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Owners corporations of commercial or mixed strata schemes and strata managers have work health and safety duties and can be prosecuted for  breaching the Work Health and Safety Act.

In one of the first prosecutions of its kind, an owners corporation of an industrial complex (Owners Corporation), a strata manager and a business within the industrial complex have all been separately prosecuted and fined for breaching the Work Health and Safety Act 2011 (NSW) (WHS Act). The prosecutions followed a fatal incident at the industrial complex on 12 June 2020.

Relevantly:

All parties each faced the maximum penalty for the offence, which was $1,731,500.

The Parties

Maluko Pty Ltd (Maluko) was a business operating at the industrial complex, which contained 8 units. The complex was initially built by Maluko in March 2017, who then sold the units but leased Unit 5, providing building and concreting services with around five employees.

The industrial complex was managed and controlled in part by the Owners Corporation, responsible for maintaining and repairing the common property of the scheme under the Strata Schemes Management Act 2015 (NSW).

In 2019, the Owners Corporation appointed Chris Darby Strata as the managing agent. Chris Darby Strata was authorised to handle repairs and maintenance, and engage qualified personnel to carry out works at the scheme. Karen Johnson, employed by Chris Darby Strata, managed the site daily and was responsible for approximately 107 other strata properties. Ms Johnson, an experienced strata manager, had been managing the scheme for approximately four weeks at the time of the fatal incident.

This article discusses the judgments against the Owners Corporation and the strata manager.

What happened

A van collided with a large heavy metal custom-built sliding electric gate which was located at the perimeter of and formed part of the common property at the complex. This caused the gate to be bent out of shape, partially pulled off its tracks, and disconnected from its electric motor. Makeshift repairs were made by some occupants within the complex so the gate could be operated manually, however this meant that there was a risk of the gate falling because there was no physical stopper to prevent overtravel of the gate. The gate was not taken out of service pending its full repair/replacement. No signage was erected as a warning and no risk assessment was conducted or safe work method prepared on manually using the gate.

A worker employed by Maluko, Jose Martins, would usually open the gate before the other workers arrived. On 12 June 2020, Mr Martins arrived for work at the complex and attempted to manually open the gate. The absence of a physical stopper caused the gate to move too far, coming off its guideposts and rollers. The gate fell against a temporary repair post, resting at an angle. While trying to reposition it, the gate became unstable and fell on Mr. Martins, causing fatal injuries.

What the court found

Management or control of a workplace

Being an industrial complex, both the strata manager and the Owners Corporation accepted that they were ‘a person with management or control of a workplace’, and therefore had duties under the WHS Act to ensure, so far as is reasonably practicable, that the workplace, the means of entering and exiting the workplace and anything arising from the workplace are without risks to the health and safety of any person.

The offence was a continuing offence and the evidence showed that workers were exposed to the risk for several days, not just the day of the incident, which is an aggravating factor.

Both the strata manager and the Owners Corporation breached their duties under the WHS Act by failing to take a number of reasonably practicable steps to address the risk of the gate falling, and as a result, exposed Mr Martins to a risk of death or serious injury contrary to ss 20(2) and 32 of the WHS Act.

Key principles in the WHS legislation

Under the WHS legislation, a residential owners corporation is excluded from the WHS Act, except where it employs a worker (as opposed to engaging a contractor). Strata managers do not attract this exemption, however.

Where contractors are engaged to carry out work at a residential strata scheme, the obligations under the WHS legislation would normally be imposed on the contractors  as the strata scheme becomes a workplace by the presence of contractors/workers carrying out work, rather than on a residential owners corporation.

However, commercial and mixed-use schemes (i.e. mixed residential, commercial or industrial schemes) attract coverage under the WHS legislation, as deemed workplaces where work is being carried out (although the residential components of the scheme are still exempt).

This case involved an industrial complex where the lots were used by various businesses – it was therefore a workplace. As the controller and owner of the common property (i.e. the person with management or control of the workplace under the WHS Act), the Owners Corporation and its strata manager should have taken steps to guard against the risk that arose from the gate not being repaired.

There is concurrent liability under the WHS Act, meaning multiple persons can have the same WHS duty for the same work activity and, therefore, can all be potentially liable.  In this case, Maluko, the Owners Corporation and the strata manager all had concurrent obligations to manage the risk of the gate falling, and were all subsequently prosecuted and convicted. The extent of each person’s obligations and resulting liability depends on their ability to influence and control relevant matters. As the person with management and control of common property, a commercial owners corporation has a high degree of influence and control of matters on site. An owners corporation cannot simply ‘leave it’ to other persons (e.g. the strata manager) and it is required to discharge its duties to the extent it has the capacity to influence and control the workplace.

Factors considered by the Court
  • The Court found that the death of Mr Martins was caused by the Owners Corporation’s, Maluko’s and the strata manager’s breaches of their respective safety duties.
  • The Court found that the Owners Corporation’s and strata manager’s level of culpability was in the lower end of the mid-range, and that it was less culpable than Maluko (for example, they were not aware that Mr Martins was opening the gate manually each day – all they saw was the gate in an open position). Maluko had knowledge of this and was more culpable.
  • While the Owners Corporation promptly reported the damaged gate to the strata manager and followed up the agent to have the gate repaired, the Owners Corporation had its own independent safety duty under the WHS Act, and both the Owners Corporation and the strata manager had the power and obligation to make the site safe.
  • The risk of the heavy gate falling was foreseeable, the likelihood of the risk occurring was significant with serious potential consequences (i.e. death), and there were simple no cost steps available to minimise the risk (e.g. directing the strata manager to fix the gate, erecting warning signs and barricades, and prohibiting the manual operation of the gate until repaired).
  • The Court observed that there was no significant burden or inconvenience for the strata manager in promptly fixing the gate or implementing interim measures to ensure safety and warn people in the area. This was because the strata manager operated for profit and could charge the Owners Corporation for the work performed.
  • The failure to take these reasonably practicable steps and to follow up that they were implemented attracted liability on the part of the Owners Corporation and the strata manager.
  • In determining the penalty, the Court considered each party’s capacity to pay a fine, a victim impact statement by Mr Martins’ daughter and the need for general and specific deterrence.

Key takeaways

This significant case demonstrates that owners corporations of commercial, industrial or mixed strata schemes, and strata managers can be criminally prosecuted for breaches of the WHS legislation. Significant penalties can be imposed by the courts for breaches of the WHS Act, along with prison terms for individuals involved in the most serious of breaches. It is important that owners corporations and strata managers are aware of their WHS duties and the extent and concurrent nature of their duties.

Owners corporations should proactively identify and address health and safety risks arising from common property. As part of this, owners corporations need to implement systems and procedures that allow them to identify, report and address risks to health and safety arising from damaged common property. This will include undertaking regular risk assessments and building safety inspections, including safety as an agenda item to committee meetings and implementing an effective contractor management system. These measures will assist in demonstrating that an owners corporation has taken reasonably practicable steps to minimise or eliminate safety risks arising from the common property.

Strata managers should also ensure they understand their own and an owners corporation’s duties under the WHS Act. They need to recognise their WHS duties are independent of the owners corporation’s obligations. It’s essential for them to proactively manage risks and promptly address complaints about property defects that pose health and safety risks.

Additionally, when an owners corporation or a strata manager become aware of a risk, they need to promptly take steps to eliminate or mitigate the risk and follow up to ensure these measures have been implemented (rather than simply relying on someone else to do it).

We would like to acknowledge the contribution of Erina Yip.
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