High Court confirms guidelines for sentencing
14 August 2018The decision determined appeals brought by three companies fined under s.48 by the District Court, being Stumpmaster v Worksafe New Zealand; The Tasman Tanning Company v WorkSafe New Zealand; Niagara Sawmilling Company Limited v WorkSafe New Zealand [2018] NZHC 2020.
The four steps are:
Step 1: Assess the amount of reparation.
Step 2: Fix the amount of the fine, first by determining the starting point for the fine in light of the guideline bands, and then by looking at aggravating and mitigating factors. The starting point will depend on the culpability of the offender and the gravity of offending.
The High Court set out four bands:
| Low culpability: | Up to $250,000 |
| Medium culpability: | $250,000 to $600,000 |
| High culpability: | $600,000 to $1 million |
| Very high culpability: | $1 million plus |
From this point, adjustments to the level of the fine will be made for aggravating and mitigating factors, such as reparation already paid, remorse, previous good character and co-operation. The Court noted that reductions for such factors have commonly been in the order of 30%, even where the situations varied greatly. In other cases a higher credit was applied which meant in reality the minimum reduction from the starting point in any case was 50%.
The court expressed concern about this level of reduction and considered proper analysis of the basis for the credit is required in future. In the area of credit for reparation for example, the Court indicated that the efforts of the defendant to assist a victim from the outset merit particular noting as these are times of greater stress and uncertainty. By way of general guidance, the High Court considered a discount of 30% is only to be expected in cases that exhibit all the mitigating factors to a moderate degree, or one or more of them to a high degree.
Step 3: Assessment of any other orders. The Court accepted that this new step is needed to take into account new orders available under the HSWA. These orders include an order for payment of the regulator’s costs in bringing the prosecution.
Step 4: Proportionality assessment. At this stage the Court will consider the totality of the sentence imposed (reparation, fine and any orders), and whether or not it is proportionate and appropriate in the circumstances. For example, the financial situation of the offender will be taken into account and adjustments made up or down depending on their situation.
The decision provides some clarity to the approach to sentencing in such cases in future. It also identifies that in considering reductions for credit, genuine efforts by offenders to assist victims and address causes of harm and risk will be taken into account.
Two recent cases illustrate the significant costs for culpable PCBUs, noting that both were heard before the High Court decision above.
The first, Worksafe New Zealand v Oceana Gold (New Zealand) Limited demonstrates the extremely high costs likely to be incurred by the death of a person. The worker had been driving an earthmoving machine underground when it fell 15 metres off a vertical edge. Worksafe’s investigation found that Oceana Gold had failed to develop and implement a safe system of work for the creation of 1.5 metre high bunds above vertical slopes. Oceana Gold had identified the risk and the solution of bunds to reduce the risk of a vehicle falling into a void. However, they had not effectively mitigated the risks involved in implementing that solution. The cost to Oceana Gold, excluding their own legal costs, was almost $1.4M, comprising:
- A final fine of $378,000.
- Ordered reparations of $350,000.
- Voluntary reparations totalling $660,000, which had already been paid.
- Costs of $3,672.
In addition it incurred losses of a further $1M by closing the mine for a week for safety and cultural reasons.
In terms of setting the fine, based on the Company's efforts to find a permanent solution and the fact it closed the mine for a week, the Court considered a start point of $700,000 was justified. The Court then gave a credit of 20% for reparations paid and payable, a further 10% credit for cooperation with the authorities and developing a permanent solution to a long standing risk in the mining industry, and a further 25% credit for the early guilty plea, remorse and contrition, making the final fine $378,000.
The second case, Worksafe New Zealand v Budget Plastics (New Zealand) Limited demonstrates the proportionality assessment. The worker became entangled in an extrusion machine and the only remaining digits on one hand were his thumb and part of the forefinger.
The District Court set culpability at moderate with a starting point of between $400,000 and $600,000. A 30% reduction was awarded for reparation, cooperation and remorse. A further discount of 25% was granted for an early guilty plea. This reduced the fine to between $210,000 and $315,000.
The Court concluded that the fine must “bite” and not be at “licence fee” level and on the evidence before it concluded a fine of greater than $100,000 would cause significant difficulties for the employer. The end result was:
- A final fine of $100,000.
- Reparations of $35,000.
- Costs of $1,000 (despite Worksafe claiming $3,621.55).