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Landmark CoR prosecutions: $2.4M fines, executive jailed and ground-breaking legal developments

08 February 2024

#Transport, Shipping & Logistics, #Dispute Resolution & Litigation

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Landmark CoR prosecutions: $2.4M fines, executive jailed and ground-breaking legal developments

On 23 January 2024 the National Operations Manager of a logistics business was sentenced to three years jail, ordered to pay $123,000 in legal costs and issued with an order prohibiting him from managing transport activities for 12 months upon his release from jail. This case is the latest in a series of six prosecutions arising out of the systemic failure of a business and its executives to manage the risks arising from their transport activities. In this article, we discuss the key lessons arising from the case for all supply chain businesses, three of which are ground breaking legal developments in this area.

The incident and investigation

In April 2020, four police officers intercepting a speeding Porsche were tragically killed when a heavy vehicle left the driving lane and collided with their police cars in the emergency lane on Melbourne’s Eastern Freeway. The driver was later found to have been substantially impaired by fatigue and illicit drugs. This finding led to a major investigation into the Chain of Responsibility (CoR) safety practices of the business that engaged the driver and its executives and revealed that, over a period of at least seven months, the business had systemically failed to manage the risk of fatigue arising from their operations. Over that period, drivers were permitted to work in excess of their work and rest hours, drive whilst impaired by fatigue and submit falsified working records.

The courts found that this failure was reckless as the business and some of its executives knew or ought to have known of the manifest driver fatigue risk and, in the case of one of the executives, knew that drivers were submitting falsified records.

You can listen to a detailed discussion of the incident and the legal implications in this interview with CoRsafe.

The charges and prosecution outcomes

The business and involved executives were charged a category 1 offence,  the most serious offence under the Heavy Vehicle National Law (HVNL), for failing to comply with the primary safety duty and/or executive duty of due diligence in circumstances where the accused knew of the risks involved and proceeded regardless.

The maximum fine for this offence at the time was $3,418,700 for a corporation and $341,870 and up to five years jail time for an individual.

The series of prosecutions that have arisen from this investigation and their outcomes are:

  • the driver – charged with culpable driving causing death and sentenced to jail for 18 years and six months
  • the transport company – charged with a category 1 offence for failing to discharge its primary safety duty under the HVNL, recklessly exposing people to serious injury or death, fined $2.31 million and issued with a Prohibition Order prohibiting the company from engaging in transport activities for 12 months
  • an executive – charged with a breach of their executive duty under the HVNL to ensure compliance by the company and was fined $70,000 and ordered to pay $60,000 in prosecution legal costs
  • the managing director – charged with a breach of their executive duty under the HVNL to ensure compliance by the company, fined $22,500 and issued with a Supervisory Intervention Order requiring him to undertake further education, in particular on the area of fatigue management
  • the immediate supervisor of the driver – initially charged with manslaughter, but later downgraded to a category 1 offence for failing to comply with his primary safety duty under the HVNL and awaiting sentence
  • the National Operations Manager of the transport company – charged with a category 1 offence for failing to comply with his primary safety duty under the HVNL and sentenced to three years in jail, issued with a Prohibition Order prohibiting him from being involved in managing transport activities for 12 months upon his release and ordered to pay $123,000 in prosecution legal costs.

Cumulatively, the fines and charges imposed to date are $2,402,500 in fines, 18 years and six months jail, two Prohibition Orders, a Supervisory Intervention Order and $183,000 in prosecution legal costs.

Ground breaking lessons

Separately from the significant penalties handed out in these cases, there are four key lessons that arise, three of which are ‘firsts’ under the HVNL.

Lesson one – the biggest failure is implementation

The Court found that the transport company had good CoR policies and systems, including a comprehensive CoR manual. The company was accredited across all National Heavy Vehicle Accreditation Scheme modules, including fatigue. The company complied with external auditing requirements and mostly diligently pursued auditor recommendations. Finally, the company engaged external experts to help them design their CoR management practices.

So what went wrong? Despite putting in the work to design a CoR risk management system, the Court found that the rubber never hit the road. The Judge said that the policies and systems were not enforced or adequately implemented or adapted. There were multiple examples of non-compliance with many aspects of the policies in the areas of recruitment, screening, the training of new workers, drug testing, recording work/rest time and adhering to work/rest requirements.

Unfortunately, this is a common finding in CoR investigations and prosecutions. Businesses diligently and proactively identify the risks arising from their transport activities and design controls and working procedures to address those risks, but they fail to monitor the implementation of those practices to ensure that they are being understood, implemented and effective.

The key lesson here is that it is more important to have implementation than documentation – it’s better to be actually doing rather than just saying that you’ll do.

Lesson two – individual employees within a business can be charged as ‘operators’ of heavy vehicles

This was the first conviction of an individual employee (as opposed to an owner/driver) as an ‘operator’ of a heavy vehicle.

Under the HVNL, an ‘operator’ is the business or person who is responsible for controlling or directing the use of a heavy vehicle. Up to now, there hasn’t been any case that has ruled on the scope of the definition.

The assumed position is that an ‘operator’ would likely be an owner/driver or the business that operated a heavy vehicle, not individual employees within such a business.

The Court has broken new ground in this area, finding that an ‘operator’ of a heavy vehicle can include:

  • an immediate manager or supervisor of drivers of heavy vehicles
  • senior management who have responsibilities for the use and control of a vehicle.

This means that a whole new class of employees within businesses could now fall within the definition of ‘operator’ and have a personal primary safety in relation to the transport activities of that business.

Individual managers within businesses that own, operate, engage or deal with heavy vehicles will now need to reconsider their role, responsibilities and exposure under the HVNL.

Lesson three – national management employees might be ‘executives’ under the HVNL

The prosecutors also brought an alternative charge against the National Operations Manager as an ‘executive’ of the transport company. The National Operations Manager did not contest this designation.

Under the HVNL, ‘executives’ of a corporation are its statutory directors and any person who is concerned or takes part in the management of the corporation.

The assumed position, based on the established position under work health and safety laws, is that a person who is not a director would only be considered an ‘executive’ and ‘concerned or taking part in the management of a corporation’ if they were a very senior manager with very broad responsibility and authority in respect of the business. It was considered that this would likely not include most ‘middle managers’.

Although this issue wasn’t argued or determined by the Court, it does pave the way for future prosecutions to be brought against individuals as ‘executives’ in situations that are probably not contemplated at present.

Individual managers within businesses that own, operate, engage or deal with heavy vehicles will now need to reconsider their role, responsibilities and exposure as ‘executives’ under the HVNL.

Lesson four – you can go to jail for CoR offences

This was the first case in which an individual was sent to prison under the HVNL.

There has been one other case in which an individual owner/driver was sentenced to six months jail for breach of his primary safety duty under the HVNL. However, this sentence was suspended, meaning that the individual did not serve jail time, subject to complying with a good behaviour order.

In contrast, the National Operations Manager was sentenced to three years jail, out of a maximum of five years, with a non-parole period of 12 months – meaning that he was ordered to serve at least 12 months in jail.

This case will represent the yardstick for imprisonment under the HVNL. The takeaway is that ‘things just got real’.

What do you need to do

Following this decision:

  • all businesses that own, operate, engage or deal with heavy vehicles should review their CoR compliance framework to ensure that it meets the requirements of the HVNL. More importantly, businesses need to make sure that they have processes to ensure that their CoR compliance practices are being properly understood,  implemented and that they are effective
  • all managers within businesses that own, operate, engage or deal with heavy vehicles should reconsider whether they fall within the definition of ‘executive’ under the HVNL and, if so, make sure that they are meeting their personal CoR safety obligations
  • all managers or supervisors of drivers and senior managers ultimately responsible for the use or operations of heavy vehicles should reconsider whether they fall within the definition of ‘operator’ under the HVNL and, if so, ensure they are meeting their personal CoR safety obligations.

Our national Transport, Shipping & Logistics team have extensive expertise and experience in the area of CoR safety and compliance, having worked with businesses, executives and industry groups in this area for more than 18 years.

If you have any questions or need any assistance in this area, please get in touch with a member of our team below.

Disclaimer
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 article is accurate at the date it is received or that it will continue to be accurate in the future.

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