Liquidation no Protection Against Occupational Safety and Health Act Prosecution

In November 2014, the Supreme Court of Western Australia granted leave to Worksafe to prosecute a company for serious alleged breaches of the Occupational Safety and Health Act 1984 (the OSH Act), despite the company being in liquidation and unable to pay any fine that may be imposed upon it.

The company in question was Australian Countertop Pty Ltd, whose main business was designing and installing solid surface kitchen bench tops.  On 1 December 2011, an employee of the company was assisting with unloading a delivery of stone slabs to the company’s premises in Bayswater.  The employee was on the ground, guiding a 220kg stone slab, which was being transported by a forklift.  As the stone slab was being placed on a rack, another stone slab from the adjacent rack fell on the employee.  The employee was crushed between the two stone slabs and died.

The difficulty for Worksafe was that ‘section 471B’ of the Corporations Act requires a party to obtain leave of the Court prior to commencing any “proceedings” in court against a company in liquidation.  The purpose of this section is to avoid the limited assets of a company in liquidation being spent defending expensive and time-consuming litigation.

The liquidator did not object to leave being granted, but noted that the company would not be able to pay any fine and therefore questioned the worth of bringing the proceedings.  Worksafe’s response was that it was important that a prosecution be commenced and, if a contravention was proved, a criminal conviction be recorded.  Worksafe argued that others in the industry needed to see that if safety measures were not taken, they would be liable to prosecution and substantial penalties.

A legal question was raised as to whether a prosecution under the OSH Act was a “proceeding” for the purposes of ‘section 471B’ of the Corporations Act.  The Court found that it was, and thus leave was required.  The Court then granted leave on the grounds that there was a real prospect that the company may have breached the OSH Act.  Implicitly, Worksafe’s submissions regarding the need for general deterrence were accepted.

It can be presumed that the proposed prosecution is now proceeding or soon to be commenced.  In addition, Worksafe may commence a prosecution (or has already done so) against any directors, managers and officers of the company who “consented or connived” to the alleged breach or for whom the alleged breach was “attributable to any neglect” on their part – the liquidation of the company will not affect their personal liability nor protect them from any penalties imposed by the court.

Worksafe Western Australia Commissioner v Australian Countertop Pty Ltd (in liq) [2014] WASC 413

Footnote: We have been informed by a representative of Worksafe that the reference at paragraph 5 of the judgment is incorrect, and that it was not in fact the fourth fatality at the defendant’s premises since 2007, but rather the fourth fatality of its kind since that date – the previous three fatalities were not related to this defendant.

If you have any questions about the above update, please contact us on (08) 9321 3755.

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