Chain of responsibility: Heavy penalties imposed on operator for breach of fatigue provisions

The recent New South Wales Supreme Court decision in Palfrey v South Penrith Sand and Soil [2014] NSWSC 842 provides a timely reminder of the significant fines that may be imposed on road transport operators under ‘chain of responsibility’ provisions.

South Penrith Sand & Soil Pty Ltd (SP Sand) transported quarried materials using heavy vehicles with GVMs in excess of 12 tonnes. NSW Roads and Maritime Services (RMS) commenced an investigation into the business practices of SP Sand following two separate major road accidents in 2010.

An RMS audit found that SP Sand had no systems to manage driver fatigue or to regulate driving hours. Instead, drivers’ schedules were determined based on customer service and commercial considerations.

RMS brought a series of charges against the company, its directors and the company’s scheduler for breaches of section 46 of the Road Transport (General) Regulation 2005. That section required all parties in the chain of responsibility to ‘take all reasonable steps’ to ensure that drivers did not drive while impaired by fatigue. Section 50 imposed similar duties on schedulers of heavy vehicles. Both sections have now been repealed and replaced by similar provisions in the Heavy Vehicle National Law (HVNL) that commenced in February 2014.

The Court was critical of the managing director’s ‘failure to inform himself about the road transport legislation, insofar as it affected the safety of his company’s commercial operations’ and found that he had ‘in a wholesale way … failed to address the tiredness and fatigue of drivers who drove very long hours’. The breaches involved six drivers, comprising 40% of SP Sand’s workforce.

The Court fined SP Sand $42,900 in respect of eight offences. In addition, the managing director was fined $40,550 personally in respect of 19 offences and SP Sand’s scheduler was fined a total of $5,050 for 12 offences. Lawyers for the defendants argued that fining both the company and its directors could be seen as double punishment and that multiple fines should not be imposed for what was, in effect, a single act of criminality in failing to have a fatigue management system. The Court rejected these submissions and found that ‘such an approach would not adequately recognise that each charge represents an occasion of criminality and an occasion when road users were potentially put at risk’.

The case demonstrates the significant fines that may be imposed on road transport operators and their officers and the courts’ willingness to impose a penalty for each and every identified offence. Given that many of the offences in the new HVNL attract a maximum penalty of $10,000 per offence, with the potential for that penalty to be multiplied by five pursuant to section 596 where a corporation is charged, it is not difficult to envisage a series of offences potentially forcing an operator into insolvency.

In addition to the fines that may be imposed under the HVNL, operators who allow or encourage drivers to breach fatigue laws may also face prosecution under state workplace health and safety laws. There is also the potential for operators to be charged under criminal law if a driver’s fatigue causes a road accident resulting in personal injuries or death. It is therefore essential that transport operators have adequate systems of fatigue management that are actively followed and enforced in order to demonstrate that ‘all reasonable steps’ are being taken to address driver fatigue.