Under COR principles, control equals responsibility equals liability, Cecil notes
The most recent and significant chain of responsibility (COR) prosecution highlights the ongoing policy to pursue consignors, loaders and consignees, the critical importance of managing the compliance of contractors and third parties in the chain and the essential need to have in place contractual compliance regimes and documented business compliance practices in order to avoid substantial financial penalties.
The facts
Remondis contracted with Lake Macquarie Council to receive, process, compost and remove household ‘green bin’ waste at its Awaba Waste Management facility.
After processing and composting, Remondis contracted Jet Group to transport the waste from the Awaba Waste Management facility to Jet Group’s premises.
The Jet Group heavy vehicle was weighed on each journey at a weighbridge operated by Lake Macquarie Council.
The driver was provided with a weighbridge docket, but this was not reviewed or acted upon in the case of overloading.
The weighbridge docket figure was inserted into an invoice to Remondis, which paid based on weight.
Remondis received and paid the invoices, despite the fact that every invoice recorded the mass overload, had Remondis thought to conduct any check.
These proceedings related to 50 offences, sometimes occurring twice per day, over the course of more than a year. The mass limit for the Jet Group vehicle in question was 42.5 tonnes.
The overmass breaches ranged between 3 and 16 tonnes overweight, with the majority being at least 10 tonnes overweight.
The proceedings
Remondis was initially charged, as the consignor of the loads, with 312 mass breach conventions.
Despite the Court ultimately finding that “there was nothing done by Remondis at the consignment (or loading) stage to ensure such compliance”, that there was a “lack of any weighing or measuring devices on the part of Remondis” and that there was “apparently a lack of any measures on the part of Remondis to ensure that they were loading or consigning mulch that met the trucks load limits”, Remondis initially pleaded not guilty to the offences.
However, after reconsidering its position over some months, Remondis subsequently pleaded guilty to 50 mass contraventions, comprised of 28 substantial and 22 severe breaches.
As a result, the proceedings continued only on the basis of the 50 charges to which Remondis pleaded guilty.
In separate proceedings, Jet Group was also charged as operator of the heavy vehicle.
Defence arguments and the court’s views
In defence, Remondis argued that it reasonably relied upon Jet Group (itself also a party in the chain and with an independent compliance obligation) and the Lake Macquarie Council (who operated the weighbridge) to ensure that loads were within legal limits and/or to report any overloading.
However, the Court said that “this submission falls somewhat flat however when viewed, as it must be, through the prism of chain of responsibility legislation”, the central principle of which is that every party in the chain has a joint and several principal duty to ensure compliance – both by itself and by others within the chain.
The Court stressed that even where road transport is conducted by a contractor or third party in the chain, it is critical that every party in the chain has an “active system in place to manage the risk and to minimise the chances of road transport law being breached”.
In the circumstances of this case, the Court said that “it was never open to Remondis to rely on Jet to be properly trained and informed as to the overweight vehicles, especially when it was Remondis itself that loaded the mulch, using their machinery, without any provision for each load to be measured or weighed as it was going into the Jet truck”.
Further, the Court held that “it is inescapable that Remondis had control over the primary step in the process – the consignment of the loads of mulch”.
Under the COR principles, control equals responsibility equals liability and the Court concluded that “ultimately, it was Remondis’ legislative responsibility to ensure that the mulch that was consigned to Jet was within lawful bounds”.
In the Court’s view, Remondis should have ensured that it had access to “immediate, real time” weighbridge data.
Remondis further relied on its Driver and Operator Manuals as evidence of its awareness and training in relation to COR compliance.
However, the Court was quick to point to the fact that “neither of those manuals makes any reference to the applicable vehicle mass requirements and/or overloading.
It does not go beyond what Remondis’ own drivers should do, and obviously does not cover loading and consignment weight compliance”.
Once alerted to the breaches, Remondis cooperated fully with RMS in the investigation and implemented significant response and rectification measures, including:
- implementing a loading protocol, so that applicable mass limits are identified and can be verified at the point of loading
- installing load cells at the loader bucket to ensure that the legal load limits are not exceeded
- implementing communication protocols between Remondis and the weighbridge or driver of the heavy vehicle so as to ensure that no truck is allowed to exit the site overweight
- providing supervision to ensure compliance or corrective action when non-compliance occurs.
Whilst the Court looked upon these measures favourably, it was critical of the “somewhat glaring absence [of such measures] at the outset of the contractual arrangement”.
The penalty
The fact that Remondis initially pleaded not guilty meant that Remondis was not granted the 25 per cent penalty reduction that is usually awarded for an early plea of guilty.
Remondis only received a 15% discount for its eventual plea of guilty. In the circumstances of this case, that was a costly decision.
The Court noted the very strong need for the size of the penalty to act as a warning to industry as a whole of the costs of breaching the COR laws, stating that “the sentence…needs to operate as a powerful factor in preventing the commission of similar offences”.
Owing to the number, duration and objective seriousness of the offences, Remondis was ordered to pay a penalty of $732,206 out of a maximum possible penalty of $2.1 million.
In addition, Remondis was ordered to pay the prosecution’s legal costs of $250,000, resulting in a total penalty to Remondis of $982,206.
Lessons learned
This case highlights:
- You cannot afford not to be COR compliant
- The ongoing focus of the prosecutors on parties up/down the chain, who can and are being prosecuted and fined regardless of the fact that they do not operate the heavy vehicles concerned
- The critical importance of properly managing the compliance conduct of contractors and third parties within the chain
- The essential need to include COR compliance assurance conditions in all supply chain contracts
- Where contractors do not have their own reliable compliance systems in place, the need to subject contractors to internal awareness, training and compliance controls
- The need to ensure that businesses have a documentary compliance framework and for this to be complete and substantive. This will become even more critical once anticipated changes are
- made to the COR laws in mid-2018, when preventative business practices will become the primary compliance focus
- The ongoing role that local councils play in compliance and the risks faced by them if they fail to properly scope, tender and supervise subcontracted processes (for example, with the City of Glen Eira having been prosecuted in 2010 for 88 offences relating to overloading by its waste collection contractor).
Nathan Cecil is a partner at Holding Redlich.
T: 02 8083 0429
M: 0405 239 402
E: nathan.cecil@holdingredlich.com
This article appeared in the October edition of ATN.