Case Note ~ ACAT Rejects Owner Income Loss Claimed for Delayed Building Rectification
THOMAS v RELIANCE BUILDING SERVICES (AUST) PTY LTD ACN 097 397 549 (Civil Dispute) [2024] ACAT 37
In this matter, the Tribunal considered whether an AirBnB host, the Applicant, could claim damages for lost income for not being able to rent out part of his unit as an AirBnB while waiting seven months for rectification works to be carried out by Reliance Building Services (Aust) Pty Ltd, the Respondent.
The Applicant was told that all personal items had to be removed from his balcony so as to enable waterproofing remediation works to be carried out by the Respondent. The Applicant was informed that the works would take two weeks and moved his belongings from the balcony into his living room and took down his AirBnB listing.
The commencement of the works was delayed nearly three months and was eventually completed 7 months later. The Applicant alleged that the balcony and living room were a key feature of his AirBnB listing and claimed a loss of income for not being able to rent out part of his apartment for the time until the works were completed at an amount of $70 per day, totalling $17,150.
The Applicant made three claims:
The Respondent had breached the following sections of the Australian Consumer Law (‘ACL’): 60 (guarantee as to due care and skill), 61 (guarantee as to fitness for a particular purpose), 62 (guarantee as to reasonable time for supply) and with respect to “unconscionable conduct”, 18, 29, 20, and 21;
The Respondent had breached the contract between Applicant and Respondent; and
The Respondent owed the Applicant a duty of care and was negligent, breaching its duty and causing the Applicant to suffer loss.
For the first claim, the Tribunal determined that the ACL did not apply because a contract did not exist between the Respondent and the Applicant. The contractual relationships existed only between the Owners Corporation and the Respondent and the project manager and the Respondent. The Tribunal rejected the argument that the Owners Corporation held the contract in trust for the Applicant as beneficiary. The Tribunal emphasised how the law is hesitant to enforce contracts on behalf of third parties.
On the second claim, the Tribunal found there was no objectively identifiable intention to create a legal relationship between the Applicant and the Respondent, which is one of the requirements for a contract to be created. A lack of intention between the two parties meant a contract could not have existed and as a result, the Respondent could not have committed a breach.
Lastly, the Applicant alleged that the Respondent owed him a duty of care to complete the works to a certain standard and did not appropriately apply the waterproofing sealant which had to be redone, resulting in delays that amounted to negligence. The Tribunal does affirm that there were significant delays, some of which can be attributed to the Respondent. However, the Tribunal decided that the claim fails as the Applicant did not have a direct relationship with the Respondent and the Applicant’s damage is too remote.
The Tribunal commented that it appeared that the Applicant did not explore options to mitigate his potential loss, notably not utilising storage services for their balcony items instead using his living room. Additionally, the Applicant conceded that he had rented the property whilst the work was being done and had been able to secure their usual rate. The Applicant did not request a schedule of work from the Respondent, which may have enabled him to avoid listing the property those times that work was being done on their balcony. The Applicant also did not provide detailed past and present rental information and financial records, which made it impossible to accept his claimed loss or to determine his actual loss, in the event he was successful.
The Tribunal dismissed the Applicant’s claim.