The recent Kaikoura earthquake was yet another reminder of the volatile and unpredictable nature of the land on which we all live. As we have seen, even earthquakes that don’t cause widespread destruction and/or loss of life can have a major impact on businesses and property owners. We set out below some guidance on points to keep in mind if you own, or are a tenant in, a commercial building potentially affected by earthquake damage.
Civil Defence Emergency Management
If you’re a building owner, you have primary responsibility to ensure your building is structurally safe. You must provide assistance to the local emergency management officials (if a state of emergency has been declared) or to the council if there’s no state of emergency.
If a state of emergency is declared, civil defence officials are likely to begin a rapid assessment to determine whether your building is structurally safe. They may inspect the building and issue a placard indicating it can be used, or that entry is restricted or prohibited.
You must co-operate fully with this inspection process, including providing any information requested (for example, any previous engineering advice received).
Civil defence officials can also require you to undertake structural assessments, and make safe or demolish all or part of those structures. They can also require evacuations, and close roads and public spaces. This often occurs where a building is at risk of collapse, and can significantly affect neighbouring businesses.
Health and safety
If your building is, or contains, a place of work, then both you and your tenant will have duties under the Health and Safety at Work Act 2015, including a duty to consult, co-operate and co-ordinate with each other.
Among other duties, a person who controls a workplace or fixtures and fittings within a workplace (shelving, for example) also has specific duties to ensure those things are without risks to the health and safety of any person.
After an earthquake
If there’s a risk that the structural integrity of the building has been affected by the quake, an inspection should be undertaken by a chartered professional engineer.
If a structural engineering report is already held, that may provide some recommendations as to the situations in which a further report is required (for example, an earthquake over a certain magnitude). If not, building owners and tenants will need to use their judgement as to whether the building’s structural integrity has potentially been affected.
The Ministry of Business, Innovation and Employment (which administers both building law, and health and safety legislation) suggests that things to look for include:
- Broken windows
- Broken or cracked concrete/plaster/masonry/linings
- Damaged building components
- Changes in building levels or tilting
- Dangers from neighbouring buildings and environs, such as power lines
- Dislodged services, and
- Significant displacement of furniture and office components.
If engineers confirm the building is structurally safe, you and your tenant/s will need to decide whether it can be reoccupied. If the building is structurally sound, there may be services which require fixing (such as water, sewerage and fire protection) before the building is safe to occupy. There may also be other hazards which can be repaired or mitigated easily, such as dust, broken windows and dislodged furniture. These must be addressed before the building is reoccupied.
Who pays?
Who is responsible for repairing damage depends on what is damaged and the terms of the lease. Under many leases the landlord is responsible for repairing the building itself, and tenants are responsible for repairing any fixtures and fittings belonging to them. However, the terms of the particular lease should be checked carefully.
There are exceptions, however. Under the Property Law Act 2007, landlords cannot hold tenants liable for any damage to the building arising from an earthquake, even if there’s an obligation on the tenant under the lease to repair that damage.
Employment
The Employment Relations Act 2000 does not specifically deal with obligations after a natural disaster. However, the duty of both employers and employees to act in good faith remains. Employment agreements or the employer’s policies may also deal specifically with the situation, so it’s important to check those. Employers should also check their insurance policy to see whether they are covered for payroll expenses if the business is closed.
Generally, if your employees are willing and able to work, but the workplace is shut, then they need to be paid. That is often not financially viable in the long term. Following major events such as the Kaikoura earthquake, the government may offer a wage subsidy to affected businesses. This is designed to encourage employers to keep staff on while the business is closed for repairs.
If the business will be closed for some time, employers and employees should talk with each other about how to best manage the situation. Good faith and common sense go a long way in situations like this.
There are many things to consider after a large earthquake, and it can be a very stressful and confusing time. We have experts who can assist you in navigating through it.
Disclaimer: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2016. Editor - Adrienne Olsen, em. adrienne@adroite.co.nz ph. 029 286 3650 or 04 496 5513
