documenting due diligence: the right way versus … documenting due diligence: the right way versus...

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Documenting Due Diligence: The Right Way Versus the Wrong Way

Schedule II Employers Conference 2014

Cheryl A. Edwards and Jeremy Warning

Mathews Dinsdale & Clark LLP - National OHS & Workers’ Compensation Practice

OHS & Workers’ Compensation

OHS law spoken here

© Copyright of Mathews, Dinsdale & Clark LLP 2

Agenda

1. Why due diligence is critical for organizations and individuals

2. What is due diligence?

3. Importance and quality of documentation

4. Due diligence and discipline for safety

5. Due diligence used proactively; not just reactively

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Why Due Diligence And Its Proof Is So Critical


Why Due Diligence Is So Critical

Current Enforcement Environment

• Over the last ten years, the Ontario government has hired more inspectors and more prosecutors

• Result has been increased enforcement through:

– Compliance orders

– Stop work orders

– Prosecutions

• Similar trends across Canada



2004 to 2012: Orders Increased Dramatically

Source: Ontario Ministry of Labour, Enforcement Statistics:

http://www.labour.gov.on.ca/english/hs/pubs/enforcement/index.php

Year Number Of Orders

2004/2005 90,141

2011/2012 136,809



2004 to 2014: Number of Convictions has Doubled

Source: Ontario Ministry of Labour, Enforcement Statistics: http://www.labour.gov.on.ca/english/hs/pubs/enforcement/index.php

Year Total Number of

Convictions

2004 386

2013/2014 780



Individual Liability Increasing

• Increased supervisory prosecutions and penalties

• Fewer charges being withdrawn against individuals

• Jail terms being sought for individuals



Public Relations Impact

• Governments regularly:

– Issue News Releases following convictions of employers, supervisors, and company directors

– Launch targeted media campaigns: publicize high profile accidents and high profile workplaces



Potential Criminal Liability

• Bill C-45 amendments to the Criminal Code in 2004

• Anyone who fails to meet this duty and shows “wanton or reckless disregard” for the lives or safety of others can be charged with criminal negligence

• Union and workers’ groups increasingly pushing for Bill C-45 charges in serious accidents and fatalities

• 2012 Metron conviction – Police and prosecutors may be more emboldened to lay Bill C-45 charges



Potential Criminal Liability

• While due diligence is not technically a defence under the Criminal Code, reasonable care and diligence in complying with the OHSA and regulations ought to prevent recklessness and criminal investigation/prosecution


What Is Due Diligence?



• Due diligence is a legal standard which provides the employer or other party with a defence if stringent, court-developed standards were met at the time of the accident or contravention

• Due diligence generally is comprised of those ongoing steps taken by companies and their supervisors to protect workers

• Due diligence must be established by a defendant on the balance of probabilities



• The standard for due diligence is high but it is not one of perfection. See, for example, R. v. Thomas Fuller and Sons Ltd. (Ontario) 2012:

“As a matter of law…the phrase “all reasonable care” cannot and is not understood to require the accused to take each and every precaution that would be reasonable to take in the circumstances. As indicated, due diligence is a negligence based standard. The pertinent question is whether the accused “took all of the care that a reasonable [person] might have been expected to take in the circumstances.”

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• Foreseeability is a key element of due diligence – employers are only responsible for foreseeable events and acts

• The standard for determining whether a hazard was foreseeable is not what risks the employer actually did foresee, but what a reasonable person in the same situation would have foreseen

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Fullowka v. Royal Oak Ventures Inc. (NWT) 2008 “In law, "foreseeable" does not mean "imaginable". The human mind is capable of imagining all sorts of fantastic and bizarre situations, but that does not make them "foreseeable" in law. The legal concept of foreseeability incorporates the idea that the event is not only imaginable, but that there is some reasonable prospect or expectation that it will arise…”

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Fullowka v. Royal Oak Ventures Inc. (NWT) 2008 “It is of course imaginable that if a person operated a mine, and had explosives in that mine, that someone would break into the mine, steal explosives, and deliberately set a bomb that would go off when a man car drove over it. The scenario is more likely in the midst of a violent strike. The law does not require that the exact way that the damage materialized be foreseeable, so long as it arises within the scope of the foreseeable risk. But even so, Warren's act was not necessarily foreseeable in law as a result. The improbability of the scenario, combined with the intervention of an intentional act of another party (Warren), pushes the legal concept of foreseeability to the edge...”

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R. v. 679052 Ontario Limited (c.o.b.) Auction Reconditioning Centre (Ontario) 2012

• A young worker drove a car into the employer’s wash bay area setting off a chain of collisions between cars that led to another worker sustaining arm fractures and bruising

• The Court found, in part, that the accident was not foreseeable because the worker was told and aware that he was not supposed to drive and his supervisors had no reason to believe that he would drive

• To hold it foreseeable that the worker might drive would be “impermissible speculation and has no evidentiary basis”

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• Due diligence must be specific:

– “I talk about safety a lot” is not enough – “It’s common sense” is not enough – “We have a health and safety officer and we comply with

all Ministry of Labour orders” is not enough – “Workers have been given the company health and safety

policy and they know where the written safety procedures are” is not enough



Key Elements of OHS Management System

• Knowledge of applicable laws and standards

• Corporate audits, inspections to assess hazards

• Ongoing correction of hazards

• Corporate safety policies and rules

• Ongoing supervision, worker training, knowledge of rules, policies and standards



Key Elements of OHS Management System

• Ongoing supervisory monitoring for compliance

• Communication of risks and steps to prevent hazards

• Ongoing reminders of those rules and hazards

• Enforcement of policies, rules and standards


A Step-By-Step Review Of What Courts Examine, And How To

Prove Your Due Diligence


Knowledge of Legal Obligations

• A fundamental requirement for any workplace party attempting to practice due diligence strategies or to argue due diligence as a defence to a prosecution

• Very difficult to demonstrate that all reasonable care was taken if organization or supervisor cannot demonstrate that the legal standards were known



R. v. London (City) (Ontario) 2000

• A worker died as a result of injuries sustained after an explosion in a maintenance room when the gas fumes from a motorized vehicle fell to the floor and were ignited by pilot light dedicated to hot water tanks

• The City’s architects, engineers and employees failed to review the precautions necessary for the protection of workers in the room, including the applicable Gas Utilization Code

• The Court found that due diligence required the City to install the water heaters at a safer height in accordance with the Gas Utilization Code and its obligations under the OHSA

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• Would your organization be able to demonstrate to an investigator that it has knowledge of applicable health and safety legislation?

• Do your organization’s policies reflect the law?

• Proof of review of project-specific or task-specific rules, policies, practices with supervisors, workers

• Ideally – if there is a particular worksite – advance review of legislative provisions for unique or complex aspects of site



• Do supervisors and managers have their own copy of the OHSA?

• Have they been trained in the OHSA and its Regulations?

• When was the last time that supervisors had an OHSA and Regulatory refresher? Are they “competent”?

• Would supervisors be able to demonstrate to an investigator that he or she knows the applicable OH&S provisions?


Hazard Recognition and Correction

R. v. National Wrecking Co. (Ontario) 2005

• Supervisor instructed workers to cut down a 2,500 lb steel door; door was propped against a wall; materials were used to brace it but no warning signs or tape were set up

• Supervisor did not inspect the work after completion

• Another supervisor was crushed when the door fell on him

• Supervisor was convicted; Court found that the supervisor should have known the leaning door was a hazard, he should have inspected and assessed the adequacy of the bracing, and he should have marked the area with a sign or tape to alert others to the danger



• Courts expect not only knowledge of legal requirements, but a system which takes all reasonable steps to determine and assess potential hazards to employees

• “Taking a step back” – look at what could go wrong, and, of course, correct it

• Taking “every precaution reasonable in the circumstances” can include matters not legislated



• How often are internal company or external professional audits conducted?

• If a serious accident occurred, would issues raised in expert audits be listed as outstanding?

• Are routine recorded job hazard analyses/inspections done by the company?


Company Safety Rules and Procedures

R. v. Linamar Holdings Inc. (Ontario) 2012

• A worker removed a fence guarding the back of an induction hardener to troubleshoot a leak and was seriously injured by an electrical shock

• Employer’s troubleshooting procedures were unwritten and “learned on-the-job”; they were not included in the employer’s Hazardous Energy Control Program

• Employer convicted of failing to provide the worker with sufficient instruction on troubleshooting leaks

• Court concluded that due diligence required the employer to develop a written policy on troubleshooting

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Company Safety Rules and Procedures

• Courts will expect that a company’s safety rules and procedures will be in writing, understandable, up-to-date and available. Consider:

– Is the company health and safety policy manual in a location where no one regularly sees it?

– Are rules and procedures committed to writing and are they posted?

– When was the last time that rules and procedures were reviewed and updated?

– Do rules contain detailed “do’s” and all the “dont’s”?

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Appropriate Orientation and Training

R. v. Concord Paving Ltd. (Newfoundland) 2012

• A flagger working along a highway was run over by an excavator and crushed to death

• The employer was convicted of, among other things, failing to provide proper training to workers at the site

• The court found that although the employer provided some training and instruction to workers, it was minimal and not to the extent required to prove due diligence

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R. v. Canadian Consolidated Salvage Ltd. (Clearway Recycling) (Alberta) 2012

• A temporary worker for a salvage company fell approximately 3 metres from an opening in a wall onto a pile of pipe, suffering a broken leg and 3 broken ribs

• The employer was convicted of several safety violations

• Among other factors that led to a finding of no due diligence, the court said that although the employer claimed it had provided workers with safety orientation, it had no documentation to prove that claim

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R. v. Canadian Consolidated Salvage Ltd. (Clearway Recycling) (Alberta) 2012

“There is no evidence that the defendant took any steps whatsoever concerning the safety of their workers, whether regular Clearway workers or temp workers, so the claim by their counsel that they took reasonable steps to prevent the commission of these offenses has literally no basis in fact. I therefore reject these submissions by defence counsel.”

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• Courts will expect employers to provide proper and comprehensive training to workers. Consider: – Is there detailed documentation of content, amount of training,

and supervisory follow-up?

– Is training provided to all workers – even those who are very experienced?

– Ongoing training as procedures, workers, work, supervisors change?

– Follow-up by supervisors?

– Documentation should confirm knowledge of rules, specialized training, certifications


Supervisory Monitoring

R. v. Inco Ltd. (Ontario) 2001 • A worker was killed during a planned detonation at the mine

• Company policy was for workers to radio an “all clear” with their full name before proceeding with detonation; workers had been given considerable training on this

• Supervisor had not required full names to be used

• Supervisor said he had reviewed blasting procedures with the workers involved numerous times but could not point to any written record confirming this

• Court convicted the supervisor and found the accident was an inevitable, foreseeable consequence of the type of radio miscommunication that was permitted by the supervisor


Supervisory Monitoring

• Supervisory monitoring should ensure:

– Policies and procedures understood and followed

– Direct monitoring and reminders

– Corrective action taken and documented

– Monitoring with appropriate frequency (increased monitoring should accompany increased risk, indication of compliance problems, unusual complexity of task, new work location)

– Proof: documentation such as checklists, forms, notebooks



Ontario (Ministry of Labour) v. Bay Grenville Properties Ltd. et al. (Ontario) 2014

• A piece of pipe fell from 23rd floor of building under construction

• Pipe struck a worker on the head causing fatal injuries

• The Court found due diligence because the evidence showed that an independent safety consultant had attended to inspect regularly, and created written reports of site inspections on a regular basis at the construction project, and on only one occasion noted pipe debris and immediate corrective action

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Checklists, Forms and Notebooks

• Checklists and forms – i.e. detailed equipment maintenance and inspection documents

• These records can provide detailed support of positive conduct relating to health and safety – Monitoring, hazard identification and resolution, correction,

enforcement, etc.

• Supervisors should develop the habit of keeping (and retaining) a diary or notebook to document daily activities – Notes may augment checklists and forms


Checklist for OHS Compliance Records

Detailed pre-job hazard assessments

Detailed pre-job qualification and pre-job meetings for contractors and other parties accessing the worksite

Detailed training records (who, what, where, when and how, copy of materials)

Policies and procedures (including signed)

Equipment manuals


Checklist for OHS Compliance Records

Detailed equipment maintenance and inspection documents

Joint Health and Safety Committee inspections and minutes

Detailed records of meetings

Detailed records of on-site inspections by supervisors

Detailed records of on-site inspections by others - (safety management, third party)


The Importance And Quality Of Documentation


Importance and Quality of Documentation

• Trying to show ongoing system/behaviour that has occurred in the past by corporation, supervisors

• Captures details lessening dependence on memory of individuals (memories fade, people leave)

• Proof of positive compliance efforts, ongoing corrective action if necessary, for use with regulator or in litigation, if necessary

• Employer’s obligation to prove reasonable care and due diligence, not a MOL obligation


Your Best Due Diligence Defence

• Documentation of all ongoing efforts. Standards are high, want to capture as much detail as possible as soon as possible

• Document all ongoing follow up, confirmation, efforts, reminders

• Persuasiveness of story is in the details

• Important to note not just the problems, but how and when they were resolved to complete the story

• Some efforts may seem trivial at the time, but became important parts of a defence later

• Retained documentation can show longstanding pattern of compliance


Quality of Documentation

• Clear and useable documentation knowing it that will be held to a strict standard in court

– Beware shorthand, legibility issues

• May want/need to rely on document without access to the person who authored it

• Document may need to be understood by regulator or court/adjudicator/your lawyer

• Crucial to avoid poor quality records

– Training records or inspection records with no detail


What Do Prosecutors Ask?

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Due Diligence – What Would a Prosecutor Ask?

• Have you ever read the OHSA and regulations?

• Have you ever received safety training?

• How many hours of safety training have you had in the last year?

• Do you know if your employer has health and safety policies? If so, do you know where to find them?

• Have you ever read them / has anyone reviewed them with you?



• How often do safety meetings take place?

• Are minutes kept of those meetings?

• Are training records kept?

• Did you assign the task to the worker on the day of the accident?

• Did you know what he/she was doing?

• Did you ask yourself whether he/she was competent to do the task?



• Did you show the worker how to do the task?

• Do you have a written procedure for that task?

• What training has the worker received in that task?

• Has any employee ever reported any safety concerns with that particular task? If yes, what steps did the company take to address the concern?

• Have you ever seen anyone performing the task in an unsafe manner? If so, what did you do?

• Has anyone ever been disciplined for performing that task in an unsafe manner?


Discipline For Safety

Due Diligence Efforts Quickly Unravel if Enforcement Absent or

Undocumented



R. v. Moran Mining and Tunnelling Ltd. (Ontario) 2006 • A worker died after falling more than 100 feet from an elevated

platform in a mine; he had been wearing a fall arrest harness but it was not connected to anything

• The employer claimed it had, and enforced, a policy requiring fall arrest protection in risky circumstances and stated that the worker had been verbally disciplined in the past for not wearing his harness

• The Court rejected the due diligence argument and found that a “culture of discretion” existed where workers would decide for themselves when fall protection would be used – if the risk was perceived as low or the worker felt safe



R. v. Wilson’s Truck Lines (Ontario) 2006

• A worker was crushed to death between the rear of a trailer and a concrete loading dock at a warehouse

• At the time of the accident the worker had been working to repair a broken loading plate, and, rather than using the stairs, he jumped to the ground to effect the repairs

• The Court found that the company had not established due diligence because the employer’s policy regarding fixing a loading plate (using the stairs and working in a two-man team) was regularly ignored and because the supervisor failed in his duty to supervise the repairs to the loading plate

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R. v. Wilson’s Truck Lines (Ontario) 2006

“Admonitions, if any, were oral and there was no discipline or action if any rule were breached. [Supervisor] admitted that there was no written censure, no firings, demotions of suspensions. The atmosphere was very laissez faire. There were no videos or safety classes or seminars to stress the importance of following the rules. The need for the same appeared obvious, given the large amount of non-compliance with the rules.”

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Discipline For Safety: Is Your Organization Prepared?

• Is attention to health and safety a performance expectation for supervisors?

• Do your supervisors have the necessary tools and authority to enforce the rules?

• Do your safety rules state a commitment to appropriate discipline if necessary?

• Is discipline carried out?

– Verbal reminders, suspensions, termination, re-training?



• Make discipline a commitment in your corporate health and safety policy and safety procedures

• Make it a fundamental performance expectation for supervisors

• Give supervisors the tools and authority to effective enforce rules with discipline

• Ensure senior management and HR aware of the importance of discipline to a defence of “due diligence”


Due Diligence Used Proactively; Not Just Reactively


Due Diligence Used Proactively

Responding To Routine MOL Inspections,

High Risk Inspections, Blitzes

• Demonstrating due diligence can prevent compliance orders, stop work orders, prosecution for blitz issues

• Establish a point of contact who is aware of company OHS program, due diligence steps

• Offer to provide information and discuss due diligence steps prior to orders


Due Diligence Used Proactively

You’ve Had A Workplace Accident!

• Appoint incident coordinator to shadow MOL • Seek permission to attend interviews. Ensure correction of

any misinformation given in interviews on policies, procedures, training, other due diligence steps

• Ensure information about reasonable care provided • No admissions of failure to take due care • Consider detailed follow up letter to confirm due diligence

steps • Don’t wait for a prosecution to think about proving your due

diligence!


Summary

• Due diligence is an ongoing and renewing process

• Pattern of conduct over time

• Courts have set high but not unreachable standards and expectations

• A documented system incorporating the elements of due diligence will best position the organization and individuals to successfully assert that all reasonable care was taken


National Expertise. Legal and Consulting Services for Management.

Cheryl A. Edwards, Partner T 647.777.8283 | [email protected]

Jeremy Warning, Partner T 647.777.8284 | [email protected]

mailto:[email protected]

mailto:[email protected]

documenting due diligence: the right way versus … documenting due diligence: the right way versus...

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