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Topic
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I am an owner in a large strata plan. At the latest AGM the Owners Corporation agreed to enter into a contact with a sole trader to provide a part time building manager, cleaning services, limited property monitoring services and limited gardening services. A condition precedent of the contract is that the sole trader provides before execution of the contract, all relevant insurances including public liability up to $20m, Workers Compensation and Professional Indemnity up to $5m. The EC have called an EGM and there is now a motion to remove the requirement for Professional Indemnity insurance. I can not seem to find or get an answer to the following
What insurances should a Building Manager have in place?
What happens if a contractor is injured and the Building Manager has not complied with WH&S requirements? Of particular concern is that under the contract the Building Manager must comply with all relevant laws, for example under WH&S – conduct site inductions for all contractors, ensure all contractors insurances are in place and they are qualified to do the work requested and safe work method statements have been provided and are being followed.
Does Workers Compensation need to nominate all areas of services being provided?
Bewildered Owner
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Replies
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I think that your Owners Corporation (O/C) may be heading towards a mine field if it expects that any act or omission by its employee (whose role would be defined as a “caretaker ” in NSW) would absolve it of responsibility under any Legislation.
The caretaker and the O/C are separate entities, so, the former gets no benefit from the latter’s insurance cover. Consequently I believe that each entity must have its own insurance cover.
As to the nature and extent of that cover, even though the O/C may have effectively delegated some of its responsibilities (e.g. to properly maintain the common property) to its caretaker, both entities remain jointly responsible and should I believe hold identical coverage for all nominated activities where that joint / shared responsibility exists, including for workers compensation and legal liability (incl. personal injury, property damage, legal costs etc), and ideally with the same insurer to avoid conflicts should a claim arise.
The O/C should seek the advice of its current insurers re. the above, but before commenting further, could you please advise what State you’re in, whether the part-time building manager is also a resident (owner or tenant), and whether your Strata Plan is entirely residential or mixed-use?
@Bewildered Owner said:
- The building manager is a part time contractor and also an owner
Look forward to your reply
Still Bewildered
Hi Bewildered,
I have one suggestion if the OC does engage this building manager who is also an owner. I would suggest that appropriate safeguards be put in place to ensure that the OC is getting proper value for any work done.
A block of units I was involved with did engage an owner and it worked very well but I have heard of stories where OC’s have been either short changed or the building manager/owner being accused of misconduct.
In the block of units I was involved with formal procedures were put in place whereby independent quotes were regularly obtained for all work done by the owner/manager. The independent quotes should not be obtained by the building mangager/owner. Such action safeguards both the building manager/owner and the OC from claims of favouritism and financial mismanagement.
I realise that my comments do not go to the initial issue you raise, however, feel that in terms of transparency they are important.
Bewildered – under the NSW Work Health and Safety Act 2012 (WH&S) Strata Plans that are entirely residential are not classified as a “person conducting a business or undertaking” (PCBU) and are therefore exempt from the significant requirements of that Legislation; yours is, and that’s why I asked.
But.. that exemption only applies provided Owners Corporations (O/C) of those entirely residential Plans do not directly engage workers as employees, so if yours does proceed to itself contract an owner to provide a building management service it’s important to ensure that that person is not directly engaged, because as the O/C would be their only client, they’d be regarded as an employee under the WH&S Act (sole trader or not), and your O/C would consequently be lumbered with all the necessarily significant requirements of that Act.
In addition, a direct engagement by the O/C would mean that the owner would be classified as a “caretaker” under the provisions of Pt 4A of the NSW Strata Schemes Management Act (1996), so it would also need to ensure that any “contract” with the owner complies with that Act.
If your O/C is determined to proceed, I’d recommend that they have the owner engaged and paid by the Plan’s Strata Manager in exactly the same way as other “contractors” like electricians, plumbers, cleaners etc. The owner would need an Australian Business Number (ABN), if your Plan’s registered for GST the owner would need to be also, and they’d need to properly invoice the O/C on the terms agreed in the contract; just as they would if the O/C directly engaged them.
As for insurance cover, I again strongly recommend that your O/C discusses its proposal with its Insurers, because I remain of the opinion that as a shared responsibility still exists, the owner performing building management / caretaker duties, whether directly engaged by the O/C or via the Strata Manager, needs to hold the same cover as the O/C where that’s relevant; and I’d include workers compensation and legal liability in those (not professional indemnity).
Finally and as Cosmo observed, there are distinct advantages to having a caretaker and I believe that these would be actually enhanced if that person was in a position to more directly liaise with the Strata Manager with regard to maintenance and repairs, particularly with doing those things that most Strata Managers don’t have time to – like coordinating activities with contractors on-site, advising the contractor of any known risks in the workplace, ensuring that the work is satisfactory and there are no safety concerns, and discussing and resolving safety issues that may arise on-site; there’s less chance for overlaps that way and only the Strata Manager issues work orders.
Good luck with it all, and don’t allow my response to deter, but instead to allow your O/C to make some better choices and to do things a better way; hope your not Still Bewildered.
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