Amputation results in first sentencing under Health and Safety at Work Act

Budget Plastics (New Zealand) Ltd (Budget) is the first business to be sentenced under the Health and Safety at Work Act 2015 (the Act). Budget pleaded guilty to a single charge under the Act after one of its employees was caught in a plastic extrusion machine, requiring most of his hand to be amputated. Budget was sentenced under the new penalties regime, which has a maximum penalty of $1.5 million, previously $250,000 under the equivalent provision of the Health and Safety in Employment Act 1992 (HSE Act).

The case provides the first insight into how WorkSafe is approaching enforcement and sentencing in relation to breaches of the Act.

Penalties

WorkSafe submitted that the Court ought to follow the same approach as under the previous regime in setting three bands of culpability for sentencing, and that those bands should incorporate the full quantum of fines available. It suggested the following bands:

  • Low culpability – up to $500,000 (previously up to $50,000);
  • Medium culpability – $500,000 to $1 million (previously between $50,000 and $100,000); and
  • High culpability – $1 million to $1.5 million (previously between $100,000 and $175,000).

Based on WorkSafe’s assessment of Budget’s culpability being in the moderate range, it submitted that a starting point of $900,000 for the fine was appropriate. Budget, on the other hand, submitted that it should be sentenced consistently with the guidance provided by the Australian Courts, which it said produced a much lower starting point of $200,000.

The Court agreed that the defendant’s culpability was in the moderate range, as there was an obvious risk of amputation and potential for an even more severe injury, which Budget was aware of but had not addressed. Accordingly, the Court set the starting point for the fine as between $400,000 to $600,000. Once aggravating and mitigating factors were taken into account, and a further reduction allowed based on Budget’s financial position, the fine was set at $100,000.

The Court also followed the established principles for setting reparations and fixed its reparation order at $37,500, as well as ordering that Budget pay $1,000 towards WorkSafe’s costs.

Observations

As the first sentencing under the Act, the case is notable for five reasons:

  1. It shows that the Court will impose higher fines moving forward, which reflects the five-fold increase in maximum fines available under the Act;
  2. The District Court recognised that it will be up to the appellate courts to set sentencing guidelines;
  3. The Court observed that although the Australian Model Work Health and Safety Act was drawn upon when developing the Act, it does not follow that sentencing will be similar in this jurisdiction. In this regard, the Court noted that the Act explicitly requires that the Sentencing Act 2002 is applied to sentencing, which is not present in the Australian legislation;
  4. The courts will continue to take into account the financial capacity of the offender in setting the fine. This will become more prevalent with the increase in fines potentially threatening the viability of some businesses (although the Court did acknowledge previous cases indicating that in instances of serious breaches, it may be preferable that the defendant is not in business); and
  5. The Court took the step of imposing costs against the defendant even though it had pleaded guilty and had been cooperative throughout the investigation.

How we can help

The judgment made clear that it will be for the higher courts to set the benchmark approach to sentencing breaches of the Act. We will be monitoring this closely and will be reporting on any developments when they occur. If you have questions about this update or the Health and Safety at Work Act 2015 generally, our team would be happy to assist you.

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