Worksafe New Zealand v Pegasus Engineering Limited [2019] NZDC 7162 (11 April 2019)

Last Updated: 3 October 2019

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

ORDER PROHIBITING PUBLICATION OF NAME(S), ADDRESS(ES), OR IDENTIFYING PARTICULARS OF VICTIM PURSUANT TO S 202 CRIMINAL PROCEDURE ACT 2011. SEE http://www.legislation.govt.nz/act/public/2011/0081/latest/DLM3360349.html

IN THE DISTRICT COURT AT CHRISTCHURCH I TE KŌTI-Ā-ROHE KI ŌTAUTAHI

CRI-2018-009-005125

[2019] NZDC 7162

WORKSAFE NEW ZEALAND

Prosecutor v

PEGASUS ENGINEERING LIMITED Defendant

Hearing:	11 April 2019
Appearances:	N Szeto for the Prosecutor L Wisker for the Defendant
Judgment:	11 April 2019

NOTES OF JUDGE D J L SAUNDERS ON SENTENCING

[1] The company Pegasus Engineering Limited has been charged with an offence under the Health and Safety at Work Act 2015. The incident giving rise to this charge occurred on 9 June 2017 at Rolleston. The charge was amended and has involved the deletion of the fourth particular paragraph (d) which read, “Ensure through supervision and monitoring the cranes were not travelled with slings/chains trailing.” There was also a consequential amendment to paragraph (a) and referred to the systems of work being included.

WORKSAFE NEW ZEALAND v PEGASUS ENGINEERING LIMITED [2019] NZDC 7162 [11 April 2019]

[2] The company has pleaded guilty to this charge and an agreed summary of facts was prepared for the Court and which is appended to the prosecutor’s book. It is available to the media and I do not intend to re-read that document. It is a comprehensive document and deals with the circumstances which gave rise to the fatality of one of the workers. As has already been explained today, there has been a request for suppression of the worker’s name and that has been confirmed in Court today notwithstanding that it may have been made available to the media at the time of the particular incident in June of 2017.

[3] The issues that have been thrown up for consideration today is whether or not [a fellow worker] is a victim for the purposes in award of reparation and secondly, what was the appropriate categorisation of the culpability bands as have been set out in a recent decision of the High Court in Stumpmaster v WorkSafe New Zealand.1

[4] In association with that, there is a particular methodology which the Court is required to follow in dealing with matters of this kind. The Stumpmaster decision makes it clear that the first consideration in matters of this kind on sentencing will be an assessment of reparation. There is then a requirement to assess the culpability factors which may lead to the imposition of any further financial penalty, a requirement to look at costs in relation to the prosecution itself and the final step is an overall assessment, proportionality and the setting of the fine.

[5] In that regard the Court has been provided with a good deal of financial information relevant to the company and again I reiterate that before the hearing commenced with submissions, orders for suppression are made in relation to the financial details that relate to the company, matters of commercial sensitivity apply and I am satisfied that it would not be appropriate for the material it has disclosed in that to be further disseminated in public but it is relevant, of course, for me to have to make some reference to it today when I come to set the financial penalty and the fact that some time payment may need to be approved.

[6] In so far as then the first aspect which is one of reparation, in dealing with this topic I preface my remarks by acknowledging that no amount of money can truly

1 Stumpmaster v WorkSafe New Zealand [2018] NZHC 2020.

compensate for the loss of a loved one and it is quite wrong for anyone who is looking at an award such as this for reparation to consider that the Court has made some value judgement about the worth of the life or lives of people who are affected by this particular incident. What the Sentencing Act provides is an ability for the Court to make an assessment and an award of both emotional harm and consequential loss from any shortfall of wages or income after ACC considerations have been factored in.

[7] Under the heading emotional harm, in looking at this issue it is helpful to look at the amounts provided for in other cases but as Chief Judge Doogue observed in a recent case involving WorkSafe v Department of Corrections, she said “the task of setting reparation for emotional harm in a case such as this does not simply involve ordering the same amount given in other cases involving a fatality, each case must be judged on its particular circumstances. While certain cases may give a broad indication of an appropriate figure, it is unhelpful to pick apart those decisions and try and pair particular features with the particular level of reparation. This is not and cannot be a tariff for the loss of life or grief.”

[8] I note the submission that an award in the range of $100,000 to $120,000 would be appropriate in respect of the deceased’s wife and daughter. To that amount, there needs to be a consideration of consequential loss. Defence counsel had earlier submitted a shortfall of $35,640. However, that has been revised to a figure of $23,240 and that will be a figure that addresses the shortfall.

[9] The most vexed question in this matter is whether [the deceased’s co-worker] can be considered as a victim for the purposes of assessing reparation in this case. The defence recognise that he has suffered as a result of witnessing the outcome of the offending. Counsel has developed an argument which concludes with the view that [the deceased’s co-worker] is not a victim within the definition of s 4 Sentencing Act. Mr Gallaway or Mr Lill who filed the submissions submitted at paragraph 44 that he does not qualify as a victim. It noted that he was not an active participant in the activity, he was not within the danger zone, he is not a surviving victim and exposed to the risk on that particular day.

[10] Having spent now some time dealing with the issue by way of reading the submissions and cases in analysis of the Sentencing Act, I have come down in favour of finding that [the deceased’s co-worker] does qualify for an award of reparation. I am satisfied that [the deceased’s co-worker] was working in close proximity to the deceased and I accept the submission that he was working as the leading hand at the same worksite and was one of the first responders at the scene.

[11] The charge faced by the defendant company refers to a failure to ensure the health and safety of workers who worked for the company and by the failures exposed, the workers were at risk of death or serious injury. While [the deceased’s co-worker] did not in fact suffer a serious injury, he was exposed to the risk factors which have been identified as an identifiable risk in which the company has failed to protect the workers against.

[12] As submitted by the prosecutor at paragraph 32 of her submissions, the end result is that I come down in favour of the argument that a direct consequence of the failure identified has created a situation where [the deceased’s co-worker] is properly classified as a victim to which reparation is potentially payable. He has clearly suffered emotional harm and as a consequence, a loss of earnings.

[13] The defence acknowledge that if I did find in favour of [the deceased’s co- worker] as being a victim, it qualifies him for reparation in the range of $45,000 to

$50,000. I find that this is an appropriate level of recognition given the information provided to the Court about his situation.

[14] In summary then, I find that for emotional harm reparation for the victim, the wife of the victim who died is in award of $80,000 in emotional harm reparation with an additional $20,000 to the daughter. Added to that will be the consequential loss which was mentioned earlier which is the revised figure of $23,240.

[15] For [the deceased’s co-worker], an award which recognises both consequential loss through the shortfall in the ACC payments and emotional harm, a figure of

$45,000 is awarded by way of reparation to him.

[16] Turning then to the question of assessing the fine, it is accepted that the orthodox approach to sentencing should apply whereby the Court identifies a starting point based on culpability for the offending. An adjustment is then made for aggravating factors and mitigating factors. This approach was endorsed by the guideline judgment of Stumpmaster v WorkSafe New Zealand, a recent decision of the full bench of the High Court. In that case there were four bands set out and suggested starting points for consideration of financial penalties.

[17] The prosecutor in the submissions filed submits this is a case, having regard to the death of the worker and failures identified, that the categorisation should be in the middle of the high culpability band. The defence on the other hand, submissions having been filed, do not accept that submission and based on their assessment the proper categorisation is at the high end of the medium band.

[18] That categorisation issue is important in establishing the starting point. The prosecution has placed a starting point of $800,000 as an appropriate figure, whereas the defence, having submitted the high end of the medium band, means a starting point in the range of $500,000 to $600,000. Both counsel have cited decisions which they say assists the determination of whether this is a medium or high culpability.

[19] The prosecution has called in aid the statutory provisions of the statute at s 151 and sets out what were the failings of the company at pages 12 and 13 of the submissions filed. The defence has taken issue with the prosecution submission about categorisation and points and relies on a recent decision of WorkSafe v Altranz.2 In that case the Court assessed liability in the high culpability band, saying that it was a significant departure from industry standards, the deceased worker and operator were insufficiently trained and a failure to identify the hazard zone and keep people out.

[20] The present case, as is submitted, did not involve a significant departure from industry practice and workers in this company had received training. Counsel for the defendant has put forward the cases of WorkSafe v Coda Operations and WorkSafe v A J Russell Bricklayers where the medium range was adopted.3 The

2 WorkSafe New Zealand v Altranz [2018] NZDC 2658.

3 WorkSafe New Zealand v Coda Operations Ltd Partnership [2017] NZDC 18902.

failures in Coda are said to be more numerous than in the present case, while in the

A J Russell Bricklayers the culpability was similar, it is said, to the present case.

[21] In the present case I note the worker had been properly trained and that while the risk of the beam moving and causing a crush injury or death was obvious, that only trained operators were able to use the cranes and lifting devices. The worker had been assessed as competent to be able to use the crane and lifting devices. Defence counsel did not accept that there was a significant departure from the industry standards and while it was caused by not adhering to a safe use of the remote while fixing the chains, the practice was in line with industry standards.

[22] I come down in favour of an assessment that places the level at the high end of the medium culpability band with a starting point of $600,000. I do not see any need to increase the starting point for the unrelated matter which the prosecutor had sought of an uplift of three percent for. As noted in the defence’s submissions, the previous matter was significantly different, and the company has had only one previous matter over 42 years of existence.

[23] The mitigating factors, and there are a number of those, and are referred to in the submissions of the defence at paragraph 84, those factors and I record them as being that Pegasus cooperated fully with the investigation and voluntarily provided all information to WorkSafe, they had expressed sincere remorse, offered to pay fees for the university education of the deceased’s daughter and offered to attend restorative justice. Thirdly, that insurance was in place and any reparation order will be paid in full. In the circumstances a 10 percent reduction for reparation would be significantly less than what is likely to be ordered and is appropriate.

[24] Fourthly, Pegasus is fully committed to ensuring its workers’ health and safety. Since the incident it has contacted Steel Construction New Zealand and updated other steel companies, SCN members, engineers, steel merchants regarding the incident and steps taken. It has carried out testing to identify suitable sanctions to install on the trolleys to prevent beams from rolling off trolleys. It has provided additional clamps to workers and removed shorteners from the chains used in the workshop. It has introduced stanchions and clamps of standard practice to manage risks of beams

falling off trolleys and work platforms. It has implemented a standard operating procedure for the use of gantry cranes which includes securing steel workpieces, correct rigging procedures and the correct way to stack and store steel. A high level of monitoring in the workplace is in place. It has implemented a new competency assessment link to the overhead gantry crane and the new template ensures the system of supervision is easily understood.

[25] Further, it has engaged a person from Chamber of Commerce to train senior manager, manager supervisors and health and safety representatives on risk analysis and health and safety legislation. It has engaged a specialist company to conduct comprehensive annual health assessment checks for workshop and site staff. Previously health checks were limited to required hearing assessments.

[26] Finally, it has focused on increasing the engagement of employees and health and safety reps in the system reviews and risk assessments. A recent example is a safety campaign that has been facilitated by the committee with a focus on stopping near misses and unsafe acts. The main message will be mates looking after mates.

[27] Those matters have been put forward as mitigating factors. The prosecutor submitted that an allowance of some 15 percent from the start point should be allowed for those mitigating factors. The defence submitted that 20 percent was appropriate before allowing the credit for the guilty plea. It is not disputed that the full 25 percent credit is available to the company for the early guilty plea.

[28] On the analysis of the figures that I have mentioned, I adopt the following methodology. I set a starting point for the purposes of fine at $600,000. I allow 20 percent for the mitigating factors that have been elaborated. That brings about a reduction from the starting point of $120,000. An allowance for the guilty plea at 25 percent is factored in. Coincidentally 25 percent of the $480,000 comes to

$120,000 and that reduces the fine level to $360,000.

[29] That is a figure that would be seen as appropriate by way of deterrence and denunciation for the particular incident. However, there is a final step that needs to be

undertaken in relation to the proportionality and overall assessment. That is the fourth step in the proceeding and I will turn to that in a moment.

[30] The third step was to fix costs which in this case have been quantified as

$936.91. That figure was not opposed by the defence and I make an order accordingly in that respect.

[31] The final step which is the overall assessment and proportionality, that requires, as does with any analysis under the Sentencing Act, the financial capacity of the defendant to meet a fine and the orders that are then to be made. As observed earlier, the reparation figures already announced will be covered by insurance and will be paid without delay.

[32] The ability to meet a fine imposed has been the subject of information, the contents of which I suppress from publication. I will not go into too much further detail about that other than to say that I have made the observations that the company, given time, will be, in my view, able to meet the financial penalty that I will be imposing.

[33] I have to look at the totality of the fine that I impose, and I am aware of the judicial pronouncements that have been made by higher Courts that indicate that for this legislation to be effective and a deterrent to defendants adopting a casual approach to obligations around work safety, that there must be some bite in the penalty.

[34] By that comment I do not mean at all to attribute any suggestion that this company has had a slack or casual attitude to its obligations, far from it. I accept that they have acted responsibly and that there has been an allowance made in the mitigating factors for the steps that they have taken.

[35] It is not the aim of the legislation or this Court to put an otherwise viable business out of business or cause its business to fail. I am satisfied that giving a time payment arrangement, the company can and will meet a fine, the level of which will take into account the matters that I have already commented upon.

[36] As then to the proportionality argument, I consider that on the information that I have received and given an ability to meet this over time, that a fine of $250,000 will be able to be met and is appropriate, when one regards the point that I reached of

$360,000 as the fine, is taken into account.

[37] I, therefore, impose in relation to the breach, a fine of $250,000. There will be arrangements put in place for time payment and that will take into account the financial information which has been supplied.

[38] Reparation orders have been made and they will be satisfied shortly and an order for costs was made without any dispute as to that level of the costs.

[39] Finally, I thank counsel for their comprehensive submissions and the way in which they have assisted the Court in this regard.

[40] I have already dealt with the issue around suppression of certain people’s names and financial information and those orders will be noted on the charging document.

D J L Saunders District Court Judge