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WAKE UP CALL FOR PROPERTY MANAGERS AND LANDLORDS
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A recent prosecution of a property management company and the contractor it engaged to undertake gas fitting work is a reminder that property managers and landlords cannot wash their hands of health and safety for the buildings they manage or own.

What happened?

The property management company, was the property manager of a block of residential properties owned by a family trust. The property management company engaged a local unqualified handyman to remove a gas heater at one of the properties.

The handyman removed the gas heater but left the gas supply uncapped, with an open ended copper pipe sticking 20-25cm out of the wall and leading straight into the house. The following day a new tenant moved into the property and, after realising the property’s water heating system was gas-powered, arranged for the delivery and installation of a new LPG cylinder. The next morning the tenant noticed a very strong gas smell. Following an investigation by WorkSafe New Zealand’s Energy Safety division it was found that 35kgs of gas had leaked into the house overnight. Luckily, no one was harmed.

Charges were laid against the property management company and the handyman alleging multiple breaches of the Gas Act 1992 (‘Gas Act’) and the Plumbers, Gasfitters, and Drainlayers Act 2006. Both defendants pleaded guilty. The property management company was fined $55,000 and ordered to pay reparations of $12,500 to the tenant for failing to ensure the safety of gas appliances and fittings in the property, and for engaging a person who was not authorised to do gas fitting. The handyman was sentenced to 200 hours community work and required to pay $2,000 in reparations to the tenant for undertaking the unauthorised gas fitting work.

How does this relate to health and safety?

Under the Health and Safety in Employment Act 1992 (‘HSE Act’) a person who controls a place of work owes duties to everyone in the vicinity of the place of work, as well as to people lawfully at work in the place. The person who controls the place of work can be the owner or any lessee, occupier, or person in possession of the place where any person is working.

In the Timaru case the property owner owed a duty to both the tenant and the handyman to ensure they were not harmed by any hazard arising from the property and was fortunate not to be prosecuted. Contracting with the property management company to provide property management services did not remove or satisfy the owner’s duties, as the HSE Act prohibits parties from contracting out of their obligations. The property management company was not a person in control of a place of work and didn’t owe duties to the tenant under the HSE Act. The property management company did, however, owe duties under the HSE Act to ensure the handyman (as its contractor) wasn’t harmed while doing the gas fitting work.

The seemingly odd result of the property management company not being liable to the tenant under the HSE Act was cured by the Gas Act (and its relevant regulations), which provided that every person who leases out a gas appliance or fittings must take all practicable steps to ensure that the gas appliance or fittings are safe. By virtue of being an agent for the property owner, the property management company became the party who ‘leased out’ the property and, consequently, the gas appliance and fittings.

What does this mean for property managers and landlords?

This case is a timely reminder that issues relating to health and safety are governed by a number of statutes, and that avoiding liability under one piece of legislation will not guarantee the same result under another. Landlords engaging property managers need to keep in mind that they have legal obligations to ensure the safety of tenants and others, even when they have no day-to-day involvement with the property. Similarly, property managers should expect that in other circumstances they are directly responsible for the safety of tenants and others, particularly where they are engaging contractors to do work on the property.

Property managers and landlords should also be aware that their potential liability will increase when the new Health and Safety at Work Act (‘HSW Act’) comes into force later this year. Applying the proposed new legislation to the current case, the property owner, Harcourts, and the handyman will all be PCBUs (a ‘Person Conducting a Business or Undertaking’ – the new primary duty holder under the HSW Act). As PCBUs these parties will owe duties to ‘workers’ (including employees, contractors and subcontractors) that they engage or can direct or influence and to others such as tenants and members of the public. The owner, the property management company, and the handyman will therefore owe health and safety duties to tenants in a wider range of circumstances than presently. The owner and Harcourts the property management company will also owe duties to the handyman.

The HSW Act will introduce a requirement that when different PCBUs hold duties in relation to the same matter (e.g. duties to the tenant) they must consult, cooperate and coordinate the means by which they will comply with their duties. This means the property owner, the property management company, and the handyman will need to talk to each other and co-operate and coordinate the way in which work will be done. This may seem counterintuitive, particularly for a property owner who has deliberately engaged someone like the property management company to manage their properties for them, but there will be no way to contract out of this obligation. Failure by landlords and property managers to comply with any of these duties will expose them to substantially increased penalties, with the maximum fine increasing to $3 million for a company and $600,000 or a term of imprisonment of up to 5 years (or both) for an individual.

The lesson for all property owners and managers is be prepared. Our specialist property and health and safety teams are experienced advisors on the health and safety issues that can arise for landlords and property managers, and are happy to assist with any issues you may have.

If you have any questions about this Newsflash, please contact John MeadsMatthew Ockleston or Grant Nicholson.

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