In a decision earlier this month, the New South Wales Supreme Court ordered Sims Group Australia Ltd and Delta Pty Ltd to pay compensation to New South Wales Roads and Maritime Services (RMS) arising from a breach of load dimensional requirements that led to substantial damage to Sydney’s M5 tunnel. The case highlights the obligations of off-road parties under chain of responsibility laws.

The facts

In October 2012, Sims, a metal recycler, engaged a heavy vehicle operator to collect and transport scrap steel from Delta, a seller of recyclable scrap steel. The transport operator visually inspected the load, but did not measure its height and neither secured nor covered the load. The load was 4.97 metres high: the maximum allowable height was 4.3 metres. During the journey to Sims’ premises, the operator drove through Sydney’s M5 South-West Motorway. The load on the heavy vehicle struck a steel beam on the ceiling of the tunnel, causing significant damage and also causing the closure of the tunnel for more than 16 hours.

Legal proceedings were brought by RMS against Sims and Delta alleging a breach of the Road Transport (General) Act 2005 (NSW). That Act has subsequently been repealed: comparable provisions in the Heavy Vehicle National Law now apply, as discussed below.

Decision

As consignor, Sims pleaded guilty to a breach of the mass, dimension and load restraint requirements in the legislation. Although Sims had an induction program including site safety rules, operations and loading procedures, Sims:

  1. did not have adequate procedures in place relating to the loading of heavy vehicles at third party sites;
  2. failed to provide appropriate instructions to Delta or the transport operator to adequately compact or restrain the load before the vehicle departed Delta’s premises; and
  3. did not include compliance assurance conditions in its contracts with transport operators.

Delta pleaded guilty based on its ‘chain of responsibility’ obligations as a loader. Its standard work practice required the scrap metal to be loaded and compressed by the excavator operator and covered by the driver before departing. However Delta did not use any measuring device to check the load height before it left the Delta site.

The Court found that the breaches of the legislation by each party were ‘severe risk’ breaches. Before reaching the tunnel, the vehicle combination had travelled along major arterial roads with a load that was substantially in excess of dimensional limits. The significant damage to the tunnel was also an aggravating factor considered in sentencing.

Mitigating factors considered by the Court included the fact that Sims and Delta pleaded guilty at the first available opportunity, had no previous history of offending, expressed remorse, and had implemented measures to ensure that a similar incident would not occur in the future. The Court fined Sims and Delta $3,000 and $6,000 respectively for breaching the Road Transport (General) Act 2005 (NSW). In addition, Sims was ordered to pay approximately $55,400 to RMS for the damage caused to the tunnel, and $40,000 for prosecutor’s costs. Delta was ordered to pay approximately $66,500 to RMS for the damage to the tunnel, and $42,500.00 for prosecutor’s costs.

The decision of the court can be accessed here: Nolan v Sims Group Australia Holdings Limited; Nolan v Delta Pty Limited [2015] NSWSC 1424

Implications

The Heavy Vehicle National Law that now applies in all states except Western Australia operates to make consignors and loading managers and others in the ‘chain of responsibility’ responsible for mass, dimension and loading offences.

The legislation contains extended liability provisions such that commercial consignors and loading managers are taken to have committed a breach of loading requirements unless they can establish that they took ‘all reasonable steps’ to prevent an offence occurring.

The HVNL provides for penalties of up to $50,000 for a corporation involved in a breach of load dimensional requirements. In addition, section 611 provides that, where a person is convicted of an offence, a court may make a compensation order (such as the one made in this case) requiring the convicted person to pay the road manager, by way of compensation, an amount the court considers appropriate for damage caused to road infrastructure as a result of the offence. There is no limit on the quantum of such an order.

The case highlights the significant penalties that can be imposed by the courts on off road parties in the ‘chain of responsibility’. In our experience, many ‘off road’ parties such as consignors are unaware of the potential liabilities they undertake and have inadequate or no policies and procedures dealing with loading of goods.

Take away message

Australian businesses that arrange with transport operators and intermediaries for the transport of goods by road should take steps to review and document their business practices in relation to the loading of goods, and to review their insurance policies to ensure that coverage is available for accidents involving damage to road infrastructure.