A property owner who sought payment after tenants turned his home into a cannabis lab has lost his claim dispute.

The complainant purchased the investment property in January 2021 before entering a lease contract with the tenants in March.

Police raided the property on April 27 and discovered it had been converted into a “sophisticated hydroponic cannabis setup,” housing more than a dozen plants, watering systems, and artificial lighting fitted to the ceiling.

The landlord lodged a claim on May 6 for malicious damage, saying that the tenants had also stopped paying rent shortly before the raid.

Hollard declined the claim, saying the complainant had not established that the lab had been set up before the home policy had been purchased on April 1. 

The claimant said there had only been six business days between the lease’s beginning and the policy’s inception, and argued that the tenants did not have enough time to cause the damage before the period of insurance.

He submitted an email from his real estate agent, which showed that the settlement for the property had been completed on March 15. A copy of the lease agreement confirmed the lease start date as March 20.

The Australian Financial Complaints Authority (AFCA) panel acknowledged the agent’s email but challenged its relevance, saying it only established the settlement date and not whether the tenants had already set up the drug lab.

AFCA said the agent had not looked at the interior of the property or spoken to the tenants to check and, therefore, could not confirm the state of the home. 

Hollard argued that the tenants had “plenty of opportunity” to establish the hydroponic setup in the period between March 20 and March 31. 

AFCA noted that the police report on the raid found the plants were in “various stages of growth”. 

One of the police officers who took part in the raid said it typically takes six to eight weeks for a plant to mature and that the police had been informed of the property being a possible drug house around April 19. 

The complainant said that the officer’s six to eight weeks figure had only been an estimation and depended on factors such as fertiliser, lighting and ventilation. He also suggested the tenants may have moved the plants from a previous location, but AFCA said there was no evidence to support this. 

The ruling said that the available information showed that it was most likely that the damage occurred before the policy was incepted on April 1. 

“The police report and interview are compelling, considering the details given of the plants and the modifications made within the home,” AFCA said.

“The complainant is unable to show that it only took approximately 20 days or so, between the policy inception and the home being under suspicion, for the drug lab to be set up and fully active.” 

Click here for the ruling.