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District Court 28 February 2018

Inspector Orr v Perilya Limited

[2018] NSWDC 29

Other
CRIMINAL LAW PROSECUTION WORK HEALTH AND SAFETY PCBU

Citation: Inspector Orr v Perilya Limited [2018] NSWDC 29
Court: NSW District Court
Date: 28 February 2018
Judge: Kearns DCJ

Background

The prosecution arose from a workplace incident at a mine in Broken Hill on 8 June 2012, in which two workers were exposed to a risk of death or serious injury. Two related companies faced charges: the subsidiary that operated the mine, Perilya Broken Hill Limited (PBHL), and its 100% parent company, Perilya Limited (Perilya). This decision concerns the charge against the parent company only.

Perilya Limited was charged under s 32 of the Work Health and Safety Act 2011 (NSW) with failing to comply with a health and safety duty owed to the two workers under s 19 of the Act. A Category 2 offence under s 32 is committed where a person has a health and safety duty, fails to comply with it, and that failure exposes an individual to a risk of death or serious injury.

Perilya pleaded not guilty. The central contest was whether the parent company, as distinct from its subsidiary, was itself conducting a business or undertaking at the mine, such that it owed the statutory duty in the first place.

  • Whether Perilya Limited, as the 100% shareholder of PBHL, was itself a "person conducting a business or undertaking" (PCBU) within the meaning of the Work Health and Safety Act 2011 (NSW) in relation to the operation of the mine
  • Whether the prosecution's case involved impermissible "piercing of the corporate veil" between parent and subsidiary
  • Whether PBHL's status as the nominated operator of the mine under the (now repealed) Mine Health and Safety Act 2004 precluded Perilya from also being a PCBU
  • Whether the prosecution had established beyond reasonable doubt that Perilya's activities at the mine were sufficient to constitute the conduct of a business or undertaking for the purposes of s 19 of the Act

Decision

Kearns DCJ incorporated the findings from the related proceedings against PBHL, treating the reasoning and conclusions in those proceedings as applicable to this case to the extent relevant. The court then turned to the single dispositive question: whether the prosecution had proved beyond reasonable doubt that Perilya itself was conducting a business or undertaking at the mine.

The court rejected Perilya's submission that the prosecution was attempting to pierce the corporate veil. Piercing the corporate veil (disregarding the separate legal identity of the subsidiary) is not permitted, but the prosecutor's case was framed differently. The prosecutor argued that the evidence showed Perilya itself, as a matter of fact, was conducting a business or undertaking at the mine, regardless of PBHL's separate legal existence.

The court also rejected Perilya's argument that PBHL's status as the mine's nominated operator under the former legislation was determinative. The court noted that ss 5 and 16 of the Act contemplate concurrent PCBUs, meaning more than one entity can simultaneously hold and be bound by the same health and safety duty. PBHL's designated operational role did not, as a matter of law, exclude Perilya from also being a PCBU.

However, after examining the evidence of the relationship between Perilya and PBHL, including the roles of various executives and board members across both entities, the court concluded that the prosecution had not established beyond reasonable doubt that Perilya was conducting a business or undertaking in relation to the operation of the mine. Because the first element of the offence was not proved, the court did not need to consider the remaining elements.

Orders Made

  • The Second Amended Summons is dismissed.
  • The parties are to be heard on costs.

Key Takeaways

  • The District Court confirmed that a prosecution under the Work Health and Safety Act 2011 (NSW) against a parent company is not, in principle, an exercise in piercing the corporate veil. The question is whether the parent's own conduct satisfies the statutory definition of conducting a business or undertaking.
  • Under ss 5 and 16 of the Act, concurrent PCBU status is possible: a parent company and its subsidiary can simultaneously hold the same health and safety duties, and the subsidiary's designated operator status does not automatically shield the parent from liability.
  • Where a subsidiary is the nominated mine operator, that designation is a relevant fact but not conclusive. Liability under the Act turns on the actual evidence of how the parent company was involved in the relevant operations.
  • A conviction for a Category 2 offence under s 32 requires the prosecution to prove all four elements beyond reasonable doubt, beginning with proof that the accused was a PCBU. Failure to establish that threshold element is fatal to the entire charge.
  • In acquitting Perilya, the court did not make findings about the appropriate scope of corporate group liability more broadly. The decision is confined to the facts of this case and the evidence about Perilya's actual role at the Broken Hill operation.

Legislation and Cases Referenced

Legislation:
- Work Health and Safety Act 2011 (NSW), ss 5, 14, 16, 19, 32
- Mine Health and Safety Act 2004 (NSW) (repealed)
- Mine Health and Safety Regulation 2007 (NSW)

Cases:
No cases were cited in the portions of the judgment provided.