Property manager cannot discharge OHS duties to contractor
In an important decision in March, the NSW District Court found a property manager of a building guilty of breaching its primary duty of care to ensure safety by failing to arrange or verify that a major 10-year inspection of a Building Maintenance Unit (BMU) was undertaken, despite a specialist contractor having been engaged to regularly maintain and service the BMU.
The Court previously found that the specialist contractor, Building Maintenance Unit Service Pty Ltd (BMUS), was in breach of its WHS duties after fatigue caused critical studs to fail.
The failure, which likely would have been averted had the major 10-year inspection been undertaken, led to the BMU falling down the side of the building with two workers inside, causing them both to suffer serious injuries and permanent disability.
The property managers, Investa Asset Management (the Company), unsuccessfully pleaded not guilty to the charge.
The Company advanced two primary submissions as to the matter being that the Company was entitled to rely on the specialist contractor BMUS to notify them that a major inspection was due. The Court rejected this submission and found that the Company could not discharge their duties under WHS legislation by relying solely on BMUS’ expertise. This was because the Company was entitled to rely on the technical expertise of the specialist contractor in any works that they performed (for example a major inspection) but not the fact that an inspection was required at all and when it was required.
The Court also found that the Company knew the purpose of this major inspection was to identify hidden defects in critical components of the BMU that may pose a risk to the BMU that could not be identified by the more frequent visual inspection.
Further, the Court found that there were alternative methods available to the Company to determine when the BMU needed to be inspected, for example the Company could have contacted the BMU manufacturer to find out the age of the BMU and its service history.
Finally, the Court was satisfied in this case that BMUS had in fact notified a staff member of the Company that the inspection was required, albeit that no action was taken following that notification by either BMUS or the Company.
The Company also submitted that, even had an inspection been initiated by the Company, there was no guarantee that the inspector would have discovered the fatigued equipment: As such, the Company submitted that the prosecutor had failed to show that a major inspection would have eliminated or minimised the risk of the studs failing.
The Court found that it was not necessary for the prosecutor to prove what would have happened if the inspection had been undertaken. The failure was that the Company could have, but did not, arrange or submit the BMU for a major inspection.
Even if the Company was correct, and that there had to be evidence that the inspection would have identified the issue with the studs, the Court accepted the prosecution’s expert evidence that had a major inspection been carried out, the fatigue and cracking would have been visible and that the studs would have been replaced.
The Company was subsequently convicted. The Court announced a sentencing hearing would be set at a later date.
Lessons to be learned
Businesses involved in property management will need to review the implications of this decision carefully.
Important lessons can be drawn that demonstrate the duty of care of a property manager can extend to proactively arranging or verifying that key milestones are met for maintenance of plant and structures in the building. This is the case even where specialist contractors are engaged to service and maintain the plant or structure.
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