Director’s Personal Liability for Unsafe Vessel Ops

Maritime New Zealand v AZ1 Enterprises Ltd and G.M. Davis –Karetai [2014] NZDC

We note this case principally as a reminder that those sitting back in the office are not immune from prosecution and can’t, as it were, hide behind the corporate shield where vessels are known to be carrying out unsafe operations. In the face of charges of unsafe work practises, where positions of responsibility are held it won’t wash to assert that duties are of an administrative nature only.

Background

On 14 March 2012 the fishing vessel "Easy Rider” departed Bluff on a fishing trip with 3 crew and 6 passengers on board. It was intended to drop the passengers off on the Muttonbird Islands in Foveaux Strait en route to the fishing grounds. The skipper sailed without the vessel certification needed for carriage of passengers; without the required skipper’s ticket; without completing a required Maritime New Zealand (MNZ) safety inspection, and in a heavily laden condition in the face of a rather unfavourable weather forecast. "Easy Rider” never returned to Bluff and 8 people lost their lives.

The vessel was owned and operated by AZ1 of which Ms Davis was the sole director. She was also listed in the vessel’s Safe Ship Management (SSM) documentation as the person responsible for ensuring compliance with the safe operating procedures applicable the vessel. The vessel was skippered by Ms Davis’ partner, with whom she jointly owned AZ1.

The unfortunate train of events is fully recounted in the judgment and in the Transport Accident Investigation Commission Report into the casualty.

Charges

MNZ charged AZ1 and Ms Davis with offences under the Maritime Transport Act (MTA) namely operating of the vessel without a maritime document (on the basis that the skipper didn’t have the required ticket) and with causing or permitting the vessel to be operated in a manner causing unnecessary danger.

Because the two deckhands were contractors of AZ1, MNZ also prosecuted charges under the Health and Safety in Employment Act (HSEA) on the basis that AZ1 and Ms Davis acquiesced and/or participated in a failure to take all practicable steps to ensure that no contractor or subcontractor was harmed whilst working on board.

Outcome

Both the company and Ms Davis were convicted on all three charges.

The Court found that Ms Davis had a clear responsibility for safety and compliance with the vessel’s SSM requirements and an obligation to ensure that the vessel complied with the applicable Safety Management Policy and Operations Manual.

The Court considered the definition of "operate” in the MTA and found that Ms Davis was an operator of the vessel. Although she didn’t physically assist with the loading or sailing of the vessel, she was in a position of authority and had permitted the vessel to sail on 14 March 2014.

The Court further held, following the earlier case of Crusader Fisheries Ltd & another v Eno [2007] NZHC, that Ms Davis was the physical mind and body (agent) of the AZ1 and it followed that if she was guilty of the relevant MTA offences then the company was similarly liable and vice versa.

In relation to the HSEA charges the Court convicted AZ1 on the basis that it, acting through the skipper of the vessel (who represented AZ1 on board on the day in question) and Ms Davis (as a person in authority vis a vis AZ1), had failed to take all practicable steps to ensure the safety of its contractors.

The Court also convicted Ms Davis personally on the charge under the HSEA on the basis that she was a "principal” as defined in the HSEA. She was nominated as the sole director of AZ1 and was the person responsible for compliance with safety on board. Ms Davis alleged that in practice, compliance was left to her partner, the vessel’s skipper. The judge recorded that this was not an excuse. He stated:

"…[246] If she has specific responsibility in her personal capacity as a principal, then directly through her actions, or through oversight, she must ensure that she takes all practical steps to avoid harm to subcontractors, at least in relation to circumstances she ought reasonably to have known about.

The Court went on to find that Ms Davis knew that the skipper was unqualified and that he had previously acknowledged his inexperience in Foveaux Strait. She knew there were 6 passengers on board and that she knew or ought reasonably to have known that the vessel’s survey certification did not permit carriage of passengers. Ms Davis knew that before any passengers were carried the SSM surveyor should have been consulted. She also knew that the vessel had not completed its required safety audit. The Court found a submission that the vessel was not being used commercially at the time to be "unsustainable”. The vessel was heading out on a commercial fishing trip and crew members were on board in their capacity as crew and not for pleasure.

Charges against directors under the HSEA have been reasonably rare. However, with post Pike River changes to health and safety legislation looming in the form of the Health and Safety Reform Bill (which is presently before the Transport and Industrial Select Committee) renewed focus on these matters can be expected. In particular there will be increased emphasis on the obligations and duties of the officers of "persons conducting business undertakings” or "PCBUs” as they are termed in the Bill.

For further information contact Karl Stolberger Partner

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