The High Court has recently grappled with the issue of whether a trust can be the subject of a WorkSafe prosecution under the Health and Safety at Work Act 2015 (HSWA).¹

The RH & Jury Trust (Trust) was charged by WorkSafe in relation to the death of a child in a farm accident. The trustees of the Trust were the legal owners of the farm, but the farming operations were primarily carried out in the Trust’s name.

The charges against the Trust were dismissed in the District Court on the basis that a trust cannot be prosecuted because it does not fit within the definition of a “Person” in the HSWA.

A Person is defined in the HSWA as including:

The Crown, a corporation sole, and a body of persons, whether corporate or unincorporate<².

WorkSafe appealed, seeking a ruling that a trust is a Person, or alternatively that the trustees are collectively a Person for the purposes of the Act. It argued that liability was more appropriately placed on the Trust because it was conducting the business and the alleged failures giving rise to the fatality were systemic failures of governance and management, rather than personal failures by one or more of the trustees. It cited the following in support of its position:

• A trust will usually have greater assets than an individual, but penalties would be confined to those that apply to individuals, undermining effective deterrence.
• Prosecuting a trust rather than trustees would better reflect culpability in light of trustees’ duties and their collective decision making roles and would be consistent with how the HSWA treats the directors of companies.
• There is case law and precedent in other Acts supporting the interpretation of a trust or a collective of trustees as falling within the definition of Person in the HSWA.

The Trust relied on the orthodox view that a trust is not a legal entity and that the trustees will have individual culpability under the HSWA if supported by the facts in each case. It relied on the following factors in support of its position:

• Trusts are distinguishable in substance and form from partnerships, companies and other entities.
• Trusts had deliberately been excluded from the HSWA by Parliament.
• Trustees are not always a “body of persons”. A trust can have a single trustee making any such definition farcical.
• There are no enforcement obstacles to proceeding against trustees, WorkSafe simply wanted to access the higher penalty provisions available in respect of entities as opposed to individuals.
• The cases relied on by WorkSafe were distinguishable.

After considering the arguments put forward by WorkSafe and the Trust, Justice Harvey found:

• A trust is not a Person as defined in the HSWA.
• The trustees of a trust collectively are a body of persons within the definition of a Person.

In reaching his decision, Harvey J made the following observations:

• The HSWA was designed to capture and impose liability on a broad range of factors. A narrow interpretation should not be taken when it would unnecessarily frustrate the Act’s application.
• The orthodox position that a trust is not a separate legal entity, is relevant, but not determinative and can be displaced by specific legislation.
• The definition of Person did not explicitly include trusts. Given the widespread and well known use of trusts in business in New Zealand it could be expected that Parliament would have expressly included trusts in the definition if intended, as it had done in other legislation.
• It was not clear that the principles laid out in the cases WorkSafe relied on supported a finding that the trust itself, rather than the trustees collectively, fell within the definition of Person.
• A finding that the trustees met the definition of “body of persons” was not unreasonable taking into account they have an internal structure enabling them to implement decisions as a collective, with a decision-making process and individuals with governance responsibilities.

However, although WorkSafe succeeded in establishing that the trustees collectively were a body of persons for the purposes of the HSWA, Harvey J was not prepared to go so far as to say that the HSWA’s context allowed for trusts themselves to be prosecuted.

Interestingly, in relation to indemnity, he found that s 29 HSWA did not prohibit indemnity of trustees from trust assets under the trust deed. He noted that as a trust is not a person for the purposes of the HSWA, it does not fall into the prohibition that “a person must not … indemnify … another person”. However, he went on to caveat this by saying that this did not mean that trustees would always be indemnified from the trust assets when fined under HSWA as this would be contrary to its overarching purpose. It remains to be seen how this issue will be interpreted by the Courts in the future. We will watch this space with interest.

1. WorkSafe New Zealand v RH & Jury Trust & Ors [2023] NZHC 3871.
2. Section 16 HSWA.

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.