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HIGH COURT CLARIFIES REPARATIONS AWARDS
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Useful guidance regarding calculation of reparations for financial loss, awards to family members, and whether reductions can be made due to the victim’s contribution to the incident.

A recent decision by the High Court has provided useful guidance on reparations awards in health and safety cases. The issues concerned:

  • whether the family of a deceased worker were entitled to reparations for loss resulting from physical harm (or instead, reparations were limited to the person(s) suffering the harm);
  • whether reparations for financial loss should be limited to the extent of any ACC shortfall (or be open-ended, potentially covering life-time earnings); and
  • whether a victim’s contribution to the incident could be taken into account in setting reparations.

The decision concerned two appeals brought separately by Oceana Gold (New Zealand Ltd)[1] (‘Oceana’) and Cropp Logging Limited[2](‘Cropp’).

Approach to reparations

The Court confirmed that reparations are payable to the family of a worker killed in a health and safety incident, to recognise the loss of earnings suffered by the household. The Court’s reasoning turned on the wording of the Sentencing Act, which provides that the term ‘victim’ includes immediate family members of a person who dies as a result of an offence committed by another.

In the Oceana case, which concerned a worker killed in a mining accident, this meant the worker’s family was able to recover the deceased employee’s lost wages (minus ACC compensation). Of the $200,000 reparations awarded,  the Court stated that approximately $120,000 was to account for lost wages (although no order for payment was made as Oceana had in effect already paid that amount). 

As to the calculation of reparations, the Court said that reparations for financial loss are limited to the shortfall between lost income and ACC compensation for the period for which a worker is entitled to ACC payments (rather than an open-ended approach unconstrained by ACC timeframes that may apply in relation to the victim’s life-time earnings). This, said the Court, would provide a straightforward basis for calculating reparation and avoid the need for complicated and contestable actuarial reports (relating to life time earnings) for sentencing hearings.

Finally, the Court ruled that a victim’s contribution to the accident should not be taken into account when assessing reparations, as this would have the effect of undermining the primary, or ‘foundational’ duty on PCBUs in section 36 of Health and Safety at Work Act 2015, which in summary requires a PCBU to ensure the health and safety of workers (so far as reasonably practicable). 

Oceana

The Oceana appeal concerned an employee who was killed in a mining accident. The District Court found that Oceana had failed to adequately ensure the employee’s health and safety, thereby exposing him to the risk of death. It ordered Oceana to pay $350,000 in reparations for the earnings the deceased worker would have earned over the course of his lifetime (after subtracting ACC compensation).

The High Court set aside the order for $350,000, on the basis of its more limited approach to reparations for financial loss. As stated above, the Court found that the appropriate figure for financial loss was $120,000, with an additional amount for emotional harm, totaling at most $220,000, but the payments already made by Oceana meant that no further order was needed.

Cropp

The Cropp appeal concerned an employee of Cropp Logging who was seriously injured when a log rolled over him. The District Court found that Cropp Logging had failed to ensure the employee’s health and safety at work, thereby exposing him to risk of death or serious injury.  In calculating the reparations to be awarded in respect of lost wages, the District Court took into account anticipated inflation and awarded the victim reparations of $80,000. It declined to make any reduction for the employee’s contribution.

Again, the High Court overturned this. It found that the District Court had erred by taking into account inflation without any supporting data. It reduced the award to $57,000, which included $7,500 for economic loss (based on the more limited approach outlined above), and $50,000 for emotional harm.  However, it upheld the District Court’s approach to the relevance of the worker’s contribution.

Lessons learnt for the future

This case has provided useful insights into the approach to calculation of reparations under the Health and Safety at Work Act 2015. In particular, reparations for financial loss will be much more limited than many had believed would be the case, with the amount limited to the ACC shortfall.

The case also serves as a timely reminder that a worker’s carelessness will not absolve PCBUs of their responsibility to ensure the safety of workers (and other persons) in the workplace. This principle has now been extended to the area of reparations, so that no reductions will be made for contributory fault on the part of a worker.

 

FOOTNOTES

[1]Oceana Gold (New Zealand) Ltd v Worksafe New Zealand [2019] NZHC 365

[2]Cropp Logging Limited v Worksafe New Zealand [2019] NZHC 365

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