STATE OF NEW SOUTH WALES v WATTON SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL POWELL JA, BEAZLEY JA and FITZGERALD AJA 17 November, 7 December 1998 [1998] NSWCA 291 TORT — NEGLIGENCE — DUTY OF CARE — content of duty of care — whether an existing independent duty upon landlords to inspect premises — standard of care — Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 — Residential Tenancies (Savings and Transitional) Regulations, regs 21, 22 — Residential Tenancies (Residential Premises) Regulations, regs 6, 8. The respondent suffered electric shock due to faulty electrical wiring whilst a tenant of the appellant. The trial judge found the appellant had breached its duty of care to the respondent as tenant, holding that Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 established that a landlord owed a duty to a tenant inspect premises, which duty was breached, causing damage. On appeal, the appellant challenged the trial judge's reasoning process and her interpretation of Northern Sandblasting Pty Ltd v Harris. HELD, dismissing the appeal: 1. (a) There is no independent duty upon a landlord to inspect premises. (b) Where a duty of care is owed, the content and standard of care are to be determined in the particular circumstances of the case. (c) A landlord owes a duty of care to a tenant to make leased premises as safe for the purpose as reasonable care and skill on the part of the landlord can make them. 2. In the circumstances of this case, the duty of care required the appellant to inspect the leased premises and carry out such inspection with due care. As a matter of fact, the trial judge found that it was the failure of the appellant to carry out the inspection with due care which caused the respondent's injury, notwithstanding the trial judge's error in respect of Northern Sandblasting Pty Ltd v Harris. This finding was open to her on the evidence. 3. It was noted that the respondent's claim in contract did not raise any separate issues. Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313; Assaf v Kostrevski & Ors (unreported, New South Wales Court of Appeal, 30 September 1998). Powell JA. I agree with Beazley JA and with the additional observations of Fitzgerald AJA. Beazley JA. This is a defendant's appeal against a decision of Ainslie-Wallace DCJ in favour of a plaintiff who suffered an electric shock due to faulty electrical wiring whilst a tenant of the appellant. Facts. The respondent was, at the time of the accident, a member of the New South Wales Police Force stationed at Goulburn. About five months before the accident he commenced his tenancy of the premises owned by the appellant at Ada Street,Goulburn. The premises had previously been tenanted by another police officer. It appears that after the previous tenant vacated the premises and before the respondent commenced occupation a Mr Sasse, then a properties clerk at the Goulburn Police Academy, carried out an inspection of the premises and prepared an inspection report. That report is headed 'Residential Premises Condition 2 UNREPORTED JUDGMENTS Report — Residential Tenancies Act 1987'. It records that the lights/power points in the lounge, kitchen, entrance and dining room were undamaged and that the lights/power points in the other rooms were working. On 30 December 1994, the respondent suffered an electric shock whilst re-attaching a metal bracket which supported a curtain rail to a gyprock wall. To re-attach the bracket the respondent had used a metal screwdriver, which he held by the metal shaft, to re-screw the screw into the wall which had supported the bracket. The respondent stood, bare foot, on the kitchen sink to perform this task. He was thrown by the force of the shock onto the floor. He was dazed and partially paralysed. He has significant ongoing disabilities. The trial judge found that: An electrical contractor was called to the house that day and he found, on investigation, a power point in a double point configuration to which the microwave was plugged, on the wall to which the curtain rail was affixed. He removed that power point and found that someone had connected an electrical flex to the live terminal behind the point and had left the ends of the flex bared. One of these ends had come into contact with the metal insulation behind the gyprock stud wall which had the effect of enlivening the insulation on the inside of the wall. When the Plaintiff drove the screw into the wall and the tip of the screw came into contact with the insulation the Plaintiffcompleted the circuit because he was standing on a metal surface. There was no dispute that the electric shock had been so caused and that the wiring did not conform to any Australian standard. It was not known who installed the faulty wiring, although there was no suggestion it was the respondent. This was not the only non-conforming wiring in the house. In the lounge room there was an extension cord socket lying on the floor near the wall. The extension cord itself emerged from underneath the skirting board. Only a small portion of the extension cord was visible. It was not apparent on visual inspection where the rest of the extension cord was. Subsequent investigations revealed that the extension cord ran from behind the lounge room skirting board under the floor of the house and back up into the kitchen and fed into the power point into which the refrigerator was plugged. Mr Carmody, senior lecturer in the Faculty of Engineering at the University of Technology and a qualified electrical contractor, gave evidence that: ... the breaches of AS3000 in regard to the use of the extension cord socket and the use of the figure eight flex, coupled with the dangerous situation caused by the inadequate workmanship that left an active conductor of the figure eight flex in contact with the metalised "Sisalation", leading to the electric shock received by Mr Watton, indicates that this work was not carried out by a competent licensed electrical tradesman. I am amazed that a responsible group such as the Police Service would have rented a property with an evident wiring fault such as that shown in photograph 3 [of the socket lying on the floor] without having a licensed electrical tradesman correct them and further test the electrical installation to attempt to uncover other possible ("backyard") electrical wiring work.""Mr Carmody also gave evidence that had the wiring system been tested for leakage, it is possible that leakage would have been detected. It would then have been necessary for investigations to have been done to detect the source or sources of the leakage. He was of the opinion that most lay persons who saw a socket lying on the floor, as was the case here, would react by seeking the advice or aid of an electrician. He also URJ STATE OF NEW SOUTH WALES v WATTON (Beazley JA) 3 considered an electrician who carried out an inspection of the premises would have been alerted by the socket lying on the floor to the possibility of other unauthorised wiring in the home. The trial judge found that Mr Carmody's evidence was consistent with common sense and also with the evidence of Mr Berry, a project manager for the Department of Housing. The trial judge's assessment of Mr Berry's evidence was that: ... when he was conducting inspections of houses after the tenant had vacated if he noticed an electrical fault he would have sought a report from an electrician. Mr Berry said that, in circumstances where he had noticed obviously unprofessional work such as an extension cord apparently wired into the electrical system of the house, he would have obtained a report on the wiring of the entire house. Mr Berry would have had the electrical fittings removed to determine whether there were other aspects of the wiring which had been tampered with but he conceded that this was really limited to what could be observed at the power points. He added that he would as an extra precaution have an (sic) Residual Current Detector [RCD] installed. Her Honour found that the extension cord socket was obviously not installed by a tradesperson and that this would have been apparent to both lay and tradesperson. Further, her Honour found that: the inspection of the premises conducted by the Defendant before and after the occupation of them by the Plaintiff ought to have revealed the presence of the cord andespecially in circumstances in which the previous tenant had vacated and, I assume, taken furniture with them. To fail to note the presence of the extension cord in my view demonstrates a want of care in the inspection process. Her Honour held that the use of an earth leakage device would have revealed the enlivened insulation material. Her Honour also held that had a residual current detector been installed: it would have minimised the effects of the shock the Plaintiff received and would certainly not have caused him to be paralysed nor to have difficulty breathing as happened to the Plaintiff as a consequence of receiving the electric shock on this occasion. Her Honour concluded: (i) that the appellant as landlord owed the respondent a duty of care; (ii) that Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 was authority for the proposition that there was 'a duty to inspect premises which was part of and an extension to the duty of care owed by a landlord to the incoming tenant'; (iii) that the duty to inspect implies that the person carrying out the inspection was qualified to do so or ought to engage suitably qualified persons to do so in order to exercise reasonable care; and (iv) that the simple expedient of having the socket inspected by a reasonable electrician would have resulted in the discovery of the defective wiring or dictated the installation of an RCD, either of which would have avoided the respondent's injury. The appellant attacked her Honour's reasoning process, and in particular her conclusion that Northern Sandblasting v Harris was authority for the proposition that there was a duty on a landlord to carry out an inspection before a new tenant took up occupation of premises. It was submitted that an analysis of the individual judgments revealed that four of the members of the Court (Dawson, Toohey, Gummow and Kirby JJ) found there was no duty to inspect but two 4 UNREPORTED JUDGMENTS (Brennan CJ and Gaudron J) found there was duty. It was submitted therefore, that the underlying legal rationale for her Honour's decision was erroneous. I agree that that Northern Sandblasting v Harris does not establish that there is an independent existing duty upon a landlord to inspect premises. Rather, it established that a landlord owes a duty of care to a tenant to make leased premises as safe for the purpose as reasonable care and skill on the part of the landlord can make them: see also Assaf v Kostrevski & Ors (unreported, New South Wales Court of Appeal, 30 September 1998). In determining whether there has been a breach of the duty of care the court is required to determine what was the standard of care is in the particular circumstances of the case. In Northern Sandblasting, Brennan CJ (at 340) considered that the standard of care was the same as is required of occupiers towards those who enter occupied premises by consent and for reward. In the particular circumstances of the Northern Sandblasting case, the Chief Justice found that this standard called for an inspection of the premises. Gaudron J appears to have put the matter more generally, holding at 360 that: Having regard to the control which, at the beginning of a lease, a landlord exercises over the state of the premisesand, also, the extent to which members of the household are then dependent upon the landlord for their safety, a landlord's duty at that point cannot, in my view, be limited to defects of which he or she is aware. Dawson J at 344 rejected that there was any general obligation to inspect, considering that the duties of a landlord to a tenant was not analogous to that of the occupier to an invitee. Having regard to the findings at trial, he also rejected that there was anything in the circumstances of the particular case which gave rise to an obligation to inspect. Likewise, Toohey J at 349 considered that there were difficulties in finding a breach of duty due to failure to inspect, those difficulties being 'in part evidentiary'. Kirby J also rejected the requirement for inspection, stating at 394: The imposition of a duty of regular and repeated inspections of domestic electricity systems was sustained neither by evidence of common practice nor by commonsense. The argument about a suggested duty of electricity inspections could not stop there. If correct in principle, it would require regular inspections against the risk of other perils, eg gas supply, floorboards, balustrades, etc. In the absence of evidence about the prevalence of, and need for, any such inspections of rented accommodation, there was no foundation for imposing such a duty on landlords leasing residential premises. The fault in the neutral link would not have been obvious to an untrained observer such as the appellant.' Kirby J's reference to 'duty' in these passages is, in my opinion, a reference to whether the appropriate standard of care calls for an obligation to inspect. McHugh J expressed no view on this issue. However, the fact that her Honour misstated the effect of Northern Sandblasting v Harris is, on the facts of this case, irrelevant to the determination of the appeal,because there was an obligation to inspect the premises before the commencement of the tenancy and her Honour held that the inspection was carried out negligently. The obligation to inspect arises under statute, implied from the requirement to complete and provide the tenant with a condition report at the start of a tenancy: see Residential Tenancy (Savings and Transitional) Regulations, Regs 21, 22 (now the Residential Tenancy (Residential Premises) URJ STATE OF NEW SOUTH WALES v WATTON (Fitzgerald AJA) 5 Regulations, Regs 6, 8). Her Honour's finding that the inspection was carried out negligently was based on findings that: (ii) there was a socket on the floor of the lounge room attached to an extension cord which disappeared behind a skirting board. No other part of the extension cord was visible; (iii) the appellant inspected the premises prior to the respondent taking up occupancy; (iv) the extension cord socket was obviously not installed by a tradesperson and this would have been apparent to both lay person and tradesperson; (v) the inspection ought to have revealed the presence of the socket and extension cord; (vi) the appellant's failure to observe the cord demonstrated a want of care in the inspection process; (vii) the existence of the socket and extension cord, which would have been revealed by a reasonably careful inspection, would have alerted the appellant to the fact that the unauthorised electrical work had been carried out; (viii) the appellant being so alerted should have had the power points in the property inspected to determine whether there was any further such faulty wiring;(ix) the simple expedient of having the socket inspected by a reasonable electrician would have resulted in the discovery of the defective wiring or dictated the installation of an RCD, either of which would have avoided the respondent's injury. Her Honour held that it was it was the failure to carry out the inspection with due care which led to the respondent's injury. Thus, notwithstanding her Honour's error in respect of Northern Sandblasting v Harris, her factual findings were open on the evidence and led inevitably to the conclusion that the appellant had breached its duty to the respondent. The appellant sought to attack the judgment on a second basis, namely that her Honour's reasoning process, which led by a process of incremental fact finding to a finding of breach of duty, was flawed because the incremental steps could not, or all of them could not, be sustained on the evidence. I do not agree. As I have already stated, the findings made by her Honour were open to her on the evidence. The respondent had also brought his claim in contract. The appellant correctly submitted that no different considerations arose in relation to that claim. As I have concluded that the appeal must fail, it is unnecessary to deal with that aspect of the matter. I would propose that: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs of the appeal. Fitzgerald AJA. I agree with Beazley JA and add only brief comments. Northern Sandblasting Pty Ltd v Harris! does not establish that a landlord does not have a duty to inspect premises before letting them to a tenant. In general, a landlord's duty to take reasonable care might or might not encompass such an obligation, depending on the circumstances. In New South Wales, such an obligation arises in relation to residential premises from the Residential Tenancies Act 1987. 1. (1997) 188 CLR 313. 6 UNREPORTED JUDGMENTS The appellant did not dispute that it is bound by the Residential Tenancies Act.2 In accordance with subs8(1) of that Act, a standard form of residential tenancy agreement has been prescribed by the regulations. In accordance with subs8(4), the prescribed standard form of residential tenancy agreement requires completion of a report relating to the condition of the residential premises. Those matters are elaborated upon in Part 4 of the Regulations made under that Act. The report relating to the condition of residential premises must be completed by or on behalf of the landlord and given to the tenant at or before the time the residential tenancy agreement is executed by the landlord.3 These statutory/regulatory provisions necessarily import a requirement that residential premises be inspected with reasonable care prior to letting to a new tenant. Breach of that obligation is evidence of negligence.4 I agree that the appeal should be dismissed with costs. 1. That the appeal be dismissed. 2. That the appellant pay the respondent's costs of the appeal. Counsel for the appellant: J D Hislop QC/J Mater Solicitors for the appellant: J V Knight Counsel for the respondent: P Menzies QC/M Cahill Solicitors for the respondent: Oates and Smith 2. See Residential Tenancies Act, s4. 3. See regulation 22. 4. Fraser v Victorian Railways Commissioner (1908) 8 CLR 54, 77; O'Connor v S P Bray Ltd (1937) 56 CLR 464; Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410.