In brief - "Officer" defined as having organisational, not operational role
The Industrial Court of ACT has been the first court to consider the scope of the definition of "officer" under the work health and safety laws in
Brett McKie v Munir Al-Hasani & Kenoss Contractors Pty Ltd (in liq) [2015] ACTIC 1. The decision of Industrial Magistrate Walker confirms that the definition of "officer" does not include operational roles within the business process and, instead, requires the individual to be within the sphere of an organisational role.
Truck driver electrocuted at Barry Drive Project site
In
McKie, Mr Munir Al-Hasani was prosecuted under the
Work Health and Safety Act 2011 (ACT) (
WHS Act) as an "officer" for failing to exercise due diligence to ensure that Kenoss Contractors complied with its duty or obligation under the
WHS Act.
The charge related to the electrocution of a truck driver working on the Kenoss Contractors Barry Drive Project. The electrocution occurred after the truck's bucket touched or came very close to touching low hanging electrical wires on the site.
Project manager found to have failed to ensure safety compliance
Mr Al-Hasani was employed by Kenoss Contractors as a project manager and was managing a number of projects for his employer. Industrial Magistrate Walker found that Mr Al-Hasani did not exercise due diligence in respect of safety compliance and that his failures were "multiplicitous".
In August 2008 he was served with a prohibition notice on behalf of Kenoss Contractors regarding working near power lines on another project.
Project manager prone to relinquishing responsibility for identified risks
In relation to the incident itself, Industrial Magistrate Walker found that the Safe Work Method Statement was inadequate to address the particular risk on the Barry Drive Project site and that Mr Al-Hasani had a readiness to relinquish responsibility for the identified risks to the site foreman with no process in place to ensure compliance.
Prosecution required to prove that project manager was an "officer"
However, the shortcomings of Mr Al-Hasani's safety management practices were irrelevant if he does not fall within the definition of "officer".
The prosecution was required to prove that Mr Al-Hasani was an "officer" at the time of the incident before it could successfully argue that he failed to comply with the officers' duty to undertake due diligence.
The meaning of "officer" under the WHS Act
"Officer" is defined under the WHS Act with reference to
section 9 of the
Corporations Act 2001 (Cth). The definition contained in the
Corporations Act sets out a number of categories or roles that fall within the "officer" definition. For example, directors of a company clearly fall within the definition of "officer" because the definition includes "a director or secretary of a company". Less clear are roles that fall within the following broader definitions of "officer" provided by the
Corporations Act:
A person:
(a) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation;
(b) who has the capacity to affect significantly the corporation's financial standing; or
(c) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors of the corporation)…
"Officer" concept should be viewed in context of organisation as a whole
The leading High Court case on the definition of an "officer" under the
Corporations Act,
Shafron v Australian Securities and Investment Commission [2012] HCA 18, was relied on by Industrial Magistrate Walker, who observed that because the definition of "officer" in the WHS Act is imported from the
Corporations Act, the interpretation should be consistent. In Shafron the High Court observed:
…the inquiry required by this paragraph of the definition must be directed to what role the person in question plays in the corporation. It is not an enquiry that is confined to the role that person played in relation to the particular issue in respect of which it is alleged that there was a breach of duty (at [23]).
Relying on Shafron, Industrial Magistrate Walker found that the concept of an officer should be viewed through the prism of the organisation as a whole and not a particular function in which the individual was engaged.
Project manager's role and responsibilities
Evidence was adduced that Mr Al-Hasani had a number of direct reports, participated in management meetings, implemented project plans and supporting plans, monitored project progress (and kept the general manager informed of the same), selected subcontractors and material suppliers and verified and signed off on the completion of projects.
Nonetheless, Industrial Magistrate Walker found that the prosecutor had not established that Mr Al-Hasani had control or responsibility for the business or undertakings of the company. Rather, Mr Al-Hasani had operational responsibility for the delivery of specific contracts which had been entered into by Kenoss Contractors.
Factors suggesting that project manager was not an "officer"
The following factors supported the finding that Mr Al-Hasani was not an "officer" under the WHS Act:
- Kenoss Contractors was essentially a family business with a husband and wife director and general manager and a relatively flat management structure
- Mr Al-Hasani could identify potential employees but he was not responsible for hiring or firing them
- Mr Al-Hasani could not commit corporate funds
- Mr Al-Hasani did not have any direction over the type, or the specific contracts pursued by Kenoss Contractors
- Although Mr Al-Hasani prepared tenders, he did not sign off on them
- There was no evidence about who determined the corporate structure, who established the type of work to be pursued and when projects were to be entered into
- It was not apparent whether Mr Al-Hasani attended board meetings or met any of the corporation's legal obligations, such as ASIC returns
Safety performance improves if more staff undertake due diligence exercise
The first case on the definition of "officer" confirms that the courts will look to the interpretation of "officer" under the Corporations Act to assist them to determine what roles are akin to "officer" under the WHS Act. McKie established that a worker must have more than an operational role in the business process.
Persons conducting a business or undertaking, including companies and other organisations, should review who is classified as an officer. A broad interpretation of the "officer" definition should be adopted. This will result in more people undertaking the due diligence exercise and will drive safety performance within the organisation.
We also recommend that due diligence frameworks are reviewed to ensure that they are relevant to all officers, from non-executive directors to the general manager. All officers should also attend regular due diligence seminars to ensure that they meet the requirements of
section 27(5) of the
WHS Act.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.