Goldilocks and the three banding approaches to health and safety sentencing

Since the Health and Safety at Work Act 2015 (HSWA) came into force two years ago, a number of cases have been prosecuted by WorkSafe in the District Court.  Due to the six-fold increase in penalties mandated under the HSWA, we have seen a substantial increase in the fines handed down to guilty PCBUs. While this increase was expected, due to the lack of appellate court guidance on the approach to fixing the starting point for fines, there has been a range of different, and somewhat inconsistent, methodologies employed by the judges hearing the various cases.

Approach under the old legislation

Under the old Health and Safety in Employment Act 1992 (HSE Act), the leading case on the approach to health and safety sentencing was Department of Labour v Hanham and Philp Contractors Limited.[1]In that case, the High Court set down three key steps in the sentencing process:

  • First, assess the amount of reparations (a payment made to the victim for emotional harm and/or consequential loss);
  • Secondly, fix the fine (the penalty prescribed for the offence the PCBU has been found guilty of); and
  • Thirdly, make an overall assessment of the proportionality and appropriateness of the total penalty.

In respect of fixing the fine, the defendant’s culpability (i.e. blameworthiness) must first be assessed. This culpability assessment determines the starting point for the fine, which will be somewhere up to the total maximum fine available for the offence. Once the starting point has been established, upwards and downwards adjustments then need to be made for aggravating and mitigating factors.

Approach under the new legislation

While Hanham and Philp is still good law when it comes to the sentencing process generally, there is significant uncertainty regarding the degree to which the High Court’s banding approach under the HSE Act can be applied in respect of the new, much heftier penalty regime. In grappling with this problem, District Court judges have adopted a range of different approaches to setting the starting point for the fine.

For example:

    • In WorkSafe v Rangiora Carpets Ltd, Judge Gilbert expressed concerns that a three or four-band approach would create inconsistency due to the greater range of fines available under the HSWA.[2] Instead, His Honour proposed a six-band approach, which has been adopted in two subsequent District Court decisions.
Culpability levelStarting point for fine (out of a total maximum of $1,500,000)
Low$0 to $150,000
Low/Medium$150,000 to $350,000
Medium$350,000 to $600,000
Medium/High$600,000 to $850,000
High$850,000 to $1,100,000
Extremely High$1,100,000 +
  • In WorkSafe v Budget Plastics (New Zealand) Limited, Judge Large commented that “it was not for the District Court to make sentencing guidelines”, but assessed the defendant as having moderate culpability deserving of a starting point between $400,000 and $600,000, consistent with a four-band approach.[3]
  • In WorkSafe v Lindsay Whyte Painters and Decorators Limited, Judge Maze commented that establishing bands was “not the domain of the District Court” and that Hanham and Philp is still binding authority. Her Honour said it was a simple matter of extrapolating out percentages from the Hanham and Philp banding guideline to align with the increased penalties under the HSWA.[4]
  • In WorkSafe v The Tasman Tanning Company Limited, Judge Ryan favoured a four-band approach, bearing in mind the increased penalties and lack of appellate guidance.[5]
Culpability levelStarting point for fine (out of a total maximum of $1,500,000)
LowUp to $400,000
Medium$400,000 to $800,000
High$800,000 to $1.2 million
Extremely High$1.2 million to $1.5 million
  • In WorkSafe v Stumpmaster Limited, Judge Sinclair said “at the risk of sounding like Goldilocks, I consider the four-band framework too few, but the six-band proposal too many. In my view five bands would be more appropriate”.[6]
Culpability levelStarting point for fine (out of a total maximum of $1,500,000)
Very Low$0 to $200,000
Low$200,000 to $400,000
Medium$400,000 to $600,000
High$600,000 to $1.1 million
Very HighAbove $1.1 million

Our view

At the present time, it is clear that there is no consensus among District Court judges as to the correct approach to fixing the starting point for the fine. This poses a challenge for defendants in how to approach this issue at sentencing.

Fortunately, help is on the horizon.  In May this year, a full bench of the High Court will hear the appeals of two District Court sentencing decisions, Tasman Tanning and Stumpmaster.  As such, we anticipate definitive guidance on the issue soon.

We will issue a further alert when the High Court releases its decision, which we expect to be sometime in June or July this year.

Footnotes

[1]Department of Labour v Hanham and Philp Contractors Limited (2008) 6 NZELR 79.

[2]WorkSafe v Rangiora Carpets Ltd [2017] NZDC 22587.

[3]WorkSafe v Budget Plastics (New Zealand) Limited [2017] NZDC 17395.

[4]WorkSafe v Lindsay Whyte Painters and Decorators Limited [2017] NZDC 28091.

[5]WorkSafe v The Tasman Tanning Company Limited [2017] NZDC 24398.

[6]WorkSafe v Stumpmaster Limited [2018] NZDC 900

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