Australia: Landlord Liability For Defective Premises

Last Updated: 23 January 2008
Article by Samantha Kelly

In the recent decisions of Randwick City Council v T&H Fatouros Pty Limited [2007] NSWCA 177 and Estate of the Late Joseph James Virgona v De Lautour [2007] NSW 282, the NSW Court of Appeal revisited landlord's liability for occupants in premises owned by the landlord. The decisions provide guidance as to the circumstances where a landlord can be found liable for the defective state of premises. It is apparent from the practical approach taken by the Court of Appeal, that knowledge is the crucial ingredient in determining liability.

Where the landlord is aware of the risk and/or creates the risk, it will be exposed to liability. However, the decisions suggest that action is only required in circumstances where the landlord knows of the risk. Landlords are not under a duty to eradicate all hazards, especially those which are well known and part of ordinary domestic life.

Randwick City Council v T&H Fatouros

On 12 December 2000 Mr Ward fell through the railing of an external stairway which was attached to premises owned by T&H Fatouros Pty Limited (Fatouros) and became paraplegic. At the time of the accident, Mr Ward had been sleeping and was woken by a thunderstorm. He exited the room where he was sleeping and walked onto the external stairway. The rain had caused the stairway to become wet. Consequently, Mr Ward's foot slipped and he fell. Mr Ward's expert engineer stated that the stairway was 'far too steep for comfort and safety.' It was accepted the stairways were defective and contributed to Mr Ward's fall.

Mr Ward's action against Fatouros was settled. Fatouros sought, successfully at trial, to recover those damages from Randwick City Council (Council). Council appealed.

The issue for the Court of Appeal was whether the Council owed a duty to take reasonable care in the discharging of its statutory powers and functions to prevent Fatouros from sustaining economic loss (being the damages it was required to pay to Mr Ward).

Background

Fatouros conducted a boarding house business in the premises. In 1996, Council issued an order for submission of an engineer's certificate as to the structural adequacy of the then external stairways. In response, Fatouros engaged an engineer and builder to design and construct new external stairways. The new stairways did not comply with the engineering drawings but Fatouros considered them adequate. Construction was completed in April 1998.

During Council's yearly fire safety inspection, no issues with the new stairway were raised. According to Fatouros, Council held the new external stairway to be 'fine'. However, intention notices and orders were issued by Council concerning other fire safety matters at the premises. No mention was made of the external stairways.

Trial

Fatouros successfully argued Council's conduct in issuing notices and orders concerning fire safety attracted a duty of care 'to ensure that the stairways were safe for the purpose which it was to be used and not to give it approval until it was safe.' In not raising the stairways in the notices, it was suggested that Council had implied they were suitable.

The trial judge also accepted it was obvious to any person 'who turned his or her mind to the safety of the stairs as constructed' that they were 'inherently unsafe' and 'posed a danger'.

Court Of Appeal

The Court of Appeal unanimously disagreed with the trial judge. The Court found that the issuing of notices and orders concerning the fire safety of particular aspects of the premises did not impose a duty on the Council to deal with the whole building and, relevantly, the non-complying stairways. The Court of Appeal stated:

'By issuing a notice of intention to give a fire safety order, a council does not take on supervision of the whole building with respect to fire safety ... if the contrary were to be the case, an extraordinarily heavy and difficult burden would be placed upon councils. It would work as a serious disincentive against councils exercising their discretion to issue fire orders.'

The facts differed significantly from those in Pyrenees Shire Council v Day [1998] 192 CLR 330 where the sole and actual knowledge of the relevant risk rested with the local council. In this case, the danger was obvious to Fatouros who also had control over the stairways. There was nothing to prevent Fatouros from remedying the situation, particularly as it knew the stairways did not comply with the engineering design. On the other hand, 'the control the Council possessed in this regard was limited to the exercise of its discretionary statutory powers and was neither significant nor special.'

There was also no evidence to support any finding of reliance by Fatouros on Council. The failure to prove the fundamental elements of control, reliance and vulnerability on the part of Fatouros was considered to be fatal to the contention that Council owed a duty of care to prevent Fatouros from sustaining economic loss.

Estate Of The Late Joseph James Virgona v De Lautour

In this case, Ms De Lautour alleged she sustained personal injuries whilst attempting to store personal effects within the confined and dark space roof of rental premises she shared with a number of other tenants. Whilst in the roof, Ms De Lautour put her right foot onto a thick wooden beam and her left foot onto what she thought was another beam. However, she had actually put her left foot onto a batten which was in place to join sheets of asbestos ceiling material. The batten was not weight bearing. Consequently, Ms De Lautour fell through the ceiling and into the bedroom below sustaining a number of injuries.

Trial

The trial judge found the landlord had breached its duty of care owed to Ms De Lautour in failing to either provide a roof space with proper flooring or locking the area from general use. His Honour found the roof had 'confined space, poor lighting and the existence of some clutter' which made the roof area 'hazardous to the average tenant'.

The landlord appealed to the NSW Court of Appeal.

Appeal

The Court of Appeal unanimously allowed the landlord's appeal and rejected Ms De Lautour's arguments that the appearance of the beam on which she stepped was 'misleading' and that the presence of the door into the roof space constituted a 'trap' of which the landlord ought to have been aware. Instead, the Court of Appeal accepted that Ms De Lautour appreciated the risk that the wooden beams may not have taken her weight (which was supported by the trial judge's finding of contributory negligence on the part of Ms De Lautour for the same reasons).

There was nothing unusual about the roof area at the premises compared to similar domestic residences. Accordingly, the Court of Appeal found there was no basis for suggesting it was not fit for ordinary habitation as a domestic premise. Further, the risks associated with climbing into the roof space were no different to those in any domestic residential premises. The Court concluded there was no requirement on the landlord to take measures to guarantee the 'absolute safety' of the roof space for tenants, particularly in circumstances where the landlord had not encouraged or even suggested use of the area for storage.

It is apparent from the practical approach taken by the Court of Appeal, that knowledge is the crucial ingredient in determining liability in cases of this kind.

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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