New High Court guidance for challenging WorkSafe Enforcement Actions
WorkSafe inspectors have considerable powers of enforcement under the Health and Safety at Work Act 2015 (HSWA). Key among these are powers to issue prohibition and improvement notices, which require a company to ‘stop work’ and modify the way it carries out an activity, if they consider there are serious risks to health and safety.
Prohibition notices can have significant commercial ramifications, including shutting down operations and requiring observed serious risks to health and safety to be rectified prior to work resuming.
If a PCBU disagrees with a decision to issue such a notice, it has a right to challenge that decision via an internal review by WorkSafe and thereafter, a District Court appeal. However, those processes are time consuming and do not resolve the immediate need to resume work activities as soon as possible.
Our team recently acted for Ward Demolition Limited, who successfully argued that complying with a notice on a ‘without prejudice to appeal rights’ basis is an appropriate pathway to balance commercial drivers with legal rights. The High Court also gave helpful guidance regarding the Courts’ role in maintaining scrutiny and accountability of the actions taken by WorkSafe inspectors, as part of the balanced framework established by HSWA.[1]
Background
In June 2022, WorkSafe issued prohibition and improvement notices against Ward, resulting in all work at a multi-PCBU construction site being shut down. Ward initially sought a stay of the notices from WorkSafe, which was declined. In order to continue operations on site and minimise commercial impact, Ward complied with the notices on a ‘without prejudice’ basis at significant cost.
Ward subsequently challenged WorkSafe’s decision to issue the notices in the District Court. In October 2023, WorkSafe sought to have the proceedings dismissed on the basis that Ward’s compliance with the notices rendered the appeal ‘moot’ as there was no longer any issue to be resolved by the Court. Key among WorkSafe’s arguments were that the Notices effectively no longer existed, having been complied with, and effectively, this meant they could no longer be challenged. In December 2023 the District Court dismissed the proceedings, agreeing with WorkSafe that the notices in question no longer existed, and no longer had any practical effect on Ward’s rights.
Ward appealed the issue to the High Court on the basis that the District Court had erred in its decision, that the appeal was not moot and, even if it was, the public interest dictated that the appeal ought to be allowed. The High Court found in favour of Ward and referred the case back to the District Court for the substantive challenge to be heard.
The High Court Decision
In the High Court, His Honour McHerron J disagreed with WorkSafe’s position and the lower court’s ruling and accepted each of the appeal grounds advanced by Ward.
His Honour determined that as a party’s enforcement and compliance record could impact future decisions of WorkSafe (particularly in relation to asbestos licencing decisions), it was incorrect to form the view that there were no adverse effects to Ward. Further, under HSWA, a court is required to consider a company’s safety record when imposing a sentence for an offence, and as such a notice issued by WorkSafe may continue to have an adverse effect on a PCBU regardless of whether it has been complied with and lifted.
Ward further argued that given the unavoidable and significant delays with court scheduling, swift compliance is the only approach that can realistically minimise possible commercial issues that arise as a result of having to stop work. The Court accepted that it was commercially sensible for a company to comply immediately while reserving its right to challenge the decision, akin to the ‘pay now argue later’ approach adopted in construction disputes.
McHerron J agreed that this approach struck an appropriate balance between preserving a PCBU’s rights and ensuring health and safety in the workplace. In short, immediate compliance with a WorkSafe notice will not prejudice a PCBU’s right to subsequently challenge the decision.
Notably, the Court further determined that even if the appeal was considered moot, it would have been prepared to accept that this appeal would have a real impact on how WorkSafe prepares and issues notices in the future and was in the public interest to allow the appeal. This gives weight to the Court’s role in scrutinising WorkSafe’s exercise of powers under HSWA.
Key takeaways for PCBUs
This ruling provides helpful insights on how companies can balance commercial concerns and minimise commercial consequences arising out of WorkSafe enforcement action, namely;
- The Courts maintain ultimate oversight of WorkSafe’s exercise of the considerable power bestowed to it under HSWA. There is broad public interest in judicial scrutiny over its decision-making, and its approaches to enforcement decisions.
- A WorkSafe notice continues to have practical effect after a PCBU has complied with it. WorkSafe is entitled to rely on a company’s enforcement and compliance history when making decisions, and as such it may well be in the PCBU’s interests to consider challenging the decision behind the notice.
- Where WorkSafe issues a notice, a PCBU can protect its commercial interests by ceasing work and complying immediately on a without prejudice basis, remaining free to dispute the decision with WorkSafe and/or by way of an appeal in the District Court later.
Our health and safety experts, Partner Olivia Lund and Senior Associate Joe Williams acted for Ward Demolition.
Special thanks to Joe Williams and Graduate Bridget Craig for preparing this article.
If you need assistance with a health and safety matter, contact our health and safety team.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
[1] Ward Demolition Ltd v WorkSafe New Zealand [2024] NZHC 1548
