Mobile Refrigeration Specialists, which unsuccessfully appealed against a $56,200 fine following the fatal Icepak Coolstores fire at Tamahere, has applied to take its case to the Court of Appeal.
Update: The application was made in May and heard on June 1 and a decision not to allow the appeal to proceed was given on June 4. Apologies to readers. I didn’t expect justice to be so swift when I wrote this original post. The full decision is included in this post.
MRS and Icepak Coolstores both pleaded guilty to offences under the Health and Safety in Employment Act 1992, and in the Hamilton District Court in December 2009 MRS was fined $56,200 and ordered to pay reparation to the fire’s victims of $175,000. Icepak was fined $30,000 and ordered to pay reparation of $95,000.
Both companies appealed the amount of the fines on the grounds that the sentencing judge, Robert Spear, had failed to take into account their financial capacity to pay, or had failed to give it due and proper weight, when setting the amount of the fine. Neither company appealed the reparation orders.
In March, both appeals failed in the Hamilton High Court when Justice Heath found that the sentencing Judge had given the matter proper consideration, and was not satisfied that the disclosed financial situation of each company justified a reduction in the level of the fines.
Justice Heath ruled that although financial information had been provided indicating that the imposition of substantial fines would potentially lead to the liquidation of the companies, nothing had been put before the sentencing Judge in concrete terms to suggest that this consequence would necessarily follow in respect of either company. As there was no reason to believe that the shareholders’ historical support of the companies would not be continued in order to enable them to pay the fines, the Judge was entitled to proceed on the basis that the fine imposed should reflect the amount required to denounce the conduct of each offender and to provide general deterrence.
The Judge suggested that a true assessment of a company’s ability to pay fines required an inquiry into its means of obtaining funds and the will and capability of its shareholders or parent company to meet its obligations. He noted that Icepak’s working capital had historically been provided through a related company, Icepak Group Ltd, and said that where a company has been funded during its trading life through the provision of shareholder advances, it should not be able to escape paying financial penalties because of alleged impecuniosity [lack of money]. Rather, the Court should be able to impose a fine which was beyond the ability of the company itself to pay; shareholders are then given the choice to either provide funds to pay the fine and allow the company to keep trading, or leaving the company to go into liquidation.
Warren Cook, the owner-operator of MRS, registered a new company, Benson Aircon NZ Ltd, in November 2009. His business partner is Ella van Eden, the wife of Icepak Group chairman Jan van Eden.
The 2008 coolstore explosion at Tamahere killed firefighter Derek Lovell and seriously injured seven of his colleagues.
Legal firm Russell McVeagh acted for MRS in the District and High Courts and reported on the appeal to the Court of Appeal in its May Litigation update.