It is never explained as to how the owner of the Lucky Smells Lumber Mill is related to the Baudelaire Orphans, but they are left in his care regardless. 

Every single story gets worse, and this one may  be the first time the Baudelaires see someone get killed in front of them. While they saw the body of Uncle Monty, they never saw him die. And here,

Dr. Orwell steps backwards into a lumber saw, and it instantly torn apart.

I never realized how brutal that was a child, and maybe I just blocked that part out of my mind, but I could not believe this happened.