Don’t smoke in bed

In April 2011 Ms Greene rented a house at Eastwood for 12 months at $400 per week.

In May 2011, the house was rendered uninhabitable as a result of a fire.

The fire was caused either by a cigarette lighter dropped on the bed or a candle knocked over by accident when Ms Greene and her wheelchair-bound boyfriend, Mr Brown, were sharing a cigarette.

The landlord sued for damages: Liang v Greene by her tutor the NSW Trustee and Guardian [2013] NSWDC 74.

The matter came before Judge Elkaim for hearing on 27 May 2013.

Most of the plaintiff’s evidence was inadmissible and counsel for the defendant (Ms Greene had in the meantime become the subject of an order by the Mental Health Review Tribunal, so that the NSW Trustee and Guardian was conducting her defence) successfully objected to it.

Triumph!

Modified triumph.  Judge Elkaim proposed to grant the landlord an adjournment, subject to the question of costs, to fix up her evidence.  “Subject to the question of costs” basically means subject to the plaintiff paying the defendant’s costs thrown away by the adjournment.

Counsel for the defendant sought instructions.  She withdrew the objections.

Judge Elkaim said “This approach seemed unusual to me as the inadmissible material all came back into consideration as evidence submitted by consent.”  Well, that all depended on the adjournment, really.  If it had been refused things might have been different.  I suppose it was worth a try.

Under the lease, the tenant was liable for her negligence and also for that of Mr Brown as a person on the property with her permission.  The defendant sought to say that negligence had not been proved.

The judge was of the view that section 5B of the Civil Liability Act led to a finding of negligence.  That’s the section about taking reasonable precautions when there is a risk of harm (you can look at it).  He said:

21There is a clear risk of damage to property if a candle or cigarette lighter is allowed to fall onto a mattress. This is not an insignificant risk. It is well known that smoking in or near a bed is a source of house fires. Further, in my view, a reasonable person would take precautions to avoid the use of open flames in circumstances where contact with the open flame might lead to a fire.

22In relation to Section 5B(2), I am satisfied that there is a high probability that harm would occur if care was not taken. A flame introduced to a mattress or other bed clothing gives rise to a high likelihood of harm. Any fire has a likely seriousness of harm. The burden of taking precautions to avoid the risk of harm in these circumstances is light. One simply does not smoke or have candles near a bed. I do not think that Section 5B(2)(d) is relevant.

That last comment is a reference to a clause which takes into account as a countervailing consideration “the social utility of the activity that creates the risk of harm.”

This conclusion held whether the fire was caused by the lighter or the candle.  (Because as tenant Ms Greene was responsible for her de facto’s conduct, it similarly didn’t matter which of the two had been careless.)  Actually, it’s not clear to me why the question of negligence arose at all, except as a means of imputing causation to the acts of either Ms Greene or Mr Brown.  I didn’t think that a tenant’s liability for damage caused by the tenant or the tenant’s invitees to rented premises depended on those actions being careless.  Obviously there is more to this case than meets the eye, but it hardly seems like a case of “ordinary wear and tear.”

At the time of the fire, the premises were uninsured because the landlord had forgotten to renew her insurance policy.  The premises had still not been remediated or relet because the landlord did not have the money to do so.  The landlord sought damages for the cost of repairs, as well as for loss of rent to date and for a short period to allow the repairs to occur.

The judge awarded $226,000 for the repairs, but nothing for the loss of the rent.

This was for two reasons.

First, the landlord had already made a claim in the CTTT for loss of rent for the remainder of the term of the lease.  That claim had already been settled.  The judge therefore took the approach that the landlord could only now claim for loss of rent after the lease would have come to an end.  This applied to the period from May 2011 (when the fire occurred) to May 2012 (when the lease was due to expire).  That still

Secondly, there had been a failure to mitigate.  The judge referred to the lease, which applied the rules of mitigation to loss and referred to loss which”could have been avoided by reasonable effort by the landlord” as loss which the landlord could not recover.

In my opinion the full clause only uses those words as a kind of plain English example to explain the rule, and the example should be interpreted in that light:

The rules of law relating to mitigation of loss or damage on breach of a contract apply to a breach of this agreement. (For example, if the tenant breaches this agreement the landlord will not be able to claim damages for loss which could have been avoided by reasonable effort by the landlord.)

The judge observed:

“Generally a failure to mitigate a loss only arises after the loss has materialised. I do not see why the same approach should not be taken in anticipation of a loss.”

“I do not see why not” is a pretty loose form of legal reasoning.  If people start being able to get away with contractual damages because the other party could have insured against the loss in question, a lot of the legal landscape is going to look rather different.  And if the landlord had insured against loss of rent consequent on fire damage, then it doesn’t really mean that the landlord would have lost nothing.  The landlord might not be out of pocket, assuming the insurer paid up, but the insurer would be entitled to sue in the landlord’s name to recoup what it had paid out.

Probably the judge’s reasoning in this particular case was probably not quite on all fours with that example.  If the landlord had been insured and the insurer had paid up, the repairs would have been finished sooner and there would have been no loss of rent from the end of the lease – or so he held.

Nevertheless, (and this is more for lawyers than any other lucky readers) the claim for the extra period of vacancy because the landlord didn’t have the money to do the place up seems more like a Hadley v Baxendale limb 1 or 2 case about causation than a question of mitigation.  Even if so, mitigation would apply to questions such as what steps Ms Liang took to seek a loan to undertake the repairs.  The strange thing to me about Ms Liang’s case is that it seems to assume that the judgment will lead to recovery of money which will enable her to undertake the repairs.

So, don’t smoke in bed (or even have candles near your bed) and don’t forget to renew your fire insurance.  It’s all pretty simple really.

You have been warned.

 

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