This Queensland case involved a tenant who was injured inside a rental property in which she lived with her husband.
They moved into the property on 20 April 2005.
A real estate agent managed the property.
On 25 April 2005, the tenant was injured when a pelmet above the bathroom door fell onto her head, fracturing her nose and injuring her left hand.
She had previously contacted the agent three days before the accident and reported that the bathroom door was stuck.
This problem was not addressed by the agent.
A complex situation evolved following the accident in relation to insurance and who would be liable to pay the compensation owed to the tenant for the damage and losses her injuries caused.
The agent had professional indemnity insurance, and there was an insurance policy in place, covering the period 24 July 2004 to 24 July 2005.
The agent paid an insurance broker to advise on, source and secure this insurance coverage.
Importantly, the policy set out the following exclusion:
“The insurer is not liable to make any payment for loss in connection with any claim: …
3.5 Bodily Injury for bodily injury or nervous shock, sickness, disease, death or mental anguish of any person.
This exclusion does not apply to damages for mental anguish in respect of a claim for defamation, which is covered under this policy.”
The tenant contacted the agent about her injury via a letter dated 26 April 2005.
The letter not only informed the agent of the injury but also outlined several other problems with the property.
The letter said, among other things:
“We were informed prior to moving in that the owners of this property were angry with the prior tenants thus the pool not being maintained until they moved out.
“You informed us that it was organised to be repaired and brought to proper standards in the first week of our tenancy. We were also promised that any repairs to this property would be attended to by the owner’s advice in the first week of our tenancy.
“We have found this property to be in a very poor non-maintained state. It is an un-safe environment to live in and requires immediate attention.”
The letter also referred to the tenant’s entitlement to make a personal injury claim arising from the accident.
In September 2005, the tenant completed and sent to the agent a Form 1 Notice of Claim under the Queensland Personal Injuries Proceedings Act 2002.
At this point, the agent notified his insurer of the tenant’s claim, providing them with the 26 April letter as well as the September claim form.
The insurer rejected the agent’s claim on the insurance policy.
The insurer said that the 26 April letter did not constitute the making of a claim and therefore no claim was made during the insurance policy period, which ended on 24 July 2005.
The tenant’s claim progressed and in July 2008, she commenced court proceedings in the Supreme Court of Queensland against the agent and the owners of the property.
The insurer was part of the proceedings as a third party.
The court was asked to determine the following pertinent issues:
- Did the letter from the tenant to the agent, dated 26 April 2005, constitute the making of/notification of a personal injury claim?
- Did the claim fall within the insurance policy, given there was a bodily injury exclusion clause?
The court found that the letter is considered to be a “form of demand” or “assertion of liability” and therefore this is sufficient to constitute a claim for compensation arising from the tenant’s personal injuries.
However, the court found that the claim fell outside the insurance policy because of the bodily injury exclusion.
Therefore, the agent could not rely on their insurance coverage in order to pay his share of the compensation awarded to the tenant for her injuries.
This case highlights important lessons for real estate agents and property managers, as follows:
- Any correspondence giving notice of or mentioning an accident, which has caused injuries, and a potential personal injury claim, must be forwarded to insurers immediately.
- Insurance coverage requires detailed consideration and sufficient expert advice to ensure that scenarios such as those involving damage caused by bodily injury are covered.
- Legal advice on the above two matters can be a crucial aspect for ensuring all bases are covered correctly.
- Rental property defects must be addressed as a matter of urgency, to avoid injuries, losses and damage.
- If immediate repairs and/or other remedial action cannot take place, urgent steps must be taken to prevent access to or use of the parts of the property that are not properly maintained.
- Owners and agents must work together to ensure maintenance problems are addressed, as both are responsible for the property and therefore both may be required to pay compensation to anyone injured on the property.