9.10.2018

Pruning Back Liability: Do Contractual Arrangements Hold the Key?

The first defended hearing under the Health and Safety at Work Act 2015 (HSWA), WorkSafe v Athenberry Holdings Ltd, required the District Court to consider the ability of a business (a PCBU) to influence or direct the activities of workers where there was no contractual relationship between the PCBU and worker.

This article briefly considers the Court’s decision regarding a PCBU’s ability to influence how work is done.

Background

In May 2016, an employee of AgFirst Bay of Plenty Ltd had been tasked with obtaining kiwifruit maturity samples from Athenberry’s kiwifruit orchard. The orchard was located on a “generally hilly” 160 hectare site. Due to the size of the orchard, AgFirst’s employees used quad bikes to complete their work.

The employee had been conducting her work at a kiwifruit block on the orchard and for reasons that were unknown, she had driven her quad bike into an area of unmown grass on a sloping hill. Tragically, the quad bike rolled onto her causing fatal injuries.  

WorkSafe alleged that Athenberry failed to ensure the health and safety of workers whose activities when carrying out work were influenced or directed by them: s36(1)(b) of the HSWA. WorkSafe also alleged that Athenberry breached its obligations arising from the management and control of a workplace: s37 of the HSWA. Athenberry successfully defended the charges brought by WorkSafe.

Influence and Direction: s36 of the HSWA

As part of a PCBU’s “primary duty of care”, it must ensure, so far as is reasonably practicable, the health and safety of workers whose activities in carrying out work are influenced or directed by the PCBU while the workers are carrying out the work: s36(1)(b). The HSWA does not provide a definition of “influenced or directed”.

The Court held that the concept was difficult to exhaustively define, but considered that one or more of the following elements would need to be established to support a factual finding of influence and direction:

“…control over the practical carrying out of the work, provision of advice, specification of matters affecting the conduct or methods of work, reporting requirements, oversight or supervision.

Athenberry’s defence was founded, in part, on the fact that the dominant kiwifruit industry force, Zespri New Zealand Ltd, had put in place industry-wide arrangements, guidelines and practices which required all orchardists to allow independent maturity sampling of the kiwifruit as a condition on the supply of crops.

Athenberry argued that due to the industry arrangement which it could not alter, it was unable to exert influence or otherwise direct how AgFirst’s workers operated at work. Athenberry said that the industry arrangement meant that it did not have a contractual relationship with AgFirst. As a result, Athenberry did not induct AgFirst samplers as it otherwise would have done for other workers attending the orchard site. It also meant that to ensure the integrity of the sampling, the samplers did not announce their arrival at the orchard and avoided contact with orchard staff. 

The Court agreed that Athenberry had no duty because it had no capacity to influence or direct AgFirst’s workers.

That assessment seems particularly narrow.  Athenberry requested that sampling work on be carried out at particular blocks, and contacted the packing house which then contacted AgFirst. In that regard Athenberry had caused the work to be done. It was Athenberry’s land and it had the usual rights with regard to anyone on its land. It maintained the orchard and the mown tracks to and from the orchard. It is difficult to understand how Athenberry could not have influenced the carrying out of the work when it caused the work to be done, and had overall responsibility for who was allowed onto the orchard.

Concurrent Duties: s33 of the HSWA

 As part of its analysis, the Court considered section 33 of the HSWA which provides that where more than one person has a duty for the same matter, it must discharge the duty:

“…to the extent to which the person has the ability to influence and control the matter or would have had that ability but for an agreement or arrangement purporting to limit or remove that ability”.

The Court found, on the particular facts, that Athenberry could not influence or direct the workers of AgFirst by dint of the industry practice ultimately imposed by Zespri.

However, that misses the point with respect to section 33(3). Section 33(3) is focused on the extent to which multiple duty holders need to discharge their respective duties. It does not mean that a duty holder has no duty.  It expressly provides that a duty holder cannot contract out of its duty, as does section 28, however the Judge has surprisingly found that because of the arrangement there was no duty.

 The Liability Net

The District Court’s decision exposes the tension between arrangements that put PCBUs at a distance from “influence”, and the HSWA’s purposes (including that workers and other persons should be given the highest level of protection against harm to their health, safety, and welfare from hazards and risks arising from work) along with the clear prohibition of contracting out.

Given the general knowledge that quad bikes are inherently hazardous – in large part due to media campaigns by WorkSafe – it seems contrary to the purposes of the HSWA to allow an orchardist to do nothing at all. This is especially so where the action required in this instance was relatively straightforward, and where Athenberry would otherwise have inducted workers with whom it had a contractual relationship.

The Court did not set out what Athenberry’s usual induction process included, but even adopting some of the points advanced by WorkSafe, Athenberry’s duty would not have been onerous: an instruction that the worker only operate the quad bike on the kiwifruit blocks or the mown, level tracks between the kiwifruit blocks. To state the obvious, a quad bike is an all terrain vehicle commonly used to traverse difficult off road areas, and so it was reasonably foreseeable that an AgFirst employee could, in contravention of any training or instructions, use the quad bike off the mown tracks.

For a PCBU landowner that is uncertain of the extent of its obligations, the judgment begs the question: when is it possible to have workers lawfully in a workplace but be able to disclaim practical oversight of the work? In some industries, the answer may be obvious. In others, a similar decision will be inherently uncertain (for example, construction sites, ports and forestry blocks to name but a few workplaces). 

The Court explicitly concluded its judgment with a warning that the decision should not be “interpreted as a ringing endorsement of the kiwifruit industry’s arrangements and practises”, noting that the AgFirst employee’s death was “entirely avoidable”.

Regrettably, WorkSafe have not appealed the District Court judgment (presumably on the basis that the decision is fact specific), but a PCBU should not assume on the basis of this decision that it is now possible to attempt to “contract out” of liability using complex arrangements, or otherwise artificially attempt to remove or distance itself from the ability to influence or control workers’ activities.  

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