A recent Australian case (SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58) has meaningfully considered the scope of a director's due diligence duty, holding that a managing director cannot be expected to know everything, and delegation is an essential element of running a corporation. The case is predicted to be relied upon by the New Zealand courts, notably in the recent prosecution of the former CEO of Ports of Auckland (who is awaiting judgment).
On 14 November 2020, Mr Herden, a truck driver, was working on foot assisting the driver of a 'B-Double trailer' in the loading/unloading area at a transport depot operated by Miller Logistics. Mr Herden was struck by a forklift driven by another worker and suffered serious injuries. Miller Logistics was charged under the relevant New South Wales (NSW) health and safety legislation, as was its sole director, Mr Doble. The NSW District Court found Miller Logistics guilty but found that Mr Doble had not failed to exercise due diligence and had acted in line with his obligations under the legislation.
The Court considered Mr Doble's due diligence obligations as managing director, and concluded that he did not have to do everything that Miller Logistics (as the PCBU) had to do to ensure safety. Rather, he was only required to have processes and resources in place to ensure that the PCBU complied with its duty under the legislation. Notably, the Court observed and held that:
- Mr Doble was the sole director of a medium sized operation, operating in eight locations across NSW. A director in such a position "cannot know everything that is going on at any given moment", and that "[t]o run a corporation there must be a level of delegation"
- Mr Doble had hired an employee, Mr Hayter, specifically for the purposes of dealing with health and safety. There was no suggestion that Mr Hayter was "anything other than conscientious" and there was nothing to suggest that Mr Doble had any reason not to place confidence in Mr Hayter carrying out his work health and safety duties. The engagement of this employee was the primary process or resource that Mr Doble used to ensure that the PCBU carried out its duty
- Mr Doble was not a "hands off" director and showed an "active interest" in health and safety matters, for example:
- Mr Doble put in place a system to identify and manage the risks to safety at the depots. He also visited each depot from time to time and if he observed a problem, then he would have it fixed straight away
- health and safety was listed on the agenda for every management meeting, and any action points were followed up at the next meeting, which constituted verification that the resources and processes provided to the PCBU were being implemented
- if there was a work health and safety matter which required attention, there was no budgetary constraint in fixing a safety problem and there was never any pushback by Mr Doble
- Mr Doble was not obliged to take all reasonably practicable measures which had to be taken by the PCBU, and he was not required to ensure the health and safety of workers.
