The proof’s not only in the pudding
When it comes to agents making Professional Indemnity claims, being able to prove they did what they said they did is paramount.
Anyone who is partial to a legal drama will hear the phrase “burden of proof” bandied about, but it isn’t only in court rooms where being able to provide proof is needed.
When agents need to make Professional Indemnity (PI) claims with their insurer, there is a requirement to substantiate the claim by providing evidence that certain actions were taken to fulfil the agent’s obligations under contract and their duty of care.
In effect, the agent needs to be able to prove that they actually said or did what they purport to have said or done. It’s a bit like that old saying about a tree falling in the forest or the joke about relieving yourself in a dark suit – if there is no evidence, did it really happen?
Most agents keep records documenting contact with landlords and tenants, and often these records, such as copies of emails sent or copies of notices issued, can be supplied if the agent needs to make a PI claim and defend the tenant’s action against them.
However, a problem can arise when the agent is not able to provide the required documentation to support their claim by showing evidence that they fulfilled their obligations.
This was the case with this recent PI claim:
A tenant was injured when they fell through rotting steps at the property. The tenant had advised the agent of their concerns about the deteriorating steps on several occasions (and eventually had notices for the breaches to be remedied issued). The agent in turn notified the landlord.
The agent did this by noting the state of the stairs in their regular written reports to the landlord. However, when writing about the issue the agent failed to say what was expected of the landlord in relation to remedying the issue; that is, they did not seek particular instructions from the landlord or advise that the repairs were in fact extremely urgent and provide a timeframe in which the landlord needed to respond. In essence, by failing to seek instructions in an appropriate and very specific manner, the agent’s action in writing to the landlord amounted to ‘no action’.
The problem was compounded by the fact that the landlord didn’t have an email, so the agent was posting the inspection reports to them and not including a cover letter drawing attention to the pressing issue with the steps. It was the same when it came to sending breach notices to the landlord. They were not accompanied by an explanatory cover letter either.
When the tenant was injured, the landlord denied being aware of the problem – and the agent was not able to prove that they had in fact notified the landlord. The landlord said that none of the letters and notices posted were actually received. And as the correspondence was sent via regular mail not via registered mail, the agent could not provide evidence that the letters had been sent or delivered.
As a result, the agent was held liable for the tenant’s injury and will have to pay the cost of the claim, which is in excess of $200,000.
In reality, the agent did most things correctly – inspections, writing letters, notifying the landlord of the tenant’s complaints, calling the landlord – but without the documentation to back it up, they were exposed.
So how can agents protect themselves and ensure that they will be able to produce the documentation if necessary?
Think like a detective or lawyer and make sure you are able to gather your evidence:
- Keep meticulous records. Log everything (complaints from tenants received, calls made including the time of the call and what was discussed, emails sent, landlord requests/responses etc.) in your CRM and client files.
- Act quickly. Immediately notify the landlord – in writing and by calling – of tenant complaints, especially ones that relate to safety. Set a timeframe for immediate action. If nothing happens, advise your client in no uncertain terms that due to their lack of response and instructions you no longer hold yourself responsible for any consequences that may stem from their inactivity. Do whatever you can in the circumstances to mitigate losses (cordon off the dangerous area etc.). Take photos.
- Put it in writing. Whether you favour emailing or snail mail, put the notices/inspection reports etc. in a letter.
- Make sure to use your company letterhead.
- Carefully detail what the issue is in a cover letter. Don’t just send the report/notice on its own as the landlord might think it’s just regular correspondence and they don’t need to do anything.
- Highlight the issue on the inspection report/notice.
- Include a request for instruction from the landlord.
- Give the landlord a timeframe – for example 24 hours or two business days – in which to reply and advise the consequences of failing to do so (e.g. costs incurred, will be in breach of tenancy legislation etc.) – this is especially important if the matter relates to urgent repairs as there are statutory requirements about dealing with these.
- Emphasise that now that the landlord has been notified, responsibility for any subsequent issue that may eventuate will rest with the landlord. You can’t absolve yourself of all responsibility, but you can let the landlord know you’ve met your obligations and it is up to them to provide instructions to act.
- If using snail mail – send it registered/signature on delivery. This way there is tracking on the letter and notification of delivery. If required, you can also get a copy of the recipient’s signature proving it was received (even if not acted upon).
- When emailing, consider requesting a ‘receipt’ that the email has been read. Many people ignore these requests, but it can’t hurt! If nothing else, it might let the receiver know that the email is important. Be sure to store copies of the emails on a portable drive or in the cloud (and for those who love going old school, put a hard copy print out in the physical file) in case there is an issue with your server/internet connection down the track and the emails are lost or corrupted.
- Consider recording phone calls with landlords and tenants (with permission). Copies of phone logs may prove you called the tenant/landlord, but it does not indicate what was discussed. But making sure you have print outs of the call logs is important regardless, as a call that lasts a couple of seconds is unlikely to have been one where an issue was discussed, but if it was for a longer duration and backed up by the record in the client file/CRM then it helps.
- Share the love. When something happens that could be problematic later, like a tenant complaint or your inability to contact a landlord, let a colleague know. It might not hold much sway legally, but at least if there is someone else who can recall the incident it might help your PI claim if they can make a stat dec that they overheard a phone call, co-signed a letter etc.
At the end of the day, if you cannot prove it – it didn’t happen. So be prepared and save yourself the headache if something happens down the track and someone in a dark suit says “prove it!”.