TALLEY’S GROUP LTD v WORKSAFE NEW ZEALAND [2018] NZHC 1565

TALLEY'S GROUP LTD v WORKSAFE NEW ZEALAND [2018] NZHC 1565 [27 June 2018]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYI TE KŌTI MATUA O AOTEAROAWHAKATŪ ROHECIV-2018-442-00007[2018] NZHC 1565UNDER the Health and Safety at Work Act 2015IN THE MATTER OF an appeal pursuant to section 124 of theDistrict Court Act 2016BETWEEN TALLEY'S GROUP LIMITEDAppellantAND WORKSAFE NEW ZEALANDRespondentHearing: 6 June 2018Counsel: G P Malone for appellantD R La Hood and D M Brabant for respondentJudgment: 27 June 2018RESERVED JUDGMENT OF DOBSON JIntroduction[1] This is an appeal from a judgment of Judge Zohrab in the District Court atNelson delivered on 19 January 2018.1Background[2] On 14 June 2017, Mr Tze Sheng Tan, an employee of the appellant (Talleys)suffered serious injuries to his hand and arm when cleaning a conveyer in a musselprocessing plant operated by Talleys in Motueka.1 Talley's Group Ltd v WorkSafe New Zealand [2017] NZDC 29068.[3] After an investigation, WorkSafe inspector Mr John Conroy issued animprovement notice to Talleys as provided for under s 101(2) of the Health and Safetyat Work Act 2015 (the Act). The notice gave Talleys nine weeks to remedy the allegedcontravention of the Act which caused Mr Tan's accident. That period was moregenerous than might otherwise have applied, because Mr Conroy understood thatmussel processing was not going to take place in the intervening period. While it isoperating, the conveyer is submerged in a bath, but during daily cleaning is elevated,thereby exposing the nip points. The improvement notice recommended that Talleysfit a guard to prevent access to nip points whilst the conveyer is running.[4] On 11 July 2017, Talleys requested an internal review by WorkSafe ofMr Conroy's decision, as provided for under s 131 of the Act. In doing so, Talleysrelied on a report dated 10 July 2017 from BVT, a Christchurch engineering firm (theBVT report), which questioned the prudence of fitting a guard and recommended thatTalleys seek to have the improvement notice cancelled.[5] On 24 July 2017, Ms Lee-Anne Milne, a reviewer retained by WorkSafe as aregulator, confirmed Mr Conroy's decision to issue the improvement notice.[6] Mr Conroy arranged with Talleys to visit the site again on 3 August 2017,taking with him Mr Ngai Weng Low, a technical specialist employed by WorkSafewith expertise in engineering solutions for machinery such as conveyers. They held adiscussion with Mr Nathan Howes, Talleys' human relations manager, at the site. Theyconveyed Mr Low's opinion that it was possible to install a guard to protect employeeswhen the conveyer was elevated out of the bath for cleaning.[7] Talleys then filed an appeal in the District Court against the regulator'sdecision and an application to WorkSafe for a stay of the effect of the improvementnotice. The application was dismissed and thereafter Talleys installed a fixed guardwhich did not incorporate material features recommended by Mr Low.The District Court appeal[8] The appeal was heard in the Nelson District Court by Judge Zohrab on29 September and 23 November 2017.[9] The basis for a first appeal to the District Court is provided for in s 135 of theAct, namely that the challenged decision is unreasonable. The parties agreed that thisreflected the administrative law notion of unreasonableness and that was applied bythe Judge. In short, Talleys had to establish that Mr Conroy's decision to issue theimprovement notice was not one that was reasonably open to WorkSafe.[10] A preliminary issue before the District Court was whether the subject of theappeal was Mr Conroy's original decision to issue the improvement notice orMs Milne's internal review. The Judge decided that it was the original decision, andthere was no issue before me that the Judge's reasoning in coming to that view waswrong.[11] The essence of Talleys' criticisms of Mr Conroy's decision was that he hadgiven primacy to the various health and safety obligations on a person conducting abusiness or undertaking (PCBU) required by the Act and other statutory instrumentsto provide all reasonably practicable safety measures for those working in thebusiness. Arguably, Mr Conroy's approach treated this sequence of obligations asindependent of other obligations on Talleys, and ignored its inter-dependentobligations in the food safety context to devise processing systems that minimised theprospects of producing contaminated food products. In the production of half shellmussels, a particularly significant concern is to control the food-borne pathogenicbacterium Listeria monocytogenes (Listeria).[12] Talleys' stance is that the reduced safety risk to employees from installation ofa guard competes with the increased risk that cleaning systems with a guard in placewill be insufficient to prevent Listeria contamination. Talleys submits that when thesetwo risks are balanced against each other, WorkSafe's decision to require theinstallation of a guard was unreasonable.The evidence[13] The BVT report provided a risk treatment analysis for Talleys. Its authors werenoted to be Mr Tim Mead and Mr Louw Butler. At the hearing in the District Court,the opinions expressed in the BVT report were the subject of evidence fromMr Matthew Bishop, the managing director of BVT, who confirmed his involvementin preparing the BVT report. The executive summary of the BVT report treated theeffect of the improvement notice as constituting a requirement for a fixed guard to beinstalled on the conveyer. BVT's recommendation was that this requirement shouldbe appealed, and that alternative plans to reduce the risk of injury be implemented.[14] The BVT report, whilst prepared by engineers, included assumptions about therisks of exposure to Listeria. The extensive appendices to the report included atechnical report by ESR on the risk profile of Listeria in processed, ready-to-eat meats,and BVT's analysis drew on the contents of that. In cross-examination, Mr Bishopsaid they acquired sufficient expertise from a desktop review of information availableabout Listeria.[15] Mr Howes also completed three affidavits in support of the appeal. Hisevidence addressed the importance of thorough cleaning and sanitising of equipment,including the conveyer in question, and the impairment to the most effective cleaningmethods created by guards installed at the point where Mr Tan had caught his hand.Mr Howes addressed the alternative means of managing the risk of employee workinjury by training and signage. He supported the engineering analysis undertaken byBVT that, in weighing the competing risks, the increased risk of Listeriacontamination by inadequate cleaning outweighed the reduction in risk of employeeinjury obtained by installing a guard, when account was taken of the other availablemeans of reducing that risk during the cleaning process.[16] In response to the appeal, Mr Conroy prepared a report that summarised thematters he had taken into account in deciding to issue the improvement notice. Hisreport annexed all the documents to which he referred, including file notes taken byvarious WorkSafe employees in dealing with the matter, reports of previous incidentsat Talleys' properties that had been investigated by WorkSafe, best practice guidelinesissued by WorkSafe, photographs of the equipment involved and the engineeringexpert's report from Mr Low.[17] Mr Low also completed two affidavits and was cross-examined at the hearing.He identified three options for engineering solutions to address the risk of injuries toemployees during the cleaning process. They included interlocked and removeableguards across the top of the conveyer and guards preventing cleaners reaching the nippoints on the conveyer. In the proposed solutions, electrical cut-offs would beprovided so that when the guards were removed, power would be shut off to preventthe conveyer moving. A further option was to have light beams monitoring movementadjacent to the conveyer. If the light beam was interrupted by an employee's bodymovement in the area adjacent to the nip points, power would similarly be cut off tostop the conveyer moving.[18] To respond to BVT's assessment of the risk of Listeria contamination,WorkSafe obtained a report from Mr Graham Fletcher, who is the team leader ofseafood technologies at the New Zealand Institute for Plant & Food Research Limitedin Auckland. Mr Fletcher's professional speciality is research into the safety, spoilage,shelf-life, processing and packaging of chilled seafood and horticultural food safety.He has 37 years' research experience and is an expert in microbial safety of seafood.[19] Mr Fletcher's report acknowledged the control of the Listeria bacterium as"[o]ne of the most difficult food safety and compliance risks for mussel processors".However, he opined that the extent of the risk was less than attributed to it in the BVTreport. Whereas BVT characterised the risk as "likely", Mr Fletcher considered it asonly "possible". Mr Fletcher acknowledged the seriousness of the health risks thatcould arise for victims of Listeria poisoning who have low resistance or increasedsusceptibility to such bacterial infection. However, he considered the biggest risk fromfailing to eliminate Listeria is not that of causing illness to consumers, but thecommercial risk of having to pay for expensive recalls and the resulting loss of brandvalue. This point was made particularly in relation to exports to the United Stateswhere very tight restrictions on the presence of the bacteria apply.[20] Mr Fletcher was available for cross-examination at the hearing, but was notrequired.The District Court judgment[21] Judge Zohrab undertook a thorough review of the evidence given in the DistrictCourt, which comprised both affidavits and oral evidence including cross-examination.2 There was no substantial argument with the accuracy of the Judge'srecord of the evidence. Rather, Talleys challenged the legal approach and theconclusions that the Judge had come to on the evidence.[22] The Judge's analysis focused on the different assessments of the extent of therisk of Listeria presented by Mr Bishop for Talleys, and Mr Fletcher for WorkSafe.The essence of Judge Zohrab's reasoning is in the following paragraphs:[256] However, Mr Fletcher is an expert with respect to Listeria and withall due respect to Mr Bishop, whilst Mr Bishop has looked at various crediblesources of information, he is not an expert. Mr Fletcher is familiar with thehistorical context in which half shell mussels were sold and that there had notpreviously been outbreaks of illness. Mr Fletcher is of the view thatMr Bishop has significantly overstated the risk presented by the guarding ofthe machine with respect to the increased risk of Listeria, and I agree withMr Fletcher's opinion. In my view, the overstated risk has meant that BVThas recommended that Talley's move to administrative controls of the risk,whereas a more objective consideration and application of s 30 of the Act, and,regulation 6 of the GRM Regulations, would suggest that installation ofguarding and engineering controls or interlocks would have been moreappropriate. In reliance upon Mr Bishop's overstatement of the risk, Talley'sfailed to engage in any meaningful assessment of guarding options whichcould achieve the dual purpose of protecting both their workers, and also theconsumers of their mussels.[257] I acknowledge, as does Mr Fletcher, that any form of guarding willincrease the risk of Listeria. I acknowledge also the potential consequencesfor consumers of a Listeria outbreak. However, given the nature of the riskpresented by the unguarded nips, it is a matter of settling on an appropriateguard and, more particularly, there is no requirement that the guard be fixed.[258] Mr Low has identified several guarding options, all of which presentsubstantially less risk with respect to food safety than posed by the guardinstalled by Talley's, and which could have been discussed with Talley's ifthey had taken up the option of an on-site discussion.[259] In my view, guarding options of the type suggested by Mr Low, suchas a guard in combination with interlocks and or light curtains, together witha suitable cleaning regime implemented by Talley's, could as suggested byMr Fletcher, contain the risk to "very small".[260] In my view, the appellant has failed to discharge the onus on it tosatisfy me that the inspector's decision was unreasonable. In my view, it wasreasonably open to Mr Conroy on the evidence I have heard to believe thatTalley's was breaching the Act, or Regulations, by continuing to operate theconveyor without taking the corrective action required by the improvementnotice.2 Talley's Group Ltd v WorkSafe New Zealand, above n 1, at [47]–[179].The High Court appeal[23] This second appeal to the High Court is one brought under s 124 of the DistrictCourts Act 2016, and is a general appeal. Applying the standard described in Austin,Nichols & Co Inc v Stichting Lodestar,3 Talleys has to establish that this Court shoulddiffer from the District Court's decision. It is only if the High Court considers thedecision under appeal is wrong that interference with it is justified.[24] Mr Malone submitted that Judge Zohrab had erred in treating Mr Fletcher'sevidence as tipping the balance in the weighing of risks respectively of Listeriacontamination in terms of food safety, and further injury to employees during thecleaning operation. Arguably, if the effect of Mr Fletcher's evidence was correctlyinterpreted, the weighting on a numerical matrix used by Mr Bishop would still showthat the risk of Listeria contamination had a greater value than reducing the risk ofphysical injury to the cleaning staff from the unguarded nip points on the conveyer.[25] In his evidence, Mr Bishop said BVT had adopted a matrix for risk assessmentthat gave a value of 20 to the high risk rating of Listeria contamination, based on thepotentially catastrophic consequences and the likelihood of it occurring. A value of 9was given to the moderate risk rating of injury to cleaning employees. The matrix wasused to assess the overall reduction in risk from installing guards to the conveyor. OnBVT's assessment, the risk to employees would be reduced by a smaller margin thanthe increase in risk of Listeria contamination once the cleaning operation wascompromised by the presence of the fixed guard.[26] The ranking of 20 depended on BVT's classification of the Listeria risk aslikely. In Mr Fletcher's report, having stated he was unfamiliar with the matrix BVThad used, he offered the comment that the difference between BVT's "likely" and hisown "possible" would reduce the risk rating from 20 to 15 if another matrix he hadpreviously used was applied.[27] Assuming the matrix is reliable and that Mr Fletcher's qualified suggestionwas adopted to the different matrix, then on BVT's matrix, the more important priority3 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.would still be minimising the risk of Listeria contamination. This was because BVTranked the severity of consequences of the Listeria risk more highly.[28] Having reviewed all the evidence, I am mindful that Judge Zohrab had theadvantage of observing Mr Bishop during cross-examination. Neither of us have beenable to assess Mr Fletcher being questioned on the terms of his report. The importantdifference between them is on a topic in which Mr Fletcher had a long-established andcredible expertise. In contrast, Mr Bishop, as an engineer, has considered genericreports on the topic as a non-expert. Mr Bishop was not inclined to accept anyinadequacy in the basis for his opinion on the extent of the risk of Listeriacontamination. Having reviewed the transcript of all his relatively thorough cross-examination by Ms Brabant, I am inclined to accept her characterisation of hisevidence as somewhat combative or adversarial, as he was not prepared to make anyconcessions in the face of well-founded propositions inconsistent with the opinions heheld to.[29] Two other issues arise in placing reliance on the matrix used by BVT and therelative ranking of the risks that he identified in reliance on it. First, the stepsundertaken to build up the numbers used to rank risks comparatively was described byMr Malone as "an evaluative process": in effect, the numbers depend on valuejudgements. Irrespective of the range of factors cited in arriving at the numbers usedin the matrix, in the end they are determined to a material extent by perceptions of therelative importance of risks being considered. Given Mr Fletcher's conclusion thatthe risk of Listeria contamination has been significantly overstated, there is sufficientconcern raised as to the remaining risk ranking by BVT.[30] Secondly, there is scope to doubt the accuracy of the factual assumptions madein the BVT analysis of the extent to which the addition of guards would impair thecleaning process. The BVT report characterised WorkSafe's requirement as one "forfixed guarding to be installed". The report's analysis of impairment to thoroughcleaning of the conveyer then assumed that a fixed guard would remain permanentlyin place whilst cleaning operations occurred. A fixed guard of the type contemplatedby BVT was not among the options that Mr Low suggested on behalf of WorkSafe andwhich options he would have aired with a BVT representative had they attended duringMr Low's visits to the Motueka plant, as invited.[31] The parties took different interpretations from the terms of the improvementnotice. WorkSafe was inclined to deny that its terms positively required the fitting ofa guard. Mr La Hood submitted that the identified contravention of the Act inexposing workers to trapping hazards in unguarded nip points of the conveyer duringcleaning was accompanied only by the "recommended prevention or remedialmeasures" of fitting guards. Talleys and BVT took the terms of the improvementnotice as requiring the fitting of guards. Despite the subtlety of WorkSafe's argumentthat the terms of the notice did not preclude alternative means of remedying theperceived contravention, I accept that it was reasonable for Talleys to treat the practicaleffect of the improvement notice as a requirement to fit some form of guard.[32] However, that does not justify treating the requirement as one for fixed guards.The dialogue WorkSafe was keen to have with Talleys' personnel included suggestionsfor alternative types of guards, including those that could be removed during cleaningso long as the conveyer was turned off.[33] The relevance of the difference is that BVT's assessment of the impairment ofthe cleaning of the conveyer is overstated by the extent to which fixed guards makethe cleaning more difficult than guards which are able to be removed during cleaningin a controlled fashion.[34] Mr Malone sought to persuade me that BVT's analysis was not done on thislatter basis. Rather, the analysis was sufficiently broadly based to accommodatedifferences in the feasibility of thorough cleaning with various forms of removableguards that would allow access to the conveyer whilst it was turned off. Mr Malonecited several exchanges in the cross-examination of Mr Bishop dealing with thehypothetical circumstances in which guards other than the fixed guard that Talleys hadinstalled were used for illustrative purposes.[35] I do not accept Mr Malone's characterisation of those passages fromMr Bishop's evidence. He was responding to questions about circumstances differentfrom those which BVT had assumed to be the case in settling the comparative riskanalysis in its report.[36] I am satisfied that the BVT report attributed characteristics to a fixed guardthat suggested the impairment to thorough cleaning of the conveyer would bematerially worse than if any of the different solutions for guarding the conveyer asproposed by Mr Low were adopted.[37] Accordingly, I respectfully agree with the assessment of risks as determinedby Judge Zohrab. The effect of Mr Fletcher's analysis is that the risk of Listeria ismanageable. The increased risk of Listeria contamination from the addition of guardsof the types proposed by Mr Low is insufficient to outweigh the improvement inemployee safety that would thereby be achieved. It follows that I also agree with theJudge that Talleys cannot make out that Mr Conroy's decision in issuing theimprovement notice was not one reasonably open to him.[38] Accordingly, the appeal is dismissed. I will receive memoranda on costs,limited to five pages, if the parties cannot agree.Dobson JSolicitors:Solutions Law Office, Stoke for appellantLuke Cunningham & Clere, Wellington for respondent