The District Court of NSW recently found the owner and managing agent of residential premises were joint tortfeasors, liable for an injury occurring on the premises, and apportioned 100% of liability to the managing agent.
In Issue
- Whether the property owner and managing agent breached their duties of care to a tenant of residential premises.
- Claims for indemnity and contribution between the property owner and managing agent pursuant to contract and apportionment legislation.
The Background
At approximately 6.00 am on 2 August 2015, the plaintiff fell whilst descending an unlit internal stairwell in the common area of her rental premises. The plaintiff sustained a left foot fracture and brought proceedings against the owner and managing agent, who filed cross-claims against each other.
Complaints had been made to the managing agent by a tenant on 12 May 2015 (the first complaint) and 10 July 2015 (the second complaint), to the effect that the stairwell lighting was not working. The managing agents failed to inform the owner of the second complaint or take adequate steps to rectify the issue.
The Decision at Trial
The owner contended that they had delegated their duty of care to the managing agent and therefore were not liable for the plaintiff’s accident.
The managing agent argued that the evidence established they had engaged an independent contractor to repair the lighting after the second complaint, and prior to the accident, and were therefore not liable. They also sought an indemnity from the owner pursuant to the terms of a standard managing agency agreement.
The court held that the owner did not delegate all of their inspection and maintenance responsibilities to the managing agent in circumstances where the managing agency agreement required the owner to approve all non-urgent and non-emergency maintenance and repair. Accordingly, the owner was liable for failing to take simple precautions to deal with the lighting issues that arose. Further, in circumstances where the owners knew there had been a history of the lights malfunctioning, the court also found the owner was negligent in failing to make enquiries with the managing agent as to the cause of the lighting problems after the first complaint.
The court rejected evidence presented by the managing agent that they had arranged an electrician to repair the lights after the second complaint and prior to the plaintiff’s accident. As such, the managing agent also breached their duty of care to the plaintiff for failing to take steps to deal with the risk posed by the unlit stairwell after the second complaint was made.
The court rejected the managing agent’s attempt to rely upon an indemnity clause in the managing agency agreement, which provided for the owner to indemnify the managing agent for claims in the course of or arising out of the proper performance or exercise of the managing agents’ powers, duties or authorities under the agreement. Consistent with previous case law, the court found the contractual indemnity did not extend to claims arising out of the managing agent’s failure to properly perform its contractual obligations.
In assessing apportionment pursuant to the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), the court held that the managing agent’s respective culpability was so dominant that 100% of liability should be apportioned to the managing agent and 0% to the owner. Various factors influenced this including that the managing agent was aware of the second complaint but failed to notify the owners of this, were in a far better and effective position than the owner to take effective action against the risk of harm posed by the lighting problem, and had the last opportunity to avoid the plaintiff’s accident.
Implications for you
The decision illustrates that a property owner may not fully delegate all inspection and maintenance obligations to a managing agent, depending upon the terms of the agency agreement. However substantial contribution, and even in some cases a complete indemnity, might be available from a managing agent pursuant to apportionment legislation.
