22.02.2023

Fail to Plan, Plan to Fail: Leasing and Health and Safety

When the Health and Safety at Work Act 2015 (HSWA) came into force in April 2016 as part of the Government’s strategy to reduce serious work-related injuries, it marked an important shift in health and safety regulation.  One complaint about the previous legislation was that its approach did not provide the coverage necessary to ensure that those people who can prevent workplace harm have an explicit obligation to do so.

The introduction of the concept of a “Person Conducting a Business or Undertaking” – or PCBU – was designed to ensure that HSWA’s coverage was broad enough to capture all contemporary working relationships.

A PCBU has an overarching, primary duty for people’s health and safety while they are at work or where they can be affected by the work.  The PCBU must ensure, so far as is reasonably practicable, the health and safety of its workers, any other workers that it influences or directs, and any other people who could be put at risk by its work, for example, customers, visitors, volunteers or the public in general.

For commercial landlords and tenants, the obligations do not end there: HSWA imposes special duties where the PCBU controls or manages a workplace, and the fixtures, fittings and plant at the workplace.

Commercial landlords and commercial tenants are PCBUs, and as such they are both required to provide and maintain a “work environment that is, so far as is reasonably practicable, without risk to the health and safety of workers”.  As the landlord and tenant’s duties overlap, HSWA requires the parties to consult, co-operate and co-ordinate activities in respect of health and safety.

A PCBU cannot contract out of its duties, but it can make reasonable arrangements with another PCBU to assist in discharging its duties, taking into account the level of influence and control each PCBU has over the overlapping work.  The idea that underpins HSWA is that the duty to protect workers is a shared obligation, but the PCBU in the best position to eliminate or minimise the work-related risk must do so.

Duties upon supply of a building

As part of ensuring the widest coverage possible, HSWA also includes duties to participants “upstream” in the supply chain: designers, manufacturers, importers and suppliers.

In HSWA, supply includes supply by way of lease.

Structure includes a building or any component of the building.

Where a PCBU, as part of its business, supplies a structure that is to be used, or could reasonably be expected to be used as a workplace, it must ensure that the structure is without risks to the health and safety of persons including those who:

  • use the structure as a workplace;
  • carry out any reasonably foreseeable activity such as cleaning, maintenance, or repair in relation to the structure; and
  • are at or in the workplace in the structure and whose health or safety may be affected by a use of the structure.

At first blush, this does not appear to add a great deal to the primary duty, or duty of a person who controls the workplace, its fittings, fixtures and plant – however, the duty also imposes a requirement on the supplier to:

  • carry out, or arrange the carrying out of, any calculation, analysis, testing, or examination that may be necessary for the performance of the duty imposed by supplier duty; or
  • ensure that the calculation, analysis, testing, or examination has been carried out.

If calculations, analysis, testing or examination is required, then the PCBU landlord must supply it to the tenant.

Earthquakes

WorkSafe New Zealand’s position statement on earthquake-prone buildings points out that the national health and safety regulator will not take action against a landlord or building owner if they are complying with their obligations to strengthen their property as set out in the current Building Act 2004.

Structures must comply with specific design requirements under other legislation, such as the Building Act 2004 (this covers seismic standards, fire protection and general ventilation, etc.).  Copies of the design specifications and certificate of compliance, as well as any subsequent alterations or maintenance, should be held on file.

If a building owner does not comply with the Building Act 2004 and a person is harmed (or nearly harmed) following an earthquake, the building owner may be prosecuted under the Building Act 2004 and the HSWA.

Asbestos

A landlord (and other potential PCBUs like property managers and building contractors) has a duty to identify asbestos and, if there is a risk of exposure to respirable asbestos fibres, create an asbestos management plan during the planning stage before the relevant work is carried out.  This duty applies when work is being planned and carried out and to the area relevant to the work creating a risk of exposure.

Fail to plan; plan to fail

In 2019, Worksafe successfully concluded a prosecution of Discoveries Educare Ltd, and Heng Tong Investments Ltd.  The prosecution concerned a dead tree in the yard of an early childhood education center in Auckland. Discoveries Educare, as tenant, and Heng Tong Investments, as landlord, pleaded guilty to breaching their duties as PCBUs when a large dead eucalyptus tree collapsed in November 2016 injuring 4 pre-school children, and exposing other children and teachers to the risk of harm.

The landlord had been advised in July 2015 that several large trees at the property would need a maintenance plan to manage hazards caused by the trees’ limbs. The landlord, however, said that it was under the impression that it was not required to take any preventative measures as this was the responsibility of the tenant.  This approach did not accord with best practice, which in general terms requires a landowner to identify trees which might, if they fell, pose a risk to people or property.  The landlord conceded that it had no systems in place to adequately manage the health and safety of the centre in this respect.  While a tenant is likely to have a greater duty, this prosecution demonstrates that a failure to plan and consult with a tenant may result in liability and significant liability.  Heng Tong Investments was fined $119,000 and ordered to pay $30,800 in reparation to the four victims.

Repair the roof while the sun is shining

Landlords should assess if their lease documentation adequately deals with the allocation of duties under the HSWA.  Usually, a standard form deed of lease will be silent with regard to health and safety duties.  Ordinarily, the obligations are relegated to a reference that the tenant must comply with “the provisions of all statutes, ordinances, regulations and by-laws relating to the use of the premises”.  If you are in any doubt about your lease documentation, contact our Commercial Property Team.

For both landlords and tenants, it is important to identify risks presented by the premises, fixtures, fittings, and plant.  Eliminate the risks where possible.  If not, you must have strategies to minimise the risks.  Document the assessments and plans.

Consult with your landlord/tenant, property manager, maintenance contractors and other PCBUs in the workplace in regard to health and safety matters arising from the premises.  Satisfy yourself that any other PCBU involved in the management of the workplace understands their obligations.  Formulate mutual strategies where appropriate.  Document any agreement, meetings or plans.

If you can exert a significant influence over the management of your business (director, partner, owner, CEO or similar), then you should satisfy yourself that your PCBU is resourced to meet its obligations and monitor effectiveness on a regular basis.

As always, if you have any questions about your health and safety obligations, please get in touch with our Health and Safety team or your usual contact at Hesketh Henry.

(This article was originally published on 13 August 2019 and updated February 2023)

 

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Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

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