By now the court case of Hillman vs. Ferro Con is a household name within the Australian building world. In an unfortunate accident, in July 2010 a rigger was killed when struck by a steel beam that had fallen from the fabric sling of a construction crane. Magistrates found Ferro Con (SA) Pty Ltd and Mr. Maione (the company’s sole officer) criminally negligent and fined them $200,000.
The case received intense scrutiny not only because it involved a death on a construction site but because Mr. Maione had previously purchased an insurance policy which he assumed indemnified him from virtually all of the court-mandated penalties.
Court critical of policies that protect against WHS Act fines.
Safety organisation Worksafe, as well as the judge presiding over the case, condemned the specific policy purchased and warned that such protection could have a detrimental impact on safety culture. After all, if companies can insure against criminal behaviour, what motivation would they have for following the rules?
While this is certainly a valid argument, there is another point of view here that is not receiving much representation in the media. First off, Ferro Con subsequently went bankrupt and into liquidation. So even with insurance protection, a company can be shut down for serious breaches of the safety code.
No intelligent director would alter the company’s safety practices simply because they had purchased an insurance policy for back-up. This would be bad business practice all around.
But more importantly, what if Mr. Maione hadn’t been guilty?
In the Ferro Con case the preponderance of the evidence showed that the director had in fact made clear breaches of the Occupational Health and Safety code which may have contributed to the accident. But the bottom line is that while Mr Maione was not directly involved in the incident it was up to the courts to decide his level of responsibility.
Mr Maione issued to the court an insurance policy purchased to protect him and this policy did cover the court-ordered financial penalties but Industrial Magistrate Lieschke was enraged the defendant called the courts attention to a general insurance policy to indemnify him for fines imposed from criminal conduct.
We find the general market assumption is Construction and Public Liability Insurance would cover you from this financial exposure but this is not the case.
SafeWork SA found Ferro Con (SA) Pty Ltd negligent in providing a safe working environment under the Occupational Health, Safety and Welfare Act 1986. The court determined Mr Maione had not taken adequate steps to safeguard the compliance of Ferro Con.
Ferro Con is only one business out of nearly 50,000 construction related companies in Australia (as per the Australian Bureau of Statistics) in the same position so it makes sense that directors and small construction company owners protect themselves against the actions of their sub-contractors.
If you’re a builder, you need protection.
Huntingdale Mobile Cranes was fined $70,000 and forced to pay over $100K in legal costs after a worker was killed by a concrete panel. These fines were levied even as the court specified that they were not alleging that the company’s breaches directly caused the fatality.
Imagine what a $170,000 loss would do to your bottom line.
If you are a small to medium sized company (Pty Ltd), penalties of this magnitude can easily push your business into bankruptcy. A Site Liability Insurance policy is hardly a ticket to break the law, it is instead the safety net that you need to continue to do business with the peace of mind that the courts cannot take your livelihood away from you due to the actions of your sub-contractors or an unfortunate happenstance.
At Buildsafe we believe it inequitable, insulting and reprehensible that people insinuate building professionals purchasing an insurance policy do so out of negligence and that an insurance product aggravates the rise of contributing factors. Responsible business owners see their sub-contractors as the lifeblood of the business with a duty of care beyond legalities which lies at the core of human nature. The majority care for those that drive their business and put food on the table. And that’s the way it ought to be.