Advise – Inform – Select – Arrange

These are the four words I have been using when training property managers and strata managers for over a decade. The recently decided case of Than -v- Galletta Anors (2019) brings these lessons to life. It is a story of an agent’s failure to advise and inform that proved costly.

People have published stories in relation to this matter, focusing heavily on the penalty that was suffered by the agency and almost pleading that the Courts were wrong. It was one of those stories whereby everyone felt sorry for the agent and tries to find excuses. What is lost is, the girl tripped and was injured.

The relevant facts of the case are:

  • The plaintiff, Ms. Than, occupied premises in Bondi Junction. The building was owned by five people and it is fair to say that it wasn’t maintained, in, let’s say a modern standard. The photograph above shows that the building probably is more accurately described as a “lower form of accommodation”. Well, at least it was kept that way. This is never the blame of the agent, this is often the frugalness of the landlord.
  • There were seven defendants in this matter. Five landlords and two agents. What is difficult for us to ascertain is why two agents were on the managing agency agreement.
  • The managing agency agreement authorised the agent to arrange for maintenance and repair. There was minimum authority given to spend money without the authority of the landlords. Also encapsulated in the agency agreement is the standard indemnity clause whereby the landlord indemnifies the agent for loss and damage suffered by others.
  • Ms. Than had written to Raine and Horne complaining that the switch in the stairway would not turn on. It is one of those pressing buttons that turned the light on for a period of time until the people reach their apartment. There were no lifts in this building, it only had one access via the stairwell. Ms. Than was complaining that this stairwell’s lighting was not working and was dangerous in the dark.
  • The agent obtained the consent of the landlords and provided a work order to the sparky. The sparky went out and repaired it and advise the agency that the work was done.
  • Soon after, the light switch broke again. The imposing Ms. Than told the agency that it was not working. The court case said she sent a number of emails restating this problem.
  • The agent did seek approval but sent another work order to the Sparky. For some reason or another, the electrician didn’t do the work. It appears that he was confused between the work orders thinking that he had already done the work.
  • At 6 am on a Saturday morning, Ms. Than was awoken to loud music. She climbed the stairway to heaven or hell, whatever it may be, to ascertain the culprit for the loud music. On returning down the staircase, she tripped and fell.

The matter was fought under the Civil Liabilities Act 2002, under a number of different sections. For the sake of brevity, we will limit our comments to the following:

  • The courts found that the landlords and the agents were negligent because they did not take reasonable care to fix a foreseeable danger.
  • Under the Civil Liabilities Act, the Court can apportion who pays the damages. Due to the Agent failing to advise the landlords of the second breakage, the Courts held that the agent had to be 100% liable. The landlords could not be held liable for something they didn’t know about. Where did reasonable care come in? The Court said the agent had issued the work order but had not ensured that it was arranged. This court case clearly sets out that the agents’ responsibility does not stop at the issuing of the work order but when they know that the work is done.

The decision doesn’t require that the property manager or strata manager to go to each building to check that it is done. It does, however, require steps to be taken to ensure that the job is carried out.
We suggest two strategies;

  1. The electrician is required as part of their invoice to declare that the work has been done, tested and to promise that the work has been undertaken. This could be done as a template invoice for your trades panel.
  2. Alternatively, the property manager could contact a member of the strata committee or the
    tenant for them to testify whether the work has been done and the defect has been
    repaired.

We suggest the former because the agent has no control over the strata committee or tenant. Alternatively, the tradesperson wants to keep the agency happy and will normally follow your standards.

In Than’s case, Ms. Than was awarded the sum of damages of $330,000.00. It seems excessive in the circumstances, but if you read the Court case, you will see that the Judge was very careful in his findings.

There are two lessons that come out of the Than case for every property and strata manager;

  • Advise your landlord or strata committee of what is to be done. In fact, taking the two words of advice and information together, you should advise your Owners Corporation/Landlord of the problem and what the next step should be.
  • Arrange the repairs means taking all reasonable steps to ensure the job is done.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

Get in touch with Bailey:

✉️ info@leveragegroup.com.au – ☎️ 1300 438 538