$225k fatal accident warning for Airbnb blocks

A penalty of more than quarter of a million dollars imposed on a Wollongong strata scheme where a worker died in an avoidable accident should send a jolt through owners corporations everywhere – especially those that have commercial enterprises, including short-term holiday lets, in their blocks.

And the clear message is that if you have commercial activities in your strata scheme, there’s a good chance that your insurance cover is “woefully inadequate.”

Strata managers and lawyers spent the tail end of last week sending out warning notices after a district court fined the owners corporation at 161 Berkeley Rd, Wollongong, $225,000 for failure to meet their obligations under the Workplace Health and Safety Act

The owners corp also had to pay $44,000 legal costs for the plaintiff as well as their own undisclosed legal costs for defending the action.

The legal actions occurred because a massive, rolling entry gate to the property was damaged after being hit by a car. Rather than seal it off immediately until it could be repaired, it was operated manually by a worker at the site.  Tragically, the gate toppled on the worker who sustained fatal injuries. 

However, before anyone in strata starts panicking, it should be noted that the strata scheme involved actually comprises several light industrial premises and there appears to be no residential properties on the site.

Those are very specific and terrible circumstances but, according to leading strata lawyers (and Flat Chat sponsors) Bannermans, there may be implications for any strata schemes that house non-residential commercial activities, including short-term holiday lets. 

Strata schemes are generally exempt from workplace safety obligations, as imposed by the Act, but commercial activity could push schemes into being a Person Conducting a Business or Undertaking (PCBU) which would mean they come under the Workplace Health and Safety legislation.

It was that law under which the Wollongong strata scheme was fined $225,000. The criteria seems to be, if you are a strata scheme and someone is running a business on it, or employed directly by it, then the Owners Corporation is liable as a PCBU.

On a fact sheet on their website, Bannermans say strata schemes could lose their PCBU exemptions if they have, among various other elements:

• A common property loading dock used for commercial purposes;
• A common property area used for visitor parking of the commercial vehicles;
• Short term letting;
• A common property concierge desk

Thus there are two areas that strata schemes need to address. Firstly, have you been wrongly assuming that your scheme is exempt? Also, is your strata insurance sufficient to cover the fines and legal costs if it isn’t? The word is that the standard $50,000 is “woefully inadequate”.

Bannermans says that following the Decision, strata schemes who are PCBUs should do the following:

• Appoint an officer (such as a committee member) armed with a suitable WH&S policy to adequately implement, assess, train, induct and manage the risks and WH&S Policy as required by section 27 of the Act;
• Ensure that insurance quotes address the Act with suitable inclusions;
• Ensure adequate insurance for the legal defence costs,
• Take compliance measures as required by the Act.

Strata schemes that are not exempt from the WHS Act may also include:

• Strata schemes that directly employ a facilities manager for whom they are liable to pay PAYG and superannuation.
• Community schemes or company title buildings that employ facilities managers or strata managers.
• Work from home arrangements where common areas are used for non-residential purposes.
  

If you are interested in reading more detail you’ll find Bannerman’s summaries of the SafeWork NSW vs The Owners – Strata Plan 93899 [2024] NSWDC 277 HERE and their summary of the case from which it stemmed (Maluko Pty Ltd [2023] NSWDC 274) HERE. You can also find the official District Court Decision HERE.