Can a trust, or its trustees collectively, be regarded as a “person” and therefore held directly accountable for breaches of Health and Safety law? In this article, we consider how a tragic accident in 2020 led to a court ruling on this issue, clarifying the liability of trustees under the Health and Safety at Work Act 2015 and highlighting the consequences for those managing unincorporated trusts.
On 17 September 2020, a tragic accident occurred where a child’s jacket was caught in machinery and the child was fatally injured. The farm where the accident occurred was owned by RH & Jury Trust (the Trust), an unincorporated trust. WorkSafe New Zealand charged the Trust with breaching the Health and Safety at Work Act 2015 (“HSWA”), as a “person conducting a business or undertaking” (“PCBU”) under sections 37(1), 48(1) and 48(2)(c).
The District Court ruled that the Trust nor the Trustees could be charged with the aforementioned breaches, and WorkSafe appealed this decision as a point of law to the High Court. The High Court had to determine whether a trust (or its trustees collectively) constitute a “person” under the HSWA.
While the Court determined that the Trust is not a “person” under section 16 of HSWA, it did determine that the trustees come within the definition of “person” as an unincorporated body of persons.
This decision now allows for the trustees themselves to be prosecuted collectively under the HSWA as a “person”. Crucially, because the trustees can now be considered “a body of persons”, the higher penalties under the HSWA become available – including the maximum fine of $1.5 million.
Implications:
- Trustees cannot assume that the trust structure shields them from liability when it comes to Health and Safety.
- Trustees of unincorporated trusts can be prosecuted collectively for breaches of the Health and Safety at Work Act 2015.
- This opens the door for significant penalties, including the maximum fines under section 48(2)(c) of the Health and Safety at Work Act 2015, which are up to $1.5 million.
- Regular risk assessments, policies, and documented compliance measures are essential to diminish the risk of liability.
We help many charities, Trusts, and other entities. If you have any questions on this topic or others, feel free to contact us and check out our free resources on our website.
