Real Estate Agency’s Negligence Costs them over $740k after House Fire

Did you know that a real estate agency can be sued for negligence in handling and exercising care in their management of properties?


Case Law

On 19 March 2024, the Court handed down the decision in Coulter v Bush [1], where the Real Estate Agency, Domain Residential Northern Beaches Pty Ltd (Domain) was found negligent in its provision of services to the property owners.

The selling agent from Domain asked that the tenants of the property leave while she prepared it for an open house. The agent was cleaning up the house and removed the bedding sheets which were hanging over the balcony railing and placed them in a bedroom on a cupboard against a wall light. Within 20 minutes, a fire started which was  believed to be caused from the overheating of the light against the sheets.

The tenants who lost their personal property and belongings sued the property owner for damages, and the owners in turn sued Domain for loss of the house. The selling agent, on behalf of Domain, provided controversial and inconsistent evidence where she claimed she was unaware there was a light nor that she had covered it with the sheets. The Court found her to be an aggressive and uncooperative witness and relied on expert evidence.

Forensic Fire Investigation Experts were called to provide their expert opinion. The Court considered that:

  1. There were no other possible ignition sources;
  2. The bedding was not in that room until it was placed there by the agent;
  3. The light was not on until the agent turned it on;
  4. There was no fire at the time the agent did those things; and
  5. 20 minutes later, there was a fire in that room.

The Court concluded, on the balance of probabilities, the agent did cause the fire pursuant to the Civil Liability Act 2002. The risk of a fire by throwing sheets on top of a light was an obvious, foreseeable risk and the agent ought to have known this.

The Court also found that the agent’s negligent act was a breach of the Australia Consumer Law around the agency agreement between Domain and the property owners, which implied “a guarantee that Domain will render its services with due care and skill”. Domain failed to take reasonable care to prevent damage to the tenant’s personal property and the house respectively.

Domain was ordered to pay property owner $740,842.93 plus interest while the tenants were awarded of $120k collectively.

 

Separately and tragically, a NSW home owner has been fined the maximum amount of only $667.25 for failing to comply with smoke alarm legislation relating to a property she owns in Queensland that burned down last year, causing the deaths of a father and his five children. Whilst the magistrate acknowledged the “pittance” the property owner had to pay; Magistrate Deborah Vasta claimed that it was not for her to comment on the laws. Magistrate Vasta further states that “it’s absolutely no excuse that she failed to keep abreast of the laws required of an investment property owner in having the premises legally wired with smoke detectors after January 2022.” This is a timely reminder for real estate agents and agencies to ensure they have proper smoke alarm compliance procedures in place to minimise the risk of tragedies such as this occurring again.

 

It is important to ensure that your agency agreements and Agency is compliant with the Australian Consumer Law and the Civil Liability Act 2002 in addition to local real estate laws, in all aspects of providing services to property owners and tenants. To ensure your agency is compliant, please do not hesitate to contact us to assist you.

 

 

Citations:
[1] Coulter v Bush; Coulter v Domain Residential Northern Beaches Pty Ltd [2024] NSWSC 267

 

Baybridge

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