Pike River blast victims awarded compo

DEIDRE MUSSEN
Last updated 13:57 05/07/2013
Judge Jane Farish
David Hallett
JUDGE JANE FARISH: ''One cannot put a value on the lives of the people who died.''
Bernie Monk
David Hallett
DEVASTATED: Bernie Monk's son Michael, 23, died in the Pike mining disaster.

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A reparation order for the families and survivors of the Pike River mining disaster may be sentiment only as the company does not have enough money in the kitty, Pike River Coal's receiver says.

Clapping broke out today in the public gallery of the Greymouth District Court, packed with Pike family members, when Judge Jane Farish announced the fine would be $760,000 and ordered the company to pay $3.41 million in reparation.

This amounted to $110,000 for each victim and the two survivors.

But receiver John Fisk, of PwC, says Pike River Coal Ltd has only $500,000 in available funds, which belonged to secured creditors.0

The families would become unsecured creditors, but they would have a claim to $156,000 in leftover insurance money.

He said that in cases where companies in receivership did not have enough money to pay compensation, the liability may have to be written off. Any fines would not even be considered claimable under the creditor process.

''Any reparations become an unsecured claim against the company, so if there are not sufficient assets to pay the creditors, which is the case here, then, unfortunately, there isn't money available distribute,'' he said. 

Bernie Monk, spokesman for most of the Pike families, said outside court that he doubted whether the families would see any of the reparation money, but he called for Pike's largest shareholder, New Zealand Oil and Gas, to pay up.

''It's almost laughable to hear them say last year how many millions profit that they made over and above a disastrous year that they had, and if they walk away from this, you know, God help New Zealand.''

He questioned why none of Pike's former directors had attended the sentencing, saying: ''If they can just get on with their lives and forget about us, we're not going to let it happen."

Judge Farish's judgment was a ''stake in the ground'' for other companies that did what Pike River Coal Ltd had done to the families, he said.

''Companies in the future, we've got to stop them doing these sort of things - walking away, going into liquidation and leaving the families distraught like we've been left.''

The families planned to make submissions to the Government to ensure legislation was changed so companies were more accountable, said Monk, whose son, Michael, 23, died in the blast.

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Pike's former safety and training manager, Neville Rockhouse, who lost his son, Ben, 21, in the blast - a second son, Daniel, now 27, survived - called for acknowledgement by Pike River Coal of its mistakes.

''Mistakes were made on that project and no-one can learn from those mistakes until you first acknowledge that you'd made some, and that's the first step in this thing never happening again in this country.''

He said it had been an emotional time in court, with many tears shed since the sentencing began yesterday morning.

''It never goes away. It's with you every day,'' he said.

''It's been an emotional two and a half years and I don't think any Kiwi has not been touched by this disaster in some way or form.''

He hoped the families would receive some reparation.

''As the judge says, there might be insurance, so if that's possible, then that's fine,'' he said.

Some Pike family members who attended the sentencing left court today in tears; others were relieved it was over and pleased with the hefty reparation order.

''To me, it's the first victory for the families,'' said Rick Durbridge, father of Dan Herrick, 36, who died in the blast.

He hoped the judgment would encourage company directors and managers to get more involved in their workplaces to ensure problems were detected.

''I'm quite embarrassed having been a miner at Pike River,'' he said.

Unsecured creditors are owed $31m, with another $20.5m owed to Pike's major shareholder, New Zealand Oil and Gas.

Questions are now being asked on whether the Government might step in to provide compensation for the victims of the 2010 mining disaster, now that the legal avenues are almost exhausted.

Fisk said that in some situations, compensation could be sought against company directors.

Pike River Coal chief executive Peter Whitall was about to face several health and safety charges laid by the Ministry of Business, Innovation and Employment, but directors remained uncharged.

At present, Fisk could see no avenue for the families to be paid.

''It's an unfortunate situation, but that's the commercial reality of it,'' he said.

However, in court today, Judge Farish suggested the company's directors and parent company might be expected to come to the party.

Usually, even when companies were in ''fragile'' financial situation, they would still offer some reparation, she said. Pike had not done so.

Judge Farish said she could rule not to impose reparation if she thought the company was unable to pay but she believed it could be paid by existing shareholders or directors.

The directors had insurance worth a considerable amount and its largest shareholder, New Zealand Oil and Gas, had gained benefit from keeping the company in receivership rather than liquidating it.

Pike River was a shell company and the directors had resigned. The remaining proceeds of $25 million were contingent on the mine being reopened.

PwC says Pike River has had two insurance payouts. The $156,000 referred to is left over from a public liability policy taken by the directors.
 
A second insurance claim, made by the receivers for material damage and loss of profit, paid out $80m, but that has been put into the company's account to pay creditors.

NZOG had allowed a partial payment to unsecured creditors, Fisk said.

'HIGH LEVEL' OF CULPABILITY

Judge Farish found the company had a high level of culpability for both its methane management and ventilation management, which were four charges.

Ventilation was an essential part of the safety of a mine, insuring gas in the mine did not reach explosive levels.

''There were significant deficiencies in the company's ventilation management plan.''

She blamed the two factors as causing the explosion and the subsequent tragedy on November 19, 2010.

Judge Farish was very critical of the company while sentencing it today.

''There were many indicators that the mine was in a potential explosive position but the warning signs were not noted or heeded.''

She said those warning signs went unnoticed by Pike management and by the men working in the mine.

Reparation was to compensate for physical, emotional and psychological harm.

''One cannot put a value on the lives of the people who died.''

''We sat yesterday through a very tough morning.''

She criticised Pike River Coal Ltd for its poor communication in the immediate aftermath of the blast, with many families finding out via media that their loved ones.

''The victim impact statements were harrowing. They all feel deep sorrow.''

She said in reading the statements, it was clear they desperately wanted to have their men's bodies retrieved from the mine.

Milton Osborne's widow, Anna Osborrne, wept openly as the judge spoke of how important it was for families to bury their loved ones. Judge Farish also struggled to maintain her composure.

Judge Farish said it seemed cruel that Daniel Rockhouse had to continue working in a mine when it obviously was so hard for him.

She agreed it was ''the health and safety event of the generation'' and she hoped there would be no repeat. 

The former Labour Department, now part of the Ministry of Business, Innovation and Employment, had charged the company over its methane, strata and ventilation management, mitigating explosion risk and impact, plus health and safety management for contractors, subcontractors and their employees.

Each charge carries a maximum penalty of $250,000.

Yesterday, the ministry's lawyer, Mark Zarifeh, told the court that reparation of between $60,000 to $125,000 for each of the 29 victims and two survivors was recommended, with the amount to be at the far end of the scale.

That would have equalLed $3.87 million.

VICTIM, FAMILIES SPEAK

The sentencing hearing began yesterday with 21 heartbreaking victim-impact statements read out to the court from bereaved families of the 29 men, including widows, partners, children and parents.

Many tears were shed in what was one of the most harrowing court hearings to date in the Pike tragedy, some telling the court they wished they too had died.

''I should have died on that day and often wish that I had,'' blast survivor Daniel Rockhouse said in his victim-impact statement, which was read out yesterday.

''This tragedy has left me feeling tremendous guilt for not being able to help others and questioning why I survive.

''My marriage had collapsed and my wife has returned to Germany with my children due to my anger and behaviour since this event,'' the 27-year-old father of four said.

Today also marks a milestone in the ministry's prosecution case as the final court hearing held in Greymouth.

Last month, Pike River Coal's former chief executive, Peter Whittall, won a bid to have his trial over 12 health and safety failings shifted to Wellington, devastating the Pike families. who wanted to watch the proceedings in Greymouth.

His trial is unlikely to start until early next year and is predicted to take three to four months.

VLI Drilling, a Sydney-based subsidiary of Valley Longwall International, was sentenced last October after admitting three health and safety failures relating to the disaster.

It was fined $46,800 last October, the sum sparking outrage from many Pike families.

THE NINE CHARGES:

1. The company allowed numerous potential ignition sources in the mine's restricted zone, including vehicles and machinery, without methane sensors to automatically shut them down if gas levels exceeded 1.25 per cent.

2. The drilling rig's methane sensor was found to be faulty on the morning of the blast but the rig kept operating. Its electrics and gas sensors were supposed to be checked weekly, but this had not been done for four and a half months before the explosion.

3. Only one of three methane sensors in its restricted zone that fed data constantly to the control room operated on the day of the explosion, which was against the company's rules.

4. A sensor for carbon monoxide, an early indicator of spontaneous combustion, in the hydromining area also stopped working more than a month before the blast.

5. The company did insufficient pre-drainage of methane before it started extracting coal less than two months before the blast.

6. The company increased the width of its hydromining panel by 50 per cent a few weeks before November 19, 2010, despite a consultant warning of an increased risk of a roof cave-in.

7. An underground fan was "not the safest option" to ventilate the mine because of risks an explosion would damage it, problems with power supply in a gassy environment and an inability to guarantee access to the surface fan.

8. The mine had inadequate ventilation-stopping devices, which controlled methane's passage.

9. Its fresh-air base was inadequate, as were its smoke lines, which helped guide workers out of a mine to safety in the darkness of an explosion.

- The Press

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