Briscoe Group Limited v Ministry of Business, Innovation and Employment
[2014] NZHC 1027
•16 May 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2013-404-000345 [2014] NZHC 1027
BETWEEN BRISCOE GROUP LIMITED
Appellant
AND
MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT Respondent
Hearing: 24 March 2014 Counsel:
A H Waalkens QC and R B McClintock for the Appellant
M R Harborow for the RespondentJudgment:
16 May 2014
JUDGMENT OF BROWN J
This judgment was delivered by me on 16 May 2014 at 2.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Crown Solicitors, Auckland
Swarbrick Beck MacKinnon, Auckland
Counsel: A H Waalkens QC, Auckland
BRISCOE GROUP LTD v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2014] NZHC
1027 [16 May 2014]
Introduction
[1] On 24 October 2013 the appellant pleaded guilty to one charge under s 16(2)(b)(ii) of the Health and Safety in Employment Act 1992 (“the HSE Act”), namely that:
On or about 3 December 2012 at its store located on the corner of Lambie and Cavendish Drives in Manukau City the appellant, being an organisation that controls a place of work, failed to take all practicable steps to ensure a hazard that arose in that place of work, namely display goods stacked in the aisle, did not harm Ajay Kumar Chadha who was there to undertake activities that included buying goods from whose sale it derived a gain.
The maximum penalty is a fine of $250,000.
[2] Her Honour Judge Simpson imposed a fine of $75,000 and ordered the payment of $4,000 in reparation, in addition to the $5,000 which the appellant had already paid to Mr Chadha.
[3] The appellant appeals against the fine of $75,000 on the ground that it is manifestly excessive and failed to take into account proper sentencing principles. No issue arises with reference to the order for reparation.
Background facts
[4] The description of the accident in the summary of facts which was admitted on the guilty plea reads as follows:
4.About midday on 3 December 2012 Mr Chadha and his wife entered the Briscoes store at Manukau Supa Centre intending to purchase an electronic kitchen appliance.
5.Mr Chadha located the appliance in one of the isles (sic) picked it up and turned in the direction of the sales counter. As he moved around other customers present in the isle (sic), he tripped over display goods stacked on the floor within the isle (sic) and fell to the ground landing on his left hip.
6. Store employees administered first aid and called an ambulance.
7. Mr Chadha suffered an injury to his left hip and a fractured femur.
He underwent surgery and was hospitalised for a total of 10 days and faces on-going rehabilitation.
[5] In the appellant’s submissions in the District Court the following further information was provided in relation to the accident. This information was not disputed by the informant:
14.Mr Chadha was shopping in the Manukau Briscoes store with his wife on 3 December 2012. This day was in the busy lead up to Christmas when literally hundreds of customers enter the store every day.
15.At that time of year trading is at its busiest, and to assist customers with product selection the Defendant’s practice is to place additional items of certain products which are on promotion (and therefore most likely to sell out) in stacks one deep next to the shelving where the product is placed. The purpose of this practice is to ensure that product is available to all customers who require it, without the need for delay which might be occasioned at that time of year in waiting for a staff member to access the product from the store room.
16.Additional stock of smaller items is generally in trolleys, but larger items in large boxes are stacked next to the shelving.
17.The Defendant is alert to the need to ensure that trip hazards are not created by the placement of stock, which is positioned accordingly and in such a way to ensure there is ample room for customers (and trolleys) to pass through the aisles without issue.
18.At the time, the Defendant had placed a few (4) additional electric juicers on the floor, two boxes high, next to the shelving. This was less than the normal level of additional stock, which is normally stacked at least three high, and accordingly was not as noticeable as it should have been. Mr Chadha apparently did not see the boxes, and tripped and fell.
19.The Defendant undertook its own investigation, separate from that undertaken by the Ministry.
20.The Defendant acknowledges that but for the presence of the boxes, Mr Chadha would not have tripped and that this amounts to a breach of this strict liability legislation.
[6] In its submissions in the District Court the appellant accepted that the few boxes on the floor on the day in question did pose a hazard as the stack was not sufficiently high as to be readily visible. However where the stack is in the nature of a display and of sufficient size, provided there is appropriate access through the aisles, the appellant does not consider there would be a hazard. It was said that the Manukau store has very wide aisles and, even with a stack of display goods, there is ample space for two trolleys to pass.
District Court decision
[7] After reciting the circumstances relating to the accident the District Court Judge considered a number of factors including the appellant’s own guidelines, the rarity of the incident and the issues of carelessness and foreseeability. The Judge concluded on the issue of a fine as follows:
[12] It is the defence submission that the culpability is low and that a low level of fine should be imposed as a result. I have considered this carefully but I have come to the conclusion that in fact the level of culpability was higher than is urged upon me by the defence. I think in fact the culpability was in the medium range.
[13] I have considered what was said by the case law and in particular the fact of the serious effect on the unfortunate victim of this tripping, and under such circumstances I think that a medium level of fine is appropriate. It was suggested that the fine should be in this level because of the foreseeability of a danger where goods are stacked on the floor.
[8] Although the informant acknowledged that there should be discounts for both mitigating factors and a guilty plea (both in the amount of 25 per cent) the Judge did not allow such discounts. Consequently the fine imposed was the same figure as the chosen starting point ($75,000).
[9] In its submissions on this appeal the respondent accepted that her Honour should have applied discounts for cooperation, safety record and remorse and also for the early guilty plea. Consequently, the focus of the argument on appeal is on the part of her judgment relating to the selection of the starting point.
Approach to appeal
[10] Sections 115(4) and 119(1) of the Summary Proceedings Act 1957 provide that this is a general appeal to be heard by way of rehearing. Section 121(3)(b) of the Summary Proceedings Act 1957 provides that the High Court may quash or vary a sentence where it is “clearly excessive or inadequate or inappropriate” or if the Court is “satisfied that substantial facts relating to the offence or the offender’s character or personal history were not before the Court imposing sentence”.
[11] The approach to be taken to appeals under s 121(3) were set out in Yorston v
Police where the Court said: 1
(a) There must be an error vitiating the lower Court’s original sentencing discretion: the appeal must proceed on an “error principle”;
(b) To establish an error in sentencing it must be shown that the Judge in the lower Court made an error whether intrinsically or as a result of additional material submitted to the appeal court;
(c) It is only if an error of that character is involved that the appeal
Court should re-exercise the sentencing discretion.
[12] In R v Monkman, the Court of Appeal considered the factors that would make
a sentence “manifestly excessive”:2
Whether a sentence can be said to be manifestly excessive turns on the maximum sentence prescribed by law for the offence; the level of sentencing customarily observed with respect to that offence; the place which the conduct in question assumes on the scale of seriousness of offences of that type; and the personal circumstances of the offender (to the extent that they are relevant with respect to the particular kind of offending).
[13] When considering whether the sentence imposed by the District Court was manifestly excessive, the focus is on the correctness of the end result, not the process by which the sentence was reached. As the Court of Appeal observed in Ripia v R:3
… this Court has consistently observed that sentence appeals will almost always turn on a consideration of whether the final outcome is manifestly excessive. The route by which the Judge reached that outcome will be relevant to the analysis, but seldom in itself pivotal.
[14] The respondent conceded that proceeding from the starting point of $75,000, the application of discounts of 25 per cent each for mitigating factors and a guilty plea resulted in an end point fine of $42,100. However the respondent submitted that the starting point was not excessive, that the Court should confine itself to applying the agreed discounts and that the outcome of the appeal should therefore be
a substituted fine of $42,100.
1 Yorston v Police HC Auckland CRI-2010-404-164, 14 September 2010 at [13]-[15].
2 R v Monkman CA445/02, 3 March 2003 at [6].
3 Ripia v R [2011] NZCA 101 at [15].
[15] The appellant contended that the Judge had erred not only in the omission to apply the discounts but also in the fixing of the starting point. It contended that a starting point of $25,000 was appropriate which, after the application of discounts, would result in an end fine of $14,000.
[16] In those circumstances, as Mr Waalkens submits, I consider that I am obliged to reconsider the fine in its totality and not merely with reference to the issue of the discounts (about which the parties are agreed). Consequently I proceed to consider the relevant principles and then apply those principles to the circumstances of the case.
Relevant principles
[17] The leading case on the approach to sentencing in health and safety prosecutions is Department of Labour v Hanham and Philp Contractors Ltd.4 That decision reviewed the principles which had been established in Department of Labour v De Spa & Co Ltd,5 reinforced the proactive, preventative approach required by the Act to promote the prevention of harm to all persons at work, in a place of work or in the vicinity of a place of work and set out a principled approach to sentencing.
[18] While recognising that s 51A(2) of the HSE Act identifies particular provisions in the Sentencing Act and other matters to which the sentencing judge must have particular regard, the Court considered that the latter Act must remain the principal guide in sentencing. It noted that the degree of culpability (an important factor identified in De Spa) is not specifically mentioned in s 51A(2) but is included by the reference to s 8 of the Sentencing Act. Under that provision the Court must take into account (amongst other things) the gravity of the offending and degree of culpability of the offender: s 8(a).
[19] The Court considered that the Taueki6 approach should be adopted in fixing a fine for offending under s 50, viewing this as necessary to promote consistency and
4 Department of Labour v Hanham and Philp Contractors Ltd (2008) 6 NZELR 79 (HC).
5 Department of Labour v De Spa & Co Ltd [1994] ERNZ 339 (HC).
6 R v Taueki [2005] 3 NZLR 372 (CA).
transparency in sentencing in this field and to ensure that the levels of fines imposed reflect the true culpability of the offender. The Court said that the imposition of a fine, in addition to reparation, will generally be required to address the statutory purposes of denunciation, deterrence (both general and specific) and holding the offender accountable for the harm done.7 The financial capacity of the offender may, in some cases, result in a significant variation from the starting point but this should not detract from any advantages of adopting the Taueki approach to sentencing in this area.8
[20] On the subject of harm, the Court said that care should be taken when assessing culpability by reference to the outcome but at the same time recognised that both the HSE Act and the Sentencing Act oblige the Court to have regard to the degree of harm that has occurred.
[21] The Court saw the assessment of culpability as including:9
The identification of the operative acts or omissions at issue. This will usually involve the clear identification f the “practicable steps” which the Court finds it was reasonable for the offender to have taken in terms of s 2A HSE Act.
An assessment of the nature and seriousness of the risk of harm occurring as well as the realised risk.
The degree of departure from standards prevailing in the relevant industry.
The obviousness of the hazard.
The availability, cost and effectiveness of the means necessary to avoid the hazard.
The current state of knowledge of the risks and of the nature and severity of the harm which could result.
The current state of knowledge of the means available to avoid the hazard or mitigate the risk of its occurrence.
[22] So far as the level of fines is concerned the Court said:
7 At [47].
8 At [50].
9 At [54].
[56] As to the level of fines, we can do no better than endorse the comments of Duffy J in Street Smart at [59]:
Workplace accidents are a cost to and burden on the community. The effect of accident compensation and the inability to sue for injuries suffered as a result of employers’ carelessness means that the community carries the cost of those injuries. The principles in s
7(a), (b) (e) (f) and (g) of the Sentencing Act are especially important and applicable here. The seriousness with which
Parliament views this type of offending can be seen from the
fivefold increase in the 2003 amendment in the amount of the maximum fine. The clear purpose of the Act, as we recognised in Areva at [39], is “to promote and enforce workplace safety”. There are good policy reasons, which accord with the purpose and scheme of the Health and Safety in Employment Act, for ensuring that where employers infringe, penalties must bite, and not be at a “licence fee” level.
[57] Accepting that a broad assessment is involved and that sentencing is not a mathematical exercise, starting points should generally be fixed according to the following scale:
Low culpability: a fine of up to $50,000
Medium culpability: A fine of between $50,000 and $100,000
High culpability: a fine of between $100,000 and $175,000
[58] The figure of $175,000 at the upper end of the high culpability band is not intended to preclude a greater fine up to the statutory maximum. Higher levels may be required in some cases of extremely high culpability.
[23] Having noted that s 40(1) and (2) of the Sentencing Act are explicit in providing that financial capacity is to be taken into account in determining the amount of a fine the Court said:
[76] Section 40(2) has not received express scrutiny at appellate level in this country but the subsection clearly permits a court to increase a fine above the level which would otherwise be appropriate where an offender has substantial means. We accept Mr Stanaway’s submission that this course may be necessary to ensure that an otherwise appropriate punishment is not diluted because of the offender’s comparative wealth and to ensure that the sentence is an effective deterrent. A fine of say $50,000 for an individual offender may be crippling or an undue burden but, for a wealthy corporation, it may be no more than a licence fee as referred to in some of the authorities. As such, it would not be an effective deterrent. The self-evident proposition that a fine must be effective to act as a deterrent is demonstrated by the introduction of s 561 HSE Act in 2003. That section prohibits persons from entering into an insurance policy providing indemnity against the cost of fines or infringement fees under the Act.
Assessment of culpability for starting point
[24] In assessing culpability I have regard to the factors outlined in Hanham & Philp.
Identification of the operative acts or omissions – the practicable steps
[25] The respondent drew attention to the fact that the appellant had in place a “Hazard Control Plan” which identified the risk of slips, trips and falls and included appropriate controls such as “ensure all walkways and aisles are not obstructed by any stock”. The appellant also had in place a “Workplace Safety Checklist of Physical Environment” whereby each store was required to complete a weekly checklist. Under a heading “Aisles/Stairs” was the question: “Are all aisles, stairs clear of stock/obstructions/packaging materials”? The respondent submitted that the appellant had failed to monitor and enforce compliance with its own health and safety policies in stacking additional stock on the shop floor adjacent to the same product on the shelves.
[26] For the appellant the point was made that the October 1995 guidelines issued by the then Department of Labour (now the respondent) did not prohibit the stacking of goods on the floor or in aisles per se and drew attention to the very wide aisles in the Manukau store. That said, from the outset, it had accepted that it had breached the strict liability criteria of the HSE Act. It drew attention to its submission in the District Court that its practices now ensure that no tripping hazard arises in the presence of displays of product and that there is ample space within aisles for customers to go about their shopping without risk.
The nature and seriousness of the risk of harm occurring as well as the realised risk
[27] The potential risk of harm from tripping and falling is well known. There is a range of potential harm which may ensue and will depend on a variety of factors including the nature of the fall, the locale and the state of health and perhaps age of the victim who trips. The actual injury sustained by Mr Chadha was towards the upper end of the range of harm.
The obviousness of the hazard
[28] The trip hazard occasioned by the storage of stock in an aisle was an obvious hazard. I refer to “storage” rather than to “display” because in my view it is not accurate to describe the practice of maximising the availability of stock as amounting to “display”. A stack of product which it is intended should be purchased (and hence removed) is not in the nature of a static display. A three-high stack of product which is placed in an aisle in order to satisfy the anticipated demand for the product will inevitably become a two-high stack and presumably be reduced to a single item as purchases are made and items are removed. I do not accept the appellant’s contention that it was not obvious that the practice was unsafe.
The degree of departure from industry standards
[29] There was a manifest departure from the well-accepted practice (reflected in the appellant’s own policies noted above) that aisles should be kept clear of stock or obstructions.
The availability, cost and effectiveness of the means to avoid the hazard
[30] Such a hazard can be simply avoided by retaining the additional supplies of stock in the storage area of the premises until such time as replenishment of the shelves is required. Inevitably during busier periods such as December there will be a significantly increased turnover with a consequent greater demand on staff in moving replacement stock from the storage area to the shelves. However that is just the reality of the matter. Stockpiling in aisles, even if motivated by the objective of responding promptly to the demands of customers, is not an acceptable alternative.
The current state of knowledge of the risks and of the nature and severity of the harm that could result
[31] The appreciation of the risk of a tripping incident was apparent in the appellant’s own policies. However it is possible, and perhaps even likely, that the severity of the injury in this particular incident was not anticipated.
The current state of knowledge of the means available to avoid the hazard
[32] The way of avoiding the hazard by retaining additional supplies of stock in the storage area until space was available on the shelves was a matter about which the appellant was plainly well aware.
Conclusion on factors bearing on culpability
[33] A review of those seven factors leads me to the conclusion that the practice which was adopted resulted in the creation of an obvious risk which was a clear departure from industry standards and could have quite easily been avoided.
Other cases
[34] While recognising that each incident is heavily fact dependent and that there is no closely comparable case, counsel cited several recent decisions, namely:
Department of Labour v Beare Haven Investments Ltd10
Ministry of Business, Innovation & Employment v Schindler Lifts NZ Ltd11
Department of Labour v Danny Doolans Ltd12Department of Labour v Middlemore Car Parking Ltd13
Department of Labour v Sequal Lumber Ltd Partnership14
Department of Labour v TM Jones Ltd15Cardrona Ski Resort Ltd v Department of Labour16
[35] Mr Waalkens contended that the District Court Judge’s assessment of the offending in this case as being in the medium culpability range was at odds with the theme of comparable cases, noting that Middlemore Car Parking, T M Jones and Cardrona were all low level culpability while Sequal Lumber was at the cusp of
low/medium. He submitted that Schindler Lifts ($50,000 starting point) had
10 Department of Labour v Beare Haven Investments Ltd DC Lower Hutt, CRN-11032510992,
23 March 2012.
11 Ministry of Business, Innovation & Employment v Schindler Lifts NZ Ltd DC Manukau, CRI-2013-092-006292, 3 October 2012.
12 Department of Labour v Danny Doolans Ltd DC Auckland, CRN 08004504670, 29 January
2009.
13 Department of Labour v Middlemore Car Parking Ltd DC Manukau CRI-2011-092-863,
16 August 2011.
14 Department of Labour v Sequal Lumber Ltd Partnership DC Whakatane, CRI-2012-087-
000398, 17 July 2012.
15 Department of Labour v T M Jones Ltd DC Taupo CRI-2012-069-001264, 15 February 2013.
16 Cardrona Ski Resort Ltd v Department of Labour HC Invercargill CRI-2009-425-000016,
11 September 2009.
substantially more aggravating circumstances in terms of culpability than the present case.
[36] He submitted that the District Court Judge’s assessment of the level of culpability being in the medium range was clearly wrong and that the case fell within the low culpability range. Within that range he proposed the midpoint as being the appropriate level which would produce a starting point of $25,000. Applying the agreed discounts would result in a fine of $14,062.50.
[37] In supporting the decision under appeal Mr Harborow submitted that the present case was more serious than Beare Haven (starting point of $60,000: culpability above the midpoint of medium) and that the hazard in Danny Doolans (starting point $70,000: culpability at midpoint of medium range) was less obvious than the present case.
[38] As counsel recognised, there is no closely comparable previous decision. Middlemore Car Parking, Danny Doolans, Cardrona and Schindler Lifts all involve falls of various kinds but they are different from the present case. Cardrona did involve the laying of an obstruction which caused an accident to a skier and I note the starting point of $60,000 adopted by the District Court Judge was reduced on appeal to $40,000 apparently because of the “one off” nature of the incident arising from a gap in the protection strategy. I view the circumstances of the present case rather differently. Beare Haven is also a distinctly different factual scenario notwithstanding that it involved a supermarket environment.
My assessment of starting point
[39] I am unable to accept that the conduct in this matter comes within the low culpability category. To find otherwise would not adequately reflect the evaluation of the Hanham and Philp factors discussed above. I consider that the conduct falls within the medium range of culpability.
[40] However I do not share the District Court Judge’s apparent view that within the medium range the starting point should be at the midpoint. In my assessment the conduct here falls into the lower end of the medium range, but above the cusp, such
that a starting point of $60,000 would be a fair reflection of the level of culpability. It is then necessary to consider issues of deterrence and the appellant’s financial position before a figure is arrived at to which the agreed discounts can be applied.
Financial position and deterrence
[41] There is no detailed information before the Court as to the financial position of the appellant. Mr Harborow attempted to provide such material from the bar at the conclusion of his submissions but that was met with an objection by Mr Waalkens which I upheld.
[42] The appellant’s submissions in the District Court simply stated somewhat cryptically that the defendant was in a position to pay a fine. More detail was provided in the submissions on appeal which recorded that the appellant is a substantial retailer, operating 85 retail stores throughout the country under trading names “Briscoes”, “Living & Giving” and “Rebel Sport”, employs 1900 employees and enjoys patronage of approximately 7.5 million paying customers each year.
[43] I accept Mr Waalkens submission that this is not a case which warrants the imposition of an uplift on account of specific deterrence. The appellant has no previous convictions under the HSE Act and its experience ratings determined by ACC compare very favourably against its industry peer group, being other significant retailers. In particular its risk management rating for the year ended April
2013 was 0.04 (industry peer group rating of 0.19) and its rehabilitation rate (being the number of weekly compensation days for qualifying claims per $1 million liable earnings within the levy risk group) for the same year was 0.26 (industry average of
5.07).
[44] However it is appropriate in my view that there be an uplift in this case for general deterrence and the appellant’s substantial retail profile and related earnings. I consider that an appropriate level of uplift is 20 per cent of the selected starting point.
[45] The submissions for the respondent observed that in the new Health and
Safety Reform Bill, that is yet to come before Parliament, the Government intends
to increase the maximum penalties under the Act for employers who have breached their duty of care, recklessly or otherwise. Mr Waalkens submitted that it was inappropriate to take that factor into account in that the appellant was entitled to be sentenced in accordance with the law that applied at the date of the accident. I accept Mr Waalkens submission and I have not taken into account any foreshadowed amendment to the legislation.
Conclusion
[46] Taking what I consider to be the appropriate starting point ($60,000), and then applying a 20 per cent uplift to reflect both general deterrence and the appellant’s retail profile and related earnings, results in a level of fine before the application of discounts of $72,000. That figure is only slightly less than the figure of $75,000 settled upon by the District Court Judge as the starting point. Consequently it cannot be said that the figure selected by the District Court Judge was clearly excessive or inappropriate.
[47] Accordingly the appellant’s challenge to the starting point of $75,000 is dismissed. By consent however the appeal with reference to the failure to allow the agreed discounts is allowed. The fine of $75,000 imposed in the District Court is set
aside and there will be substituted a fine of $42,000.
Brown J
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