An agent’s duty of care

A real estate agent was recently found liable for the injury of a tenant at a rental property and ordered to pay more than $800,000 in damages.

When a tenant was injured at one of Century 21 Brough & Sons’s properties, the incident signalled the beginning of landmark lawsuit for the real estate industry. The judge found in favour of the plaintiff and Tim Simpson, the managing agent and Principal of Century 21 Brough & Sons, was ordered to pay 75 per cent of $843,136 plus costs in damages.

The plaintiff (tenant) was injured when his arm smashed through a glass panel in the front door of the rented premises. He sought damages for alleged negligence by the managing agent and the owner because the door did not have safety glass.

The incident

The defendant (managing agent and owner) presented evidence suggesting the injury was caused when the plaintiff, during an argument with his ex-partner, deliberately placed his arm through the glass. The plaintiff argued that he tripped and fell on the front steps. In doing so, his arm penetrated the glass and lacerated his right hand and forearm.

One month prior to the plaintiff’s injury, an intruder smashed a glass panel in a bedroom during an attempted burglary. The plaintiff’s expert stated that the defendant, now aware that the property had annealed (non-safety) glass, should have installed safety glass to the front door as well.

While the use of annealed glass was permitted at the time of the construction of the property, this glass doesn’t conform to current Australian Standards.

Judgment

The judge accepted the plaintiff’s account as to the circumstance of his injury. He also noted that in 1998 the agent employed a handyman to replace glass at another location. Despite his experience in the real estate industry, the handyman was not suitably qualified or appropriately supervised by the agent; if a glazier had been used, a recommendation would probably have been given to replace annealed glass in areas of foreseeable possible human impact, stated the judge.

Agent responsibility

As a result of these considerations, the judge concluded that it was reasonable to expect the agent and owner to take the precaution of installing safety glass at the time they were made aware that annealed glass was present throughout the premises. The Court found the agent 75 per cent liable and the owner 25 per cent liable. Realcover is however appealing the decision.

The defendant, Tim Simpson, was shocked by the judge’s decision. “I’m lost for words,” he says. “I’ve been a member of the real estate profession for more than 40 years and, despite my extensive experience, I didn’t anticipate the outcome.”

PI insurance: are agents covered?

While Tim’s professional indemnity insurance will take care of the judgment and any consequent orders, he says the incident is a timely reminder of how a lawsuit can financially cripple a real estate agent who isn’t covered.

He goes on to say that his insurer, Realcover, assisted him throughout the legal process. “I felt supported every step of the way with excellent legal representation,” he says.

Michael Lynch at Realcover believes the decision raises the question of whether a $1 million professional indemnity insurance policy is sufficient considering the severity of the injury sustained by the plaintiff.

He adds: “It is essential that agents should heed the warning of having professional indemnity insurance and review the amount of cover they have.”

REINSW

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