’s sister] had health issues and is now at home fulltime looking after her mother, her niece and the rest of the family. She notes when discussing the rest of the family that includes a younger sister who is mentally incompetent and who has a four year old daughter; a brother 22 years of age who has a hole in his heart. The situation is one where her brother who was killed was working to support the family needs, but also she has lost her own support system through the death of her brother. She believes it is her duty now to take care of the family.

[45] [The deceased]’s daughter’s Victim Impact Statement was prepared by the previous victims i.e. her aunt and her grandmother. She notes that $15,000 USD was received to be used for her upbringing and education, but she suffers the loss of her father; tears and upset (as one would expect for a child of her age whose only parent was [the deceased]).

Quantum of Emotional Harm Reparation

[46] The position of the prosecution on Emotional Harm Reparation is that reparation of $110,000 should be awarded, recognising the overall Emotional Harm occasioned by the death of [the deceased]. That should be apportioned as to $60,000 to the sister of [the deceased] who is solely responsible for raising the daughter;

$25,000 to the victim’s daughter; and $25,000 to the victim’s mother.

[47] The defendant’s position, when considered both from para [15] of its main submissions and the supplementary submissions at para [3], appear to me to confuse Emotional Harm Reparation with reparation for consequential loss. The defence case is that other than the payments already made, together with a further $25,000 payment offered as a “total reparation payment” no further reparation for Emotional Harm should be paid.

Decision on quantum of Emotional Harm Reparation

[48] The assessment I make takes into account all of the factors I have discussed above and also note that [the deceased] was primarily aboard the defendant’s vessel to earn money to support his family. I emphasise the word “primarily”. The work that he had with the defendant enabled him to provide for his extended family. [The deceased] was on the vessel undertaking tasks that he had not been fully trained for. He was placed in a situation where there were clear deficiencies, failures and omissions and, as a result, he died.

[49] The matter is one where, taking into account the authorities, and the particular circumstances of the deceased’s extended family in the Philippines and the culpability of the defendant, it is my decision, that Emotional Harm Reparation in the sum of

$110,000 NZD should be awarded to the deceased’s family, apportioned between the three victims in the manner as detailed in the prosecution’s submissions at para [30] (but subject to further submissions as requested in para [79] of this decision).

[50] Having said that, the payments made by the defendant of $100,517 NZD must be taken into account. The residual amount of Emotional Harm Reparation required to be paid by the defendant, therefore, is the balance sum of $9,483.

Reparation – consequential loss

Costs of repatriation of body

[51] There is no difficulty in assessing the costs involved in having [the deceased]’s body repatriated to his Philippines home. The fees involved amounted to some

$10,450.95 USD. Full payment of those costs has been met by the defendant. There is no need for any order to be made in that regard.

Consequential loss of earnings

[52] This is a matter of issue between the parties. The prosecution suggests that reparation for consequential financial loss should be the sum that the family could expect that [the deceased] to earn to support himself and his family for 30 years from the date of his death. The prosecution submits that in the terms of s 32(3) of the Sentencing Act there is no compensation available to the [deceased]’s family under the Accident Compensation Act 2001. As previously detailed, the deceased was survived by his family including his sister and daughter and that his earnings are no longer available to the family unit. [The deceased] was earning a guaranteed monthly wage of $1646 USD. The prosecution argues that the family could have expected therefore to have a further $812,460 NZD available to support [the deceased]’s family. That is the amount sought for consequential loss.

[53] The defence position is that reparation of this kind would require separate proceedings because reparation is not a suitable machine for determining substantial disputes as to causation or as to measure of loss. Mr Ferrier submits the case of Davies

v Police6 in this respect. The defence says that the way in which the prosecution assess consequential loss is unprecedented. Lifetime earnings have not previously been ordered by way of reparation and there needed to be “realistic restrictions and assessments” which is borne out by various cases quoted by Mr Ferrier in his written submissions from para [25] on. Mr Ferrier submits that anticipated lifetime earnings have been used as a measure of loss only where cases involve serious permanent injury but not death. Mr Ferrier notes that the payments being sent home by [the deceased] to support his family were not quantified and that some of [the deceased]’s income would have been retained for his own purposes. The “speculation” of attempting to foresee where his family will be over the 30 year period makes it, overall, Mr Ferrier submits, wrong to deal with it in the way the prosecution suggests.

[54] At para [31] of his submissions, Mr Ferrier suggests that the Emotional Harm Reparation Payment already dealt with and discussed is sufficient to also address consequential loss. He notes the difference in earnings between the amounts already paid and the day to day living wage of persons in the Philippines. The defence suggests that there should be no further reparation to address consequential financial loss, but offers a further $25,000 at para [32] of the written submissions and then repeated at para [3A] of the supplementary submissions filed by the defence (which I have already earlier discussed).

[55] While the defendant’s submissions recognise that there is an ability to award reparation for consequential financial loss, it is submitted that the analysis by the prosecution of the position is not in accordance with the law and that this Court should follow the Supreme Court decision in Davies v Police where the Court said that assessment of reparation in a summary process was not appropriate for determining substantial disputes as to causation or measure of loss. Further, it is submitted that even where reparation is available for such compensation, it may not be an appropriate mechanism. (I note from the Davies decision as discussed in para [24] of the written defence submissions, the Supreme Court said where reparation awarded only partially covers the loss that s 38(2) of the Sentencing Act enables the victim to take additional relief through other proceedings. A sentence of reparation does not affect any right

6 Davies v Police [2009] NZSC 47, [2009] 3 NZLR 189.

that the person who suffered the harm, loss or damage to be recovered by civil proceedings any damage in excess of the amount recovered under the sentence. I adopt that approach from Davies.) Further, I note what Judge Clark said in Worksafe New Zealand v Hamilton City Council.7 Judge Clark referred to comments in Adams on Criminal Law, suggesting that the Court take a “pragmatic” approach and limit liability to a realistic period. I agree with those comments and with Judge Clark.

[56] Mr La Hood for the prosecution in his oral submissions submitted that there needed to be some “middle ground” in this case because there was no precise actuarial evidence. He emphasises that there is a need for fairness to be exercised in relation to a family living in poverty in the Philippines with a sick mother, a disabled sibling, a medically unwell sibling and a sister now effectively the solo mother to the children. Mr La Hood’s position was that the Court needed to come to a common sense and realistic view in calculating consequential loss. I agree with Mr La Hood. I note the comments that I have already mentioned by the Supreme Court in Davies as regards to quantum. I do not accept the defence contention that it is only the money that could be remitted by [the deceased] regularly from his wages that any calculation should be based on.

[57] Rather, I consider that acting in a common sense way in looking at the matter overall, that the factors that should be taken into account are:

• [The deceased] was working on the defendant’s vessel as result of the plight of his family and the need for him to earn income to support the extended family.
  
• He remitted funds on a regular basis which were markedly increased when there were demands for costs incurred for further medical care and similar such issues.
  
• Calculations of the loss of that source of income and with it the loss of the basic confidence it would have given to the family unit remaining in the Philippines cannot be specifically quantified. It is part of, in my view, the
  

7 Worksafe New Zealand v Hamilton City Council [2016] NZDC 18590.

financial consequential loss. It could be summed up as “peace of mind”. It is just not an issue of calculating living expenses.

• I need to take into account that the family group has specific issues in relation to the health of the mother and the disabilities of the other members of the family. I accept for the purposes of this assessment, that there is a wider family group than just the grandmother, [the deceased]’s sister, and [the deceased]’s daughter. The fact that they had to borrow money i.e. higher payments being made by [the deceased] when a loan was required to be repaid, emphasises the point.
  
• I need to take into account the family group and its difficulties in assessing how long the reparation for lost earnings should be calculated on.
  

[58] A precise mathematical approach is therefore unreal. I accept what Mr La Hood submits in his supplementary submissions, such an approach is inappropriate. In making the assessment for the earnings loss, the cases that I have read in my view give me the authority to take into account the means of the defendant as a multi- national company.

[59] In this overall assessment, I need to take into account that at the time of his death, [the deceased] was earning $2,000 USD approximately. I need to acknowledge that circumstances may change when the deceased’s daughter is of working age; or upon the death of the mother. While I do not accept the opening position of the prosecution as detailed in para [35] of the written sentencing submissions that the approximate earnings for a further 30 years of $812,460 should be awarded (noting that it was an estimate and adjustments would be necessary) nor do I accept the position of the defendant which is that the Emotional Harm Reparation paid in the terms of the contract, represent sufficient reparation. As I have said, the consequential loss is entirely different from the Emotional Harm Reparation.

[60] I note what was detailed in counsels’ submissions and the various comments in the cases, such as Worksafe New Zealand v Hamilton City Council8 and Worksafe

8 As above at n7.

New Zealand v Corboy Earthmovers Ltd9 and the comments of the learned District Court Judges – referring to paras [25(a) and (b)]. I particularly take note of the decision in Worksafe New Zealand v Oceana Gold (New Zealand) Ltd.10 The position of the prosecution in that case was that the net loss of lifetime earnings varied between

$2.77 m and $700,000. The Judge did not accept that approach and used what he described (and as detailed at para [25(c)] of the defendant’s submissions), a “realistic assessment” of the net loss of earnings. I again note the authorities that Judge Clark discussed in the Hamilton City Council case where she talked about the Courts taking a “pragmatic” approach and realistic periods.

Assessment of reparation for consequential loss

[61] I assess reparation based on the consequential loss issues as being the income earned by [the deceased] of $2,000 USD per month, or put in an annual basis of

$24,000 USD. In my view, he would have had a normal life working expectancy of some 30 years. I discount that to a period of 15 years. On the basis of earnings remaining constant at $2,000 USD per month (an increase over his current monthly wage) for the full 15 years, I arrive at a figure of $360,000 USD. I note approximations in relation to allowances for taxation and the other variables, including the use of money being paid at one time rather than over a 15 year period, and taking a pragmatic approach to it, I bring the figure to $180,000 USD. In today’s terms, that equates to

$265,000 NZD.

[62] I then have regard again to the issues relating to the incident itself; [the deceased]’s death; the basis of the family group in the Philippines; and the very real difficulties with poverty and serious illness which appears to impact upon the family group as a whole, other than for the sister and the deceased’s daughter. I consider the sum then assessed by me as in appropriate payment of reparation, in a broad-brush way, for consequential financial loss. I consider $250,000 NZD to be an appropriate award for consequential loss.

Decision

9 Worksafe New Zealand v Corboy Earthmovers Ltd (in liq) [2016] NZDC 21982.

10 Worksafe New Zealand v Oceana Gold (New Zealand) Ltd [2018] NZDC 5274.

[63] Accordingly, in relation to reparation the summary of the orders I make are:

• (a) Emotional harm reparation - $110,000 NZD (the sum actually due after the contractual accidental death payments have been made amounting to $9,483 NZD).
  
• (b) With regards to reparation for consequential loss - $250,000 NZD.
  

Level of fine - prosecution

[64] The prosecution’s position is that the offending has the aggravation of the company failing to properly maintain and service the gas cylinders; that the failures identified posed a serious risk to all onboard and to those within the vicinity of the vessel itself, as is substantiated by the fact that when the explosion occurred, through no fault that could be placed on the deceased or other crew member, death occurred. The prosecution’s position is that the actual harm caused and the risk of harm with aggravating features lifting overall to the extremely high level. The prosecution’s case is that the failures in identifying the hazards was of a high extent as the hazards in relation to nitrogen gas cylinders are well known and the crew members tasked with the particular work in relation to those gas cylinders were put in an inherently dangerous situation where the risks could not be identified or properly managed. The prosecution does not accept the manufacturer’s default in its inspection of the cylinders as detracting from the gravity of the defendant’s overall culpability. The prosecution accepts remedial measures were put in place and problems are being rectified. But in the end, it is the submission of the prosecution, that what was being done after [the deceased]’s death should have been in place from the outset. There is no argument from the prosecution that a discount of 25 percent for the guilty plea should not be allowed. The position of the prosecution is that the defendant’s culpability was high towards the upper end of the high culpability band, with a final starting point of between $60,000 - $65,000.

Defence

[65] The defence position, on the other hand, is that the culpability of the company is considerably less than what is argued by the prosecution. (I have no intention of adopting sentencing bands.) I accept the defendant’s position that it is wrong in principal to address culpability solely on the basis of death having occurred.

[66] In my view, the written submissions made by Mr Ferrier in relation to the defendant’s culpability cannot be accepted. Mr Ferrier argues that the tasks that [the deceased] was to undertake were not unusual and were being carried out from the recommendation from the manufacturer; that [the deceased] was a qualified fitter and had experience in carrying out the tasks. In reality, there was no procedures or policy put in place to ensure that the cylinders were fit for purpose at all times, or that the persons charged with bringing the gas pressure levels to the right level, had training or had been instructed about the various risks in relation to such cylinders, their deterioration etc. Mr Ferrier accepts that the cylinders were overdue for hydro-static testing because of incorrect management; he accepts there were delays in relation to the replacement of cylinders. He submits that annual inspections of the davits were carried out and although now it is accepted more urgency was required around testing and replacement, it was not possible to attribute significant blame for the lack of any risk assessment, and that the failings were on the manufacturer not the company.

[67] Mr Ferrier submits that in relation to remorse that this was at a high level; that there was full co-operation; that there is evidence showing significant steps taken since the incident; that there has been a payment of reparation; and the defendant’s previous good record. Mr Ferrier submits that a guilty plea credit of 25 percent is appropriate. Overall the position of the defence is that a starting point of $40,000 should be brought to an end figure of some $20,000.

Fine level

[68] I repeat the culpability assessment that I made earlier in this decision. I consider culpability to be at least to an above moderate level. I note the maximum fine available in the terms of s 65(2)(a) of the Maritime Transport Act is a fine of

$100,000. Having made all the necessary assessments, the starting point for the fine therefore, in my view, should be $50,000.

[69] As against this, I allow discounts for the following factors. The payment of reparation in terms of the employment contract i.e. death by accident in the course of work, was paid and paid speedily (as would have been required in the terms of the contract). This is closely related to the issue of remorse. I allow a credit of 10 percent for remorse and reparation from the following starting point of $50,000. The company has good character and I bring that to account by allowing a credit of 10 percent. In relation to the acts taken to address the underlying causes, I accept the prosecution position that the company was doing very little more than what should have been put in place once the ship had cylinders full of nitrogen aboard. Overall, I allow 5 percent. A total of 25 percent. The allowance of those discounts brings the figure before allowing the guilty plea credit, to $38,000.

[70] Guilty plea credit as agreed by both sides, is 25 percent. I allow $10,000 as the guilty plea credit.

[71] The assessed fine therefore is $28,000.

[72] I again consider all the issues that has been raised. I consider that a provisional fine of $25,000 is an appropriate level of fine end point.

Overall impact

[73] I then, as the third step, must assess the impact overall and consider the total penalties imposed on the defendant by way of reparation and fine. The overall total imposed must be proportionate of the circumstances of the offending and the defendant itself. I have as the prosecution notes in its written submissions, taken into account the provisions of ss 7 and 8 of the Sentencing Act in looking and considering the imposed levels of Emotional Harm Reparation and Consequential Loss Reparation. I also take into account here that the defendant is a large multi-national company, operating throughout the world.

• I have imposed Emotional Harm Reparation payment of $110,000 NZD.
  
• Reparation for loss of earnings, $250,000 NZD.

• Reparation of the costs involved the repatriation of [the deceased]’s remains and the casket, in the sum of $10,450.95 USD.
  

[74] I note in para [66] of the defendant’s written submissions that the payment made by the defendant is described as “...voluntary reparation payment...”. It is not. It was a contractual obligation on the part of defendant to pay that sum to [the deceased]’s family.

[75] The prosecution submits that the Step Three assessment does not normally result in adjustment being made because the total was disproportionate to the circumstances of the offending and the defendant itself.

[76] I accept the position of the prosecution that the defendant because of its very nature being a multi-national corporation, has the means to pay all the reparation and fine at its assessed level. I note the amounts imposed in other cases under such similar Health and Safety in Workplace legislation. I also note that there has not been any authority put to me where the defendant is a limited liability company being prosecuted under the Maritime Transport Act.

Assessment

[77] When I consider the amounts overall, I consider an adjustment in the quantum of the fine needs to be made.

[78] Accordingly, the defendant upon its conviction is sentenced as follows:

• (a) To a fine of $15,000 NZD (reflecting the level of reparation ordered):
  
• (b) To a payment of Emotional Harm Reparation of $110,000 NZD.
  
• (c) To a payment of reparation for consequential financial loss of

$250,000 NZD.

(d) To a payment of the expenses of repatriation of [the deceased] in the sum of $10,450.95 USD. (Already paid.)

This decision recognises in paying the above figures, there must be allowances made for the payment of the $10,450.95 USD being the cost of repatriation of the victim’s body and the payment already made to the family of $100,517 NZD.

[79] Two issues remain:

• (a) The apportionment of the ordered reparation as to the various victims of the offending, namely [the deceased]’s family. Counsel may wish to address that issue in writing.
  
• (b) The issue of costs of the prosecution and as to the quantum of such costs.
  

[80] I invite submissions from counsel to be filed and served on those matters within ten days from the date of the delivery of this judgment.

K J Phillips

District Court Judge