Former Ports of Auckland (Port) chief executive, Tony Gibson, has been on trial for the workplace death of Pala’amo Kalati in 2020. Maritime New Zealand (Maritime NZ) brought charges against Gibson as an officer of the Port, for failing to undertake due diligence to ensure the Port complied with its health and safety obligations, as required by s 44 of the Health and Safety at Work Act 2015 (HSWA).

The Port, a Person Conducting a Business or Undertaking (PCBU) under HSWA, previously pled guilty in 2023 for breaches of HSWA and was fined $500,000. The case is significant because it is the first time a chief executive of a large New Zealand company has been charged under HSWA.

Legal framework

Under section 36 of HSWA, a PCBU must ensure, so far as is reasonably practicable, the health and safety of its workers and all those impacted by the PCBU’s activities. The Port is a PCBU under HSWA.

Mr Gibson was an officer under HSWA because his position as chief executive allowed him to exercise significant influence over management of the Port. As an officer, Gibson was required to exercise due diligence to ensure that the Port complied with its health and safety obligations.

Following Kalati’s death, Gibson was charged under sections 48 and 49 of HSWA. If found guilty of both charges, Gibson is liable up to a maximum of $400,000.

Section 48	Section 49
Gibson was charged with failing to comply with his due diligence obligations, exposing Kalati to a risk of death or serious injury or serious illness. Section 48 attracts a maximum penalty of $300,000.	In the alternative, Gibson was charged with failing to comply with his due diligence obligations. Section 49 is a lesser charge which attracts a maximum penalty of $100,000.

The opposing arguments

Maritime NZ argued that Gibson failed to use his influence, power and resources to monitor “systemic deficiencies” in the Port’s health and safety procedures, and ensure action was taken to protect workers. An expert for Maritime NZ gave evidence that Gibson “failed to take the steps that a reasonable officer would have taken” to minimise the “critical” health and safety risks at the Port. In his view, appropriate steps included:

• ensuring the Port’s rule prohibiting lashers from working three containers from an operating crane, was “clearly documented, effectively implemented, and appropriate to the hazard"; and 
• an annual review with staff to go over the contents of training manuals, and an independent review to occur every five years.

Gibson’s lawyer rejected Maritime NZ’s arguments, conceding that Gibson was responsible for operations but could not be “personally liable for failures of individual systems and staff over which he had no direct control”. Rather, the Judge was asked to consider Gibson’s unique role in a large company operating during a global pandemic. Gibson’s lawyer argued that Maritime NZ treated Gibson as a qualified health and safety manager, rather than a chief executive, blurring the lines between the obligations of a PCBU and an officer.

Gibson elected to personally give evidence in defence of the charge (he could have exercised his right not to do so) telling the court that he fulfilled his due diligence obligations because:

• health and safety was the first item on board meeting agendas, with updates included in chief executive and board reports;
• he developed a “port fit” programme to ensure worker health and safety;
• he banned stevedores from working double shifts; and
• he was actively involved in promoting trainers into newly established operational performance coaches, who oversaw training of workers in frontline roles.

Gibson maintained his innocence, testifying that “any organisation to be successful has to have delegation” and that “as a CEO you’ve got to trust your officers”.

Recent Australian decision

The trial comes after a similar case was heard in Australia,^[1] relating to an officer’s due diligence obligations under NSW’s equivalent of HSWA. In that case, a worker suffered serious injuries from a forklift. The company had recognised the risk, but the only precaution it took to minimise the risk was to implement a 3-metre safe distance rule. The managing director was charged for failing to exercise due diligence to ensure that the company complied with its duties and obligations under NSW’s healthy and safety legislation.

The Court held that NSW’s health and safety legislation requires officers to have processes and resources in place to ensure the PCBU complies with its health and safety obligations. The managing director fulfilled this obligation because:

• the company was medium-sized meaning the managing director could not know everything that was occurring at any given moment;
• the company employed a specialist health and safety manager whose job it was to update policies and procedures, and deal with any incidents;
• the director could not be held responsible for the PCBU failing to mandate the separation of forklifts and workers; and
• the director was actively involved in reviewing health and safety, receiving regular updates from the health and safety manager and following up to ensure matters were dealt with in a timely manner.

Significantly, the court noted that officers “cannot know everything that is going on at any moment. To run a corporation there must be a level of delegation”.

The NSW decision is significant because HSWA is modelled closely on the Australian legislation, with officer due diligence obligations being nearly identical. All else being equal, this suggests that the court will apply similar reasoning in reaching a decision in the Gibson trial.

Why is the case important?

The case is significant because it will mark the first time the court has considered what executive directors must do to comply with their due diligence obligations under HSWA (and will, hopefully, provide substantive guidance going forward). Once the judgment is released, it will set a precedent for what is required of executive directors to satisfy their due diligence obligations. This will then provide a starting point to distinguish the standard for non-executive directors.

Previously, the directors of Whakaari Management Limited, who owned Whakaari White Island, were charged for failing to fulfil their due diligence obligations. However, the charges were dismissed due to insufficient evidence relating to each individual director. Other decisions are not comparable as they have involved guilty pleas by officers of small companies who were also a worker and almost exclusively involved in the PCBU’s day to day operations.

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Special thanks to Law Graduate, Matthew Maitland for his assistance in preparing this article.