Update from the courts

In a recent decision involving a prosecution by WorkSafe, the High Court found that a trust is not a ‘person’ (in the sense of a ‘person conducting a business or undertaking’) that can be prosecuted under the Health and Safety at Work Act. Following a tragic accident on a farm, WorkSafe charged both the ‘trust’ in and (in the alternative) the trustees individually. Operations were primarily carried out in the trust’s name and WorkSafe considered liability more properly sat with the trust because the alleged contraventions were systemic failures of governance and management.
The District Court dismissed the charges against the trust and the High Court confirmed that outcome, but held the trustees could be prosecuted collectively. Essentially that was because there would be conceptual and practical difficulties in prosecuting a trust, which is not a separate legal entity, and prosecuting the trustees as an unincorporated body of persons would more closely align with the approach in civil cases where liability generally accrues to trustees. Further, the Court noted that if there was a structural fault , “it will be the trustees’ collective actions that are responsible so criminal liability is appropriately apportioned [to them] jointly” .
There is nothing particularly surprising about trustees being potentially liable where there is a breach legislation. For me, the key takeaways are:
– Because the trustees were charged as a body, the professional trustee company is a named defendant and it seems likely (I‘m guessing only – the judgment does not say) to have had little to do with the operation of the farm. That certainly leaves open the question of whether professional trustees of trusts which carry out businesses or undertakings ought to adopt a more active role in relation to health and safety compliance. The prosecution will now presumably continue against the trustees so it is one that professional trustees should watch with interest, particularly if they are involved in trusts that operate businesses or undertakings that involve material health and safety risk.
– The judgment also includes a brief discussion on s 29 of the Act. Section 29 prohibits insurance against the liability to pay a fine imposed under the Act. The High Court found that an indemnity from trust assets under a trust deed is not caught by this prohibition (but notes, of course, that whether the indemnity applies will depend on the specific facts, the trust deed, and the general law of trustee indemnity – and, I would add, whether the trust has sufficient realisable assets to make good). It is also worth noting that, while an indemnity might deal with a potential fine, it will not deal with the potential conviction, reputational consequences and other impacts of the criminal process for a professional trustee.
There are more details in the article below.


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