Australia: Leased premises - Liability of Builder for Defect resulting in Injury to Tenant

Last Updated: 15 April 2008
Article by Kate Blue

Guiney v Australand Holdings Limited And Ors; Castlehaven Sales No. 2 v Guiney And Ors [2008] NSWCA 44

1 April 2008

NSW Court of Appeal,

Mason P Giles, JA and Einstein J

In Brief

The decision confirms the principle set out in Voli v Inglewood Shire Council (1962) 110 CLR 74, namely, that a person who negligently manufactures goods or builds a defective structure is liable in negligence if a consumer or user in reasonable contemplation suffers reasonably foreseeable personal injury in consequence.


  • The plaintiff was injured when she slipped and fell on wet tiles in the bathroom of a recently constructed home leased to her husband. After the fall, the couple noticed a lot of water on the floor that had entered from an external source. This was the first time that this had happened in the upstairs bathroom but there had been similar problems in the downstairs bathroom about which the plaintiff's husband had complained unsuccessfully on several occasions.
  • The latest complaint was made about one week before the accident. A plumber was sent to the house and advised the plaintiff's husband that he had put in a temporary plug which should fix the problem on a temporary basis but that he had been unable to get on to the roof because of the rain. It continued raining. The leaking problem in the downstairs bathroom persisted and water entered the upstairs bathroom where the plaintiff had her accident on 6 February 2002.
  • The plaintiff sued three defendants being:
  1. Australand Holdings Pty Limited (the builder);
  2. Real Estate Franchises Pty Limited (managing agents); and
  3. Mr Tanberge (the owner).
  • Damages of $96,100 were recovered against the second and third defendants but the claim against the first defendant failed.
  • The owner was found to be liable for the negligence of his agent, the second defendant. The basis of the second defendant's negligence lay in its failure as managing agent to respond to repeated complaints by the lessee about the water leaking into the downstairs bathroom.
  • The trial judge found that the house was defective when built in that water that should have got away through the down pipe was able to get into the house. The judge found that any failure on the builder's part to have remedied the problem after it had been notified would probably have been negligent. The builder was nevertheless acquitted of negligence because it did not become aware of the problem until notified by the owner after the accident.
  • The plaintiff challenged the quantum of damages awarded in the District Court.
  • The plaintiff also challenged the verdict in favour of the first defendant.

On Appeal

  • The Court of Appeal referred to the principles set out in the decision of Voli v Inglewood Shire Council (1962) 110 CLR74 and confirmed that it is well established that a person who negligently manufactures goods or builds a structure is liable in negligence if a consumer or user in reasonable contemplation suffers reasonably foreseeable personal injury in the consequences.
  • Mason P found that Voli demonstrates that it matters not that the building is taken over on completion without anyone being aware of the defect.
  • In Mason P's view, the plaintiff as a member of the immediate family of the first occupiers of the newly built home was within the scope of such a duty of care.
  • The Court of Appeal noted that the first defendant's Notice of Grounds of Defence squarely admitted the allegation that the premises when constructed contained a defect in that from a vent or other location, large quantities of water would enter the roof of the premises and be deposited on the bathroom floor and elsewhere in times of rain.
  • The Court of Appeal considered carefully the decision of Voli v Inglewood Shire Council and it was noted that when harm enures, the problem for a court is whether the proximate cause of the harm was the negligence of the person who made the fault or the negligence of a person who was to examine, test or treat the fault, or the combined negligence of both.
  • In the matter of Voli, the Plaintiff sustained personal injury when a timber stage collapsed beneath him. Windeyer J held no doubt the fact that the architect's plans were approved by a public authority was relevant in considering whether or not the architect was in fact negligent. But as noted by Windeyer J it was a very different thing from saying that by obtaining approval, the architect was freed of all liability for negligence.
  • In the decision of Brian v Maloney (1995) 182 CLR 609, the court drew attention to the need to distinguish between relationships with respect to claims for physical injury and claims for mere economic loss. The present proceedings involved ordinary physical injury to the plaintiff caused by an act attributable to the first defendant. This is generally a settled area of the law of negligence where, depending on the particular facts a duty of care will be seen to arise.
  • The Court of Appeal also considered the plaintiff's challenge to the assessment of quantum and in particular to the plaintiff's claim for Sullivan v Gordon damages. At the time of trial, Sullivan v Gordon damages were no longer available as per the high court decision of CSR Limited v Eddy [2005] HCA 64, but by the time the trial judge delivered judgment on 7 July 2006, the Civil Liability Amendment Act 2006 had come into effect. Section 15B of that legislation outflanked the decision in Eddy by restoring Sullivan v Gordon type damages under a new regime with retrospective effect. When the judgment was delivered, no party considered approaching the trial judge on this issue. In the circumstances the Court of Appeal did not consider that a case for a new trial had been made out.


The decision confirms the principles set out in Voli v Inglewood Shire Council (1962) 110 CLR 74, namely, that a person who negligently manufactures goods or builds a structure is liable in negligence if a consumer or user in reasonable contemplation suffers reasonably foreseeable personal injury in consequence and that it is not necessarily a defence if the negligent construction has been checked, tested or approved prior to the event occurring.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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