Settlement reached in civil forfeiture arising from convictions under Health and Safety and Hazardous Substances legislation

Salters Cartage Ltd (SCL) has reached a settlement in a long running case brought by the Commissioner of Police against SCL and its directors (the Salters, a husband and wife team and their related trusts) seeking forfeiture of property under the Criminal Proceeds (Recovery) Act 2009 (Act).

Background

SCL collects and processes used oil and manages hazardous substances at its premises in Wiri.  On 15 September 2015, a large tank exploded on SCL’s premises, killing one of SCL’s workers.

Following the explosion, SCL and its executive director, Ronald Salter, each pleaded guilty to a total of six charges under the Health and Safety in Employment Act 1992 (now the Health and Safety at Work Act 2015) and the Hazardous Substances and New Organisms Act 1996, which included failing to take all practicable steps to ensure workplace safety and failing to comply with hazardous substances laws.  Mr Salter was sentenced to four and a half months of home detention, fined $25,000, and ordered to pay reparation.  SCL was fined $258,750 and required to pay over $128,000 in reparations.

High Court Proceedings

In an unprecedented move, the Commissioner pursued civil forfeiture under the Act against SCL and its directors/shareholders, Mr and Mrs Salter and their related trusts, seeking $10.928 million.  The Commissioner alleged that the company’s non-compliance with health and safety and hazardous substance legislation demonstrated a disregard for legal obligations and amounted to "significant criminal activity", and that Salters derived substantial benefits from this non-compliance.

The Commissioner’s application was set down for a seven-week trial but shortly after the hearing began a proposed settlement was reached between the parties for $4 million against SCL and Mr Salter, subject to the Court’s approval.  Justice Downs has now approved the settlement in Commissioner of Police v Salter [2024] NZHC 3069.

Legal Significance

1. Potentially expanding the Scope of the Criminal Proceeds (Recovery) Act 2009

The criminal proceeds recovery regime has typically been used to target profits from criminal activities such as drug trafficking, fraud, and organised crime.  This case is significant because, whilst the Court was not required to determine the matters in issue in the proceeding, the judgment of Justice Downs approving the settlement suggests that the Act can extend to civil forfeiture for non-compliance with regulatory safety standards, which would set a new precedent for how the law may be used to target profits derived from commercial business operations not compliant with the law as such operations may potentially be framed as significant criminal activity.

2. Trust Property and Civil Forfeiture

The Commissioner obtained restraining orders against four properties, all held by trusts.  The defending parties initially argued that the properties held by the trusts were beyond the reach of the criminal proceeds recovery regime, but subsequently consented to those properties being sold to raise the settlement sum of $4 million.  While this was done by consent of the parties, with the approval of the High Court, the judgment raises the prospect that assets held in family trusts may be subject to claims in civil forfeiture cases, particularly where ownership and control are closely associated with the individuals concerned.

3. A Pragmatic Approach to Settlement

The Court’s approval of the settlement reflects a flexible and pragmatic approach to achieving the Act’s objectives.  While the Commissioner initially sought $10.928 million, the final settlement of $4 million was recognised as more or less a "common sense compromise" and reflected “a mature appreciation of the evidence and the risks inherent in litigation”.    

Key takeaways

The Salter case represents a possible expansion of the application of New Zealand’s criminal proceeds recovery regime and sets a potential precedent with implications for businesses and individuals, particularly those involved in industries exposed to significant health and safety risks.  This decision serves as a reminder of the potentially far-reaching consequences of non-compliance with health and safety and other regulatory standards and highlights the importance of maintaining robust compliance practices.