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Court raises fines for work injuries

The Dominion Post 4 April 2009

Readers may recall the fines and reparation payment orders made against the Sir Edmund Hillary Outdoor Pursuits Centre coming to about $480,000. Six students and a teacher died at the centre.

In the past, courts have often imposed modest fines and reparation orders against companies even when significant injuries were inflicted on people. The fines against the centre were not high, a mere $20,000 for each offence, but the cumulative effect of all fines and reparation payments is costly.

Despite the fact that the Health and Safety in Employment Act brought about an increase in penalties from a maximum of $50,000 to $250,000 in 2003, this did not seem to be reflected in fines imposed.

However, a recent full court sitting of the High Court has set new and much higher guidelines for health and safety prosecutions.

Be warned. The average fine level in 2006 and 2007 of a mere $10,000 will become a relic of the past.

The Labour Department appealed against three district court decisions to the High Court and the new standards were set.

One of the three appeals involved the Black Reef Mining Company. A miner drowned when a mine was inadvertently flooded. The second was against Cookie Time - an employee's arm was dragged into the mechanism of a conveyor belt and fractured. The third appeal was against Hanham & Philp Contractors - an employee was badly injured after falling off wooden scaffolding and dislocating his shoulder.

The High Court considered the levels of fines which had been imposed both historically and recently, and set out a "sentencing process".

First, assess the amount of reparation to the victim. Second, fix the amount of the fine. Finally, make an overall assessment of the appropriateness of the overall total of reparation money and the fine.

The High Court provided a scale for assessing fines based on culpability. The "bands of seriousness" are:

* Low culpability - a fine of up to $50,000.

* Medium culpability - a fine of between $50,000 and $100,000.

* High culpability - a fine of between $100,000 and $175,000.

However, the figure of $175,000 at the upper end of culpability is not intended to preclude a greater fine up to the statutory maximum in some cases of extremely high culpability.

This is just a starting point. The amount fixed will then be adjusted to reflect reparation, financial capacity, a guilty plea, co-operation with the authorities in the investigation and prosecution, remorse and a favourable safety record.

Take for example, the Cookie Time case. In the district court, Cookie Time was sentenced to $5000 in reparation and a fine of $15,000. On appeal, the High Court adopted a starting point of $100,000, discounted 33 per cent for an early guilty plea and 15 per cent for other mitigating factors, including reparation.

Adopting a total discount of about 50 per cent, the High Court increased the fine to $40,000. The court also noted that although reparation was not challenged in the appeal, it considered the $5000 ordered was "barely adequate".

In the appeal against Hanham & Philp, a $5000 fine was replaced by one for $50,000. Black Reef Mine was ordered to pay $25,000 additional reparation and a fine of $10,000 was replaced by one for $20,000.

Discrepancies in fines still exist. Compare $40,000 after seven deaths and $50,000 for a dislocated shoulder. Regardless, it is clear both the Labour Department and the courts are taking health and safety seriously.

Peter Cullen is a partner at Cullen - the Employment Law Firm

Email: peter@cullenlaw.co.nz

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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