Home' API Magazine : November 2014 Contents 24 n APIMAGAZINE.COM.AU n NOVEMBER 2014
THE DAYS OF MAKING A BIG CLAIM AGAINST A LOCAL COUNCIL
when you trip and fall on a curb or gutter – because you were playing
with your mobile phone as you were walking – are long gone.
In a landmark case some years ago, one famous judge heralded the
change in trend in the “sue anyone” mentality when he said, “life is
not a bowling green”. He meant that as citizens we bear some personal
responsibility for our own safety in public places. But the risk of being
sued by someone who has suffered personal injury is still alive and
well if you’re a private property owner. And a recent case highlighted
just how raw this issue still is.
The case involved a handyman who was engaged by a homeowner
to trim a garden hedge. While trimming the hedge he stepped back,
with a chainsaw in hand, onto a metal grid over a drainpipe. The grid
collapsed and he fell and sadly died 17 days later. His widow sued
the homeowner for financial compensation suffered by her because
of the loss of the family’s breadwinner. It was accepted in the case
that the owner didn’t know anything about the damaged grid but the
judge said that this was irrelevant. The court decided that owners had
an obligation to be aware of any hazards on their property and warn
visitors to the property of these dangers.
So, is this case an isolated incident and the
whole issue more illusory then real? I mean,
if the property you own is an investment
property and you have a professional
managing the letting of the property, surely
they’re responsible for these sorts of issues?
They’ll also have professional indemnity
insurance to back them up in case they’re
negligent in the carrying out of their duties.
‘Negligence’ sounds like a dirty word, but
at the end of the day it’s still just honest
Yes it’s true that as an investor you can try and hide behind the
firewall of the rental manager and their insurance policy. However,
when people sue because they have suffered personal injuries, they
invariably take a scattergun approach and sue everyone involved,
including you as the owner.
How can you add some more barriers between you and someone
looking to “have a go” and take away your hard-earned assets? Firstly,
you need public liability insurance. This is insurance that covers you
in the case of slip and fall accidents and is relatively inexpensive. You
should have it for every property you own. For investment properties,
the cost is tax deductible. You should also have this insurance for any
property that you own and occupy as your home.
But the big sleeper is the potential liability that we all have as
owner-occupiers of our homes that we reside in as private dwellings.
If you engage a builder or tradesperson to do work around your
home, who have the appropriate licences and are registered with the
building authority, then they’ll be protected by the usual insurances.
But all too often people who come and do work at your home don’t
hold such registration or any insurance at all.
Think about it. The person who comes to mow your loan, clean your
windows, repair your fence or clean your house are often part-timers
doing this work to subsidise their lifestyle as retirees or to financially
support them in their role as parents. If one of these people is injured
while on your property then there will be no insurance backing them
up. This is where the greatest risk lies to homeowners.
Is there anything that you can do to protect yourself ? Yes, there is.
In my part of the world (Queensland), you can obtain a homeowner’s
household workers policy for $50 through Work Cover Queensland.
You can even get this to cover holiday homes that you have which
aren’t rented. This insurance will protect you in the case of any
financial claim resulting from someone being injured while working
at your house. Some other states also provide similar cover under
their work cover/workers compensation schemes so this is well worth
investigating. A few insurance companies also offer domestic worker
protection under their homeowner’s insurance policies.
This whole dialogue highlights once again the importance as a
property investor of asset protection. I mean, what’s the point of
going to all this trouble and implementing strategies to create wealth
so that you can pass this wealth onto future generations, when you’re
exposed to actions by people looking to “have a go”?
The issue of which name to buy a property in is also something
that should always be at the back of your mind. When you acquire
any property you should always give consideration to implementing
strategies that quarantine or reduce the risk of someone “having a go”.
You can do this by acquiring properties in the name of a company
acting as trustee for a trust. That is, a company acting as trustee for a
trust and not you personally would own the property. You’d control
the company trustee by being the directors and shareholders of it
but you wouldn’t own it. This still smells like, looks like and feels like
personal ownership but it doesn’t have the sting in the tail of personal
liability. I’m strident in my promotion of this strategy and believe you
need to embrace it if you’re in this for the long game and not just the
short sprint. Absorb it and this will serve you well in your life as a
property investor. API
“The risk of being sued by someone
who has suffered personal injury is
still alive and well if you’re a private
n ROB BALANDA is a partner of MBA Lawyers at the Gold Coast and the author of
the ‘Made Simple’ series of publications available from www.businessmall.com.au.
HAZARDS OF BEING
This information is of a general nature only and does not constitute professional advice. You
must seek professional advice in relation to your particular circumstances before acting. This
information is also to be read subject to the disclaimer on page 6.
LEGAL HELP DESK n Rob Balanda
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