The NSW Court of Appeal has considered the respective liabilities of various parties arising out of the collapse of a balcony at a house, on the northern beaches of Sydney, at Collaroy.

The house was constructed in 1995. The landlords purchased it in 1999. It had an upper level balcony constructed from Oregon timber. Such timber is well‑known to be unsuitable for unprotected, external construction.

The house was leased to a tenant in 2005. Over the course of the next seven years, the tenant raised issues with the managing agent about the condition of the balcony (rotting timber) and the managing agent discussed those issues with the landlords.

In June 2012 the balcony collapsed and four people, including the tenant, were injured. All brought legal claims.

The Court decided that the landlords were liable. Although they delegated their duty of care to the managing agent, by 2010 at the latest they should have formed the view that the managing agent was not discharging its delegated duties competently. Further, they should have expressly instructed the managing agent to engage an expert to investigate the structural integrity of the balcony.

The Court also found the managing agent was in breach of its obligations under its contract with the landlords by failing to properly investigate, or recommend a proper investigation, of the tenant’s complaints. Interestingly, the agent was found to be liable on the basis that it breached a term implied by law into the management contract that it would exercise reasonable skill and care in the carrying out of its duties. Because it had breached the contract, the Court decided that the agent was liable to indemnify the landlords in respect of their liability to the injured people.

However, because legislation permits a defence of contributory negligence in circumstances where the same duty of care is owed both in contract and under the general law, the Court decided that the amount (the indemnity) payable by the managing agent to the landlords should be reduced by 30% on account of the landlords’ contributory negligence.

The Court went on to decide that the tenant was also liable to the three other injured people because she ought to have prevented access to the deck until its structural integrity had been properly investigated and rectified. She was ordered to make a 20% contribution.

Interestingly, the Court declined to interfere with the decision of the trial judge that there should be no finding of contributory negligence on the part of the tenant in respect of her own claim. The Court decided that it was not inconsistent to find her guilty of negligence in relation to the other three injured people, but not guilty of contributory negligence in relation to her own injuries.

Libra Collaroy Pty Ltd v Bhide

Landlords who receive personal injury claims relating to premises managed by an agent should consider their entitlement to a complete indemnity from the agent if it can be demonstrated that the agent was in breach of an express or implied term of the management contract.

The duty to take reasonable care to avoid causing injury to others attracts a different standard of care to the duty to take reasonable care for one’s own safety.