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Enforceable undertakings

15 June 2020

#Transport, Shipping & Logistics

Published by:

Rebecca Niumeitolu

Enforceable undertakings

On 25 March 2020, the National Heavy Vehicle Regulator (NVHR) accepted an enforceable undertaking (EU) offered by engineering and construction company, Laing O’Rourke Australia Construction Pty Ltd (LORAC). The offer by LORAC was made in circumstances where Transport for New South Wales charged it with two severe risk breaches of mass requirements under section 96(1)(c) of the Heavy Vehicle National Law (HVNL). The estimated value of the steps proposed by LORAC to ensure compliance with its mass HVNL obligations is about $249,500, so not a cheap exercise.

In this article we revisit requirements for EUs and reasons why a party in the Chain of Responsibility (CoR) may wish to propose one to the NHVR.

What is the incentive in offering an EU?

A CoR party may consider offering an EU as an alternative to being charged with contravening the HVNL. It is available in relation to all offences except for serious category 1 offences of breaching a primary duty.

The incentive for offering an EU to a regulator is essentially to stop it from advancing a prosecution against a CoR party.

Practically speaking though, a CoR party that is contemplating offering an EU would also need to be willing to put significant resources behind its future compliance with HVNL requirements. This is because usually the NVHR will only accept an EU if the CoR party can demonstrate an ability to effect profound reform of their activities to improve safety and to benefit the community in ways not able to be achieved by other sanctions (NVHR’s Enforceable Undertaking Policy).

As can be seen in LORAC’s case, EUs can be costly depending on the nature of your business and causes of your breaches. LORAC’s EU included a commitment to implementing the following HVNL compliance strategies:

  • training for LORAC employees that targeted improved awareness of CoR requirements which LORAC estimated required a minimum commitment by it of $134,500
  • CoR training for supply chain partners in NSW, Victoria and South Australia with an estimated minimum commitment of $80,000
  • third-party transport safety management system audit estimated to cost LORAC $35,000.

Does offering an EU mean that the CoR party has a conviction publically recorded against it?

No. Section 508B(4) of the HVNL provides that if a CoR party offers to make, or makes, an EU, it is not admitting guilt.

However, making an EU can have reputational implications that may influence a CoR party’s decision to offer one.

Section 590A(9) requires the NHVR to publish on its website its decision to accept an EU and its reasons for the decision, as it did in the case of LORAC’s EU. This publication will include a statement by the party offering the EU that it regrets the incident occurred. While this is not the same as the CoR party admitting guilt of committing and HVNL offence, it is arguably an acknowledgment that it has some HVNL compliance concern(s).

Possible reputational risks associated with having EUs published may need to be weighed against other reputational risks where no EU is offered, such as, risks of having a criminal conviction against a CoR party or that criminal proceedings for charges under the HVNL are held in open court. One advantage of an EU is that, if it is feasible for a CoR party to propose one, then it can also reasserts its commitment to safety across the CoR and community.

What form should an offer for an EU take?

The NHVR has published a guideline on proposing EUs on its website. It provides that proposals for EUs must include, among other things:

  • details of the CoR party offering the EU and its current HVNL compliance systems
  • details of alleged contraventions, its consequences, possible consultation taken within a company concerning the EU offer, and any rectification steps taken by the company as a result of the alleged contravention
  • a statement of regret that the incident occurred, assurance around future compliance and an ability to comply with the EU
  • an acknowledgment that the EU will be published and may be publicised
  • strategies that the CoR party will deliver to benefit drivers and CoR parties, industry and the community.

They must not include:

  • outright denials of liability
  • terms which give CoR parties an ‘out’ (i.e. set up defences) for non-compliance with the EU or future breaches of the HVNL or Work Health and Safety laws
  • terms that impose obligations on other parties, such as parties down the supply chain, without their consent.

What if a CoR party breaches conditions of its EU?

Failure to comply with an undertaking exposes a CoR party to three key outcomes:

  • the NHVR could apply to a tribunal or Court for orders that the CoR party pay a penalty for its non-compliance. The maximum penalty for a breach of an EU is $50,060 (up to July 2020) for a company or $11,210 (up to July 2020) for an individual
  • in addition to seeking orders for a penalty, the NHVR could seek orders for the CoR party to comply with the EU or to otherwise discharge the EU
  • proceedings relating to the original charges may be re-enlivened.

Author: Rebecca Niumeitolu

* This article was originally published in CoR Adviser. The article is © 2020 Portner Press Pty Ltd and has been reproduced with permission of Portner Press.

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Rebecca Niumeitolu

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