Whakaari Management Limited found guilty in Worksafe’s latest prosecution arising out of the Whakaari White Island disaster

Whakaari (White Island) is New Zealand’s most active volcano, located 48km off the East Coast of the North Island in the Bay of Plenty. Whakaari Trustees Limited owns the island, which is managed by Whakaari Management Limited (WML).

WML has agreements with a number of tourism operators which run tours on the island. Access to the island is by boat or helicopter.

On 9 December 2019 Whakaari erupted, resulting in the death of 22 of the 47 people on the island, while the remaining 25 were seriously injured. Following the eruption, WorkSafe laid charges against 13 defendants under the Health and Safety at Work Act 2015 (HSWA).

Of the 13 defendants, six pled guilty:

• Inflite Charters Limited, a tourism operator which sold and provided trips to Whakaari entered a guilty plea and has been sentenced.¹ Inflite was fined $227,500 and ordered to pay prosecution costs of $40,000.
• Four tourism operators, White Island Tours Limited, Volcanic Air Safaris Limited, Aerius Limited, and Kahu NZ Limited, have pled guilty and are yet to be sentenced.
• The Institute of Geological and Nuclear Sciences Limited (GNS), responsible for monitoring volcanic activity, has pled guilty with sentencing to come.

The National Emergency Management Agency (NEMA) successfully applied to have the charges against it dismissed. We considered that decision in the June 2022 issue of Navigate, which can be found here.

Five defendants had charges dismissed at trial:

• WML’s directors (Andrew, James, and Peter Buttle) applied unsuccessfully to have the charges against them dismissed before trial. We reported on that decision in the November 2022 issue of Navigate, which can be found here. They subsequently had charges dismissed at trial.
• Two companies which formed part of the “supply chain” organising bookings for White Island Tours Limited, ID Tours New Zealand Limited and Tauranga Tourism Services Limited, pled not guilty and had charges dismissed at trial.

Only WML was found guilty at trial.

The substantive trial was held from 11 July 2023 to 21 September 2023. District Court Judge Thomas issued three separate rulings in relation to the remaining prosecutions.

WorkSafe New Zealand Limited v Andrew Buttle James Buttle Peter Buttle [2023] NZDC 18939

WML has three directors (Andrew, James and Peter Buttle), but no employees. In the words of Judge Thomas, “the Buttles were WML”.

WorkSafe laid charges against the Buttles as individual directors under s 44 HSWA. They sought unsuccessfully to have the charges against them dismissed on the basis that they were defective for lack of adequate particulars. Read more about the case here.

At trial the Buttles argued the evidence against them was insufficient to establish a case to answer and applied to have the charges dismissed.

Judge Thomas agreed. He found that evidence against them was lacking to the extent that, even taking WorkSafe’s case at its highest, he could not convict. He dismissed the charges against the Buttles.

WorkSafe’s evidence had focused on the failures of WML as an entity, or the directors as a board. Judge Thomas held that to successfully bring charges against the directors individually, WorkSafe needed to establish the role and decision-making of each director individually. WorkSafe failed to do so, despite having the power to request relevant “behind the scenes” evidence such as board minutes. This failure was the subject of some criticism in the judgement.

WorkSafe New Zealand v ID Tours New Zealand Limited Tauranga Tourism Services Limited [2023] NZDC 19521

WorkSafe charged ID Tours and Tauranga Tourism under s 32(2) HSWA, which sets out the primary duties of a Person Conducting a Business or Undertaking (PCBU). Section 32(2) provides that:

A PCBU must ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking.

ID Tours and Tauranga Tourism formed part of a supply chain through which White Island Tours would sell tours of Whakaari. WorkSafe alleged that, as part of the supply chain, they had a duty under s 32(2) to ensure that necessary safety information reached Royal Caribbean Cruises’ customers but failed to do so.

ID Tours and Tauranga Tourism argued that they did not owe a duty under s 32(2) and applied to have the charges dismissed.

Section 32(2) is the same section under which WorkSafe brought charges against NEMA. Those charges were dismissed on the basis that s 32(2) should be construed narrowly as applying only to the PCBU’s own workers and workplace, and not to its work product. Read more about the case here.

Judge Thomas applied his decision in NEMA. He found that ID Tours and Tauranga Tourism’s roles in the supply chain did not create a duty in relation to work product. The charges were dismissed.

WorkSafe New Zealand v Whakaari Management Limited [2023] NZDC 23224

WML faced charges under ss 37(1) and 36(2) HSWA. Section 37(1) reads as follows:

A PCBU who manages or controls a workplace must ensure, so far as is reasonably practicable, that the workplace, the means of entering and exiting the workplace, and anything arising from the workplace are without risks to the health and safety of any person.

WML denied that it had a duty under s 37(1) on the basis that it did not “manage or control a workplace”.

Judge Thomas rejected that argument and held that WML owed a duty under s 37(1) based on the following:

• To owe a duty, a PCBU must “manage or control a workplace”.
• It is not enough that a PCBU has the ability to manage or control a workplace, a factual inquiry must establish that it actually does so.
• Normally, a landowner who allows a tourism operator to conduct an activity on their land will not “manage or control” the workplace because the activity is the attraction, not the land itself, and the operator will control access to that activity. Judge Thomas uses the example of a zipline operator. The zipline is the attraction, not the land the zipline is situated on.
• In this case, the volcano itself was the product and exposure to the volcano was the recreational activity. WML’s business was to provide access (through tourism operators) to that product so it did “manage or control” the workplace.

He then went on to find that WML breached its duty. In particular:

• WML failed to obtain expert advice on the risks associated with allowing tourists onto the volcano and consequently to take steps based on that advice.
• While a PCBU is not usually expected to duplicate risk management conducted by other PCBU’s, the Judge found that in this case WML was unable to rely on risk management done by other parties because an eruption in 2016 demonstrated that the risk management steps taken by those other parties were inadequate.²

WML’s breach was considered to be a significant causative factor in the deaths and injuries which occurred in the disaster, and WML was found guilty on the charge under s 37(1).

Turning to the charges under s 36(2), Judge Thomas applied his ruling in NEMA. As in NEMA, WML did not have employees or customers on the Island. Judge Thomas found that because there was already a duty under s 37(1) there was no need for an expanded interpretation of s 36(2). The charge was dismissed.

A number of criticisms of WorkSafe have emerged in Judge Thomas’ recent judgements. Of primary interest to PCBUs which are subject to a WorkSafe investigation (and their insurers) will be Judge Thomas’ finding in WorkSafe v Whakaari Management Limited that WorkSafe cannot compel a PCBU to attend an interview at a time and place of its choosing.

Section 168(1)(f) reads:

(1) Subject to section 169, for the purpose of performing any function of the regulator or an inspector under relevant health and safety legislation, any inspector may, at any reasonable time, enter any workplace and—

…

(f) require the PCBU or a person who is or appears to be in charge of the workplace to make or provide statements, in any form and manner that the inspector specifies.

WorkSafe sought to use the power conferred by s 168(1)(f) to compel the Buttles, as directors of WML, to attend an interview at the time and place of its choosing. It was accepted that WorkSafe had the power to compel an interview, but it was found that WorkSafe did not have the power to compel an interview at the time and place of its choosing.

The wording of the HSWA does not expressly grant WorkSafe a power to dictate the time and place of an interview. In light of the requirement that a PCBU give reasonable assistance, which would include attending an interview, and the ability of WorkSafe to prosecute for a failure to give reasonable assistance, Judge Thomas found that there was no need for such a power to be implied into the statute.

Judge Thomas found that there was no prejudice to WML and allowed the interviews into evidence. However, prejudice could arise if a PCBU is placed at a disadvantage by (for example) WorkSafe compelling a PCBU to attend an investigation with insufficient time to adequately prepare or brief counsel. The decision provides some guidance to PCBUs around their obligations to attend interviews.

The trial judgments have reinforced Judge Thomas’ narrow interpretation of s 36(2), in line with his earlier decision in NEMA. We agree the narrow interpretation is consistent with the wording of s 36 and the purpose of the HSWA as a whole.

With respect to prosecutions under s 44, or other instances where directors of a PCBU are charged individually, Judge Thomas’ decision makes it clear that WorkSafe must bring evidence of each of the directors’ knowledge, circumstances, and role in the making of decisions. In most cases it will not be enough to simply impute the collective actions and decision-making of the board to individual directors.

The situation may be different if there was only one director, or if the company constitution required that the actions and decisions of all directors be unanimous and informed.

Finally, WorkSafe New Zealand v Whakaari Management Limited has provided useful guidance for when a landowner who permits a tourism activity to take place on their land will owe a duty under s 37(1) HSWA. The decision reinforces the presumption that generally a landowner will not owe a duty where they simply allow an activity to take place on their land.

We expect that WorkSafe’s guidance on that matter, which Judge Thomas considered inadequate, will be updated as a result of the decision.

For commercially pragmatic defendants, and their insurers, it may be desirable to plead guilty to charges under the HSWA as a way of reducing exposure to legal fees and minimising adverse findings through cooperation.

However, the successful applications by six of the 13 defendants charged after the Whakaari disaster to have charges dismissed, demonstrate that it will be worthwhile considering opposing charges which seek to extend duties beyond the plain and ordinary meaning of the HSWA.

However, defendants taking this approach will need to be prepared to be in it for the long haul. The ID Tour and Buttle decisions provide a cautionary tale. In both cases the judge was only prepared to dismiss the charges after hearing the evidence and having the opportunity to consider WorkSafe’s case “taken at its highest”.

The six parties which have either pled guilty, or been found guilty but not yet sentenced, will be sentenced in early 2024. We will provide updates on any significant developments in sentencing under the HWSA.

1. Interestingly, Inflite did not have any customers on the Island at the time but WorkSafe alleged a series of breaches of the HSWA in the period leading up to the disaster.
2. No one was injured, primarily because the eruption occurred at night when no one was on the Island. The eruption was not predicted by GNS and had it occurred during the day it would almost certainly have had a similar outcome to the 2019 tragedy.

This publication is intended as a general overview and discussion of the content dealt with. It should not be used in any specific situation, in which case you should seek specific legal advice.