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Collective trustees are a person under Health and Safety at Work Act

9 Feb 2024

| Author: Andrea Hilton

Statutory interpretation – Health and Safety at Work Act 2015 – definition of person – liability of trust and trustees body of persons – Criminal Procedure Act 2011 ­– Trusts Act 2019 – Legislation Act 2019 – Resource Management Act 1991 ­– Work Health and Safety Act 2011 (NSW)

WorkSafe New Zealand MHI Haumaru Aotearoa v RH & Jury Trust [2023] NZHC 3871­.

 

A partially successful appeal by WorkSafe of the District Court’s dismissal of the charge against RH and Jury Trust under the Health and Safety at Work Act 2015, on the basis that a trust cannot be prosecuted because it is not a person under the Act.

The trust owned and operated a farm. A young child visiting his grandfather at work on a dairy farm died from his injuries after his jacket became caught in an exposed rotating shaft on a backing gate. WorkSafe charged the trust and, alternatively, the three trustees individually under ss 37(1), 48(1) and (2)(c) of the Act. WorkSafe believed it was more appropriate to charge the trust than the trustees because the trust was conducting the business (although the trustees were the legal owners of the farm under the terms of the trust).

The trust did not make an application for dismissal under s 147 of the Criminal Procedure Act 2011 so WorkSafe applied for a ruling, submitting the trust was a person or the trustees collectively were a person under the Act.

WorkSafe appealed on the following question of law: can a trust (or its trustees collectively) meet the definition of a person under s 16 of the Act?

It submitted:

  • there is precedent for including a trust or trustees collectively in the definition of persons in common law and other Acts;
  • in the context of work safety, public policy supports an expansive approach to enforcement. Limiting penalties to those applicable to individuals is likely to undermine deterrence; and
  • prosecuting trusts rather than individual trustees would be consistent with how the Act treats company directors.

The trust opposed the appeal, submitting:

  • trusts are distinguished in substance and form from other entities and the cases relied on by WorkSafe can be distinguished;
  • trusts were deliberately excluded from the legislation;
  • trustees are not a ‘body or persons’ since a trust can have a single trustee;
  • there are no enforcement obstacles to proceeding against the trustees. WorkSafe merely wished to access the higher penalties.

 

Applicable principles: Interpretation includes regarding context, text, scheme and purpose – trust business usually conducted by decisions of collective trustees­ – public policy must be supported by analysis of legislation text­ – legal recognition is not necessary for a body to be recognised­ – North v Commissioner of Inland Revenue (1985) 7 NZTC 5, 192 (HC) distinguished­ – NSW Act excludes trusts from liability­ – NSW Interpretation Act 1987 definition of person different to NZ Act – safety legislation interpreted to support effective protection –Westfield (New Zealand) Limited v North Shore City Council [2005] NZSC 17 applied – ­Cometa United Corporation v Canterbury Regional Council [2007] NZCA 560 applied – wide interpretation of PCBU (person undertaking a business or undertaking) to achieve the Act’s purposes

 

Held: a trust is not a person under s 16 of the Act but the trustees of a trust collectively are a ‘body of persons’ within the definition of ‘person’. Legislation can override the orthodox position that a trust is not a separate legal entity.

A narrow interpretation could frustrate the purpose of the Act recorded in s 3 (1)(e). The trust itself, rather than the trustees collectively, does not fall under the definition of person in s 16 but trustees collectively do and the higher penalty under s 48(2) is available.

Section 29 alone does not prevent trustees from being indemnified by a trust’s assets under the Act, but it also depends on the specific facts, the trust deed and the general law of trustee indemnity.

 

After 14 years as general counsel for a local authority, Andrea Hilton is now a sole practitioner practising local government law.

 

Worksafe New Zealand MHI Haumaru Aotearoa v Jury Trust [2023] NZHC 3871.

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