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Friday Workplace Briefing

The Reckless Director – The Operational Executive Who Gets the Job Done

This week, Andrew Douglas and Nina Hoang discuss what happens when officers of organisations rush to meet their operational goals, making them careless about well-known practices including their own policies.

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About the Hosts

Managing Principal - Victoria

Senior Associate - Workplace Relations

Episode Transcript

Andrew Douglas: All right, let’s go on to our topic for today which is “The Reckless Director.” I’ve got a case for you today which is, sort of, one of those cases that you just read about and it’s one that you sort of go-

Nina Hoang: You’ve had a lot of joy with this case.

Andrew Douglas: Well, not so much joy. We’re not going to do any “Liquidated Company”, are we? No, we’re doing-

Nina Hoang: No, no, noNina Hoang: the next one, yeah.

Andrew Douglas: “The Reckless Director”. Yeah, we’re running out of time for that one. It’s gone. This is a case called Cordell, and Brian Cordell was one of six directors and was the operational director within the organisation. They were sand miners. Part of sand mining is you have pressurised hoses that wash the sand.

Nina Hoang: Yeah.

Andrew Douglas: In this case, the hose, which sat about 4.5 metres above the ground, had a valve and the valve broke and Brian Cordell, to fix the valve, decided he would use some earth moving equipment, some front-end loaders, and stick two people on the front-end loaders up to 4.5 metres-

Nina Hoang: Oh, gosh.

Andrew Douglas: To actually fix the valve. Now this is something with a bucket and you put two people in a bucket.

Nina Hoang: Yep.

Andrew Douglas: For those two people to communicate they had to communicate to someone over here, to talk to the driver there, to actually say how to lift it and move it. And that’s just as a start. Brian Cordell went home and thought about this and then came back the next day.

Nina Hoang: And this was his bright idea?

Andrew Douglas: This was the cunning plan. His policies and procedures said he had to use mobile scaffolding or scaffold.

Nina Hoang: And a harness.

Andrew Douglas: And a harness.

Nina Hoang: Yeah.

Andrew Douglas: There was no harness involved with this. What happened was inevitable. For some reason, the bucket tilted slightly. One young boy jumped off to safety. The other guy became entrapped and his head was wedged, causing 160 sutures in it.

Nina Hoang: Awful.

Andrew Douglas: And significant ugly after things, which caused him psychological harm. And what the judge said, finding him and the company reckless, was this. He said, “You got a policy and procedure that adopts industry standard. You went home and thought about this. This isn’t something a spur of a moment and it’s not something you haven’t done before. You’ve used this type of behaviour in the past. So you’ve got an utter disregard for the risk of serious injury, which is reckless endangerment.”

Nina Hoang: Yep.

Andrew Douglas: And gave him a six month sentence in jail and suspended it, okay? Had he had a prior offence, he would’ve definitely gone to jail, okay?

Nina Hoang: Oh yeah.

Andrew Douglas: But my point about this case was this guy raised the argument the company can’t be liable because it was his mistake. Which misunderstands attribution and safety.

Nina Hoang: Yeah, that’s literally what the statute says.

Andrew Douglas: That is what the statute says, so it was a dumb argument. But the court couldn’t get-

Nina Hoang: Guessing he wasn’t represented.

Andrew Douglas: Past the fact that a person who, in a premeditated way, ignores his own policies and procedures that adopt industry. It’s actually a very beautiful judgement as it goes through and does-

Nina Hoang: Yeah, it’s very detailed.

Andrew Douglas: Reasonable practicability. And it says, you know, look, here’s a hazard that’s known, it’s an obvious hazard that’s known. Here is the level of risk, it’s high. Here is the control, it’s recognised. In fact, your policies and procedures define reasonable practicability. It is the correct method of dealing with it.

Nina Hoang: Yeah.

Andrew Douglas: And you ignore it. So you breach your due diligence obligation. So you’ve got the primary breach duties done.

Nina Hoang: Yep.

Andrew Douglas: And goes on to say, well, not only did you do that, but you were so careless that you just weren’t interested at all in what was reasonably practical. You chose to do something knowing it was dangerous.

Nina Hoang: Yeah.

Andrew Douglas: So had this boy been killed that would’ve been industrial manslaughter because it has all the smell-

Nina Hoang: Oh yeah.

Andrew Douglas: Of that utter indifference.

Nina Hoang: Yeah, and complete negligence too.

Andrew Douglas: Yeah.

Nina Hoang: Yeah.

Andrew Douglas: So pretty interesting stuff. And when we look at what’s happening with the harmonising in law now, where we are going to have industrial manslaughter in all jurisdictions where negligence is going to become part of recklessness.

Nina Hoang: Yep.

Andrew Douglas: And where in all jurisdictions, very shortly, all insurances are gone. This is a sort of case which will percolate well beyond reckless endangerment in the future if there is a death.

Nina Hoang: Yeah, and I think the important thing from this is, Andrew, it’s not that uncommon. Like, yes the slight facts might change but this kind of situation is happening in businesses, particularly smaller, family owned businesses, every day because they’re prioritising operations over safety.

Andrew Douglas: Yeah.

Nina Hoang: Even though they’re well aware of the risk and they have clear policies that say they, you know, need to step up their game.

Andrew Douglas: Yeah, and look, that’s the reason we talked about it.

Nina Hoang: Yeah.

Andrew Douglas: That’s the reason we chose it as the main theme today is, it is a constant theme that comes in front of us where people have decided to do something to get the job done.

Nina Hoang: Yeah.

Andrew Douglas: And it’s often in a family business. It’s the owner of the business who says, “Look, can we just get on with it? Just get the job done.” But we also see it in very large scale businesses where there is a cost, you know, where there’s money burning and someone says, “Look, can you just cut through this and just go and get it done?”

Nina Hoang: But the cost, I think for this you said, it was, like, 4,000.

Andrew Douglas: 4,400.

Nina Hoang: To get it done safely.

Andrew Douglas: Yeah, yeah.

Nina Hoang: That’s a cost of-

Andrew Douglas: That’s it.

Nina Hoang: That person’s injuries, I guess. Gosh.

Andrew Douglas: So there you go. Alright, we’re going to give this a bit of a run now. We’re going to go-

Nina Hoang: The case study.

Andrew Douglas: Off case study, where we’ll revisit this problem again.

Nina Hoang: So, Ken was the Head of Operations for Love the Load (LTL), a heavy earthmoving contractor. LTL had operations throughout Australia and supported major builders at its Brisbane Ports Site, the largest non-mining excavation in Australia.

The EPA had stopped work at the site because of high chrome, mercury and asbestos levels in excavated soil, near the old foundry, in February 2023. The delays in excavation were leading to delay costs on LTL.

Ken flew up from Sydney to reduce the damages risk. When he arrived on site, he noticed the major area of excavation had not commenced. He asked his site foreman why. The foreman explained the road to the site needed fresh rolling and grading and that cement culverts needed to be installed beside a bridge to manage water flow in the event of heavy rains.

Ken looked up into the sky, said to the foreman, “There’s no rain today.” Looked over at the large mobile crane and asked why we couldn’t use it to move the culverts. The foreman said the weight was within the crane, but the road meant lateral movement would make it unsafe.

Ken and the foreman drove down the road to the excavation site. It was bumpy but not too bad. Ken instructed the foreman to have the crane move the culverts in place and start rolling and grading.

The foreman again raised the weight issue. So Ken said, “Let’s get one up and see what the controls say.”

The culvert was lifted and the crane dials showed it was 85% of load. Ken told them to get a move on. He walked with the crane on the way down to the bridge.

Several times along the way the crane alarm system beeps, suggesting the movement of the culvert overloaded the crane. Nonetheless the crane successfully moved the culvert into place.

Ken directed them to do the next one. And part of the way down to the bridge with the next concrete culvert, the crane lurched sideways and fell crushing the foreman and dogman who accompanied it.

Andrew Douglas: All right, so. Not an unfamiliar a set of facts.

Nina Hoang: No.

Andrew Douglas: Of the what, you know, the-

Nina Hoang: Yeah.

Andrew Douglas: Canberra Hospital. So, the company had detailed policies and procedures, which if followed by Ken, would have prevented the incident. The foreman tried to enforce these policies and procedures. Can the company still be liable under safety law?

Nina Hoang: Yes. Because the policies are evidence that they knew what was reasonably practical.

Andrew Douglas: Well, it’s interesting. If the company had repeatedly done the right thing beforehand and the actions of Ken were so outside of what had occurred, there is an argument that only Ken could be liable.

Nina Hoang: But if Ken’s liable, isn’t the company liable for attribution?

Andrew Douglas: Well, no, attribution only works to the extent you can carve out attribution if you can demonstrate everybody else who is competent and the business is competent. The detail in here is that Ken is an officer, so Ken is the company.

Nina Hoang: Yeah.

Andrew Douglas: Yeah.

Nina Hoang: And also, like, the company is definitely the one who’s done the behaviour. Like, Ken’s directed them to. But the other, yeah-

Andrew Douglas: Yeah, they’re trying to resist. I’m just saying, so-

Nina Hoang: I feel Like that would be very difficult to run.

Andrew Douglas: Yeah. Well there’s been cases that have been successfully run. Not where it was an officer but where it was an employee, you did something.

Nina Hoang: Yeah, I feel like that makes sense.

Andrew Douglas: And I guess that’s the point of this question is to show when it is actually the officer who does it, which is the mind of the corporation.

Nina Hoang: Yeah.

Andrew Douglas: At that stage then the company is most definitely liable.

Nina Hoang: Yeah, because if it was, like, a random employee you could say they were an outlier.

Andrew Douglas: That’s right.

Nina Hoang: But…

Andrew Douglas: This is the only mind. So anyway, look, both of them would be liable under attribution. So next question is, Ken is an officer of LTL. Is he in breach of his due diligence obligations? Now the answer’s pretty easy.

Nina Hoang: Yeah.

Andrew Douglas: Yes, isn’t it?

Nina Hoang: Because he knew of the risk.

Andrew Douglas: Yeah. I understand that. But let’s talk about what it is. I just want to be clear about what is due diligence obligation. So, was Ken aware of the high risk involved then?

Nina Hoang: Yes.

Andrew Douglas: Yes he was.

Nina Hoang: Because they told him about it.

Andrew Douglas: Not only did they tell him, so in Victoria he was on liability under 144 because-

Nina Hoang: Because he had knowledge.

Andrew Douglas: He’d been told.

Nina Hoang: Yeah.

Andrew Douglas: And he had the power to influence and control it.

Nina Hoang: Yeah.

Andrew Douglas: So he is definitely liable under 144 in Victoria. In every other jurisdiction, he had the objective knowledge of the nature of risk that he was directing to be undertaken. He had a knowledge of the law, ought to have had a knowledge of the law that applied to it, and he ought to have known what the resources that ought have been applied to doing it.

Nina Hoang: Yep.

Andrew Douglas: And he knew there was a system and he should have followed it.

Nina Hoang: Yeah.

Andrew Douglas: Okay. So he’s definitely in breach-

Nina Hoang: And he bypassed all of that.

Andrew Douglas: Of the due diligence obligation.

Nina Hoang: Yep.

Andrew Douglas: So, is Ken guilty of a category 1 reckless endangerment?

Nina Hoang: Yes, because he engaged in reckless conduct that put someone at serious risk of injury or death.

Andrew Douglas: Okay, and the reckless, we talk about that, so-

Nina Hoang: He was indifferent to the risk.

Andrew Douglas: He was indifferent to the nature of the risk. So in fact, how indifferent can you be when you hear the beeping of a crane going. And this is what R and Watt, this is Queen versus Watt.

Nina Hoang: Yep, yep.

Andrew Douglas: The industrial manslaughter case was about. Where a crane went down a track, it was overloading, and it was actually sending alarm signals as it was going. And it had happened in the past. They’d used this crane in the past in the same way and what was charged was industrial manslaughter ’cause it eventually fell and caused death. So, yes. Okay, next.

Nina Hoang: But it’s not just the beeping, like, the foremen raises that, “Look these are the risks and you can’t do it, it’s unstable.” So it’s many different levels-

Andrew Douglas: It is. So many different of being aware of the risks.

Nina Hoang: Yeah.

Andrew Douglas: Is Ken guilty of industrial manslaughter?

Nina Hoang: They’d need to be negligent, breach of duty.

Andrew Douglas: And such a wanting of standard of care.

Nina Hoang: Yeah.

Andrew Douglas: So what we’ve got to look at is a high degree of negligence and a complete wanted of standard of care. And if we go back to the basic standard of care.

Nina Hoang: That results in death, yeah.

Andrew Douglas: Yeah. So, what is that? Is there a hazard? Yeah.

Nina Hoang: Yeah.

Andrew Douglas: There’s a multitude of hazards.

Nina Hoang: And they’re high risk.

Andrew Douglas: And they’re all exceptionally high risk. He was put on notice of the risk actually while it was happening.

Nina Hoang: Yep.

Andrew Douglas: So, if he wasn’t aware of the risk during the time, at the time decision making, he was at the time it was occurring and could have stopped it.

Nina Hoang: Yep.

Andrew Douglas: What was the control in place to stop? The only control was not to proceed, okay?

Nina Hoang: Yeah.

Andrew Douglas: It was the only elimination strategy, that they had to wait. He didn’t do that and he had the resources, he had the power to do that. So it was so wanting in that reasonable practicability.

Nina Hoang: Does the fact that he got them to, kind of, like, test it. Like…

Andrew Douglas: But the test actually gave greater knowledge of the risk that was involved. ‘Cause it actually had the beeping.

Nina Hoang: Ah, so the beeping. But, as in the fact that it didn’t fall.

Andrew Douglas: Yeah.

Nina Hoang: Does it, like, in itself, like, mitigate?

Andrew Douglas: No, no. In fact, the fact it doesn’t fall, is just-

Nina Hoang: Luck.

Andrew Douglas: Good luck, is the short answer.

Nina Hoang: Yeah.

Andrew Douglas: It could have broken, the crane could have collapsed. A whole lot of things could have happened. So yeah, he’s in the gun for industrial manslaughter. Alright. If the company had a prior conviction for a safety system breach around crane usage and Ken was the Head of Operations at the time, would this increase the likelihood of a custodial sentence for Ken and heighten the penalty for LTL? And the answer is yes. I guess this is is something that Nina and I constantly advise people about. When you look at breaches of safety, the bottom three breaches in duties, the bottom duties are safe plant or site.

Nina Hoang: Yeah, training, supervision.

Andrew Douglas: Yeah, safe in that. And supervision is the third. All of those don’t create a lot of officer liability. But when you move up to a breach of a system…

Nina Hoang: That’s, ah…

Andrew Douglas: And particularly where the system breach is, one which is controlled by the relevant officer. And then there is another systems breach, particularly if it is the same system, but another systems breach, or here in this question, it’s about crane usage.

Nina Hoang: Yeah.

Andrew Douglas: That’s a definite go to jail.

Nina Hoang: Yeah.

Andrew Douglas: Because what’s happening at the moment is with no prior convictions, people’s convictions are regularly being suspended.

Nina Hoang: Yep.

Andrew Douglas: On a good behaviour. But the answer is, if you’ve got a prior, even though you’re not personally charged, it’s a relevant prior to your stated knowledge.

Nina Hoang: Yep.

Andrew Douglas: On that basis, I reckon Ken will be off to jail for six months.

Nina Hoang: Yeah. They have to. It’s got to be for deterrence reasons, like…

Andrew Douglas: Yeah.

Nina Hoang: Yeah.

Andrew Douglas: Now, will LTL be guilty of the same offence as Ken? In other words, if Ken is guilty of industrial manslaughter, could LTL be guilty of a lesser?

Nina Hoang: No, I think ’cause he is an officer, it’s directly attributable.

Andrew Douglas: Yeah, well I think it’s slightly more difficult than that. But I agree with you, because he is the active mind of the business.

Nina Hoang: Yeah.

Andrew Douglas: So he has a capacity to influence.

Nina Hoang: Yep.

Andrew Douglas: He has the financial control, the ability to control what needs to be done and he has the state of knowledge of risk.

Nina Hoang: Yeah.

Andrew Douglas: I think under those circumstances they are the state of knowledge of the company. When you look at what the company does it’s actually got all the infrastructure that talks about that knowledge.

Nina Hoang: Yep, and ignored it.

Andrew Douglas: Yeah, so he’s acting as the company.

Nina Hoang: Yeah.

Andrew Douglas: When he does it because of an officer. So the short answer is, they’d both be guilty of industrial manslaughter. So that’s the reason I want to do this case today. We don’t often do just a safety case.

Nina Hoang: No, but I think it’s good because it clearly shows step by step exactly how easy it is to breach.

Andrew Douglas: Yeah.

Nina Hoang: And there’s a common misconception that officers can be, like, “No, look, this is my bad decision”, separate to the company, but it’s very closely intertwined.

Andrew Douglas: Yeah, and that’s what Cordell’s case talks about.

Nina Hoang: Yeah.

Andrew Douglas: It talks directly about, well you can’t actually separate the actions of Cordell from the Cordell Company because actually he is the mind of Cordell Company and he was the person who gave the directions in breach of their own structures and strategy.

Nina Hoang: Yep.

Andrew Douglas: Okay. So look, that’s it for today.

Nina Hoang: Yeah.

Andrew Douglas: Interesting set of cases. There’s some really interesting stuff happening in the next week too, so.

Nina Hoang: And Matt will be back.

Andrew Douglas: Matt will be back. That’s exciting.

Nina Hoang: Yeah.

Andrew Douglas: It’s exciting for all of us. We can actually stop sweating so profusely. We’re working so hard and waiting for the MSU to attack us. Alright guys, thumbs up.

Nina Hoang: Give us a thumbs up.

Andrew Douglas: See you later, bye bye.

Nina Hoang: See ya, goodbye.

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