Former Port of Auckland (POAL) CEO Tony Gibson has been convicted of exposing workers to a serious risk of death or injury in breach of his due diligence duties as an officer of POAL. 

The prosecution, brought by Maritime NZ represents the first of its kind against an officer of a large complex company. As we discussed in our April 2024 legal update, prior prosecutions against officers initiated by the regulator have tended to involve small closely held companies or similar organisations, where the officers in question were much closer to the day-to-day operation of the business or undertaking. The same is largely true in Australia. 

The prosecution followed the 2020 death of a stevedore who had been loading containers on a ship berthed at the port. He was killed when an object (a shipping container) fell from a crane. In its press release, Maritime NZ emphasised that the decision to bring charges against Mr Gibson was only taken after considering the harm caused, POAL’s compliance history, and the broader public interest. 

While it is not yet known whether the conviction will be appealed, officers of other large complex organisations should certainly take note of the decision, and what it stands for, and are likely to watch closely whether this decision influences the approach taken by WorkSafe and other health and safety regulators to the enforcement of officers’ obligations under the Health and Safety at Work Act 2015 (HSWA).

Background

The essential context for the incident at the centre of this prosecution is:

• At 2am on 30 August 2020, a pair of stevedores identified that a group of containers had been mistakenly unlashed by the dayshift. They approached the ship leading hand in their team and asked whether they should relash those containers.
• The ship leading hand directed those stevedores to do so. This direction was in breach of POAL’s policy that workers should not be located within three container-widths of an operating crane. The worker in question was working within that exclusion zone.
• The nearby crane operator commenced lifting two containers, unaware that a twist lock mechanism had mistakenly been left locked, meaning that the container being lifted was still locked to the container below at one corner. He was not aware of the stevedores, and could not see them from his position in the crane. 
• The crane operator recognised that something was wrong with the lift and stopped lifting. However, the twist lock mechanism broke under the weight of the container before he was able to lower it. The container then fell towards one of the stevedores, crushing and killing him.

Maritime NZ brought two charges against POAL. The first related to the conduct of POAL’s ship leading hand, who directed the stevedores to relash the containers within three container-widths of an operating crane. The second related to POAL’s underlying systemic failures to protect the health and safety of stevedores at the container terminal. POAL pleaded guilty to both charges and was convicted. 

Mr Gibson, who served as POAL’s CEO from February 2011 to June 2021, was charged as an officer, with failing to exercise the care, diligence, and skill that a reasonable officer would exercise in the same circumstances to ensure that POAL protected the health and safety of stevedores at the container terminal (in circumstances where this exposed workers to a serious risk of death or injury). Maritime NZ alleged Mr Gibson’s omissions manifested in three specific failures:

• a failure to take reasonable steps to ensure that POAL had available for use, and used, clearly documented, effectively implemented, and appropriate exclusion zones around cranes;
• a failure to take reasonable steps to ensure that POAL had available for use, and used, clearly documented, effectively implemented, and appropriate processes for ensuring coordination between lashers and crane operators; and
• a failure to take reasonable steps to verify the provision and use of the resources and processes described above.

Mr Gibson successfully defended the second allegation, but has been convicted in respect of the first and third allegations.

The Court’s approach

The Court’s decision began with a summary of principles which it considered relevant to the assessment of officers’ exercise of due diligence. These principles included that:

• A breach by the PCBU does not imply officers’ failure to exercise due diligence. Equally, failure to exercise due diligence is a strict liability offence, meaning an officer does not need to act intentionally or even recklessly to be found in breach.
• The assessment must, necessarily, be fact and circumstance dependent. The relevant circumstances include (without limitation) the nature of POAL’s business and the nature of Mr Gibson’s responsibilities as CEO.
• An officer in a large organisation does not need to be involved in day-to-day operations in a hands-on way but cannot simply rely upon others within the organisation either. The officer must personally acquire and maintain sufficient knowledge to reasonably satisfy themself that the PCBU is complying with its duties under the Act. 
• In particular, officers must:
  • Ensure that people with assigned health and safety obligations or roles have the necessary skills and experience to properly execute their roles.
  • Acquire and maintain sufficient knowledge of the PCBU’s operations and the work actually carried out “on the shop floor” (also described as “work as done” in the judgment, and contrasted with “work as planned, intended, or imagined”) to adequately identify and address actual hazards and risks.
  • Ensure entrenched and adequate systemic processes are put in place for ensuring the PCBU complies with its duties (which is described as key in large organisations).
  • Ensure there are effective reporting lines and systems for the flow of necessary health and safety information to the officer and others with governance and supervisory functions (again, described as key in large organisation).
  • Engage upon, or arrange, an effective process of monitoring, review and/or auditing of the PCBU’s systems, processes and work practices to ensure they are achieving their purposes and being adhered to (as applicable).
• Industry standards, guidelines, and comparators are relevant to the Court’s assessment, but not determinative. An officer relying on such guidance might be found to be in breach if the guidance falls short of the requirements of the HSWA

In stating these principles, the Court emphasised the importance of holding directors and other officers in governance roles accountable for the health and safety consequences of their decisions as being a key policy that underpins the wider HSWA regime.

The Court also upheld the relevance of Australian cases decided under the previous legislation, observing that the different burden of proof in those cases did not materially affect their relevance, and that the reference to “all due diligence” rather than “due diligence” in the previous legislation did not create a materially different threshold. In the same discussion, the Court declined to place weight on the more recent Doble decision relied upon by Mr Gibson.

Why Mr Gibson was convicted

In setting out the level of due diligence expected of a reasonable officer in Mr Gibson’s circumstances, the Court emphasised his responsibilities, his awareness of the risks involved in stevedoring, and his awareness of POAL’s inadequate monitoring of “work as done.”

Regarding Mr Gibson’s role, the Court emphasised the 30% weighting given to health and safety management in his performance agreement, his “hands-on” involvement with a range of initiatives that had driven positive health and safety outcomes during his tenure as CEO, and his direct responsibility for approving the “Health and Safety Manual” (POAL’s primary health and safety management document, setting out various systems, policies, and procedures), for approving the annual health and safety plan, and for ensuring attendance at meetings of POAL’s Health and Safety Steering Committee (HSSC). 

As to Mr Gibson’s awareness of the risks, significant weight was placed on his awareness of a series of recommendations made by KPMG in its 2018 audit report (by reason of his receipt of monthly health and safety reports), and his awareness that the number of recorded incidents and near misses relating to load handling and crane operations was likely not reflective of actual events occurring within POAL due to a lack of reporting (by reason of a March 2019 Critical Risk Report). He was also held to be aware, at least constructively, of widespread non-compliance by workers with the “three container-widths” exclusion zone rule.

Moreover, Mr Gibson was found to have been put on notice that POAL had not been adequately monitoring “work as done” on the wharves by POAL’s previous health and safety convictions across the period from January 2014 to August 2018, which reflected common systemic failures around monitoring of its health and safety systems and supervision of its workers. 

The Court deliberately declined to place weight on the lack of guidance issued by New Zealand regulators on the relevant risks (in an alleged breach by the regulators of their International Labour Organisation obligations), observing both that there was significant international guidance in relation to port operations and stevedoring and that the need for effective management of risks associated with crane operations and suspended loads was obvious in any event. The Court also declined to place weight on the Board’s approval of Mr Gibson’s performance, having pointedly noted that whether there were failings on the part of any other officer did not fall for determination in that case.

In terms of the aspects of the charge relating to POAL’s management of exclusion zones, the Court found that Mr Gibson had not exercised the care, care, diligence, and skill of a reasonable officer in his circumstances. Particular failures include that:

• he had not turned his mind to the introduction of hard controls (such as signage, barriers, and adequate lighting) around operating cranes; 
• that he had not taken steps to ensure POAL progressed KPMG’s recommendations or to improve POAL’s systems and processes for monitoring “work as done”; and 
• that he had not ensured POAL placed appropriate focus on ensuring the progression of critical risk management associated with handling overhead loads in a meaningful and timely way. 

The Court’s overall conclusion in that respect was that a reasonable CEO would have recognised the shortfalls in POAL’s management of exclusion zones and would have ensured POAL utilised appropriate resources and processes to address those shortfalls.

These failures were found to have exposed workers to serious risk of death or injury because they decreased the likelihood of POAL taking the necessary steps to eliminate that risk.

However, the Court dismissed the aspects of the charge relating to inadequate coordination between lashers and crane operators. POAL’s key breach in this regard was a management of change process introduced in response to the Covid-19 pandemic, by which POAL had removed the lash leading hand role without conducting an appropriate risk assessment or providing effective training to ship leading hands and crane operators when requiring them to assume the responsibilities of lash leading hands. Although the Court accepted that Mr Gibson was responsible for management of change processes by virtue of his role, the associated nation-wide emergency, lockdowns, and social distancing rules were found to bear on the reasonableness of Mr Gibson’s actions in relation to POAL’s failures.

Our view and key points for officers

Mr Gibson’s conviction reflects a departure from a recent trend of failed officer-prosecutions in Australia, although the outcomes of those prosecutions can be seen as reflecting a failure by the prosecution to tender appropriate evidence or an approach that tends to conflate the obligations of officers and PCBUs themselves.

The decision sets a clear precedent that officers (including chief executives) at large complex organisations may be held liable for breaches of their due diligence obligations, notwithstanding the fact that they are typically operating at a greater remove from “work as done” than officers at smaller, closely-held organisations. 

While there is much for officers to consider in the judgment, and there are unique factors applying to this case including the high-risk nature of the industry and the history of prior prosecutions, key takeaways in our view include:

• Officers are expected to ensure there are effective reporting lines and systems for the flow of necessary health and safety information to them, from competent people.
• Proactive critical risk management is vital. Where the need for additional controls is known (or should be) and these additional controls are not identified and implemented in a timely way, workers will be placed at unnecessary risk and officers will be exposed. 
• Officers are expected to acquire and maintain sufficient knowledge of “work as done” as opposed to “work as imagined” to adequately identify and address actual hazards and risks, especially where officers are on notice of systemic issues. 
• Relying on workers to keep up to date with exclusion zones or other aspects of safe practice as an alternative to implementing hard controls is unlikely to be adequate where there is a clear culture of widespread non-compliance.
• Evidence of Mr Gibson’s hands-on involvement with other positive health and safety initiatives was not treated as exculpatory, but instead used as a benchmark for the due diligence expected of him in his role.
• Although Mr Gibson’s particular responsibilities as Chief Executive were central to the Court’s analysis, the Court emphasised that the alleged failures of the Board were not a matter for determination in the case brought before it, leaving it open for the Court to hold both Chief Executives and company directors responsible for similar failures in the future.

Please contact one of our experts if you would like advice regarding governance and due diligence obligations.