SafeWork NSW has successfully prosecuted an owners corporation in relation to a fatal incident occurring on 12 June 2020 on the common property of an industrial site. SafeWork also prosecuted the employer of the deceased worker and the strata manager in relation to the incident.
As a result of the decision in SafeWork NSW v The Owners – Strata Plan No 93899 [2024] NSWDC 277, owners corporations and their insurers should consider their respective exposures to liability in the event of a work health and safety (WHS) investigation or prosecution arising from safety risks on common property.
Owners corporations must ensure they meet their WHS duties in respect of common property, while their insurers should consider whether relevant insurance policies cover defence costs if the owners corporation is subject to an WHS investigation or prosecution.
The facts
The Owners of Strata Plan No 93899 (Owners) owned and controlled the common property of an industrial site at Berkeley, NSW. The Owners had contracted Chris Darby Strata Pty Ltd (Strata Manager) as the strata managing agent for the site. The Strata Manager had authority to effect repairs at the site, including maintaining the common property and engaging qualified people to carry out repair work.
The site included a large heavy metal custom-built sliding electric gate which formed part of the common property. The gate included guideposts and a stopper to prevent the Gate from overtravel in the closing direction.
On 4 June 2020, a van collided with and seriously damaged the gate, rendering it inoperable. The damage meant the stopper was ineffective and the gate could overtravel when closing, with a risk of coming off its tracks and falling. The damaged gate was reported to the Strata Manager on 5 June 2020. The Strata Manager issued a work order to repair the gate but it was not arranged as an urgent repair.
When operated manually, the gate had a risk of falling because it could overtravel along its track and come out from its guideposts. This is what occurred on 12 June 2020, when Jose Martin, an employee of a contractor engaged by the Strata Manager, was attempting to manually open the gate. The gate over-travelled off its tracks and came out from its guideposts. Tragically, while Mr Martin was attempting to move the gate back into position, the gate fell onto him, causing fatal crush injuries.
Relevant legislation
Strata title bodies corporate are exempt from the operation of the Work Health and Safety Act 2011 (NSW) (WHS Act) if:
- they do not engage any workers as employees, and
- the common areas the body corporate is responsible for are used only for residential purpose.
The exemption did not apply to the Owners. This is because the site was the subject of a mix-use scheme and used for commercial and industrial purposes. Consequently, for the purposes of the WHS Act, the Owners was a person conducting a business or undertaking (PCBU) with management or control of the workplace at which Mr Martin was working.
This meant the Owners had a duty pursuant to section 20 of 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 was without risks to the health and safety of any person. This included the Gate.
This duty is separate to the Owners' duty under section 106(1) and (2) of the Strata Schemes Management Act 2015 (NSW) (SSM Act) to properly maintain and keep in a state of good and serviceable repair the common property at the Site and to renew and replace any fixtures or fittings comprised in the common property.
Delegation to effect repairs
The Owners had delegated to the Strata Manager, 'full authority with no limitation for effecting repairs to and maintaining common property or engaging appropriately qualified tradespersons to undertake standard work orders'. The Court found that the repairing the damaged gate was a standard work order.
The Owners gave evidence it heavily relied on the Strata Manager to meet its obligations under the strata laws, including to carry out repairs and maintenance. The Owners had not turned their minds 'to the issue of the gate falling and causing a serious risk to health and safety'.
However, the WHS Act imposes concurrent liability on duty holders. Multiple persons who exercise management or control over a workplace can have the same WHS duty for the same work activity (though may have differing degrees of ability to influence safety). Accordingly, the Owners and the Strata Manager had a concurrent obligation to assess and secure contractors and others from the risks on the premises, namely the unrepaired Gate.
Court's findings
The Owners entered an early plea of guilty to an offence under the WHS for failure to comply with its work health and safety duty pursuant to section 20(2) of the WHS Act, in that it failed to comply with that duty and thereby exposed persons, including Mr Martins, to a risk of death or serious injury contrary to section 32 of the WHS Act.
The Court found the risk of the gate falling was foreseeable and the likelihood of the risk eventuating was significant. The Court went onto find that there were simple no-cost steps available to eliminate or minimise the risk, which would not have imposed any burden or inconvenience on the Owners.
The Court found the Owners had greater influence and control over the risk to which Mr Martins was exposed – the risk of the gate falling. The Court found the Owners had their own independent safety duty under the WHS Act, as the owner of the common property, to make the site safe.
Mitigating factors were considered when imposing the fine on the Owners, including the early plea of guilty, no prior convictions and that the Owners were unlikely to re-offend. The Court imposed a criminal conviction on the Owners and sentenced the Owners to pay a penalty of $300,000, reduced by 25% due to the early guilty plea, plus payment of the prosecution's costs in the amount of $40,000.
Implications
This decision removes any uncertainty as to an owners corporation's WHS Act duties in relation to common property, in addition to an owners corporation's obligation to lot owners under section 106 of the SSM Act. Unless exempt, an owners corporation can be criminally prosecuted for breaches of the WHS Act and subject to significant penalties.
Owners corporations should take steps to monitor safety risks in common property and implement procedures to identify and address them. This should include, as a minimum, conducting risk assessments as part of safety inspections. Safety matters should be a standing item for discussion in owners corporation meetings. Such measures would assist owners corporations demonstrate that reasonably practicable steps are being taken to reduce or eliminate safety risks on common property.
This decision also serves as a reminder that an owners corporation's WHS duty cannot be wholly delegated. Independent of any contracts for management and maintenance that an owners corporation may hold, it must understand its obligations and duty under the WHS Act and take proactive measures to ensure compliance with that duty to protect any person at and entering and exiting its property.
Strata insurers should interpret this decision as notice that the usual legal defence cost claims may look a little different. Policy wording should be carefully considered as to whether the policy covers legal defence costs and prosecution costs in SafeWork prosecutions and to what extent. WHS penalties are uninsurable by law, so could not be covered even if a policy arguably purported to do so. However, the defence costs associated with an investigation and prosecution are insurable and can be significant.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
