By Grant Mitchell, Partner, Juliana Marcus, Lawyer and Poppy Scaife, Paralegal

Key Takeaway

This case demonstrates that a duty of care owed by a landlord is capable of being delegated to their agent (such as a property manager).

However, critically the Court found that landlords cannot escape the liability for the negligent acts of their agents which are attributed to them under the law relating to agency.

As such, in this matter, the landlords had breached their duty of care and their obligations under a tenancy agreement, because their property managers did not carry out an adequate ingoing inspection of a property that was being leased.

Facts

The applicant was the tenant of a property. The respondents were the owners and landlords. The property was managed on the respondent’s behalf by a real estate agency. The parties entered into a tenancy agreement formalising the arrangement.

The applicant claimed that during his tenancy, he suffered an electric shock after he came into contact with exposed wires from an uncovered junction box in the garage.

As a result, the applicant brought proceedings against the respondents, claiming damages for breach of contract and negligence arising from the alleged personal injuries.

Decision

Ultimately, Judge Burnett was not satisfied that the applicant had been electrocuted, so the claim was dismissed.

However, the Court still considered the question of breach of duty of care and breach of contract.

One of the key issues in question was whether the respondents breached their duty of care to take reasonable care to avoid foreseeable risk of injury.

To address the risk that the applicant, as a tenant, may suffer injury from a dangerous defect in the property, the respondents should have conducted an inspection of the property at the commencement of the tenancy.

The Court found that no inspection occurred before the commencement of the tenancy, as the material, comments and photographs in the report were copied over from a previous tenancy inspection. As such, the respondents could not rely on this report ‘to submit that they made reasonable efforts to ascertain the condition of the [p]roperty’ before the applicant commenced his tenancy.

The respondents submitted that:

1. they had discharged their duty by engaging agents (the real estate agency) to carry out their inspection obligations that are imposed at common law, under the tenancy agreement and s 68 of the Residential Tenancies Act 1995 (SA); and
2. they were entitled to rely on their agents to undertake their property management duties, including undertaking an adequate pre-tenancy property inspection report.

Ultimately, the Court held:

1. the terms of the property management agreement between the respondents and the real estate agency created an agency relationship;
2. the respondents, as landlords, could not escape liability if their agents did not conduct an adequate pre-tenancy inspection;
3. ‘[a]s principals, [the respondents] are responsible for the negligent acts of their agent’ committed in the course of the agency;
4. ‘[t]here is no doubt the duty of care owed by the respondents, as the landlord, was capable of being delegated’; and
5. ‘while that delegation may be sufficient to discharge the landlord’s personal duty of care, it does not operate to avoid liability for the negligent acts of the agent, which are attributed to them under the law relating to agency’.

It follows that the respondents failed to carry out an adequate inspection at the time of the commencement of the tenancy and were therefore in breach of their duty of care.

For these same reasons, His Honour also found that if there was an exposed junction box, the respondents would have breached their obligations under the tenancy agreement.

Nonetheless, the applicant’s claim was dismissed on the basis that there was not sufficient evidence that he had been electrocuted.