News & Thinking

Shared responsibilities – identifying and managing health and safety risks in leased premises

Contributed by:

Olivia Welsh
Special Counsel

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Olivia Welsh

Landlords and tenants need to pro-actively assess and manage the health and safety related risks their premises and operations may pose, and cannot contract out or delegate this responsibility to each other or a property manager. Ultimately, both landlords and tenants may be held accountable if an incident occurs as a result of a property related hazard.

What can go wrong?

A company operating a childcare business, Discoveries Educare Limited (Discoveries), and the landlord of the premises, Heng Tong Investments Limited (Heng Tong), were recently sentenced in the Auckland District Court after pleading guilty to offences under the Health and Safety at Work Act 2015, following an incident where a tree fell and injured four young children and an adult at the childcare centre.

WorkSafe found that the tree had been dead for more than a year before it fell, and that risks posed by the tree had not been identified or managed by either Discoveries or Heng Tong:

  • Site hazard reports prepared by the former property manager, Bayleys, while it was managing the property had noted the presence of several large trees and the need for a tree maintenance programme to limit falling branches and low headroom hazards. Despite this, Heng Tong did not inspect the property or the tree after taking back management of the property from Bayleys. Instead, Heng Tong relied on Discoveries to tell it about any issues with the property as they arose.
  • Discoveries noticed the tree’s condition had deteriorated and that it had stopped producing leaves after renovations were undertaken in the vicinity of the tree, but failed to monitor and manage the condition of the tree. Discoveries had daily health and safety checklists for its staff to complete, but the dead tree was never identified as a hazard.

Unsurprisingly, both defendants pleaded guilty and were convicted. Discoveries was fined $209,625 and ordered to pay reparation of $46,200 for emotional harm ($3,500 having already been paid) as well as $3,490 in consequential economic loss. Heng Tong was fined $89,250 and ordered to pay reparation of $30,800 for emotional harm as well as $2,326 in consequential economic loss.

Key learnings

This case is a good reminder that both landlords and tenants need to ensure commercial premises are safe and don’t pose risks to the health and safety of people who work at or use them. It also demonstrates that WorkSafe does not simply look at the tenant operating a business from the premises if an incident occurs – both the landlord and the tenant may face enforcement action if they fail to comply with their duties.

Landlords and tenants can and commonly do make operational agreements to allocate responsibilities for health and safety matters between themselves. The important lesson for both parties is to understand that this type of agreement between them doesn’t take away their respective legal responsibilities. If one party doesn’t do what it should, the other may need to step in to avoid the risk of breaching its own health and safety duties.

It is critically important that landlords and tenants engage with each other and each understand:

  • the relevant risks associated with the premises and the work conducted there
  • how these risks will be managed
  • who will be responsible for doing what.

This includes assessing and implementing controls to manage whatever hazards and risks arise from the property, including the maintenance of it, as well as doing a similar exercise for hazards and risks arising from the tenant’s permitted use of the premises.

 An example

We are regularly asked to advise landlords and tenants about “who pays”? when repairs or improvements need to be made to make commercial premises safe. This might involve issues as diverse as removing and replacing asbestos roof tiles or upgrading air conditioning services to provide moderate temperatures and avoid excessive heat or cold. The first question will be what does the Deed of Lease say and is there any other relevant agreement between the parties. When the lease is silent, the answer may be that both parties are liable, and the practical problem will be which party is sufficiently concerned to act.

For further guidance or to help you resolve any issue with a landlord or tenant, please contact our expert health and safety lawyers Grant Nicholson and Olivia Welsh.

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