Tag: due diligence

Contractor safety management series Part 4: The Queen v ACR Roofing

~ My safety thoughts ~ Leave a comment

The Queen v ACR Roofing involved a fatality at a construction site, when a worker was electrocuted after a crane contacted overhead power lines. The worker was employed by a sub-contractor engaged by a 3rd party, and did not have any contractual relationship with ACR, the company that was prosecuted.

The case explores a number of interesting concepts, including whether a sub-contractor can be “engaged” when there is no contractual relationship. The case also explores the ongoing issue of “control” in a contracting relationship, and considers what role the relative “expertise” of the parties has in determining who has control.

You can access a video presentation about the case here.

Contractor safety management series Part 3: Nicholson v Pymble No 1

~ My safety thoughts ~ 1 Comment

Nicholson v Pymble No 1 (Inspector Nicholson v Pymble No 1 Pty Ltd & Molinara (no 2) [2010] NSWIRComm 151) is not strictly speaking a contractor safety management case. However, it does involve a contracting relationship, but more importantly, it builds on the issues of “control” that we looked at in the last presentations.

Pymble had engaged a contractor to carry out construction work at the premises, and there were a number of allegations that the construction site was unsafe. Mr Molinara was a director of Pymble and lived in South Australia.

Pymble and Molinara were effectively charged on the basis that they were both (relevantly) “persons” with control of a premises being used by people as a place of work, and they failed to ensure that the premises were safe and without risk to health.

The case turned on whether Pymble and/or Molinara had relevant control.

You can see a short video presentation about the case here.

Contractor safety management series Part 2: Stratton V Van Driel Limited

~ My safety thoughts ~ Leave a comment

Stratton v Van Driel Limited is the second case in our contractor safety management series.

It is a somewhat older decision, having been handed down in 1998, but useful in that it looks at a narrow issue that is very important in the context of contractor safety management: Control.

In 1995 Mr Baum, a roof plumber was seriously injured when he fell down a ladder. Mr Baum was employed by Signal & Hobbs, who in turn had been engaged by Van Driel Limited, to do work on the new Dandenong Club in Dandenong, Victoria.

The essence of the charges against Van Driel was that it had not done everything Reasonably Practicable to provide a safe system of work, in that it had not managed the risks associated with working on the roof.

Van Driel defended the charges on the basis that they did not have relevant control over the way an independent contractor did their work.

You can access the video presentation of the case here.

Conactor safety managment series Part 1: Nash v Eastern Star Gas

~ My safety thoughts ~ 2 Comments

In August 2009, Bruce Austin a working director of a small business, The Saver Guys, died from head injuries after he was hit by a length of pipe that was being extracted from the ground.

Mr Austin’s business had been contracted by another entity, Applied Soil Technology Pty Ltd. The relevant work was being overseen by Austerberry Directional Drilling Services Pty Ltd, who had in turn been engaged by Eastern Energy Australia Ltd on behalf of a related corporation, Eastern Star Gas Ltd.

At the time of the accident, Mr Austin and others were trying to recover a blocked pipeline from under the ground.

Although a number of entities were prosecuted and convicted in relation to the fatality, this case looked at the safety management arrangements in place between Eastern Star Gas and Austerberry Directional Drilling. The case provides some useful insights into the expectations placed on businesses removed to an extent from the conduct of the physical work by a contractor. It also demonstrates how an organisations’ own, documented safety management systems (in this case a contractor safety management system) can be used to demonstrate that the organisation is not meeting its obligations.

You can access a copy of the decision here, and the video presentation here.

References in the Presentation:

Hillman v Ferro Con (SA)

Delphic motherhood statements part 2 – safety documents that nobody can understand

~ My safety thoughts ~ 2 Comments

A little while ago I did a post looking at the complexity of documented safety management systems, and the role that documentation has played in undermining effective safety management. You can review the post here.

I was recently sent an article (you can access it here) which underscores the potential negative impact safety documentation has on safety performance.

The New Zealand research found that:

  • Two thirds of employees did not fully understand information contained in health and safety documents , including safety procedures;
  • 80% of employees were not able to accurately complete hazard report forms; and
  • Safety documents were highly complex and used vocabulary that employees did not understand.

A fascinating aspect of the research is that it provides a list of words that were unfamiliar and confused employees. Some of those words included “significant hazards” , “competence”, “accountabilities” and “not adversely affect”. All words that reflect the requirements of legislation and guidance material but have little place in the day to day comprehension of workers.

From my own perspective, I have to say that this research is entirely consistent with my study of major accident events going back 30 years. Every major accident events enquiry that I have ever researched has identified that in some way the documented safety management systems undermine effective safety performance. Typically they are too complex for the people who have to implement them to understand.

Based on my experience I would add two further phrases to the list of unfamiliar words: ” reasonably practicable” and “root cause”. These two phrases are ubiquitous throughout safety management documents in Australia, yet universally whenever I am conducting obligations or investigation training there is no common (much less “correct”) understanding of what these things mean.

There are two things that I find professionally embarrassing as a person who has spent the last two decades specialising in safety and health management . The first is our continued reliance on lost time injury data as a measure of safety performance in light of the overwhelming evidence that they add no value to our understanding of the management of risk.

The second is , despite at least 30 years of “reminders” that out documented safety processes add little to the management of safety risks, almost universally we continue to do the same thing, in the same way but somehow expect a different. I think Einstein had something to say about that.

I have recently been working with a senior executive in an organisation who confronted a safety consultant with the following:

“if you can’t explain it to me easily, then you don’t understand it yourself “

An interesting test to apply to our safety documents?

Safety risk and safety data: Exploring management line of sight

~ My safety thoughts ~ Leave a comment

I have recently done a video presentation on a fatality at the Adelaide Desalination plant, which you can find by following this link.

Recently, I was reading some of the transcript of the South Australian Senate Inquiry into the desalination plant (which you can find by following this link), and was struck by one manager’s description of all of the activity undertaken in the name of safety:

We start with the inductions when new staff join the project. So, at 6.30am, usually three times a week—I attend probably two of them; I was in one yesterday—we induct new staff onto the job. The first thing I point out is the list of non-negotiables. The second thing I point out is for each person to look after their mate. It starts there. We then have a standard list of documents. I will read from this list, because it’s quite a large list. There is the HSC risk register, task specific for each job. There is a construction execution plan. There is a JSA, task specific.

We have daily start cards for each area, which is another thing I introduced. I am not sure if we gave you a copy, but it’s a small easily-filled-in card where a work team can assess the risks of adjacent trades, etc. So, that is a specific thing. We have a pre-start meeting every day. There are SafeWork instruction notices posted at each of the work areas. We toolbox the job weekly, because the pace of this job changes. You can go out there in two-day gulps and the whole access can change, so we need to make sure people see that. We have the non-negotiables in place. We have site and work-front specific inductions, which is what I told you about. Again, I attended one yesterday.

I have regular safety walks. I have trained all of my management team and the two layers beneath that to go on safety walks. We have our OHSC risk register. There is a just culture model in place. So, if I need to address an incident and it turns out that this person needs retraining or perhaps needs to be disciplined or work outside the fence somewhere, we use this just culture model for that. We have all been trained in that. There are safety KPIs for management. There is a safety enhancement committee, which is a mixture of workers and staff. I actually chair a weekly safety leadership team, and that’s improving safety over and above. We are looking to refresh it all the time. And so it goes on. I have two pages of this stuff.

Now, there may have been far more information that sat behind all of this activity, but it seemed to me to be a typical approach to safety management – and one that typically gives no insight into whether the risks in the business are actually being managed.

One of my particular areas of interest in the context of safety management is “management obligations”, and more particularly how managers (at all levels) get assurance that the health and safety risks in their business are being effectively managed. It is a concept that I have referred to before and written about (Smith, 2012) as “management line of sight”.

An area of speciality for me is management obligations training; courses that are designed to help managers understand their legal obligations for safety and health, and how their behaviour – what they “do” – contributes to effective safety management.

Over the last 3 or 4 years I have put the following scenario to the various courses:

Who here knows about a risk in their business or area of responsibility that could kill someone?

Invariably, most hands go up.

Who has safety information that comes across their desk on a regular basis.

Again – most hands go up.

OK. What I would like you to do is to think about the risk. Then I want you to think about the data that you have looked at in the past 3 months.

Pause ……

What does that data tell you about how well the risk is being controlled?

And then the lights come on, with the realisation that their organisations spend inordinate amounts of time and resources producing volumes of information that tell them nothing about whether risks in the business are actually being controlled.

This “gap” was most recently highlighted in the Royal Commission into the Pike River Coal Mine Disaster (Pankhurst et.al, 2012), in which 29 men died in an underground coal mine explosion in New Zealand. The Royal Commission noted the following:

The statistical information provided to the board on health and safety comprised mainly [LTI rates]. The information gave the board some insight but was not much help in assessing the risks of a catastrophic event faced by high hazard industries.

… The board appears to have received no information proving the effectiveness of crucial systems such as gas monitoring and ventilation. (My emphasis).

Typically, in a training course discussion there is no meaningful consensus on  what the “crucial systems” are in a business, much less how we prove that they are effective.

What we can say with a high degree of certainty is that traditional measures of safety performance do not prove the effectiveness of crucial systems – certainly LTI and other personal injury rates do not, and we have known that for at least 25 years. However, other indicators are equally poor in creating insight into the control of crucial systems. The number of management site visits do not enlighten us, nor do the number of audit actions that have been closed out, the number of “behavioural observations” don’t help, the number of people trained, the number of corrective actions completed, the number of JHAs or “take 5s” done and on it goes.

These things are all indicators of activity, which are designed to ensure that the safety management systems are effective, but ultimately, they leave us in no better position as far as understanding the effectiveness of crucial systems.

There is another interesting challenge that falls out of exploring management line of sight, and that is, what should I be looking at?

Historically, and as I touched on above, we typically consider safety in the context of harm and risk: what can hurt people and how likely is it that they will be hurt? But line of sight and assurance demands a wider gaze than hazards and risks.

The Royal Commission (2012, volume 2, p. 176) also stated:

Ultimately, the worth of a system depends on whether health and safety is taken seriously by everyone throughout an organisation; that it is accorded the attention that the Health and Safety in Employment Act 1992 demands. Problems in relation to risk assessment, incident investigation, information evaluation and reporting, among others, indicate to the commission that health and safety management was not taken seriously enough at Pike. (my emphasis)

“Crucial Systems” mean more than gas monitoring or ventilation. They are more than the control of physical risks. They incorporate broader organisation systems around hazard identification and risk assessment, contractor safety management, management of change, incident investigation and so on. All elements that are designed to work together so that the “system” as a whole is effective to manage risk.

If organisations are weak insofar as they cannot “prove” that physical risks are being controlled, the reporting, assurance and line of sight to prove that these other “crucial” systems are effective is almost non existent.

When was the last time you received a report “proving the effectiveness” of your incident investigations, for example?

What are the “crucial systems” in your business, and how would you “prove” that they were effective. Food for thought.

References

Pankhurst, G., Bell, S., Henry, D (2012). Royal Commission on the Pike River Coal Mine Tragedy. Wellington, New Zealand

Smith , G. (2012). Management Obligations for Health and Safety. CRC Press, Boca Raton

25 Years on: Remembering Piper Alpha

~ My safety thoughts ~ 4 Comments

In the past few weeks I have been asked to do presentations and share my views about the legacy of Piper Alpha in this, the 25th anniversary year of the disaster.

For me, the positive legacy is the advancement in safety regulation, engineering and “safety in design” that has seen the improvement of the physical safety of high hazard workplaces. Safety in design has also improved the “survivability” of disasters so that when accidents to occur, their consequences are better mitigated.

The ongoing disappointment, however, is the persistent failure of management oversight and assurance to properly understand if health and safety risks are being managed. This is a failure that has played out in every major accident inquiry since Piper Alpha and continues to undermine effective safety management.

You can see a video presentation of these ideas and concepts here.

Fatalities, Insurance and failed paper systems: Hillman v Ferro Con (SA) [2013] SAIRC 22

~ My safety thoughts ~ 5 Comments

On 16 July 2010 a fatality occurred during lifting operations at the Adelaide desalination water plant. A rigger employed by Ferro Con (SA) Pty Ltd was killed when he was struck on the head by a 1.8 tonne steel beam.

The Company, Ferro Con, and its Director, Paolo Maione were prosecuted under South Australian health and safety legislation, and in June 2013 were handed fines of over $200,000.

The case has attracted some attention because Mr Maione was able to call on an insurance policy to pay his penalty – effectively avoiding the punishment of the Court. It has long been thought, in my view correctly, that insurance to pay for effectively criminal penalties is counter to public policy and unlawful and it will be interesting to see if there is any “public policy” response to the decision.

Over and above the insurance aspects of the case, the judgement offers some good insights into the weaknesses of “paper based” safety management systems, a compliance mentality and lack of assurance. The judgement also explores some issues in the Principal/Contractor relationship.

You can see a video presentation about the case here.

Also, set out below are links to various references and materials referred to in the discussion if you would like to explore some of the concepts further.

Links to material referred to in the presentation.

Video presentation – case review: Capon v BHP Billiton Iron Ore Charge No. 1917/11

Video presentation – case review: Fry v Keating [2013] WASCA 109

Court judgement: Silent Vector v Shepherd & Anor [2003] WASCA 315

Court judgement: Hillman v Ferro Con (SA) Pty Ltd (in Liquidation) & Anor [2013] SAIRC 22

Article: Borys, D. (2009). Exploring risk-awareness as a cultural approach to safety: Exposing the gap between work as imagined and work as actually performed. Safety Science Monitor, 13(2), Article 3.

Are health and safety managers “company officers” and should they be?

~ My safety thoughts ~ 5 Comments

This post has been prompted by recent activity on various blogs and safety discussion boards about whether a health and safety manager could be a Company Officer for the purposes of recently adopted health and safety legislation.

For those of you who follow this blog outside of Australia, part of this post is particular to recent legislative developments is Australia, although part of the discussion also looks at the broader accountabilities of health and safety managers.

Since about 2008, Australia has been engaged in a discussion about a legislative change agenda commonly referred to as “harmonisation”. The object of harmonisation was to achieve nationally consistent health and safety legislation across all jurisdictions in Australia. Although due to commence in 2013, and despite “harmonised” laws having been implemented in a number of jurisdictions, to date, the objectives of harmonisation have not been achieved.

You can read more about harmonisation here.

One of the key elements of harmonisation is a positive obligation of “due diligence” imposed on “company officers”.

Previously, under Australian law Company Officers could be held personally liable for breaches of safety legislation where offences occurred due to the company officers consent, connivance or neglect. A recent example of this type of case was the Western Australian decision, Fry v Keating, and you can see a presentation of this type of case here.

The due diligence obligations mean that relevant individuals must demonstrate positive actions to be satisfied that health and safety risks are being effectively controlled. So for example, the “model bill” used to frame harmonised legislation provides that due diligence includes taking reasonable steps:

  • to acquire and keep up-to-date knowledge of work health and safety matters; and
  • to gain an understanding of the nature of the operations of the business or undertaking of the person conducting the business or undertaking and generally of the hazards and risks associated with those operations; and
  • to ensure that the person conducting the business or undertaking has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking; and
  • to ensure that the person conducting the business or undertaking has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information; and
  • to ensure that the person conducting the business or undertaking has, and implements, processes for complying with any duty or obligation of the person conducting the business or undertaking under this Act; and
  • to verify the provision and use of the resources and processes referred to above.

Given that harmonisation is about legislation aimed specifically at managing health and safety risks, it does suggest two important questions: Could health and safety managers by company officers for the purposes of the due diligence obligations, and should they be?

In my view, the answers are “probably not”, and “yes”.

Although health and safety managers, are often “senior managers”, they are not by default company officers. The term “officer” of a corporation is defined by s 9 of the Corporations Act 2001, and relevantly for this post includes a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation.

A relatively recent case looking at the issue of who may be a company officer was Shafron v Australian Securities and Investments Commission [2012] HCA 18, which you can access here. The case was one of a series of cases that concerned the prosecution of a number of company officers and executive managers of James Hardie arising out of disclosures by the company over its ability to fund potential asbestoses liabilities.

Mr Shafron was both Company Secretary and the General Legal Counsel, and the relevant arguments turned on whether Mr Shafron could be a company officer in his capacity as General Legal Counsel.

Part of the argument run by Mr Shafron was that he could split the two roles, Company Secretary and General Counsel; so that when he was acting in his capacity as a Company Secretary, he was a Company Officer, but that in his capacity as General Counsel.

That majority of the High Court “greatly doubted” that the capacities could be spilt in that way, but usefully for this discussion went on to discuss whether Mr Shafron was a Company Officer when acting in his capacity as General Counsel.

In forming the view that Mr Shafron was a person, who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation  the High Court made a number of observations.

First, that Mr Shafron was a senior officer, the second or third most senior executive in the company.

Second, Mr Shafron was one of a small group of three people who were “responsible for formulating” the relevant proposals.

Third, Mr Shafron’s “participation” went beyond merely providing advice – he played a large and active part (along with two others) in putting together the proposal that they chose should be put to the Board and adopted.

What is clear from the decision is that in some circumstances, whether a person is a Company Officer is situational – it is not fixed. So a person in making (or participating in making) some decisions may be regarded as a Company Officer, but in other cases may not.

On the face of the reasoning of the High Court, it is difficult to envisage too many circumstances where a health and safety manager would be likely to be found to be a Company Officer.

In my experience, health and safety managers are not typically amongst the senior echelon of executive managers, nor do they put proposals directly to the Board. To the extent that health and safety management proposals are put before a Board, they often come via a CEO or “sustainability” manager who put their own imprimatur on the proposal.

So to answer the first question, could health and safety managers be company officers for the purposes of the due diligence obligations? In my view – I cannot rule it out, but probably not,

As interesting (or otherwise) as this discussion might be, the more fundamental question is whether health and safety managers should be regarded as company officers – or at least have equivalent obligations of due diligence under safety legislation.

By way of comparison, there was and continues to be ongoing debate about how the mining industry is some parts of Australia will implement the principals of harmonisation.  At one point, a draft set of what were referred to, as “non-core” mining regulations were prepared, and without going into the rationale behind, and operation of the non-core regulations they did propose:

  1. The appointment of a senior person on a mine site who would be responsible for safety under the regulations – the Site Safety executive or SSE; and
  2. That the SSE would be “deemed” a company officer for the purposes of the health and safety regulations.

In doing this, the regulations were clear that the positive obligations of due diligence would apply to that position.

There seems to me to be no reason in principle why a similar approach could not be adopted in relation to health and safety managers. And if you look at the due diligence obligations as set out above, there is no reason that I can think of why you would not expect a health and safety manager to be across all of those requirements.

So, even is a health and safety manager may not be a company officer, there is no reason why they should not have the positive obligations of due diligence. After all, where would we expect the company officers to get the information top discharge their obligations if not from the health and safety manager?