WORKSAFE NEW ZEALAND v DONG SH AUCKLAND LTD [2020] NZHC 3368

WORKSAFE NEW ZEALAND v DONG SH AUCKLAND LTD [2020] NZHC 3368 [17 December 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2020-404-000402[2020] NZHC 3368BETWEEN WORKSAFE NEW ZEALANDAppellantAND DONG SH AUCKLAND LIMITEDRespondentHearing: 14 December 2020Counsel: KE Hogan and AR Everett for AppellantS Moore and NJM Devery for RespondentJudgment: 17 December 2020JUDGMENT OF DOWNS JThis judgment was delivered by me on Thursday, 17 December 2020 at 12 pm.Registrar/Deputy RegistrarSolicitors/Counsel:WorkSafe New Zealand.Ong & Partners, Auckland.S Moore, Auckland.NJM Devery, Auckland.An early case to reach the High Court under the Health and Safety at Work Act[1] The Health and Safety at Work Act 20151 casts a broad duty on a personconducting a business or undertaking—a PCBU—to ensure, so far as is reasonablypracticable, the health and safety of workers who work for the PCBU while they areat work in the business or undertaking.2 Breach of this duty attracts criminal sanction.3[2] Dong SH Auckland Ltd4 was prosecuted for breaching the duty in relation tothe demolition of a home that went badly wrong. A wall fell onto a neighbour's home,trapping a wheelchair-bound occupant. Asbestos was discovered too.Quick Earth Moving Ltd5 carried out the demolition—and pleaded guilty.WorkSafe New Zealand6 said Dong SH was Quick Earth Moving's supervisor ormanager, having allegedly engaged the company to carry out the demolition.[3] Judge N R Dawson dismissed the charges.7 The Judge concluded absentevidence of a contractual relationship tying Dong SH to the demolition, "the chargesmust fail".8 Dong SH's actions—for example, "fencing of the site and cutting off theservices"9—were equally consistent with acts of "friendship" vis-à-vis the site'sdeveloper, J&Ling Properties Ltd.10[4] WorkSafe seeks permission to appeal questions of law. It argues the Judgefailed to consider relevant matters, and the only reasonable conclusion on the evidencewas that the charges were proved. Dong SH resists permission and says the Judge didnot err.1 The Act.2 Health and Safety at Work Act 2015, s 36.3 Sections 47–49.4 Dong SH.5 Quick Earth Moving.6 WorkSafe.7 WorkSafe New Zealand v Dong SH Auckland Ltd [2020] NZDC 16013.8 At [24].9 At [23].10 J&Ling.[5] These arguments touch on the real question in the case: was the prosecutionobliged to establish Dong SH was contractually tied to the demolition? Or, was itsufficient to establish Dong SH, for whatever reason, did supervise or manage thedemolition? More precisely, in terms of the Act:(a) In a prosecution for breach of a safety duty as a PCBU, must the PCBUarise from a contractual relationship?Alleged facts and charges[6] J&Ling purchased 26 Moa Road, Pt Chevalier, with an eye to development.This meant the house had to be demolished. Quick Earth Moving began demolition19 December 2017. The next day, a neighbour or neighbours contacted WorkSafe withsafety concerns, including possible presence of asbestos. That afternoon, a wall beganleaning ominously. Quick Earth Moving attempted to support it with the arm of a(second) digger. However, the wall collapsed. It hit a neighbour's home, damagingit, and trapping the wheelchair-bound occupant in the backyard. The collapsing wallalso severed a gas line. The occupant had to be rescued by the Fire Service. Sitesamples revealed presence of asbestos.[7] Dong SH is a project management company. The parties agreed Dong SH wasengaged to manage 26 Moa Road's development at some point, but differed as towhen:(a) WorkSafe said Dong SH had overarching responsibility for thedemolition and had engaged Quick Earth Moving as a subcontractor.Dong SH's owner and director, Colin Huo, inspected the site beforedemolition works began; offered Quick Earth Moving's services toJ&Ling for $25,000; disconnected services to the property; erected asecurity fence; conferred with Quick Earth Moving when things weregoing wrong 20 December 2017; and later wrote a letter of apology tothe neighbours. WorkSafe said the existence of an oral agreement tosupervise and manage the demolition could be inferred from thesecircumstances.(b) Dong SH said (through Mr Huo's testimony) Mr Huo recommendedJ&Ling use Quick Earth Moving, and only as a friend of J&Ling'sdirector, Ling Gao. In other words, this was a personalrecommendation, not more. Dong SH said Mr Huo's site activity alsoreflected his friendship with Ms Gao, and it had no contractualobligation in relation to the project until after the botched demolition.[8] These arguments framed competing contentions about whether Dong SH wasa PCBU in relation to the demolition work as alleged in the (three) charges:11(a) Being a PCBU having a duty to ensure, so far as reasonablypracticable, the health and safety of other persons is not put at riskfrom work carried out as part of the conduct of the business orundertaking, namely project management work involving demolition,did fail to comply with that duty, and that failure exposed otherpersons to a risk of serious injury or death arising from the collapse ofthe wall between 24 Moa Road and 26 Moa Road.(b) Being a PCBU having a duty to ensure, so far as reasonablypracticable, the health and safety of workers who work for the PCBU,while the workers were at work in the business or undertaking, namelydemolition work, did fail to comply with that duty, and that failureexposed the workers to a risk of serious illness arising from exposureto asbestos.(c) Being a PCBU having a duty to ensure, so far as reasonablypracticable, the health and safety of workers who work for the PCBU,while the workers were at work in the business or undertaking, namelydemolition work, did fail to comply with that duty, and that failureexposed the workers to a risk of serious injury or death arising fromthe collapse of the wall between 24 Moa Road and 26 Moa Road.The decision[9] The Judge summarised the charges and evidence. He concluded WorkSafe hadestablished a PCBU responsible for the demolition had a duty to ensure, as far asreasonably practicable, the health and safety of those involved. He also concludedthat duty had been breached with attendant risk of death, serious injury, or seriousillness. This left "whether Dong SH was a PCBU".12 The Judge then considered themuch-abbreviated arguments at [7](a) and (b). He said:1311 Health and Safety at Work Act, s 48.12 WorkSafe New Zealand v Dong SH Auckland Ltd, above n 7, at [16].13 At [22]–[24].No arrangements were recorded in writing between any of the parties untilthree days after the collapse of the wall when J&Ling emailed Dong SH. ForDong SH to be found to be a PCBU pursuant to the Act in relation to thedemolition work then that can only be established by inference from theevidence available. The onus of proof lies upon WorkSafe and the standardof proof requires this court to be sure that the charges are proved beyondreasonable doubt.Mr Huo remained adamant throughout that he had merely acted as a facilitatorbetween his friend [Ms] Gao and QEM, a company whom he knew diddemolition work and he had worked with previously. His fencing of the siteand cutting off the services to the property were also done out of friendship.His evidence was to the effect that while he may well have had an expectationof being engaged by J&Ling because of his friendship with Ms Gao and theapparent trust she showed in him, Dong SH had not been appointed in anycontractual sense until three days after the wall collapsed.WorkSafe have been able to point out many characteristics that might beexpected if Dong SH was at that time a project manager or head contractor.Many of those characteristics are also compatible with Mr Huo's explanationof assisting and caring for a friend. In the absence of a written contract orreliable evidence of an oral contract of J&Ling engaging Dong SH to aposition where it becomes a PCBU with respect to the demolition work thecharges must fail. WorkSafe have not proved beyond reasonable doubt thatJ&Ling had engaged the services of Dong SH by the time the demolition tookplace. In particular, that the payments to QEM were made direct from J&Ling,and that J&Ling emailed Dong SH after the wall collapse appointing them toact for J&Ling indicates that Dong SH had not normally been engaged at thattime.[10] It followed WorkSafe had "not proved beyond reasonable doubt Dong SHwas engaged in any role in respect to demolition work at 26 Moa Road so as to prove[it] was a PCBU within the meaning of the Act".14[11] The charges were dismissed.Proposed questions of law, permission to appeal and gist of argument[12] A prosecutor or defendant may, with permission, appeal a question of law in aruling by the trial Court, here the District Court.15 WorkSafe says the Judge erred inconcluding Dong SH was not a PCBU in relation to the demolition work. It framestwo questions:14 WorkSafe New Zealand v Dong SH Auckland Ltd, above n 7, at [25].15 Criminal Procedure Act 2011, s 296.(a) Did the Judge err in failing to consider relevant matters in determiningthat Dong SH did not qualify as a Person Conducting a Business orUndertaking (PCBU), in respect of the relevant work, under [the Act]?(b) Did the Judge err in omitting to draw what was the only reasonablypossible inference available on the evidence namely Dong SH was aPCBU in respect of the relevant work?[13] On behalf of WorkSafe, Ms Hogan says the appeal raises a novel point ofconstruction in relation to the statutory concept of a PCBU; and this would benefitclarification given the breadth of the attendant duty and ongoing, like prosecutions.Permission should be given accordingly.[14] In relation to each question, Ms Hogan invites attention to many aspects of theevidence I do not repeat. This because Ms Hogan's central, unifying contention is thata person who manages a demolition project for another as their friend "is under thesame obligations as someone who is not a friend", hence the Judge erred in dismissingthe charges.[15] On behalf of Dong SH, Mr Moore says permission for the appeal should notbe granted because WorkSafe's proposed questions are factual ones masquerading asquestions of law, and Quick Earth Moving has been convicted. So, the public interestdoes not require an appeal. Mr Moore also says the Judge did not err on the particularfacts.[16] Permission is appropriate for the reasons Ms Hogan advances. Concern aboutthe proposed questions is met by amendment, leaving the question posed at [5](a).16Analysis[17] The Act's "main purpose" is to provide "a balanced framework to secure thehealth and safety of workers in workplaces by":17(a) protecting workers and other persons against harm to their health, safety,and welfare by eliminating or minimising risks arising from work or fromprescribed high-risk plant; and16 Criminal Procedure Act, s 299. This is not to conclude the questions posed by WorkSafe are notquestions of law; these appear to mirror Brown v R [2015] NZCA 325, (2015) 30 FRNZ 471.17 Health and Safety at Work Act, s 3(1).(b) providing for fair and effective workplace representation, consultation,co-operation, and resolution of issues in relation to work health andsafety; and(c) encouraging unions and employer organisations to take a constructiverole in promoting improvements in work health and safety practices, andassisting PCBUs and workers to achieve a healthier and safer workingenvironment; and(d) promoting the provision of advice, information, education, and trainingin relation to work health and safety; and(e) securing compliance with this Act through effective and appropriatecompliance and enforcement measures; and(f) ensuring appropriate scrutiny and review of actions taken by personsperforming functions or exercising powers under this Act; and(g) providing a framework for continuous improvement and progressivelyhigher standards of work health and safety.[18] The Act emphasises the importance of the first purpose by requiring regard to"the principle" that "workers and other persons should be given the highest level ofprotection against harm to their health, safety, and welfare from hazards and risksarising from work".18[19] The Act creates the "Primary duty of care" foreshadowed at [1].19 A PCBUmust ensure, so far as is "reasonably practicable", the health and safety of:20(a) Workers who work for the PCBU, while the workers are at work inthe business or undertaking; and(b) Workers whose activities in carrying out work are influenced ordirected by the PCBU, while the workers are carrying out the work.[20] The phrase "reasonably practicable" is defined:22 Meaning of reasonably practicableIn this Act, unless the context otherwise requires, reasonably practicable, inrelation to a duty of a PCBU set out in subpart 2 of Part 2, means that whichis, or was, at a particular time, reasonably able to be done in relation toensuring health and safety, taking into account and weighing up all relevantmatters, including—(a) the likelihood of the hazard or the risk concerned occurring; and18 Health and Safety at Work Act, s 3(2)19 Section 36.20 Section 36(1).(b) the degree of harm that might result from the hazard or risk; and(c) what the person concerned knows, or ought reasonably to know, about—(i) the hazard or risk; and(ii) ways of eliminating or minimising the risk; and(d) the availability and suitability of ways to eliminate or minimise the risk;and(e) after assessing the extent of the risk and the available ways of eliminatingor minimising the risk, the cost associated with available ways ofeliminating or minimising the risk, including whether the cost is grosslydisproportionate to the risk.[21] The Act creates other health and safety duties.21 It is not possible to contractout of any duty;22 or transfer any duty to another.23 Unsurprisingly, a person may havemore than one duty;24 and more than one person may have the same duty.25[22] A duty imposed by the Act requires the person:26(a) to eliminate risks to health and safety, so far as is reasonably practicable;and(b) if it is not reasonably practicable to eliminate risks to health and safety,to minimise those risks so far as is reasonably practicable.Moreover, the person must comply with these obligations to the extent they have, orwould reasonably be expected to have, ability to influence and control.27[23] Breach of a duty attracts criminal sanction. The Act creates a suite ofoffences.28 The most serious concerns reckless endangerment. It attracts a maximumpenalty of five years' imprisonment, and a fine of $600,000 for an individual who is aPCBU or an officer of a PCBU.29 The next most serious is the offence with whichDong SH was charged: failing to comply with a duty, thereby risking death, serious21 Health and Safety at Work Act, ss 37–43.22 Section 28.23 Section 31.24 Section 32.25 Section 33.26 Section 30(1).27 Section 30(2).28 Sections 47–49.29 Section 47(3).injury or serious illness.30 The least serious requires only proof of a failure to complywith a duty.31[24] Central is the concept of a PCBU. A PCBU is defined this way:17 Meaning of PCBU(1) In this Act, unless the context otherwise requires, a person conducting abusiness or undertaking or PCBU—(a) means a person conducting a business or undertaking—(i) whether the person conducts a business or undertaking alone orwith others; and(ii) whether or not the business or undertaking is conducted forprofit or gain; but(b) does not include—(i) a person to the extent that the person is employed or engagedsolely as a worker in, or as an officer of, the business orundertaking:(ii) a volunteer association:(iii) an occupier of a home to the extent that the occupier employsor engages another person solely to do residential work:(iv) a statutory officer to the extent that the officer is a worker in, oran officer of, the business or undertaking:(v) a person, or class of persons, that is declared by regulations notto be a PCBU for the purposes of this Act or any provision ofthis Act.(2) In this section, volunteer association means a group of volunteers(whether incorporated or unincorporated) working together for 1 or morecommunity purposes where none of the volunteers, whether alone orjointly with any other volunteers, employs any person to carry out workfor the volunteer association.[25] Related definitions include "person", which includes the Crown, a corporationsole, and a body of persons whether corporate or incorporate,32 and "worker":30 Health and Safety at Work Act, s 48.31 Section 49.32 Section 16.19 Meaning of worker(1) In this Act, unless the context otherwise requires, a worker means anindividual who carries out work in any capacity for a PCBU, includingwork as—(a) an employee; or(b) a contractor or subcontractor; or(c) an employee of a contractor or subcontractor; or(d) an employee of a labour hire company who has been assigned towork in the business or undertaking; or(e) an outworker (including a homeworker); or(f) an apprentice or a trainee; or(g) a person gaining work experience or undertaking a work trial; or(h) a volunteer worker; or(i) a person of a prescribed class.(2) For the purposes of subsection (1),—(a) a constable is—(i) a worker; and(ii) at work throughout the time when the constable is on duty or islawfully performing the functions of a constable, but nototherwise:(b) a member of the Armed Forces is—(i) a worker; and(ii) at work throughout the time when the member is on duty or islawfully performing the functions of a member of the ArmedForces, but not otherwise:(c) a PCBU is also a worker if the PCBU is an individual who carriesout work in that business or undertaking.(3) In this Act, a volunteer worker—(a) means a volunteer who carries out work in any capacity for aPCBU—(i) with the knowledge or consent of the PCBU; and(ii) on an ongoing and regular basis; and(iii) that is an integral part of the business or undertaking; but(b) does not include a volunteer undertaking any of the followingvoluntary work activities:(i) participating in a fund-raising activity:(ii) assisting with sports or recreation for an educational institute,sports club, or recreation club:(iii) assisting with activities for an educational institute outside thepremises of the educational institution:(iv) providing care for another person in the volunteer's home.[26] A workplace is defined too:20 Meaning of workplace(1) In this Act, unless the context otherwise requires, a workplace—(a) means a place where work is being carried out, or is customarilycarried out, for a business or undertaking; and(b) includes any place where a worker goes, or is likely to be, while atwork.(2) In this section, place includes—(a) a vehicle, vessel, aircraft, ship, or other mobile structure; and(b) any waters and any installation on land, on the bed of any waters, orfloating on any waters.[27] In identified circumstances, the conduct and state of mind of an officer,employee or agent constitute the conduct and state of mind of a person.33[28] Four things about all this stand out. First, the breadth of duties created by theAct. Second, the Act's emphasis of its purpose, including through creation of theprinciple that workers and others should be given the highest level of protection.Third, the breadth of the concept of a PCBU. Specified exemptions alleviate awide-ranging definition. Fourth, the Act's emphatic rejection of form in theadvancement of purpose.[29] To elaborate the last point, it matters not if the duty holder is an individual, acompany or a body corporate; whether the worker is an employee, contractor or33 Health and Safety at Work Act, ss 160–161.subcontractor, an employee of a contractor or subcontractor, an employee of a labourhire company assigned to work in the business or undertaking, or so on and so forth.It matters not whether the person is conducting a business or undertaking (termsundefined, but inherently broad); or whether the person conducts the business aloneor with others. Indeed, it matters not whether the business or undertaking is conductedfor profit or gain.34[30] These features leave no room for the conclusion a PCBU must arise a particularway, still less the conclusion a PCBU must be contractually tied to the activity inquestion. Were it otherwise, the Act would be frustrated. So too potentially, workplacehealth and safety.[31] To return to the case, the issue for the Judge was not whether Dong SH hadcontractually agreed to manage or supervise the demolition; rather, whether, forwhatever reason, Dong SH was managing or supervising the demolition, hence aPCBU in relation to the demolition.[32] Mr Moore does not contest this analysis. Rather, he argues the Judge did notelevate as an ingredient of the offences the need for a contractual relationshipimplicating Dong SH. Mr Moore observes the Judge began his analysis by asking thecorrect question, "whether Dong SH was a PCBU".35 Mr Moore argues the Judge'smany later references to the need for a contract reflect no more than the way WorkSafeput its case in terms of the evidence, and the Judge did not err on the particular facts.[33] The Judge posed the correct question initially, as Mr Moore observes.The Judge said Mr Huo might have been acting as a friend.36 The Judge then saidDong SH might not have been "appointed in any contractual sense until three daysafter the wall collapsed".37 He observed, without "a written contract or reliableevidence of an oral contract engaging Dong SH to a position where it becomes aPCBU, the charges must fail".38 The Judge added, "WorkSafe have not proved beyond34 Health and Safety at Work Act, s 17(1)(a).35 WorkSafe New Zealand v Dong SH Auckland Ltd, above n 7, at [16].36 At [23].37 At [23].38 At [24] (emphasis added).reasonable doubt that J&Ling engaged the services of Dong SH by the time thedemolition took place"; and "Dong SH had not been formally engaged at that time".39Contrary to Mr Moore's submission, the Judge did treat a contractual relationship asan element of the offences, or at least tantamount to an element of the offences(attracting the criminal standard or proof), when it was not.[34] The existence of a contractual relationship would, of course, have been an easyway in which the charges could have been proved. If a company enters an agreementto supervise or manage the demolition of a home, clearly, it is a PCBU in relation tothat undertaking, for, it has agreed to just that. However, this is not the only way thecharges could have been proved. Again, what mattered is whether Dong SH wasmanaging or supervising the demolition, not why or how it came to be allegedly doingso. This distinction became blurred. In fairness to the Judge, this may well reflect theway the parties presented their cases. WorkSafe seems to have emphasised theexistence of an alleged contractual relationship; Dong SH the friendship thesis.[35] The appeal must be allowed.Result[36] The (amended) question of law is:(a) In a prosecution for breach of a safety duty as a PCBU, must the PCBUarise from a contractual relationship?[37] The answer is no.[38] The appeal is allowed. A re-trial is ordered...Downs J39 WorkSafe New Zealand v Dong SH Auckland Ltd, above n 7, at [24].