When a tragic workplace accident occurs, the legal and reputational stakes for directors can be immense, especially when prosecutors target individuals in senior leadership positions that are far removed from the day-to-day operations.
This is exactly what happened in Inspector James v Ryan (No 3) [2010] NSWIRComm 127, a high-profile prosecution under NSW Occupational Health and Safety Laws. We acted for Mr Justin Ryan and won the case, which shaped the limits of director liability in Australia.
The Allegations
In July 2006, a worker at Dekorform Pty Ltd’s Milperra premises was tragically killed in a workplace incident involving a circular saw. Following an investigation, the WorkCover Authority of NSW prosecuted Dekorform for failing to ensure a safe workplace under section 8(1) of the Occupational Health and Safety Act 2000 (NSW) (OHS Act).
Alongside the company, the prosecution brought charges against Mr Justin Ryan, arguing that he was a “director” of Dekorform and personally liable under section 26 of the same Act. This section argues that directors, or those involved in the management of a corporation, can be held individually responsible for a company’s breach of workplace safety duties unless they can show that they were either not in a position to influence the breach or had exercised due diligence to prevent it.
The Legal Question
At the heart of our case was the fundamental legal question: what does it mean to be a director under s26 of the OHS Act?
Prosecutors argued that Mr Ryan was either formally appointed, or was a de facto or shadow director, terms used to describe individuals who act like directors or influence corporate boards behind the scenes.
Our team identified the broader implications where, if the Prosecution succeeded, it could open the door to criminal liability for countless executives across corporate groups, even those not directly involved in operational decisions.
Our Approach
Our role was to demonstrate separation from Mr Ryan’s senior role in the parent company, Alesco Corporation, from any directorship or managerial responsibility for Dekorform.
We demonstrated that:
– Mr Ryan was never validly appointed as director of Dekorform under its constitution, which required a formal notice of appointment by its holding company (Alesco). No such notice had been issued.
– Even though he has signed several company documents and attended some business meetings, he did not “act in the position” of a director in a way that would satisfy the Corporations Act definitions of a de facto or shadow director.
– Most importantly, he was not in a position to influence the company’s conduct, especially regarding workplace safety matters at a subsidiary multiple layers below his role of CEO of the parent company
The Outcome
The Industrial Court agreed. The charges against Mr Ryan were dismissed entirely. The Court found that he was:
– Not a validly appointed director;
– Not a de facto or shadow director;
– Not in a position to influence Dekorform’s compliance with OHS duties; and
– Not criminally liable under the OHS Act.
Costs were awarded in Mr Ryan’s favour.
Why it Matters
The case remains a key authority on the interpretation of director under workplace safety laws in NSW. It confirms that:
– The term ‘director’ in section 26 of the OHS Act refers to a formally appointed director, not just anyone involved in management or senior leadership.
– Senior executives in parent companies will not be liable for OHS breaches by subsidiaries unless they had a clear, demonstrated influence over the conduct in question.
– De facto or shadow directorship must involve meaningful, consistent conduct, not isolated actions like signing documents or attending meetings.
– Courts will not lightly extend criminal liability to individuals who lack operational control.
This interpretation provides reassurance for executives working within complex corporate structures, especially those overseeing multiple subsidiaries. It also emphasises the importance of maintaining clear corporate records and formal appointment procedures.
What does this mean?
This result reflects our firm’s deep expertise in corporate litigation, workplace regulation, or director liability. It also demonstrates our ability to mount successful, high-stakes defences in complex legal environmental, particularly where personal reputations and professional futures are on the line.
If you are a director, executive, or company owner navigating regulatory obligations, particularly in complex group structures, our team can assist with:
– Structuring and documenting director appointments;
– Managing regulatory risk and compliance policies;
– Responding to investigations or prosecutions; and
– Minimising exposure to personal liability.
Bilbie Faraday Harrison offers clear, practical advice across a broad range of legal issues. If you need assistance or would like to discuss your situation with our team, get in touch, we’re here to help.
The information provided on this website is intended for general informational purposes only. It does not constitute legal advice and should not be relied upon as a substitute for professional legal consultation. We do not accept any liability for loss or damage arising from reliance on the material contained on this site.
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