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Compensation granted to families affected by White Island disaster

8 Mar 2024

| Author: Jamie Dierick

Sentencing – Health and Safety at Work Act 2015 – breach of duty to workers – reparation for emotional harm caused – fines to reflect culpability

WorkSafe New Zealand v Whakaari Management Limited [2024] NZDC 4119 per Judge E M Thomas.

 

Whakaari White Island erupted on 9 December 2019. Forty-seven people, all of whom were tourists or guides associated with licensed commercial tours, were onshore at the time. The eruption engulfed everyone on the island with tragic consequences: 22 people lost their lives from injuries sustained during the surge. The remaining 25 people on the island were seriously injured.

Whakaari has been privately owned by the Buttle family since 1936. In 2008, the Buttles established an ownership and management structure for Whakaari – Whakaari Trustee Ltd became the legal owner who leased the island to Whakaari Management Ltd (WML).

White Island Tours Ltd had an exclusive agreement with WML enabling it to conduct tours to Whakaari by boat. It took approximately 17,000 passengers to Whakaari annually, representing 80% of visitors.

Volcanic Air Safaris Ltd had a licence with WML granting it the exclusive right to transport tourists to Whakaari from Rotorua by helicopter. Kahu Ltd had the exclusive right to transport tourists to Whakaari from Whakatāne by helicopter. Aerius Ltd had the exclusive right to transport tourists to Whakaari from the Bay of Plenty by helicopter.

WML failed to ensure that adequate risk assessments of conducting tours had been undertaken. It failed to obtain the necessary advice in relation to volcanic risk and concerning its own obligations arising from that risk. Under the licence agreements, it required tour operators to conduct the necessary risk assessments but failed to recognise it had an obligation to do so too.

WML was found guilty of breaching one charge under s 371(1) and 48 of the Health and Safety at Work Act 2015 (the Act).

White Island Tours and Volcanic Air Safaris Ltd pleaded guilty to one charge under ss 36(1) and 48 of the Act relating to a breach of duty of their workers and ss 36(2) and 48 of the Act relating to a breach of duty of the tourists.

Kahu and Aerius pleaded guilty to one charge under ss 36(1) and 49 of the Act relating to a breach of duty of their workers and ss 36(2) and 49 of the Act relating to a breach of duty of the tourists.

Each defendant knew Whakaari was active, knew it had an eruptive history, and appreciated this risk to tourists and employees needed to be managed. Judge Thomas acknowledged that each defendant did take some active steps to manage the risk. Various defendants did make preliminary decisions the night before a tour was scheduled, about whether it was safe to proceed the next day.

However, Judge Thomas stated the parties failed to adequately assess and mitigate risks leading up to the catastrophic eruption in December 2019. Despite attending meetings and relying on information from GNS Science, they continued tours even after a warning sign and flaws were revealed in their risk management procedures. This failure to assess risks and consult experts was seen to have contributed to the tragic outcome in December 2019.

The first consideration for sentencing was reparation for the emotional harm caused by the offending. Judge Thomas adopted a general sum of $250,00 per individual, totalling $10.2 million, split between parties associated with Whakaari Island Tours and Volcanic Air Safaris Ltd. Settlements with other parties did not affect reparation amounts.

The second consideration for sentencing was the fines to be imposed on each party. Judge Thomas noted the culpability of each party was at the cusp of high to very high.

WML and White Island Ltd received a fine at a starting point of $1.1m; Volcanic Air Safaris Ltd received a fine at a starting point of $750,000. Aerius and Kahu received a fine at a starting point of $375,000.

Each of the parties received discounts for various factors including guilty pleas, cooperation, remorse, and post-eruption actions. Each of the party’s end fines was adjusted for proportionality and the respective parties’ financial positions.

White Island Ltd had insurance cover for up to $5m in respect of reparations. Judge Thomas increased White Island Ltd’s share of reparation to $5m, reflecting its insurance cover was the most  reliable source of funds and it should be maximised. A corresponding reduction of $225,000 was made to its fine, and the reparation payable by WML.

WML claimed to have no assets or a bank account and – a claim WorkSafe said it couldn’t dispute. However, there was nothing stopping the Buttles, as WML’s shareholders, from advancing the necessary funds to cover its reparation or fine obligations. Judge Thomas said while there might be no commercial basis for doing so, “many would argue there is an inescapable moral one”.

Volcanic Air Safaris, which had insurance covering reparation up to $300,000, was in liquidation. Its remaining liability for compensation appeared unlikely to be covered by its remaining assets. The judge said liability should follow the company, whatever direction it may head in.

Possessing no assets that they could use to pay a fine, Aerius and Kahu were in weak financial positions. However,  they were in materially different positions compared to the other defendants as they were still trading and faced smaller financial penalties, reflecting their lower culpability. Judge Thomas said fines could be paid over five years – a period “not so onerous to defeat the public interest in imposing them”.

 

Applicable principles: sentencing – sentencing principles – accountability, denunciation and deterrence – protection of the community – gravity of the offending – culpability of the offender – effect on victims – the need to impose the least restrictive outcome.

 

Held: WML is fined $1.04m ($522,500 on each charge). It is to pay reparation totalling $4.88m.

White Island Ltd is fined $517,000 ($258,500 on each charge). It is to pay reparation totalling $5m.

Volcanic Air Safaris is fined $506,000 ($253,000 on each charge) and must pay total reparation of $330,000.

Aerius is fined $290,000 ($145,000 on each charge) and Kahu is fined $196,000 ($98,000 on each charge).

 

Jamie Dierick is an employed Criminal Defence Barrister

 

WorkSafe New Zealand v Whakaari Management Limited [2024] NZDC 4119.

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