Court finds director didn’t fail to exercise due diligence to comply with WHS obligations
The New South Wales District Court has found that a director did not fail to exercise due diligence under s. 27 of the Work Health and Safety Act 2011 (NSW) to ensure his company complied with its duty or obligation under s.19 of the WHS Act.
The defendant, Miller Logistics, was a freight distribution company with eight transport depots located throughout New South Wales and the Australian Capital Territory. Mitchell Doble was Miller’s sole director. Zentry Pty Ltd (Zentry) was contracted to provide freight services at Miller’s transport depot in Tamworth (the site). Zentry employed truck drivers who would utilise Miller’s depot to load and unload their trucks.
On 4 November 2020, the injured worker (Mr Herden), a truck driver employed by Zentry, was working at a transport depot operated by Miller at the site. The truck driver was assisting the driver of a B-Double trailer which was located in the loading/unloading area at the site. While searching for a smaller freight pallet that would fit beneath the mezzanine level of the B-Double trailer, he was struck by a forklift driven by another Miller employee. He suffered significant injuries as a result.
On 2 March 2023, Miller entered into creditors voluntary liquidation.
On 18 May 2023, SafeWork NSW (SafeWork) commenced a prosecution against Miller and Doble respectively. As Miller did not appear in the proceedings, a plea of not guilty was entered. Both the prosecution of Miller and Doble were heard together.
Liability of the company
It was uncontroversial that Miller was a person conducting a business or undertaking (PCBU). As a PCBU, Miller had a health and safety duty under s. 19(1) of the WHS Act to ensure, as far as reasonably practicable, the health and safety of workers while the workers are at work or undertaking.
It was alleged that Miller failed to ensure so far as is reasonably practicable the health and safety of workers while at work in the business or undertaking. Miller failed to allegedly take various reasonably practicable measures, including:
- To provide designated loading and unloading zones
- To provide designated and clearly marked forklift lanes
- To provide designated and clearly marked pedestrian exclusion zones
- Install physical barriers
- Enforce, or verify that Zentry was enforcing the “three metre rule” at the site.
Liability of the director
Doble was charged as an officer of Miller under s. 27 of the WHS Act for failing to exercise due diligence to ensure that Miller complied with its duty under the WHS Act.
SafeWork alleged that Doble breached his duty to exercise due diligence by failing to:
- Ensure that Miller had the appropriate resources and processes to eliminate or minimise WHS risks arising out of its operations.
- Verify that one or more of the resources or processes were provided and implemented at the site.
The court was satisfied that Miller owed a duty under s. 19(1) and was in breach of s. 32 of the WHS Act on the basis that it exposed the truck driver to a risk of death or serious injury. Relevantly, Miller had already been issued with three previous improvement notices by SafeWork over the course of the prior three years at several different depots. His Honour noted that “if the forklifts and the pedestrians were separated, then Mr Herden would not have been in the forklift area and would not have been struck by the forklift driven by Mr Everson.” In the circumstances, the court went on to conclude that “a substantial cause of Mr Herden being exposed to the risk of serious injury was the failure by Miller to take the pleaded reasonably practicable steps, together with inducting workers into those steps and supervising them to make sure that the safety system was followed.”
Director not directly responsible for all of company’s safety duties
The court relevantly noted that the summons against Doble “does not actually plead what Mr Doble should have done to discharge his duty of due diligence. To put it in the terms of the legislation, the Doble Summons does not particularise the ways in which Mr Doble failed to exercise due diligence, beyond essentially saying that he should have done something to ensure that Miller complied with its duty.”
The court also noted that simply because Doble was the sole director did not mean he had to do everything that a PCBU had to do to ensure safety. The evidence adduced by Doble indicated that he had engaged an employee for the specific purpose of dealing with WHS, he was not a “hands-off” director in relation to WHS, he was not “hands-off” in relation to the depots and visited each from time to time. Crucially, the records indicated that WHS was raised at management meetings regularly and there was a follow-up at the next management meeting to check that steps had been taken as discussed in the previous meeting. The court did suggest that if the minutes did not reflect the evidence that WHS was discussed, then the prosecutor should have tendered documents and made submissions about the lack of WHS matter entries in the minutes that would demonstrate that due diligence was not being exercised. However, no such documents were tendered.
Ultimately, in light of the evidence adduced by Doble and the lack of evidence to cast doubt on the involvement of Doble in WHS matters, the court concluded that the prosecutor had not proven beyond reasonable doubt that Doble failed to exercise due diligence to ensure that Miller complied with its duty or obligation under the WHS Act.
Implications for employers
The decision is a timely reminder of the dangers of not properly pleading a cause of action nor adducing evidence to support all elements of a cause of action. Although, in this instance, even if the prosecution against Doble had been properly pleaded, it may well have not made a difference to the ultimate outcome, based on the evidence.
It's also an important reminder to Directors and Officers of a PCBU that they need to ensure that they are taking all reasonable steps to comply with their WHS obligations, for example, keeping up to date with knowledge of WHS matters, ensuring that there are resources and processes implemented to minimise risks to WHS, ensuring all staff are aware of WHS issues, and that material is readily available and WHS is on regular senior management meeting agendas, and that any steps discussed/proposed are in fact undertaken.
See SafeWork NSW v. Miller Logistics Pty Ltd; SafeWork NSW v. Mitchell Doble, [2024] NSWDC 58.
Thomas J. Byrne is a Principal in the Insurance and Health team at Barry Nilsson in Sydney. Lisa Schumacher is a Special Counsel in the Insurance and Health team at Barry Nilsson in Sydney.
