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Which case won?

Who is liable for a balcony collapse on a residential property? Which case won?
05 Nov | Which Case Won

Who is liable for a balcony collapse on a residential property? Which case won?

by Rita Yousef, Elizabeth Street, Sydney

The Facts

Balcony collapses due to deterioration of structural beams

The accident happened on 15 June 2012. Four people were injured when a balcony collapsed at a rented residential property in Collaroy, on Sydney’s northern beaches.

The cause of the collapse was “weathered deterioration of the structural beams and metal fixings”.

The property was managed by a real estate agent on behalf of the landlords. The property was leased to a tenant who had lived at the property for about seven years.

All parties fully aware of balcony’s defects

The real estate agent, landlords and the tenant were all fully aware of the balcony’s defects. The tenant, for example, who was an architect, had made complaints to the real estate agent about the state of the balcony as recently as February 2012, some four months before the accident.

However, she continued to use the balcony and did not prevent access to the balcony.

Those who were injured included the tenant’s daughter and three of her friends. They each made separate claims for compensation arising from their injuries.

The tenant also claimed to have suffered damage and loss as a result of witnessing the distress of her daughter and the friends.

casea
The case for the landlords
  • We wholly delegated our duties to the real estate agent and therefore we are not responsible.
  • The real estate agent did not have adequate procedures in place to ensure that inspections, follow ups and repairs were conducted appropriately.
  • The tenant knew about the balcony defects, given that she lived at the property for seven years and wrote to the managing agent about the defects. The injuries would not have occurred if the tenant had prevented access to the balcony.
  • The real estate agent did not ensure that an opinion about the balcony from a properly qualified expert was obtained.
  • Therefore the court should find that it is the real estate agent and the tenant who are responsible for the balcony collapse and the resulting injuries.
caseb
The case for the real estate agent
  • The landlords did not wholly delegate to us full and free authority in relation to repairs and inspections of the leased property.
  • The landlords did not give us sufficient instructions regarding the repairs.
  • The landlords did not respond adequately to the need for repairs and the risks involved.
  • We were not ultimately responsible for arranging the repairs.
  • The tenant knew about the balcony defects, given that she lived at the property for seven years and wrote to us about the defects. The injuries would not have occurred if the tenant had prevented access to the balcony.
  • The landlords did not ensure that an opinion about the balcony from a properly qualified expert was obtained.
  • Therefore the court should find that it is the landlords and the tenant who are responsible for the balcony collapse and the resulting injuries.

So, which case won?

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Expert commentary on the court's decision

Rita YousefLawyer
“Managing agents, landlords and tenants must take reasonable precautions to address foreseeable risks of harm at residential properties arising from defects.”
Landlords win as Court of Appeal attributes greatest share of blame to real estate agent

In the case of Libra Collaroy v Bhide [2017] NSWCA 196, the NSW Court of Appeal found that the real estate agent, landlord and tenant were all liable for the damage and loss arising out of the collapse of the balcony, albeit to varying degrees.

The real estate agent was Elders Real Estate, the landlords were Deepak and Alka Bhide and the tenant was Joanne Gillies.

This case was first heard by Judge Curtis of the District Court of NSW. His Honour decided that Elders was 100% liable.

Elders was successful on appeal, in that the Court of Appeal found it was not 100% liable. However, Elders was found to be partially responsible.

Proving negligence in this situation involves ascertaining the cause of the balcony collapse and therefore who was responsible.

The court said: “On the findings of breach I have made, Elders, the Bhides and Ms Gillies are joint tortfeasors liable for the same wrongful act or tort leading to a single damage.”

Liability was apportioned between the real estate agent (50%), landlords (30%) and the tenant (20%).

What was the risk of harm?

It is necessary to look at the relevant risk of harm and whether the real estate agent, landlord and/or tenant ought to have known of it. Without knowing the risk of harm, it is impossible to accurately say what should have been done to address it and by whom, as required by section 5B of the NSW Civil Liability Act 2002.

In this case the court said that “the risk of harm is sufficiently identified as that of people being injured due to the failure to properly investigate, and maintain, the structural integrity of the balcony”.

Precautions that the real estate agent could have taken

Elders as the managing agent owed a duty to the injured people as lawful visitors to the property (and one tenant), to exercise reasonable care in the management of the property.

Elders should have taken precautions such as:

  • Having a proper system in place to manage and monitor maintenance requirements
  • Responding to concerns and quotes regarding the balcony
  • Making recommendations to the landlords and following through adequately in relation to the expert opinion(s) required
Precautions that the landlord could have taken

Despite being permitted to delegate their duties as landlords to Elders, and even though there was a valid agency agreement between them, the Bhides owed a duty as the owners.

The Bhides ought to have concluded that Elders had not been competently performing its duties to manage the property and to follow through with required repairs.

Landlords are required to take such precautions as:

  • Specifically instructing the managing agent to obtain an opinion from a properly qualified expert as to the state of the balcony and any need for repairs
  • Ensuring that all required repairs and replacement work were conducted as soon as practicable
  • Being actively involved in ensuring the appropriate steps are taken and following up until the defects are properly addressed
Tenant should have prevented access to balcony

Despite Ms Gillies’ position as a tenant renting the property, she had a duty of care as the primary occupier.

Ms Gillies had lived at the property for seven years. She was aware of the balcony’s defects and had made complaints about them herself.

The court found that a reasonable person in Ms Gillies’ position would not have allowed her children nor anyone else onto the balcony due to the foreseeable risk of injury.

Practical implications for real estate agents, landlords and tenants

Real estate agents, landlords and tenants must all take reasonable precautions to address foreseeable risks of harm on residential properties arising from defects.

While varying degrees of culpability may be applied to each of these parties, they are required to not only be aware of the state of the properties that they manage, own or occupy; but also to take active steps to address any hazards or defects that could lead to damage and loss.

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.
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