Getting caught in the chain of responsibility

Articles Written by Susan Doherty (Special Counsel)

Introduction

Scott's Transport Industries Pty Ltd and Anor v Road and Maritime Services

The impact and reach of chain of responsibility laws in the transport industry should not be underestimated. While the defence of having taken "reasonable steps" to ensure compliance with road transport laws is available, it may not be that easy to make it out.

The recent experience of Scott's Transport and its successful appeal should serve as a timely reminder that chain of responsibility legislation can have serious financial consequences, not only for those in the transport industry.

Although the appeal judgement represented a phenomenal saving for Scott's, the prosecution involved:

  • more than two years of time diverted from business activities (including 11 Court dates before sentencing in the Local Court) plus associated legal costs;
  • negative publicity for Scott's; and
  • a strain on relationships with clients who themselves became concerned about their own role in the chain of responsibility.

The time to determine whether reasonable steps have been taken is now - not when charges are laid.

Introduction

In 2003 the Road Transport Reform (Compliance and Enforcement) Bill was introduced by the Commonwealth. The Bill introduced the "chain of responsibility" concept and was intended to provide a nationally consistent framework to improve compliance outcomes for road safety, infrastructure and the environment.

On 30 September 2005 the "chain of responsibility" legislation took effect in New South Wales. During the second reading speech of the Bill for the Road Transport (General) Act in the Legislative Council on 6 April 2005, Mr Costa, the Minister for Roads, said:

"Under the new regulatory framework, those other parties in the transport chain who by their actions, inactions or demands put drivers and other road users at risk and gain unfair commercial advantages may also be committing an offence and be liable to substantial penalties. In practical terms, this means that it is essential that all parties to the chain of responsibility - consignors, packers, loaders, operators, drivers and in some cases consignees - need to be aware of the requirements of road transport law particularly relating to mass, dimension and load restraint. They also need to have active systems in place to manage these risks to minimise the chance of road transport laws being breached." (Hansard, Legislative Assembly, 6 April 2005 at 15050).

The result of the chain of responsibility provisions is that a range of parties can be held responsible for breaches of road transport laws including the owner of the trucks, and their clients, as well as the individuals who are involved in the management of those bodies. None of these parties needs to be aware of the actual offence in order to be made liable for it; nor does the driver need to be charged for another party in the "chain" to be prosecuted. The effect of the legislation - which exists in all states and territories - extends beyond the freight industry, into all major industries which utilise road transport (such as retail, construction, manufacturing and resources). In some states, including Victoria, the chain of responsibility concept has been extended to other means of transport such as bus and rail.

Although the chain of responsibility transport laws are now some years old (and have been re-enacted), Courts in NSW are only just starting to deal with them - with some surprising results.

Background

Following a triple fatality involving a heavy vehicle on the Hume Highway in January 2012, NSW Roads and Maritime Services (RMS) launched "Operation Overland" in which they investigated and charged a number of trucking companies (and their directors and officers) with chain of responsibility offences relating to speeding offences and speed limited non-compliance offences. (Note: heavy vehicles in NSW are required to be speed limited to 100km/h and heavy vehicles travelling at more than 115km/h are deemed to be speed limiter non-compliant). In the majority of cases the trucking company was not aware of the incidents of speeding because no speeding fines had been issued to the drivers or the company.

Scott's Transport Industries

One of the companies charged was Scott's Transport Industries, a family company operating out of Mt Gambier which has provided road transport services since 1952. In May 2012 Scott's was served with Court Attendance Notices which related to 165 instances of alleged speeding between August 2010 and March 2012. In that period Scott's vehicles had only received infringement notices for 15 of the 165 alleged incidents of speeding. The remainder were picked up by the audit described above.

The charges

The charges

The allegations were:

  • 165 alleged instances of Scott's breaching its duty to ensure speeding offences were not committed by its drivers (cl 156(3) of the Road Transport (General) Regulation 2005);
  • 6 alleged instances of Scott's breaching its duty to ensure its vehicles were speed limiter compliant (s 69C of the Road Transport (Safety and Traffic Management) Act 1999);
  • a total of 92 alleged instances of four Scott's directors, officers and former officers breaching their duties (74 x speeding and 18 x speed limiter non-compliance) (s 178 Road Transport (General) Act 2005).

In essence, all the RMS had to prove was:

  • in the case of the speeding offences against the company, that Scott's was the employer (or prime contractor) of the drivers, and that while the vehicle or its driver was subject to Scott's' control, the driver committed a speeding offence;
  • in the case of the speed limiter offences against the company, that Scott's was the registered operator of the vehicle and that the vehicle travelled at more than 115km/h; and
  • in the case of the individuals, that the speeding or speed limiter offence occurred and that the individual was a director or was concerned in the management of the company at the time.

Available defences

 The following defences were available:

  • in relation to the speeding offences alleged against Scott's, that it did not and could not reasonably be expected to have known of the speeding; and that it took "all reasonable steps" to prevent the instances of speeding from occurring or there were no steps it could have taken;
  • in relation to the speed limiter offences alleged against Scott's, that the gradient of the road was such that the vehicle could have achieved a speed of 115km/h notwithstanding that it was speed limiter compliant; and
  • in relation to the individuals, that they were "not in a position to influence the conduct of the body corporate in relation to the actual offence" or that they had taken "reasonable precautions and exercised due diligence" to prevent the commission of the speeding or speed limiter offences.

Maximum penalties

Because of the alleged operation of a tiered penalty regime for second and subsequent offences and according to the severity of the speeding, some of the speeding offences alleged against the company attracted maximum fines of $27,500 and the individuals, $11,000. Scott's alone faced a possible total maximum penalty of almost $2.5 million.

Particulars

Scott's sought a brief of evidence as well as particulars of the "reasonable steps" which were alleged should have been taken. Particulars were sought pursuant to the High Court decision in Kirk v Industrial Court (NSW) (2009) 239 CLR 531 which involved a prosecution under s 15(1) of the Occupational Health and Safety Act 1983 (NSW) for failure to ensure the health, safety and welfare of employees. Section s 53 provided a defence if the person could prove that it was not reasonably practicable to comply with the provision or that the offence was due to causes over which it effectively had no control.

In that matter, the particulars of the offences provided did not identify what measures the Kirk company could have taken but did not take. A majority of the High Court found that, as a result, the Kirk company was denied the opportunity to properly put a defence under s 53 and the Industrial Court had made a jurisdictional error by proceeding without proper particulars. The convictions were quashed.

In the Scott's matter, the Local Court declined to order the RMS to provide to Scott's either a full brief or Kirk particulars, on the basis that failure to take "all reasonable steps" was a defence rather than an element of the offence. This part of the proceedings alone occupied more than a year from the time the charges were laid. Because Scott's was declined those particulars, it did not know what, in substance, it was alleged to have done wrong - namely, the "reasonable steps" it was alleged not to have taken.

Ultimately, Scott's pleaded guilty to all 165 offences relating to speeding and one speed limiter non-compliance offence. Two individuals pleaded guilty to a total of 32 charges relating to speeding. All charges against one director were dropped and another director was sentenced separately.

Sentence at first instance

Scott's and the individuals were sentenced in the Local Court on 28 May 2014, more than two years after the charges were originally laid. The result was a total fine of $1,252,640 made up as follows:

  • Scott's - $1,158,700
  • the two individuals - a total of $93,940.

These fines were far heavier than sentences which had been imposed within the previous 12 months on other trucking companies and their officers for comparable offences as part of Operation Overland. Scott's agreed to an order that it pay $100,000 in Court costs. The Magistrate ordered that 50% of the fines be paid to the RMS by way of a moiety.

Appeal

Appeal

Scott's and one of its directors (who was fined $85,800) appealed to the District Court against the severity of the sentences pursuant to section 11 of the Crimes (Appeal and Review) Act 2001. The Court was required to engage in a fresh exercise of its sentencing discretion without the need to find error. The appeal came before Judge Maiden on 22 - 24 September 2014. Judgment was given on 3 October.

In summary, the Judge:

  • found that the objective seriousness of the offences was at the lowest end of the range in terms of the circumstances of driver speeding (nature of road and in many cases speeds of less than 110km/hr) and in terms of Scott's' failure to take "all reasonable steps";
  • gave weight to the steps taken by Scott's to prevent driver speeding both before and after the charges were laid;
  • was critical of the RMS for its failure to provide Kirk particulars;
  • increased the discount for the pleas of guilty from 10% to 25%;
  • declined to record a conviction against the director given his excellent record, his non-management position and the lack of notice of the speeding offences prior to the charges being laid; and
  • declined to impose fines on the basis of the tiered penalty regime for "second and subsequent offences" on the basis that the provision did not apply because Scott's was charged with all of the offences simultaneously and because, even if it did apply, the offences should be treated as first offences for sentencing purposes because Scott's was not aware of the earlier offences when the later ones were committed.

The final result was that the Judge imposed no fines on the director and reduced the fines imposed on Scott's from approximately $1.2 million to about $85,000. In addition, he quashed the order for costs made in the Local Court and declined to grant any moiety to the RMS on the basis that there was no justification. The end result of the appeal was a total saving to Scott's of almost $1.16 million.

Importantly, the RMS's lawyers indicated (and Judge Maiden accepted) that the measures Scott's had put in place to prevent driver speeding since the speeding incidents had occurred were sufficient to satisfy the "all reasonable steps" defence. Accordingly, by complying with those measures, Scott's will have protection in the future against further prosecutions.  

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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