Dorash v Lindemann
[2018] VCC 446
•12 April 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-17-04110
| JAMES EDWARD DORASH and YVONNE MAY DORASH v JODIE LOUISE LINDEMANN and SWEENEYS ESTATE | Plaintiffs Defendants |
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JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 April 2018 | |
DATE OF JUDGMENT: | 12 April 2018 | |
CASE MAY BE CITED AS: | Dorash & Anor v Lindemann & Anor | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 446 | |
REASONS FOR JUDGMENT
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Catchwords: Practice and procedure – Application by defendants for summary judgment – Claim by property owners against letting agent and the real estate agent’s sole director – Plaintiffs made oral application to substantially amend their statement of claim – Statement of claim struck out with plaintiffs to pay the defendants’ costs of the proceeding to date – Orders for limited preliminary discovery by the defendants and the delivery of a proposed further amended statement of claim by the plaintiffs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr F Badali | Mills Oakley Lawyers |
| For the Defendants | Mr J Mckay | Hub Property Specialists Pty Ltd |
HIS HONOUR:
1 In a proceeding commenced by Writ dated 5 September 2017, the plaintiffs, James and Yvonne Dorash, made a claim against Sweeneys Estate Agents Altona Pty Ltd (“Sweeneys”) and Jodie Lindemann, Sweeneys’ sole director. By summons dated 19 February 2018, the defendants sought the summary dismissal of the proceeding.
2 From 2002 to 2015, Mr and Mrs Dorash owned a property at Point Cook. They moved overseas in June 2012 and engaged Sweeneys to manage the property.
3 The property was tenanted until a date prior to 9 September 2013. On that date, an employee of Sweeneys, Amanda Colley, inspected the property. On 11 September, Ms Colley sent two emails to Mr Dorash informing him that on 9 September she had carried out a “final inspection” of the property and, later, that she had shown prospective tenants through the property. Apparently, on 25 October 2013, Ms Colley received an email from Mr and Mrs Dorash “instructing me to stop advertising the property for rent”, although the email of that date tendered to the Court was from Ms Colley to Mr Dorash.
4 On 26 March 2014, upon returning from overseas, Mr Dorash collected the keys from Sweeneys and inspected the property. He found that “the house was flooded and significantly damaged by water”. Mr Dorash said that, he “noticed the tap in the laundry was on and accordingly I turned it off to stop the water flowing”.
5 A later inspection by a plumber confirmed that the laundry tap was the likely cause of the water damage. In the proceeding, Mr and Mrs Dorash claimed that the cost of repairing the house and other losses totalled more than $240,000.
6 Mr Dorash asserts that:
a. there was only one set of keys to the property which, until he picked them up on 26 March 2014, was held by Sweeneys;
b. when he went to the property that day, “there did not appear to be any unauthorised entry”.
7 The claims made in the Statement of Claim attached to the Writ were in contract and alternatively negligence, as follows:
a. the agreement in relation to the management of the property entered into by the plaintiffs was “with the first and/or second defendant”;
b. on 9 September 2013, Ms Lindemann “and/or another individual … accessed the property for the purpose of showing it to [a] prospective tenant(s)”;
c. “during the course of the inspection … a tap was turned on and left on in the laundry”;
d. “between the inspection and about March 2014, the tap was left running in the laundry”;
e. pursuant to the property management agreement, “the defendants agreed to take all reasonable precautions for the maintenance and care of the property”;
f. the defendants breached the terms of the agreement, and/or were negligent by having “allowed damage to be caused to [the property] by the running tap in the laundry” and by having “left the tap on at the property” or by having “failed to ensure all taps were turned off prior to vacating the property and after any inspection”.
8 The defendants’ summons was served on the plaintiffs’ solicitors with extensive supporting affidavit material in February 2018 and was supplemented by further shorter affidavits. No answering material was filed or served on behalf of the plaintiffs until the morning of the hearing on 6 April 2018. This material included a proposed Amended Statement of Claim. The supporting affidavit by Mr Dorash made no attempt to explain the delay or the basis of the changes included in the proposed amended pleading.
9 At the hearing, plaintiffs’ counsel, Mr Badali, conceded and/or submitted that:
a. the allegation that Ms Lindemann was a party to the property management agreement was untenable;
b. the plaintiffs no longer relied upon a specific allegation that a tap had been left running after the inspection on 9 September 2013, but had “broadened” the allegations as to how the water damage had occurred;
c. the basis of the claims against both Ms Lindemann and Sweeneys had essentially changed from the allegations in the Statement of Claim;
d. the Statement of Claim should be struck out with the plaintiffs being liable for the defendants’ costs of the proceeding to date. However, the plaintiffs should be permitted to file and serve an Amended Statement of Claim in the proceeding.
10 The amended pleading instead made the following allegations:
a. Ms Lindemann was “an officer in effective control” of Sweeneys and was therefore required by s29B of the Estate Agents Act1980 to:
“(c)properly control and supervise any estate agency business carried on by the agent or for which the person is responsible; and
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(e)establish procedures designed to ensure that the business is conducted in accordance with the law and good estate agency practice; and
(f)monitor the conduct of the business in a manner that will ensure, as far as is practicable, that those procedures are complied with”;
b. Ms Lindemann had failed to properly exercise these responsibilities and, as a consequence, Sweeneys, or its employees, had:
i. “caused the water tap to be turned on in the laundry”;
ii. failed “to ensure that the water tap would not be left on following any attendance at the property”;
iii. failed “to attend on or inspect the property during a period of extended vacancy”.
c. Sweeneys’ actions involved breaches of the property management agreement, negligence and/or breach of Sweeneys’ statutory duty pursuant to regulation 13(1) of the Estate Agents (Professional Conduct) Regulations 2008 to “exercise all due skill, care and diligence in performing the agent’s functions as an estate agent”.
11 After hearing argument, I made orders striking out the Statement of Claim and permitting the plaintiffs to replead in the proceeding.
12 One of the issues raised by the proposed amended pleading was the compliance by Sweeneys’ employees with the procedures established by Ms Lindemann for Sweeneys in relation to:
a. the inspection of properties to be left vacant and specifically ensuring that taps were turned off;
b. the recording of property inspections;
c. the handling and security of the keys to a property.
13 Ms Colley stated in an affidavit that, in relation to the inspection on 9 September 2013, “I followed the usual procedures when carrying out that inspection, including that the taps were off”. However, neither the procedure manual nor an inspection report had been produced by the defendants.
14 I made orders requiring the defendants to provide preliminary discovery of its property management manual or any similar document. The real estate agency business of Sweeneys was sold by Ms Lindemann in 2015 and she had provided the purchaser with the computer records of the business. These documents included scanned copies of agreements and leases and the originals were not retained.
15 A subpoena directed to the new owner, Sepsre Pty Ltd, had apparently yielded a number of documents. The company’s computer system had crashed at some stage and documents which would ordinarily be on Sepsre’s file relating to the plaintiffs’ property may have been lost.
16 In relation to the proposed Amended Statement of Claim, I was concerned that the specific allegations in the Statement of Claim that on 9 September 2013, “a tap was turned on and left on in the laundry”, had been abandoned without explanation.
17 In the place of that allegation was a more general assertion that at an unspecified time the water tap in the laundry was caused to be turned on and left on without any further inspection during an extended period of vacancy.
18 In large part, the amended pleading seemed to be a response to the detailed analysis made in the defendants’ material of the water bills for the property. They showed the following:
Date water meter read Period of water usage Number of days Total water consumed 16/10/2013 6 Sep to 15 Oct 2013 39 1,000 litres 17/01/2014 15 Oct to 31 Dec 2013 78 5,093 litres 1 Jan to 17 Jan 2014 17 5,003 litres 14/04/2014 18 Jan to 31 Mar 2014 73 9,020 litres 1 Apr to 14 Apr 2014 14 9,152 litres
19 These figures, on their face, suggest:
a. there was little water consumed prior to 15 October 2013;
b. at some stage prior to 31 December 2013, there was a more substantial consumption of water;
c. the consumption of water continued, including after Mr Dorash attended the property on about 26 March 2014 and turned off the laundry tap.
20 An amended pleading will only be permitted if the pleaded claims have a real prospect of success. In that regard, it is noted that:
a. Mr Badali could not refer to any authority where s29B(2) of the Estate Agents Act1980 (Vic) had been held to found a claim for breach of statutory duty by “an officer in effective control of the estate agency business of a corporation”, although the matter was raised in a decision by Member Wentworth at VCAT in Director of Consumer Affairs Victoria v Bill Kaye Co Pty Ltd [2017] VCAT 942;
b. the proposed Amended Statement of Claim presently lacked sufficient specificity in the allegations of the conduct by the Sweeneys’ employee in turning on the laundry tap, failing to turn it off and failing to appropriately inspect the vacant property.
21 Any pleading of these matters must have regard to:
a. the adequacy of the management procedures adopted by Sweeneys and whether they were complied with;
b. the exclusion of other explanations for water consumption, for example use by authorised or unauthorised occupants of the property or water escape by a means otherwise not the responsibility of a Sweeneys’ employee;
c. the basis for any continued responsibility on the part of Sweeneys for the property after the final inspection on 9 September 2013 or any instructions by Mr Dorash on 25 October 2013 that the property would not be re-tenanted;
d. the interpretation of the water bills and particularly the water consumption for the specified periods and whether the proposed amended allegations can be reconciled with the water use data.
22 These are matters which will need to be considered by the parties in the preparation of the further proposed amended pleading and the response to that document. It is difficult at this stage to anticipate what further affidavit material would be necessary or appropriate if disputed issues remain requiring determination by a Judicial Registrar. Any such material must, however, be served on the other party in a timely manner.
23 I repeat one further matter I raised at the hearing. The issues in this case are complex. I referred counsel to the decision in Wyman v R.T. Edgar Bellarine Pty Ltd [2013] VCC 567, a case I determined involving the issue of a letting agent’s responsibility to his principal. The present case will likely require expert evidence in respect of the following matters:
a. the ordinary practices of a property manager to carry out inspections, particularly during periods of vacancy where a property may not be re-tenanted, including the content and recording of those inspections;
b. evidence from a water supplier as to the process of compiling water bills and their interpretation;
c. plumbing evidence about the likely cause of the water consumption;
d. the quantification of the plaintiffs’ repair costs.
24 This action is brought in the plaintiffs’ names as a recovery action by their insurer. It is possible that one or both of the defendants are also insured. This does not, of course, affect the way in which the case will be dealt with by the Court. However, insurers and the lawyers advising them would readily understand the advantages of early settlement discussions in a case of this nature.
25 I note that the proceeding is fixed for trial on 8 October 2018 with an optimistic estimate of four sitting days. The interlocutory timetable set in the order dated 30 November 2017 is no longer viable. However, the trial date, and also the date of 29 June 2018 by which “the parties must have completed the mediation of the disputed”, should still be regarded as appropriate target dates.
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Certificate
I certify that these 8 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 April 2018.
Dated: 12 April 2018.
Zeinab Ali
Associate to His Honour Judge Anderson
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