Cate Doosey v Nigel Walsh and Complete Building Inspection Services Pty. Ltd.;; Evangeline Doosey-Shaw by her next friend Cate Doosey v Nigel Walsh and Complete Building Inspection Services Pty. Ltd

[2017] NSWDC 8

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Cate Doosey v Nigel Walsh & Complete Building Inspection Services Pty. Ltd.;; Evangeline Doosey-Shaw by her next friend Cate Doosey v Nigel Walsh & Complete Building Inspection Services Pty. Ltd. [2017] NSWDC 8
Hearing dates:	21, 22, 23, 24, 25, 28 and 29 November, 5 and 6 December 2016
Date of orders:	03 February 2017
Decision date:	03 February 2017
Jurisdiction:	Civil
Before:	Montgomery DCJ
Decision:	(1)   In proceedings numbered 2014/224296, plaintiff Cate Doosey, I give judgment for the plaintiff against the defendants jointly and severally in the sum to be calculated by agreement between the parties in accordance with these reasons. (2)   In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I give judgment for the plaintiff against the defendants jointly and severally, damages to be assessed. (3)   In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I dismiss the Second Cross-Claim. (4)   In proceedings numbered 2014/224296, plaintiff Cate Doosey, on the First Cross-Claim I give judgment for the Cross-Claimants against the Cross-Defendant. (5)   In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I give judgment for the Cross-Claimants against the Cross-Defendant. (6)   In both proceedings, the First and Second Defendants pay the Plaintiffs' costs of the proceedings. (7)   In both proceedings, the Cross Defendant to the First Cross Claim pay to the First and Second Defendants the costs payable by the First and Second Defendants pursuant to order 6. (8)   In both proceedings, the Cross Defendant to the First Cross Claim pay the First and Second Cross Claimants' own costs of the proceedings.
Catchwords:	Negligence – pre-purchase inspection and report – contract – where child fell through balustrade – Insurance - construction of exclusion clause
Legislation Cited:	Civil Liability Act 2002 (NSW)
Cases Cited:	CGU Insurance Limited v Porthouse [2008] HCA 30; (2008) 235 CLR 103 Chubb Insurance Company of Australia Limited v Robinson [2016] FCAFC 17; (2016) 239 FCR 300 Darlington Futures Limited v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas ¶61-731; (2007) Aust Torts Reports 81-89 Husher v Husher [1999] HCA 47; (1999) 197 CLR 138 GIO General v Newcastle City Council (1996) 38 NSWLR 558 Graham v Baker [1961] HCA 48; (1961) 106 CLR 340 Luxton v Vines (1952) 85 CLR 352 McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 Mount Bruce Mining Pty. Ltd. v Wright Prospecting Pty. Ltd. [2015] HCA 37; (2015) 256 CLR 104 Penrith City Council v Parks [2004] NSWCA 201 Roads and Traffic Authority of NSW v Dederer [2007] HCA 42; (2007) 234 CLR 330 Voli v Inglewood Shire Council [1963] HCA 15; 110 CLR 74 W.B. Jones Staircase & Handrail Pty Ltd v Richardson & Ors [2014] NSWCA 127
Category:	Principal judgment
Parties:	In first proceedings, 2014/224296: Cate Doosey (Plaintiff) Nigel Walsh (First Defendant/Cross-Claimant) Complete Building Inspection Services Pty. Ltd. (2nd Defendant/Cross-Claimant) Pacific International Insurance Pty Ltd (Cross-Defendant)   In second proceedings, 2014/224312: Evangeline Doosey-Shaw by her next friend Cate Doosey (Plaintiff) Nigel Walsh (First Defendant/Cross-Claimant) Complete Building Inspection Services Pty. Ltd. (2nd Defendant/Cross-Claimant) Pacific International Insurance Pty Ltd (Cross-Defendant)
Representation:	Counsel (in both matters): G Hickey (Plaintiff) A Rogers (Defendant / Cross-Claimant) D Priestley SC (Cross-Defendant)   Solicitors (in both matters): Slater and Gordon (Plaintiff) Dribbus Kovacevic Lawyers (Defendant / Cross-Claimant) Moray & Agnew Solicitors (Cross-Defendant)
File Number(s):	2014/224296; 2014/224312
Publication restriction:	None

Judgment

1. There are two proceedings before the Court seeking damages for personal injury suffered by in the first a mother and in the second her daughter. They were heard consecutively on the question of liability. The mother’s claim is for pure mental harm consequent of the injury suffered by her daughter.

2. In the first proceedings numbered 2014/224296, the plaintiff, Cate Doosey (Cate), sues by Amended Statement of Claim (leave to amend by consent granted on the first day of the hearing, 21 November 2016). The second defendant, Complete Building Inspection Services Pty. Ltd., is the alter ego of the first defendant, building inspector, Mr Nigel Walsh.

3. In the second proceedings numbered 2014/224312, the plaintiff’s daughter Evangeline Shaw-Doosey (Eadie) sues by her mother Cate Doosey as Tutor. The issues concerning negligence of the defendants are identical.

4. In Cate’s proceedings, the defendants rely upon a notation contained in the defendants’ building inspection report both as founding a claim of Cate’s contributory negligence and as excluding liability. By Second Cross-Claim in Eadie’s proceedings, the defendants rely on the notation to seek indemnity from, Cate.

5. In each of the proceedings the defendants cross-claim against Pacific International Insurance Pty Ltd (Insurer) for breach of contract by failure to indemnify and pay the claim arising out of the contract of insurance.

6. Cate’s and Eadie’s cases allege that relying upon the pre-purchase building inspection report which Cate Doosey retained the defendants to provide, she completed the purchase of 11 Point Street, Bulli, in the State of New South Wales (Property), without causing any work to be done to the balustrade of a balcony because the report negligently did not identify any defect in that balustrade. Cate says that on the first day of her having her children at the new home, the balustrade failed causing Eadie to fall 2.57m to the concrete pavement below, where she was discovered seriously injured by Cate.

7. In Eadie’s proceedings, I am to determine the question of liability only. I am informed that Eadie is now 13 years of age and in Year 7 at school. On 17 December 2011, when the accident occurred, she was 7 years of age and had completed Year 2. Eadie’s injuries include a brain injury and assessment of damages in her case will occur at a later date.

8. At the opening of the hearing I was informed that insurance cover was denied. The cross-defendant insurer opposed an application made by other parties that the question whether the policy responded be determined first. The insurer’s opposition to that course, I was assured by senior counsel, was that it would forensically disadvantage the insurer in the conduct of the hearing, and that the insurer had some questions for witnesses to be called in the primary proceedings, on the Cross-Claim. Relying on senior counsel’s claim of forensic disadvantage, I refused the application that the Cross-Claim be determined first.

The Accident - In Brief

9. On 17 December 2011, 7 year old 31kg Eadie fell 2.57m from a balcony to the concrete pavement below when a baluster released at its bottom fixation and failed to restrain her. Cate found her daughter Eadie unconscious and unresponsive at the scene.

Historical Facts

10. Cate is a barrister practising in Wollongong. She is the mother of two children, the eldest being Isaac, born 30 April 2001 who is now in Year 9 at school, and the younger is Eadie born 5 January 2004.

11. After completing her Higher School Certificate in 1980, Cate worked in administrative roles including in the Public Service and with a Trade Union. In 1986, she commenced study toward her degree of Bachelor of Law at the University of New South Wales. She commenced employment as a solicitor in 1992 with the Australian Copyright Council where her role involved mainly advice work. This employment lasted approximately two years. Cate was next employed at the Aboriginal Legal Aid Service in Redfern where she remained for 14 years. In this work she was often involved in the practice of criminal law, including appearing for defendants often in relation to domestic disputes. In 2006, she was admitted as a barrister and became a member of the New South Wales Bar Association. In that year, she completed her reading in Sydney before moving to Wollongong at about Christmas 2006.

12. Cate had commenced a long-term relationship in about 1995 or 1996 with the father of her two children. The couple separated in about 2006 and remain living apart. Her ex-partner lives in Sydney, has the care of the children every second weekend, and half of holidays.

13. Prior to 2011, Cate practised three days per week almost exclusively in criminal law at the Wollongong Bar. When Cate was at work, Eadie was in child care.

14. By the commencement of 2011, Cate was practising full-time. Her practice was developing from Legal Aid-based criminal law to increasingly private work as her reputation grew. Private work paid more than Legal Aid work. She continued to develop a practice in Family Law work which part of her practice increased after her first year at the Bar in Wollongong. Primarily, her Family Law work has been for private clients with some Legal Aid work in the area of parenting disputes.

15. Cate said that in 2011, 60% of her practice was a substantial Family Law case involving the death of a child in which she appeared for a client (the mother) named Windeyer. The case occupied 90 hearing days that year.

16. Ms Windeyer was charged with manslaughter. Cate was separately retained to appear in her defence.

17. In 2015, Cate succeeded as counsel unled during the 22 day criminal trial in the District Court of New South Wales. The charges were dismissed.

18. Generally work since 2011 in her practice has been 60% to 70% criminal law, and 30% Family Law.

19. Cate had been present in Court when her counsel opened describing her economic loss due to the mental harm for which she sues to result from her having become “gun shy” and to have “lost her nerve”. It was significant to me as I observed Cate give her evidence that she interrupted her counsel to disclose that the manslaughter trial in which she appeared was complex and involved a long hearing of 22 days in 2015. I considered Cate’s interruption to be sure that her case was not accidentally exaggerated, as conduct satisfying the very high standard of frank and truthful evidence which the Court is entitled to expect from a barrister giving evidence in her own case.

20. Returning to the pre-accident period, Cate explained that during 2011 her usual hours of work were between 9.00 a.m. and 4.30 p.m., after which time she cared for her children until they were in bed. Once her children were in bed, she would again work, as required at night. Every second weekend, when her partner had the children, she was able to work.

21. She said that in 2011 she was in Court 4 to 5 days per week.

22. Cate was first introduced to the Property by Mr Dan Dignan of Dignan Real Estate. She inspected it on 23 June 2011, and first spoke about it with the real estate agent only two weeks to a month before that inspection.

23. Cate was immediately very interested in the Property, and agreed in principle a purchase at a price of $765,000. She said that the vendors were willing vendors, but there had not been much discount negotiated in the purchase price. She had to sell her house in Thirroul to complete the purchase of the Property.

24. It was after having agreed in principle the purchase price that Cate chose to obtain a building inspection report. She did so because, as she put it, she did not know much about houses and it was an old house. She wanted to know if it had any substantial problems.

25. Cate chose the first defendant, Nigel Walsh, as inspector because the real estate agent, Mr Dignan, informed her that Mr Walsh had provided an earlier report on the house in consequence of which the vendors had carried out work. Also, Mr Walsh had been the pre-purchase inspector on her purchase of her house in Thirroul. She contacted his office on 23 June 2011 to organise an inspection.

26. On 27 June 2011, Cate received the defendants’ report of that same date. She read the report. Cate candidly stated that she had already decided to purchase the house if there were no major problems identified in the report. The report did not describe such problems so she went ahead with the purchase as had in principle been agreed.

27. Contracts were formally exchanged on 16 August 2011. Settlement of the purchase of the Property occurred in early December 2011.

28. Cate’s evidence was that had the report identified repairs required to the balcony, and from this I would understand Cate to have intended to include repairs related to the safety of the balcony; then she would have had that work done because she had young children. Indeed, she believed that the vendors were willing sellers, and she might have negotiated for them to have covered the cost. The Property had been introduced to her as already “fixed up” by them.

29. Before the purchase, Cate had inspected the Property on more than one occasion. For her, its location was the big attraction. She had been on the balcony and recalled discussing the Property with Mr Dignan whilst standing on the balcony.

30. Cate did not recall there being any furniture on the balcony. She said the vendors were an older couple, and the Property was sparsely furnished. She remembered that when standing on the balcony, she was thinking that it did not seem to be much used. This was the impression Cate recalled she held because the balcony was not furnished so as to indicate use.

The Accident and its Effect on Cate

31. Cate moved into the Property on a weekend or mid-week before the settlement. The following weekend the children were with their father so Cate took the opportunity to set up the house.

32. Cate put furniture on the balcony including a faux cane L-shaped day bed and matching chairs and table. It was light furniture. She said it blew over in the wind.

33. On the Saturday following the school year finishing, the accident occurred. Cate does not recall the balcony having been used before the day of the accident. She does not recall the children having used the balcony before the day of the accident, and there had been no entertaining of children on the balcony before that day.

34. On that Saturday, Cate was working in the garden, and Eadie had two friends over and Isaac had one friend over playing in the pool for most of the morning.

35. After some time, Eadie and her girlfriends wanted to watch television, and Cate, it being such a nice day, told Eadie to play with her friends on the balcony and she would bring afternoon tea. She brought Eadie and her two friends, Iliana and Cedar, biscuits and refreshments. This was the last time she saw them prior to the accident. Eadie and her friends were on the balcony laughing. Their towels from swimming were on the rail of the balustrade.

36. At this point in giving her evidence, Cate was obviously emotional. She gave her evidence with a stoic determination. In my view, she achieved significant accuracy given the obvious distress that it was causing her. She continued without significant interruption.

37. Having given the girls their afternoon tea, Cate went to the front garden. The layout of the Property was not described to me in detail, but I understand that the garden Cate went to was not in view of the balcony on which the girls were laughing and having afternoon tea.

38. She heard the girls screaming, but as she said in her evidence, the girls had been screaming when playing in the pool too. She attributed it no significance.

39. One of Eadie’s friends came to her saying Eadie had fallen off the balcony. Cate thought that what was being said to her did not make sense. Eadie’s friend took Cate down to the back of the Property.

40. On arrival, what Cate saw was her daughter Eadie laying on her side in front of the pool. Doing the best she could in her highly distressed state, the words Cate used in court were that it was “just unbelievable”.

41. Cate said that Eadie had obviously fallen. She described mayhem, noise and as I would interpret her evidence, she panicked. She referred for instance to the irrelevant matter of the dog barking.

42. Cate gave her evidence of what she did next with apparent distress. She perceived her personal lack of effective function to care for Eadie as she viewed it. She did not use those words. In my opinion, it was apparent as she gave her evidence, particularly in regard to her having picked her injured child up and later realising when she saw ambulance officers placing Eadie on a backboard with a collar to protect her neck; that she had exposed Eadie to injury. She was critical of herself for not immediately calling 000.

43. Her evidence was that she ran and picked Eadie up, kicked the dog, and was stumbling around as she said “like an idiot”. She described herself as going “crazy”. Cate laid Eadie on the lounge.

44. Eadie was unconscious as Cate had approached her laying on her side by the pool. In Cate’s words, which I accept, her first thought was that Eadie was “dead”.

45. At some stage whilst Eadie was on the lounge, she regained a level consciousness enough to say “I don’t feel good”, and then she receded into uncommunicative unconsciousness.

46. Cate screamed at Isaac to get a phone. 000 was called and, as is the practice of that service, Cate had to answer a lot of questions, and in her distressed state, sensed the process seemed to take a distressingly long time.

47. She described Eadie at that time as “limp”, and whilst she had no observation of anything physical to attribute it to, she sensed Eadie was trying to move.

48. The 000 operator explained to Cate that it was taking some time for an ambulance to arrive because specialist teams were coming from Wollongong. Police arrived first. Eventually what Cate understood to be three teams of ambulance officers arrived, one team being specialists in that type of retrieval, and others being “normal ambulance guys”. She understood one of the ambulance officers to be an Inspector.

49. Cate observed the ambulance officers put a cervical collar on Eadie, and carefully lift her onto a backboard. This was when Cate reflected on what she described as her having stumbled around with Eadie, and that if Eadie’s neck was injured, she might have caused further injury.

50. By road ambulance, Eadie was taken only 200m to the helicopter which had landed at Sandon Point where, given the proximity of the beach and it being summer, there were lots of people observing. Eadie was placed on the floor of the helicopter, remaining on the backboard.

51. Cate described that as the helicopter was taking off, she saw Eadie’s eyes roll back and heard the doctor on board call for the helicopter to stop. The doctor then crouched over Eadie before resuming his seat and directing the pilots to “go … just go”.

52. Cate said the doctor’s hands were shaking so much that he could not click into his harness readily.

53. The helicopter took Eadie and Cate to the Sydney Children’s Hospital, Randwick, where Cate was introduced on arrival to the neurological team, the resuscitation team, and another medical team. They cut Eadie’s clothes off. Eadie underwent MRI, x-rays and other tests.

54. Cate said that at the end of the MRI she looked up at the nurse who gave her a “thumbs up”. Cate described her sensation as “unbelievable” meaning good.

55. Again, I comment that Cate gave this evidence with stoic frankness whilst plainly under obvious distress in Court.

56. About 2 hours after the incident and when Cate was permitted to re-join Eadie in a hospital ward, a doctor who Cate understood to be a neurologist or a surgeon, informed her that he had good news saying that Eadie had problems, but “she could not have done better”. Cate recalls the doctor saying words to the effect that for the nature of the fall, it was unbelievable that Eadie had not died. Cate was informed that Eadie had bleeding in the brain and a fractured skull.

31. Eadie’s father, Cate‘s ex-partner, arrived at about the time that the neurologist or surgeon provided that information of Eadie’s condition. Her ex-partner had been at Coalcliff, so he had had to drive up to meet her at the Sydney Children’s Hospital, Randwick.

32. Cate understood that Eadie could not be discharged until she could answer three questions. This took several days for Eadie to achieve. For the first couple of days in hospital, Eadie was “not with it”. Eadie was in hospital for 7 days, arriving home the day before Christmas.

33. On Eadie’s discharge, Cate was given books on brain injury. Eadie was not on any medication.

34. Over the school holidays, Eadie was “pretty wiped out” and took life quietly. In hospital, Eadie had been “groggy” and remained so when she came home. Cate recalled one of Eadie’s friends saying Eadie had lost her “Ohs”. Cate was describing Eadie’s loss of a delightfully bright expressive nature. In this way Cate was describing in her words that Eadie was “withdrawn”.

35. Cate said that Eadie remained groggy for most of the holidays. She was sleepy and subdued, but gradually improved.

36. Cate said that before her injury Eadie was unlike herself and her son Isaac in that they are quiet but Eadie was enthusiastic, vibrant, fearless and extroverted. Cate said that Eadie’s first spoken sentence was “I’ll do it myself”.

37. Prior to her injury, Eadie had been doing very well at school and winning academic awards. Her brother Isaac is bright and attends a selective school for his Year 9. Isaac is doing very well at school. Cate said that Eadie pitches herself against her brother. She said Eadie was a keen reader and even looked at books before she could read.

38. After the accident, Eadie slept in Cate’s bed. Cate moved Eadie into a bedroom below her own, and she described the two bedrooms as connected by a stair. She said that until Eadie went to high school in 2016, she would come up the stair and into Cate’s bed at night.

39. After the accident, Eadie said that she hated the house. Again with frank and candid disclosure, Cate volunteered that Eadie did not want to move from Thirroul in the first place. She said that Eadie got the idea that bad things happened to her in the subject house.

40. Cate described that dealing with Eadie’s brain injury gave her both a feeling of overriding relief that they were lucky to have her, but also a feeling like the family had lost Eadie, or a part of her, and got back a different version of Eadie.

41. This evidence was given again with patently credible stoicism. Cate explained that she felt disloyal saying it because she loved her daughter.

42. I accept that Cate was frankly describing her understandings, beliefs and impressions when she said in effect that she felt that she had lost a little bit of her daughter, and that parts of her daughter are gone. Cate believes that her daughter is a different girl to that whom she would have been but for the injury.

43. Cate’s evidence in chief and in cross-examination was that whereas after the accident and until conduct of the hearing of the manslaughter charges in the matter of Windeyer in 2015, she handed back trial briefs delivered to her because she felt that she did not have what it took to take on the challenge of new and more complex work continuing the progression and advancement of her career from prior to the incident. She said that she regained her confidence by successfully conducting the Windeyer hearing.

44. It was in early 2012 she realised her loss of confidence when a solicitor asked her to take on the brief in a sexual assault charge. She had carried briefs for sexual assault charges before. However, she rejected it, telling the solicitor that she did not think she could get ready in time. Looking back, she knows that she did have enough time. She described her perception of self as not having it within her to do the work at that time.

45. She explained that the acceptance of the Windeyer manslaughter hearing was a unique obligation because she understood that having conducted the Family Law Care proceedings before the accident; she knew the evidence better than anyone else would. The evidence in the manslaughter hearing, in the main, was the evidence in the Care proceedings. She felt a deep commitment to the subject matter of the case being an allegation of the mother causing the death of her child, and she was aware that she had built a strong professional relationship of trust with the client, Ms Windeyer.

46. That Cate accepted the challenge of the complex manslaughter case to hearing, and it being a case of significant consequence for the client, was not indicative at the time she elected to take the brief of her having already regained confidence. That confidence returned because of her experience of the hearing.

47. Cate said that in the community of the Wollongong legal fraternity, she had earned a reputation as a barrister who baulked at challenge from her having returned trial briefs between the date of the accident and the 2015 Windeyer hearing. She did conduct a short criminal trial earlier in 2015 for the purpose of getting back into practice of conducting significant trials, not having done so for more than 2 years since the accident.

48. The work which Cate did do between the accident and the Windeyer manslaughter trial was mostly Legal Aid work in the Local Court. She found this work easy because she had done it at the start of her career at the Bar and as a solicitor before that. She said it required no significant preparation.

49. Cate explained that at the end of the Windeyer manslaughter trial, the perception of her capacity for exercise of judgment and fearless representation as a barrister was commencing to be restored in the Wollongong legal fraternity. She felt personally reassured that her capacity was back to where it had been at the time of the accident

50. Again, in my view and observation of her as a witness, Cate gave balanced and frank evidence of herself which the court is entitled to expect from counsel giving evidence in their own interest. She explained that trials are still challenging for her; but contrasted this to how she functioned in 2012 to 2014 when her head was “not in the right place” such that she was not confident in herself that she would do service to challenging briefs. In that period she did no trials which was different to her practice prior to the accident. This evidence was not shaken in cross-examination.

51. Cate experienced collapsing, which I understood to be faint-like events. She described “brawls” with people which estranged her from people and as a result she felt isolated. She was drinking nightly after her children had gone to bed. At times she consumed two bottles of wine in the short time between her children going to bed and herself going to bed. She realised that was counter-productive.

52. During 2014, Cate consulted a neurologist for investigation of whether she was experiencing epilepsy or suffering a tumour. She was medically advised at that stage not to drive a motor vehicle. She was concerned that she was not even fit to raise her children. No abnormality or disease was detected in that specialist directed investigation.

53. Cate consulted psychologist, Ms Dill, in about the last 2 months of 2014, but did not find Ms Dill’s treatment helpful. Cate said her impression was that the focus of Ms Dill’s counselling was more directed to relationships whereas Cate sought assistance for her own coping mechanisms, particularly confidence.

54. In addition to the confidence re-establishment experience of conduct of the 22 day trial of Ms Windeyer on manslaughter charges in 2015, Cate attributed her improvement of self from early 2015, including in relation to her capacity to regain her composure as a barrister, to counselling from Mr Ross Backen, psychologist, fortnightly. Cate described herself when first consulting Mr Backen as “not coping in anything” and “falling apart”.

55. She said that seeing Mr Backen had made her feel improved, helped a lot with her anxiety and in terms of managing herself. She has not taken, and does not take, medication but would do so if on professional recommendation it was unavoidable in order for her to achieve improvement.

56. Having spoken to Mr Backen about her drinking, she now generally only drinks alcohol on a weekend, and then only one or two glasses on an occasion unless it is a particular social event when she may drink 3 or 4 alcoholic beverages.

57. Whereas before seeing Mr Backen, on one occasion in 2014, Cate failed to turn up at a hearing in which she was briefed and in relation to the occasion she had received a notification from the NSW Bar Association; she feels that presently her personal capacity to practice as a barrister is back to where it was prior to the accident and she is re-engaging with the legal fraternity and solicitors in Wollongong resurrecting the stage of progression of her practice as it was.

58. Cate described herself, commencing during 2015, as endeavouring to get “runs on the board” to overcome the reluctance of solicitors to brief her, as she understands it, consequent of the reputation she earned for baulking when she returned trial briefs between 2012 and 2014. She said that she feels capable to get those “runs on the board”.

59. Cate said that she knows within herself that her fitness for her role as a barrister in the conduct of trials has been restored.

60. In cross-examination, Cate was adamant that her practice had definitely suffered a dip from the trajectory of its progression or as she expressed it “where I was going”. She considers her earnings to be back to about where they were in 2011 after taking account of rushes and lags of payments and attributing her higher revenue in 2014 to that lag.

61. Cate described her not having sought psychological counselling until seeing Ms Dill in 2014, almost 3 years after the accident, as because having given it time she felt that she was getting worse. She had spoken to her GP, Dr Vickers, about things getting worse and he referred her to Ms Dill.

62. Cate gave evidence of her observation of Eadie. She explained, in my view earnestly and quite naturally, that she does blame the accident for causing what she assesses to be deficits in Eadie’s development and function.

63. Her evidence identified, what I would understand to be the following areas or categories in which those perceived deficits were broadly portrayed:

1. diminished vibrancy, confidence, adventurousness and humour which before the accident marked Eadie as a brighter personality than her quieter mother and her brother Isaac;

2. diminished popularity socially with her peers such that whereas in primary school up to Year 2 before the accident, Eadie had friends who visited her freely at home and she loved going to school, in Year 7 (at the time of the hearing) the incidence of friends visiting the home had trailed off and on occasions when children visited they told Cate that they were visiting because Eadie had had her fall;

3. Eadie now has no one to play with at school and a mother of one of Eadie’s friends from primary school, known to Cate, informed Cate that her son described Eadie as “weird”;

4. Eadie plays soccer with the Thirroul Club, but is, in Cate’s description, “conspicuously bad” and cries, saying “I am the weakest link”;

5. Eadie is trustworthy now that she is nearly 13 years of age and is permitted to go to the local shops using Cate’s ATM card;

6. whereas Eadie academically pitches herself against her brother Isaac’s academic success, on her return to school after the accident her NAPLAN English result was bad, particularly in comprehension and in Years 3 and 4 Eadie complained to Cate that “I can’t read anymore”, “I can’t see words properly” and “I don’t understand”. Eadie continues to perform poorly in English-based subjects, albeit she continues to do well in maths.

90. Cate explained that the Montessori primary school Eadie attended did not provide graded feedback in Year 3, so in Year 4 Cate organised for Eadie to sit a performance assessment through the University of New South Wales. In maths she scored what Cate described as a credit or a distinction and went “really well”, but in English she scored “participation” which Cate said was not even a pass.

91. When trying to emulate her brother’s achievement of making it into a selective school by sitting the selective school entrance exam, Eadie scored an overall mark of 208 when 300 was required.

92. Cate explained that “I don’t need Eadie to be a really bright kid” but said that Eadie became very upset and cried at that result. The appearance of Cate as she gave this evidence displayed deeply felt distress.

93. In cross-examination, Cate openly conceded that she has no specialist skills in child development other than being a mother and she agreed that she would welcome expert help in that department. She said she is aware that there is no final determination of Eadie’s future and what the legacy of the accident will be.

94. Eadie now does not want to go to school and getting her to school is becoming an issue because she is unhappy at school. Cate described her as an unhappy girl with lots of anxiety and fears who is separated from her friends.

Assessment of Plaintiff Oral Evidence - Reliability

95. I accept as accurate Cate’s description of the incident and of herself, as well as of her perception of Eadie. Her account is entirely consistent with the evidence of Dr Dragutinovich, clinical psychologist. Cate gave her evidence with the accuracy to be expected of a barrister giving evidence in her own claim. She was open during cross-examination and even during her evidence-in-chief readily gave answers against self-interest. In these proceedings I accept Cate as a truthful and accurate witness.

The Defendants’ Report

96. On 23 June 2011, Cate and Mr Walsh agreed that he would provide a pre-purchase report and she paid, as required, for the report prior to its delivery to her.

97. The defendants’ report dated 27 June 2011 relevantly provided as follows:

1. the Introduction declared that the purpose of the report was to provide both advice and information regarding the “functionality” and general “condition” of the building;

2. that the inspection was visual (elsewhere in the report inaccessible defects were identified as excluded);

3. that that inspection was in accordance with AS4349.1 – 2007 (Part 1 – Property Inspections – Residential Buildings) (Comment: this is the description of inspection included within the definition “Business Activities” in the Schedule to the insurance policy);

4. that the building “has been maintained” and that there had been “no significant loss of strength or serviceability”;

5. within “Areas Inspected”, Verandas/Balconies were included; and

6. under “Summary”, it was in bold type and underlined, that the overall condition of the building was “considered structurally sound & in a fair condition”, and the “incidence of major defects” was “Low”. The notation at the bottom of page 6 of the report which is the page headed “Summary” reads as follows:

Note: This report should not be relied upon if the contract for sale becomes binding more than 30 days after the date of initial inspection. A re-inspection after this time is essential.

[Comment: This is the notation relied upon by the defendants to allege contributory negligence and contractual exclusion of claim.]

98. Cate gave frank evidence that she did not read the whole report closely and that she was not able to recall with accuracy the parts of the report which she read. Cate said that she was confident in her recollection of having read the “bullet pointed” and “summary” type passages. She said that she read page 6. “major defects” which appears in bold at a bullet point on page 6 and is defined on page 8 to mean those areas where the defect is of sufficient magnitude as to require rectification in order to avoid unsafe conditions, loss of utility or further deterioration of the Property. That definition would meet the plain English meaning and practical application of those words in the circumstances.

99. Cate said in her evidence in chief that she read the report with a concern for whether it identified major defects in the Property. An alternative meaning was not put to her in cross-examination.

100. The Summary page numbered 6 of the report, provided as follows:

“SUMMARY

Important: Any person who relies upon the contents of this report does so acknowledging that the attached terms & conditions define the scope and limitations of the inspection & form an integral part of the report.

IMPORTANT DISCLAIMER

This Summary is not the report & is supplied to allow a quick and superficial overview of the inspection results. This summary is NOT the report & must be read in conjunction with the full report and not in isolation from the report & cannot be relied upon on its own.

If there should happen to be any discrepancy between anything in the report and anything in this summary, the information in the report shall override that in this summary.

This assessment of the overall condition of the dwelling is based on the stability, watertightness & standard of workmanship as specific in Appendix C AS4349.1 – 2007.

On this basis the overall condition of this dwelling in context of its age type & general expectations of similar properties is considered structurally sound & in a fair condition.

The incidence of major defects for this dwelling is considered: Low

The incidence of minor defects for this dwelling is considered: Typical

Note: This is a general appraisal & must be read in conjunction with the full report and not in isolation from the report.”

101. In my view, Cate was entitled to read that bullet point in the Summary to mean that the incidence of defects requiring rectification in order for the Property to be safe was low.

102. In my opinion, whilst accommodating the disclaimers that the Summary was not to distract the reader from the body of the report, page 6 informed the reader plainly that the Property was structurally sound and in a fair condition. In any event, nothing contained elsewhere within the report identified a defect in the balustrade. This is expressed below.

103. Under the large, bold type page heading on page 9 “Items Requiring Attention or Rectification”, the “most notable and serious” defects are identified. The balustrade is not mentioned.

104. On pages 17-18 the passage with which this case is most concerned provides:

13.0 Rear Lower Balcony:

13.1 Timber Frame / Posts / Decking & etc. appears secure, structurally adequate & in a fair / good condition. It is expected structure was designed & certified by a structural engineer / approved by council at the time of construction. Note: Maintain paint to all external timbers to protect surface and maximise lifespan of material.

13.2 We recommend regular inspection of the timber structure which is exposed to the elements at least every 12 months to ensure the ongoing structural integrity & safety of the balcony.

13.3 Timber balustrade / lattice panel privacy screens appear secure and in fair condition. Undertake maintenance to include paint touch-ups etc / as necessary. Note: maintain paint to all external timbers to protect surface and maximise lifespan of material…

105. In my opinion, Cate, reading the report, would have understood the balustrade and veranda to be secure and in fair condition; meaning it was safe for the purpose of her daughter, Eadie, and other children playing there. This comprehension was available without close reading. The Summaries, bullet points and bold headings took the reader to that understanding. Combined with a “skim” read of a legal practitioner across the body of the report that comprehension of a safety hazard free house would be fortified.

106. Cate’s evidence was that she read the balance of the report with a focus for any advice of significant defect, into which category Cate explained she would have placed a description of insecurity of the balustrade. I accept Cate’s evidence that she so read the report with the skills of a legal practitioner. As shown in the paragraph 13.0 quoted above, not only did the report not describe such a defect but, it in fact advised that the balusters were secure. Cate’s evidence was:

Q.   What other matters did you have regard to?

A.   I don't know exactly but I - I - I skim read it, like I did read through it to see that everything was in order. I was - buying the house was like me stretching myself as far as I could financially so I didn't want to buy any - I didn't want to end up with any problems that I would need to be paying money. Like, that just wasn't an option. It had to be - the house had to be okay for me to go ahead with the sale. Like, I couldn't buy it on the basis there were all these problems that I would fix later, it had to be okay for me to buy it.

Q.    Did I incorrectly understand you to say yesterday that, if the property didn't have any major defects, you'd already made up your mind to buy it?

A.    That's right.

Q.   That was independently of the report?

A.   Well, the report was the thing that was going to tell me if it had problems.

Q.   Yes, but I think the expression you used yesterday I think you said major defects.

A.   I don't know if I used that expression but

Q.   But that's the position, isn't it?

A.   If it - yeah, if - unless there was something wrong - like, unless there was something - like, there was - there were some little problems, like, you know, it's an old fibro house so there were things like - and there were doors that, you know, were hanging off and things like that. None of that was going to stop me. But if there'd been a problem that required any sort of - yeah, it needed - it needed - the - the property needed to be okay.

Q.   If you'd been told that there were some rusty screws on the balcony?

A.   Yeah.

Q.   That wouldn't have stopped you buying the property?

A.   If I'd been told that there was a - a balcony that was structurally unsound that people could fall off, there's no way - there's no way I would have bought that property.

Q.   Now, can you tell me why you reformulated my question? The question I put to you was, if you'd been told there were some rusty screws in the balcony, that wouldn't have dissuaded you from buying the property?

A.   If I'd been told there were rusty screws in the part of the balcony that held the railings of the balcony together?

Q.   Yes.

A.   I would - I - I - I think I - I would have regarded that as a - as a big problem. I would have thought that was a big problem. Like, a balcony?

Q.   Just if there were some screws that displayed signs of rust, you would have regarded that as a big problem?

A.   Well, I don't - displayed signs - if it had been in that language, "displayed signs of rust", I - I may not have understood the significance of that. But if it had been that there are structural screws or screws that are holding - if there'd been any sense that the integrity of that structure was compromised because of the rust, I definitely would have seen that as a massive problem.

Q.   But short of that, that wouldn't have prevented you buying the property?

A.   If I didn't understand how serious it was, then I - then I might have made the mistake of going ahead. Like, if someone had just said there's a tiny bit of rust and I didn't - they didn't tell me where it was or that it - what the implications of that were, I might have made the mistake I made. But if I had any inkling that - that there was a balcony waiting to collapse, I definitely would have thought that was a big problem.

Pure Mental Harm – Dr Dragutinovic

107. The defendants concede that Cate’s claim for pure mental harm damages satisfies the entitling hurdles provided by ss 30 and 31 CLA, and that s 32 CLA did not relieve it of a duty of care save that the defendants say that damages are to be reduced on account of contributory negligence as contemplated by s 30 (3) CLA.

108. Cate relies upon the reports of Dr Dragutinovic dated 23 August 2013 and 13 June 2015. Dr Dragutinovic is a clinical psychologist. He was retained for the purposes of the proceedings by Cate’s solicitors. The defendants do not rely upon expert medical opinion evidence but did cross-examine Dr Dragutinovic.

109. Dr Dragutinovic diagnosed Chronic Post-Traumatic Stress Disorder and moderate intensity co-morbid Major Depression as the mental harm suffered by Cate. In his report dated 23 August 2016, he set out the diagnostically relevant history which is entirely consistent with the oral account given by Cate in her evidence. As it is descriptive of the psychiatric illness suffered, I quote the relevant passages as follows:

“In response to hearing shrill screams followed by Edie’s friends yelling that Edie had fallen off the balcony, the plaintiff’s first reaction was one of confusion: “It didn’t make sense to me – it didn’t seem possible – it was a solid wooden bordered balcony – I couldn’t imagine her climbing it – it didn’t make sense.”

Kate ran over to the concreted pool area under the balcony, unable to believe the horrible sight of Edie lying “crumpled” on her side unconscious; “A nightmare – unbelievable – I freaked out – I tried to pick her up – her dog was running around her barking – I pushed it away – I picked her up – I thought she was dead – I thought it was the end of her” …..

Kate called the ambulance. Edie “came to” on the lounge. A specialist team was sent from Wollongong owing to concerns that Edie had suffered a spinal injury: ‘They took a long time to come – the Police got there before they did – I stayed next to her – she went back under” [lapsed back into unconsciousness] - but before she did she said: ‘I don’t feel very good’.

As Kate waited for the ambulance her mind cast worst case scenarios; ‘When she went back under I thought she was going into a coma – that she’d be brain damaged or die – I honestly thought it was such a fall onto concrete that it was too much for her – too much of a fall – that she must have been smashed up inside – waiting for the ambulance seemed like it went on forever – I thought she needed help quickly – I’ve never had a worse time in my life’’.

(emphasis as used by Dr Dragutinovic)

110. Dr Dragutinovic then described, as Cate did in her evidence, the horror of her assessment of herself as stumbling in the care of Eadie, such as picking her up to carry her to the lounge when Cate knew better than to do so because of the risk of worsening her serious injury including causing paralysis and in the inadequacy of her response by taking too long to achieve the 000 call. Dr Dragutinovic recorded a history identical to that given in oral evidence by Cate of her perception of the doctor aboard the emergency helicopter “freaking out”:

“It was like ‘just let’s get there’ – the impression I got was that there was nothing he could do to make any difference one way or the other”.

111. Dr Dragutinovic explained the rationale for his finding Cate’s history to satisfy the DSM – V criteria for Post-Traumatic Stress Disorder. In his oral evidence, he explained that the image of Eadie crumpled on the ground associated with the perception that she might be dead was something indelibly printed on Cate’s mind and which re-sensitises her to the idea that no matter how careful you are, something bad can happen.

112. He recorded Cate having described herself as being “ridiculously paranoid” meaning hyper-vigilant about something bad happening and of her mind going to worst case scenarios, catastrophising things in the middle of the night.

113. He quoted Cate as reporting that there remains a part of her which feels that she remains in “that world where I feel I’ve lost her – she’s gone – I thought at best I’d have a vegetable [severely brain damaged daughter] – it’s weird that feelings never left me – it’s totally irrational but I feel it”.

114. He noted during the consultation, Cate’s teariness and visible distress when recounting the event and describing her continuing reactions to the event. This is just as Cate exhibited in the course of giving her oral evidence.

115. He recorded the history of Cate’s having missed attendances at Court for which she was briefed, lack of drive and energy, fatigue and difficulty functioning at a high and competitive level, consistently with the history given by Cate for 2012 to 2014 in Court.

116. In his second report dated 13 June 2015, Dr Dragutinovic provided the most recent update of his assessment of Cate before the hearing. He reported that flashbacks and re-sensitising continued and that avoidance reactions remained in evidence, albeit Cate was doing her best not to think about what happened and what she fears may still happen. He observed that her efforts were at that stage inconsistently successful. In particular he commented that the horrible sight of Eadie lying crumpled on her side when discovered by Cate remained for her an unbelievable nightmare associated with her having “freaked out” and picked Eadie up and her thought that Eadie was dead.

117. The impression given by Cate as she gave her evidence establishes that she continues to suffer the symptoms observed by Dr Dragutinovic when he assessed her on 13 June 2015; however, as Cate disclosed, she has significantly improved in the functioning in her life consequent of the three following influences:

1. counselling with Mr Backen, psychologist, since early 2015;

2. having found her capacity to conduct complex trials; and

3. her trial conduct experience in 2015, particularly her successful conduct of the 22 day Windeyer manslaughter trial and her understanding that local solicitors are being restored of trust in her ability to exercise judgment in the conduct of cases.

118. Dr Dragutinovic identified the categories of symptoms which Cate continues to suffer as sadness, pessimism including being discouraged about her future, a sense of flatness and a feeling of hopelessness, loss of pleasure because she is always waiting “for the shoe to drop” [a sense of pending doom], self-blame, propensity to cry, loss of interest in people and things in her environment, indecisiveness, a sense of worthlessness, fatigue, changes in sleep pattern and irritability.

119. In his second report 13 June 2015, Dr Dragutinovic diagnosed:

1. Chronic Post-Traumatic Stress Disorder – insubstantially remitted; and

2. Co-morbid Major Depression – moderate intensity.

120. Dr Dragutinovic gave clear evidence that he prognosised that some form of Cate’s nervous shock will remain an embedded part of her psyche for the rest of her life. That it will continue to adversely affect her in the course of her high-level functioning lifestyle including her occupation as a barrister, particularly at peak periods of work or personal pressure. He said that triggers which cannot be precisely predicted will cause her fatigue, foggy mindedness, low mood, irritability and re-emergence of the gambit of symptoms of Post-Traumatic Stress Disorder.

121. During oral evidence, Dr Dragutinovic was brought up to date with the improvement of Cate, particularly in relation to the three influence set out above. When, without objection of counsel for the parties, I invited Dr Dragutinovic’s responses to the impression given by Cate that she seemed to be doing relatively well compared to as she was when last assessed by him; he gave the following most up to date prognosis:

A.   Your Honour, I would agree. And people can sustain that kind of effort for - well, I think you said 22 days or whatever. I - my prognosis is - is a conservative one because I've seen too many instances where people do seem to be functioning adequately competently over periods of time only to have their durability impaired when out of the blue either a spontaneous relapse or one triggered by something else decompensates them. And they're not back to where they started from but for a while then they are less than fearless, less than confident, less than on top of their game. And it's in the nature of PTSD that it waxes and wanes.

It tends not to go away and when it comes back, when it relapses, depending upon the intensity of the relapse, what triggers it and what else is confronting the particular person at that point in their life, then the weight of it will, in my opinion, adversely affect their ability to durably, resiliently and reliably just plod on and on and on. Professional life, not that I need to say this to anyone in this room, is gruelling; you do need to have that - that doggedness and wherewithal. I think she had it before, I don't think she has as much of it now. She will have periods of it but then I think there will be a tendency to - to relapse for unpredictable periods of time.

It's - it's - it's a - it's an opinion, as I said, a conservative one but based on previous experience with lots of different kinds of trauma causing post‑traumatic stress. This is one of the severest ones involving a child and that's why I've been very conservative by - I'm - I don't think that she'll get back to exactly how she was before and - and - and to be able to maintain it.

122. Dr Dragutinovic agreed that there is no mathematical measure for the prediction of the triggers for Cate to regress in the environment of her life. Dr Dragutinovic agreed that Cate having reduced her heavy nightly alcohol consumption present at the time he saw her, was a significant factor in consideration of improvement of her functioning consequent of her dogged and stoic effort to achieve successful functioning in her life.

Eadie’s Accident – Balustrade Failure – Evidence in Detail

123. On 17 December 2011, Eadie fell from the balcony when a baluster failed to restrain her.

124. One of the two policemen who attended the scene of the accident was Senior Constable Daniel Hilton. At the time of the accident he was a constable in the NSW Police force. He was on the scene second only to the single person Emergency First Response ambulance officer. After providing traffic control for the helicopter extraction of Eadie, Senior Constable Hilton returned to investigate the scene. The thirteen photographs taken by him only about three quarters of an hour after the accident and the police COPS narrative of the event created by him were admitted into evidence.

125. In his narrative he recorded that when sitting on an outdoor lounge and playing with her friends on the verandah, Eadie fell backwards off the lounge and through the balustrade, 2.57 metres to the concrete below where Cate found her with her eyes open but unresponsive.

126. He found that the 1.2m vertical balusters were held in position by one nail at the top and one nail at the bottom, all of which nails were very rusty. He observed – and there is no issue between the parties that this is the place through which Eadie fell – one slat missing from the balustrade which slat was laying below on the ground.

127. With his partner he tested the balusters on either side of the gap through which Eadie fell. He found that they were easily pushed out at the bottom. It was because he observed two of the three most proximate balusters to be loose to mere touch and the third slat to have moved with a push that he took the thirteen photographs in evidence.

128. Whereas “nail” is referred to his narrative, it was common ground that what he described was a “screw”. He observed along the whole of the verandah that it was “clearly apparent” that the screws were “rusted”. He observed that there was no recent paint such as might have covered the screws and recalled that the surfaces were weathered. Photograph 13 showed the back of his hand against balusters which had pushed out at the bottom. He clarified that he pushed the middle of the balusters, not the bottom or top when testing them. He could not recall, in relation to the balusters which moved with a push, whether the wood broke from the screw or the screw broke, releasing the bottom.

129. In his photograph number 5 the two balusters under the beach towel and closest to the centre post of the balcony were not loose but the three balusters on the other side of the gap through which Eadie fell, were loose.

130. His evidence, consistent with the evidence given by Cate, was that the furnishings on the verandah at the time of the incident were of light wicker construction.

131. There was no evidence of impact to the balustrade occurring between the date of inspection 27 June 2011 and the date of accident 17 December 2011.

Plaintiff Expert Liability Evidence – Dr Cooke

132. Cate relied on the expert evidence of Dr John Cooke, consultant architect. Dr Cooke provided two reports. He inspected the property on 18 May 2012, eleven months after the subject report and six months after the accident. Dr Cooke’s second report is dated 18 November 2016 and responds to the report of the defendant expert witness, Mr Grieve of 2 August 2016.

133. The defendants’ expert liability opinion evidence came from Mr Grieve who is an engineer.

134. Mr Grieve misunderstood the location of the balustrade through which Eadie fell when he wrote his first report. During the hearing he carried out an inspection at the correct location and his second report dated 22 November 2016 was admitted without objection.

135. The factual question to be answered by expert evidence involved fairly straightforward propositions arising from the factual observations of Senior Constable Hilton at the time of the accident. On Senior Constable Hilton’s evidence, the bottom fixation of the balusters (also referred to in the evidence as slats) to the bottom horizontal rail of the balustrade was shown to be insecure.

136. Plainly Eadie was able to fall through the balustrade and the single baluster fell to the ground, probably because it was dragged down by her falling through.

137. Senior Constable Hilton’s evidence established that the screws fixing the balusters to the bottom rail were obviously rusted and there had been no recent painting which might hide that fact.

138. That rusty state of the screws would have been apparent when the defendant Mr Walsh inspected the house less than six months before. The common expert evidence accorded with this. Mr Walsh’s evidence is not inconsistent.

139. Dr Cooke’s evidence, in my opinion, explained what can be described in layman’s terms as the “vulnerability” of the construction of the fixation of balusters to the bottom rail. That vulnerability arose because the bottom of the baluster was retained in position by two sources of fixation, being a 5mm lip in the bottom rail and a common steel screw angled across grain near the distal end of the baluster holding it into the bottom rail against the 5mm lip. In the context of the components being of wooden construction, natural shrinkage and movement expected to have occurred in the 20 years between construction and the date of the defendants’ inspection most likely resulted in the bottom of the baluster not being restrained by the whole 5mm of the lip. In the context of the screw being normal un-galvanized steel, it had over 20 years rusted greatly

140. Contributors to the lessening of the height of the retaining lip included aging of the distal bottom end of the baluster, shrinking of the baluster and movement by a minimal bowing or even twisting of the bottom rail. The second fundamental element was deterioration by corrosion of the common steel screw through the end grain of the slat. Obviously corrosion of the screws resulted in their weakening.

141. At the time of his inspection, Dr Cooke found the corrosion of screws to be so extensive that the head of one of them simply broke away to his touch. Many of the photographs including the photographs of the baluster which failed, permitting Eadie to fall, plainly show extensive staining caused by rust of the screw.

142. I understood Dr Cook’s explanation of the constructed fixation to be that absent the restraint of the screw, so long as the baluster was of full length, and fully 5mm behind the vertical of the bottom rail lip; then, it would be restrained by the lip such that it could not be pushed outwards as occurred in the accident. In addition, if there were some defect in the lip such as by a twist of the bottom rail; then, so long as the screw was strong it would retain the baluster to the bottom rail.

143. In the Conclusion Executive Summary in his report of 19 June 2012, Dr Cooke explained what I have described as the vulnerability of the fixation construction in the following terms:

“Mr Walsh mentions the exposure to the elements (in paragraph 14.2 of his report – [Comment: it was a typographical error referring to paragraph 14.2 when Dr Cooke intended to refer to paragraph 13 of the defendants’ report.] The inevitability of corrosion of steel screws in a marine environment would have been obvious to a competent inspector at the time when Mr Walsh carried out this inspection. The highly corroded state of the screws at the time of my inspection (photographs numbered 19 to 20 in Appendix) was such that I have no doubt that the screws would have been badly corroded at the time of Mr Walsh’s inspection. In my view it would have been obvious to a competent building inspector that the balcony slats were at the point of failure at the time of Mr Walsh’s inspection. In my view, a competent inspector would not have formed the opinion that the balustrade appeared “secure and in fair condition” on 27 June 2011 (paragraph 14.4 of inspection report). [Comment: again, Dr Cooke intended to refer to 13.1 which read “secure structurally adequate & in a fair / good condition”.]

5.   A competent building inspector would have made “a close and careful scrutiny” of the building as required by AS 4349.1 – 2007 Inspection of Buildings Part 1 Pre-purchase inspections – Residential Buildings cl 1.4.7. A visual inspection was required “to identify major defects” AS 4349.1 – 2007 cl2.3.1 in Appendix C. A competent building inspector would have inspected and assessed the slat fixing method as defective and at the point of failure. The report should therefore have advised that the balustrade was a major defect that was “an urgent and serious safety hazard” (AS 4349.1 – 2007 cl 2.3.5(c) in Appendix C.

6.   The NOTE to cl 2.3.5 gives an example of a major defect that is an urgent and serious safety hazard as “unsafe balustrades or imminent collapse of a structural member”. A competent building inspector would have reported (at the time when Mr Walsh prepared his report) that the balustrade was unsafe and that the slats were structural members in a state of imminent collapse”.

144. In the detail of his report, Dr Cooke explained that the single screw fixing into the end grain of the baluster was poor building practice and that the bottom of the baluster through which Eadie fell was not contained by the lip in the bottom rail.

145. Dr Cooke took photographs showing that the bottom end of some balusters literally stood on top of the bottom rail lip at the time of his inspection. Dr Cooke observed that in that environment the screws ought to have been other than common steel. They were not galvanised.

146. Further to the above quoted references to the relevant Australian Standard commented upon in his report, Dr Cooke in oral evidence said that during Mr Walsh’s inspection, identification of the major defect of the fixation would not have required invasive inspection. He said that a prudent inspector would have at least given the balustrade a shake and touched the slats. His evidence during cross examination included:

Q.   Well, I'm limiting visual simply to looking at something.

A.   Yes, if we look at it we can't tell just by looking at what's happening in the - within the timber.

Q.   You accept, do you not, that the report of Mr Walsh was expressly a visual report?

A.   Not in the sense that you're suggesting, I don't think.

Q.   What other sense do you say - well, what sense do you understand a visual report to mean other than looking at?

A.   Well, it involves something - it doesn't involve any invasive investigation. It doesn't involve pulling things apart to look at them. It involves looking at things and also for example shaking the railing of the balustrade or trying to see if it shakes, can be shaken.    

147. Dr Cooke was of the view that had Mr Walsh done so the insecurity of the bottom fixation of the slats would have been visible. Given the ready discovery of balusters coming away from the bottom rail merely to touch and of the obviously rusted screws made by Senior Constable Hilton at the time of the incident less than six months after the defendants’ inspection, in my view Dr Cooke’s opinion is readily acceptable. Mr Walsh’s evidence, discussed below, does not support a finding of significant deterioration over that six months.

148. Further, that Senior Constable Hilton, who was not possessed of any specialist building skills, so readily observed what is properly described as complete failure of security of the bottom fixation of balusters across substantial parts of the balustrade including of balusters immediately beside the baluster which failed, shows that more probably than not a competent inspection performed according to the Australian Standard on the date of the defendants’ inspection would have observed the hazard of corrosion of the screw heads at the very least.

Mr Walsh’s Inspection

149. The first defendant, Mr Walsh, was throughout the whole of his evidence in chief and in cross examination an obviously frank and truthful witness.

150. Mr Walsh had no recollection of either his subject inspection of the property on 27 June 2011 or of his inspection of it about two months before that date for a client named Schweimer.

151. At the time of the subject inspection he on average performed two such inspections per day. He had assistance in his business from his wife and from a book keeper. On occasion he employed other inspectors. He estimated that he worked four to five hours most days per week on the administrative side of his business including the preparation of reports.

152. Admitted into evidence was the template document of 80 pages from which he selected paragraphs and made additions, modifications and deletions of paragraphs in his process of producing reports. For instance, the subject report is 46 pages long, not the 80 pages of the template.

153. Common photographs appear in Mr Walsh’s April 2011 Schweimer Inspection report and in his subject 27 June 2011 report. Plainly, Mr Walsh referred to his work done in the production of the Schweimer report to some extent in his preparation of the subject report.

154. His practice was to follow the same routine during every inspection. That routine was to move clockwise around the outside of the property inspecting the exterior of the building, outbuildings and fences and then clockwise inside the property. He said that he stuck to this routine so as not to miss rooms. Then he inspected the roof cavity and finally the sub-floor.

155. Albeit he said that he took notes and photographs during an inspection, no evidence was given of notes or photographs taken during the subject inspection. As above, it is conceded that he used photographs taken during his earlier Schweimer inspection.

156. He said that his normal practice when inspecting a balcony was and in relation to the subject balcony would have been to inspect it from the outside underneath and then during his internal inspection to examine the condition of the roof, the frames, look for any water leaks, check the decking, the attachment of the balcony to the side of the house and move clockwise examining the balustrading.

157. Mr Walsh demonstrated with his hands as he gave his evidence that when “visually” checking the balustrade his practice was to hold and attempt to shake the rails and to apply some force to some balusters at the top, the bottom and the middle.

158. In short, there is no issue on the evidence of Mr Walsh that his “visual” inspection as he contracted to perform included testing by applying some force to look at how the structure was performing, the conditions of the members of the structure and to see if any problems were associated with it.

159. He identified possible problems as wood rot, bowing and deterioration of timbers.

160. He said that even were he instructed to perform a pre-purchase inspection of a property when he had recently inspected the same property; he would perform the same inspection as was his routine. He said only in circumstances where the prior inspection was two weeks or less before would he offer the client that they be provided with that earlier report.

161. He firmly believed, but on the basis only of his belief in his usual practice, that he would have completed his routine inspection on 27 June 2011. He rejected the challenge that when completing the Doosey report he merely attended to those matters identified as problems in his earlier Schweimer report. His evidence was that he probably did not have the Schweimer report with him at the time of the subject inspection for Cate.

162. I accept that Mr Walsh’s evidence of his belief that he would have performed a complete inspection was truthfully given.

163. Mr Walsh frankly conceded that the photographs taken by police about 45 minutes after the accident showed the balustrade was in a deteriorated condition. He agreed that the photographs showed a balustrade which was hazardous and that the screws were rusted.

164. He conceded that the state of the baluster and the state of the nails as shown in the police photographs would have been “similar” to when he performed his inspection.

165. He properly maintained that the visual inspection of the head of the rusted screws, as shown in the photographs, does not provide a way of knowing whether or not the screws were corroded at the fixation. By this he meant that one cannot see the screw through the baluster and into the bottom rail because it is contained within those components.

166. In the end, Mr Walsh gave evidence founded on belief but not on recollection of the inspection and of the creation of the subject report.

167. He insisted that if the balusters had not been retained behind the 5mm lip of the bottom rail and were resting upon the bottom rail as shown in the police photographs, he would have reported it. This evidence can only be accepted as evidence of usual practice, he having no recollection of his inspection,

168. The difficulty is that Mr Walsh’s belief in himself as to the thoroughness of the inspection which he would have performed is contrary to the factual evidence proved by the police photographs. As Mr Walsh conceded, the balustrade was hazardous at the time of the accident. Mr Walsh’s properly made concession was that the condition of the balustrade between his inspection and the date of the accident would have been “similar”.

169. Mr Walsh conceded that none of the police photographs, taken from several different angles, revealed a visibly obvious rotation of the lower rail.

170. During cross examination by Counsel for the insurer, Mr Walsh confirmed that his relevant qualifications were, Member Housing Industry Association, Licensed Building and Licensed Building Consultant, that he followed the Australian Standard during his practice of inspection and report. He said that during an inspection he would go to and from his van and likely make use of a clipboard, checklist, laptop computer, ladders, electrical moisture detection equipment, general tools such as screwdrivers, thermal imaging equipment, electric borescope and torch.

171. It was not put to Mr Walsh, nor did he give evidence, that in the course of inspection he used a spirit level with a digital slope readout as used Mr Grieve to measure the degree of roll-out of the bottom rail.

Defendant Expert Liability Evidence – Mr Grieve

172. As above, the defendant expert opinion evidence was contained in to the two reports of Mr Grieve, an engineer.

173. Mr Grieve’s opinion was that the balusters were insecure, so as to fail to restrain Eadie, because the bottom rail was rotated outward 7% (approximately 3 degrees). The outward tilt of the bottom rail meant that the baluster was retained at the bottom by only 1.43mm of the lip, and not the 5mm vertical restraint as designed.

174. In Mr Grieve’s opinion, that the mere 3 degrees of rotation of the bottom rail at the point of its failure to restrain Eadie was so slight as to be not observable in the police photographs but observable with the use of a spirit level.

175. The crux of Mr Grieve’s written report opinion is a hypothesis that the baluster came free at the bottom rail permitting Eadie to fall because the bottom rail had at some time suffered an impact of outward force causing it to rotate, the effect of that rotation being the 5mm retaining lip of the bottom rail was reduced in height to 1.43mm against the baluster.

176. In other words, assuming the bottom rail to have been originally affixed decades before such that its top and bottom surfaces were horizontal; then the bottom of the baluster ought have been restrained from moving outward because it was held behind the 5mm lip.

177. In Mr Grieve’s opinion, the retaining screw, in that method of construction, was not intended to provide tensile strength restraint against outward movement of the bottom of the baluster. In Mr Grieve’s opinion, the purpose of the screw was only to hold the bottom of the baluster in the horizontal position so that it did not move sideways.

178. When inspecting the balustrade on the wrong side of the centrepost opposite to the side that from which Eadie fell for his first report, Mr Grieve found substantial rotation of the bottom rail which he described as:

“The bottom rail had rotated forward to a slope of 14.4% at the block near the third baluster and 16.6% at the bracket near the third baluster … The third baluster was not retained by the lip but was touching the lip …. Noting the slopes of the bottom rail the rotation at the lip was approximately 7 mm at the block near the third baluster and 8.5 mm at the bracket near the third baluster. The third baluster was approximately at the third point between the block and the bracket. Therefore the rotation at the third baluster was approximately 7.5 mm. This is in excess of the 5mm retaining the third baluster and is consistent with the baluster swinging free not just touching the lip”.

179. At his inspection during the hearing of the correct balustrade location, proximate to the point from which Eadie fell, Mr Grieve found that the bottom rail’s rotation was less than half that which he had measured previously and upon which he had commented in his August report. His report of 22 November 2016 described the rotation at the relevant point of the balustrade as:

“The slope of the bottom rail at the accident was 7%. It was laying outwards towards the pool. The distance from the rear of the unit to the lip was 51mm. The height of the lip was 5mm. Therefore at the location of the lip there was a downward movement from the horizontal of 3.57mm. Since the lip was 5mm the bearing was only 1.43 mm. This is insufficient bearing to retain the slat”.

180. When shown the police photographs, Mr Grieve agreed that the metal bracket affixing the bottom rail to the centre and end posts of the relevant side of the balustrade showed no visible rotation of the bottom rail. This was contrasted to the same perpendicular fixture to the bottom rail on the opposite (wrong) side of the balustrade, the subject of his first report where the bracket appears in the photographs to be plainly at an angle from the vertical, indicating that the bottom rail to which the bracket was secured, had rotated. This concession rendered irrelevant his hypothesis of rotation of the bottom rail on the irrelevant side of the centre post, caused by an intervening forceful impact, made in his first report.

181. Further, his hypothesis was based upon an assumption that when constructed about 20 years before the builder would have affixed the bottom rails horizontally. Mr Grieve conceded that he could not know that.

182. What I have referred to as the vulnerability of the constructed system of fixation, in my opinion, is confirmed by the fact reported in Mr Grieve’s report of 22 November 2016 that whilst in the early 1990’s such fixation did commonly employ a 5mm lip, over the intervening 20 years since the construction of the subject balustrade, design development in construction had increased that height to 7mm. The consequence of that improved construction, Mr Grieve reported, meant that balusters would be effectively retained as long as rotation of the bottom rail resulted in a slope of less than 13.7%. Obviously that is almost twice the 7% rotation measured by Mr Grieve at the point from which Eadie fell.

183. Albeit Mr Grieve disagreed with Dr Cook’s opinion that the construction also relied on the tensile strength of the screw to retain the baluster from releasing outward at the bottom, Mr Grieve agreed that extensive corrosion of the head of the screw was something requiring notice by the inspector.

184. Mr Grieve conceded that given that the 90 degree angled metal bracket affixing the bottom rail to the centrepost proximate to where Eadie fell was at the time of her fall perpendicular (meaning it had not rotated); there was no reason to expect that the bottom rail was other than as it had been originally installed. Further, that given that was how he found it at the time of his inspection on 21 November 2016, the bottom rail rotation which he measured at 7% would have been as the rail had appeared at Mr Walsh’s inspections for Schweimer in April 2011 and at the subject inspection on 27 June 2011. There was no evidence to suggest to the contrary.

185. When asked to focus on the extent of the corrosion of the screws shown in the police photographs taken at the time of Eadie’s fall, Mr Grieve conceded that they were very corroded and volunteered that police photograph number 3 suggested that part of a broken screw appeared in the bottom rail.

186. Whilst the point of fixation of the shaft of the screw could not have been visible to Mr Walsh at the time of his inspection, Mr Grieve’s observation is consistent with the point made by Dr Cooke that the very extensive corrosion of the head of the screws which he observed ought have alerted a prudent pre-purchase inspector to the risk of failure of the screw. In Dr Cook’s opinion, the screw did provide a tensile restraint against outward movement.

187. Mr Grieve agreed that if as found by Senior Constable Hilton, the balusters immediately proximate to the one through which Eadie fell (two balusters under the towel in police photographs 1, 2 and 3) moved outwards to touch and on the other side of the baluster which failed, could be pushed out; then the retaining effect of the lip at the bottom of the rail had been lost at that time.

188. In his conclusion, Mr Grieve agreed that assuming the visual state of the balustrade to have been the same on 27 June 2011 as photographed by Senior Constable Hilton at the time of the accident; then it was a hazard. Further, that upon application of the tests required of Mr Walsh’s pre-purchase inspection including shaking of the balustrade and applying some force to test the restraint, the hazard would have been even more apparent.

189. Mr Greive agreed that as Dr Cooke had inspected the relevant part of the balustrade four years before he did, Dr Cooke was in a better position to achieve an accurate assessment.

190. In my opinion, the unavoidable conclusion on the evidence of Mr Walsh, Dr Cooke and Mr Grieve is that Mr Walsh, perhaps through distraction or pure mistake, failed to observe the extensive corrosion of the screws, the reduced height behind the lip of the bottom rail of restraint of the balusters, and the looseness of the balusters at the time of his inspection on 27 June 2011. Whether by natural attrition of the wood components and corrosion of screws, by imperfect original installation, or a combination of one or more of those factors; the balustrade was unsafe because the bottom end of the baluster through which Eadie fell was not adequately secured behind the lip of the bottom rail.

191. There is no evidence contradicting that that on 27 June 2011 the balustrade was in the condition reported and photographed by Senior Constable Hilton. That the balustrade was in that condition on 27 June 2011 is the only available conclusion on the evidence of Dr Cooke, Mr Grieve, and indeed Mr Walsh.

192. The defendants’ Closing Submissions pointed to the fact that there was no direct evidence of the state of the balustrade and baluster on 27 June 2011.

243. Counsel for Cate has invited me to assess past economic loss on a lump sum basis taking account of the evidence of actual economic performance. The assessment is necessarily impressionistic and cannot be precisely calculated.

244. Doing the best that I can on the evidence and accepting, as was put to me, that approximately 50% of Cate’s gross revenue is received by her as net income, I calculate past economic loss on the following basis:

1. for the 2012 calendar year, the $97,000 drop in gross fees rendered must be discounted because the exceptional 2011 year was not shown to be a yardstick. I allow $50,000.00 loss of gross fees rendered equating to a $25,000.00 net income loss;

2. for the 2013 calendar year, the further reduction of $46,000 is consistent with Cate’s description of her drop in reputation and her turning to Local Court work in order to earn money from less demanding briefs which she felt more confident to perform. It is not easy to estimate an average fees rendered year for Cate, but again, because the 2011 fees rendered were exceptionally high, I do not allow the total dip to 2013 of $143,000 for fees rendered as due to Cate’s impairment and diminution of capacity. I allow diminution of fees rendered in the sum of $70,000.00 equating to a $35,000.00 net income loss;

3. for the 2014 calendar year in which Cate increased her gross fees rendered by $78,000, no doubt due to the combination of her increasing success acquiring her bulk Local Court criminal work and to her restoration of self; I allow $20,000.00 reduction in fees rendered equating to a $10,000.00 net income loss; and

4. for the 2015 calendar year the gross fees rendered show that Cate recovered by increasing her performance another $28,000 and in the course of that year she re-established her self-confidence and considered herself to have progressed well on the path of restoring her reputation among briefing solicitors in Wollongong. I do not allow for any loss of earnings in the 2015 or 2016 calendar years (up to the hearing).

247. I assess past economic loss in the total sum of $70,000.00

Future Out of Pocket Expenses

248. Neither in his report dated 13 June 2015 nor in oral evidence did Dr Dragutinovic vary his estimate of treatment given in his report of 23 August 2013. That ongoing treatment is a reasonable expense for Cate is a conclusion properly accommodated by the evidence given by herself of her improvement in her function personally and professionally attributable to her fortnightly counselling with clinical psychologist Mr Bracken since early 2015. I accept Cate’s evidence in this regard. It is consistent with Dr Dragutinovic’s opinion. There is no evidence to the contrary.

249. In his first report, Dr Dragutinovic assessed Cate’s need for treatment on the basis of his opinion that her condition had stabilised at a level where her Post-Traumatic Stress Disorder and Comorbid Major Depression would be unlikely to significantly remit without counselling. He has been proved correct in that. At the time of his 2015 report Cate was participating in the excessive consumption of alcohol to which I have referred. With ongoing treatment from Mr Bracken her alcohol consumption has returned to healthier level permitting her to function in life without the effects of that earlier excessive consumption. Dr Dragutinovic in his first report recommended 10 sessions of covert systematic desensitisation of Post-Traumatic Stress Disorder and 10 sessions of cognitive behavioural treatment for Comorbid Major Depression involving assistance with monitoring, identifying and reorienting cognitions underlying comorbid mood and affect disturbance. He said that those treatments could be adequately provided by a clinical psychologist.

250. Whilst the precise treatment provided by Mr Bracken was not examined in the evidence such that it can be equated with what Dr Dragutinovic recommended; the impression I have is that Dr Dragutinovic was correct and that the treatment of Mr Bracken has proved beneficial. That said, nothing in Dr Dragutinovic’s evidence describes ongoing psychological treatment beyond that which has been already fulfilled by Mr Bracken.

251. In my view, the real and readily acceptable evidence is that in the course of the permanence of her Post-Traumatic Stress Disorder and ongoing depression Cate requires continuing clinical psychological consultation of a reasonable measure as well as episodic medical treatment by way of general practitioner visitation as her condition waxes and wanes through the demanding lifestyle course which she has chosen.

252. I allow one general practitioner consultation per annum for the life of Cate and 6 clinical psychologist consultations per annum. The clinical psychologist consultations are to be calculated at $190.00 per consultation, that being the rate agreed between the parties as presently charged by Mr Bracken.

Future Economic Loss

253. Applying the provisions of s 13(1) CLA, I am satisfied on the evidence that Cate’s most likely future circumstances but for the injury would have been that she continue as a successful barrister without interruption and unhampered by the fatigue of the waxing and waning of her permanent psychological impairment. Further, Cate’s doggedness and personal discipline observed by me in the manner in which she gave her evidence and also as observed by Dr Dragutinovic cause me to assess for the purposes of s 13(2) CLA that no adjustment is required for future economic loss for circumstances which might have occurred but for the injury. They would be entirely within the normal experience of a working professional. This is because her displayed strength of character and professionalism was likely but for the injury to have carried her through the ups and downs of life as well as would be expected from any other person.

254. I accept that, the effect of the waxing and waning will happen but as opined by Dr Dragutinovic the extent of it is impossible to accurately assess. For that reason, the impact of the injury upon the economic benefit from exercising earning capacity into the future is difficult to determine. Nevertheless, periods of compromised personal exertion to earn which are likely to be productive of financial loss are her reality. She is entitled to compensation for that loss: Graham v Baker (1961) 106 CLR 340 at [346]-[347] per Dixon CJ. Kitto and Taylor JJ; [1961] HCA 48 at [7]-[8]; Husher v Husher (1999) 197 CLR 138 at 144 per Gleeson CJ. Gummow, Kirby and Hayne JJ; [1999] HCA 47 at [7].

255. Cate is 53 years of age. She gave no evidence of her intended retirement age. Previously she worked part-time to accommodate her child raising obligations. She may in the later years of her remaining, say 12 years of working life work part-time or receive less demanding briefs as life’s demands and opportunities avail upon her. At the time of the hearing, she was not suffering economic loss consequent of impaired personal exertion.

256. Doing the best that I can on the evidence as is available, I assess future economic loss on a buffer basis according to the principles set out in Penrith City Council v Parks [2004] NSWCA 201 at [5] and [58] in the lump sum of $30,000.00.

257. The parties agreed that following my delivery for these reasons counsel would agree the mathematical calculation of damages. Normal allowances for exigencies of 15% are to be allowed.

The Insurance Question

258. Turning to the insurance question, by First Cross-Claim in each of the proceedings, the defendants seek relief from breach of contract or the Insurer’s failure to indemnify and pay the claims.

259. The Insurer admits the policies of insurance and that it has refused to indemnify, but relies upon specific exclusion clauses to deny that its refusal is a breach of the contract.

260. The parties refer to the Professional Indemnity and General Public Liability wording as separate policies. So far as it is relevant, I do not determine that they are separate policies. They carry the single policy number AUS12-5234, renewal date and single premium. They were agreed pursuant to the single Coverage Summary Brokered, Policy Schedule and Insurance Premium Advice. The wordings were contracted as composite covers. Nevertheless, the cover is described in wording presented in separate parts and, subject only to assistance of interpretation should it be necessary to consider whether or not they form a single contract. The parts are available to be interpreted as describing separate risks of the same defined Business Activity.

261. The first part is entitled “Professional Indemnity Policy – Part B (Wording)”, and the second part is entitled “General and Public Liability Policy – Part B (Wording)”.

262. In relation to the Professional Indemnity, the Insurer relied on the Exclusion Section 7, clause 7.17, on page 9. In relation to the General and Public Liability wording, the Insurer relied on Exclusion Section 6, clause 6.19, on page 16.

263. The insurance promises indemnity covering the defined “Business Activities” which includes specifically Residential Building Inspections – AS4349.1-2007 (Schedule). The subject inspection report provided to Cate by the defendants, was a Residential Building Inspection – AS4349.1-2007. The defendants’ provision of that report for the purposes of this case falls precisely within the defined Business Activities for which cover was promised.

264. The Coverage Summary notified the defendants that it was a quick reference “for when you prepare your Insurance Proposal”, and that it listed the “main details of your cover currently held” with the Insurer, whilst not forming part of the Schedule.

265. The Insurance Premium Advice which does form by incorporation part of the Schedule, includes:

Based on your proposal, cover is provided for the following Business Activities: … Residential Building Inspections AS4349.1-2007

and makes direct reference to inclusion of Residential Building Inspections and “for work” carried out in that activity. It advises that the wording is to be read “in conjunction with” relevant endorsements for the Business Activities.

266. In each of the wordings, the Definition Section provides that conditions, exclusions or definitions contained in the Schedule to the policy are Special Conditions: Professional Indemnity Policy wording, clause 4.33; General and Public Liability Policy wording, clause 3.33.

267. Each of the wordings provides that Special Conditions prevail over conditions, exclusions and definitions in the General Wording: Professional Indemnity Policy wording, clause 5.5; General and Public Liability Policy wording, clause 4.5.

268. The wordings provide for claims made cover.

269. By its Insuring Clause, the Professional Indemnity Policy promised to pay all sums for which the defendants became legally liable to pay for “Claims … in relation to actual or alleged breach of Your professional duty in connection with the Business Activities”.

270. The wordings do not define “professional”.

271. The prominence of the cover promised in that provision of the Insuring Clause combined with the description of cover contained in the Schedule and confirmation by the Special Condition of that description of cover, in my opinion, plainly promises the defendants the Business Activity of the provision of the subject report is covered by the cross-defendant’s promise of indemnity for any legal liability relating to actual or alleged breach of the defendants’ professional duty in connection with the provision of that report.

272. Given that clearly expressed object of the contract of insurance; the wording is to be construed so as to avoid making commercial nonsense or working commercial inconvenience with that commercial purpose or object secured by the contract: Mount Bruce Mining Pty. Ltd. v Wright Prospecting Pty. Ltd. (2015) 256 CLR 104 per French CJ, Nettle and Gordon AJ at [46] to [52], Bell and Gageler JJ at [119] to [121], and Kiefel and Keane JJ at [107] to [113].

273. In McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 (McCann) at [22], in a passage approved by the High Court in CGU Insurance Limited v Porthouse (2008) 235 CLR 103 at 116, Gleeson CJ said that a policy of insurance is a commercial contract, and as such should be given a businesslike interpretation. Such interpretation requires “attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure”.

274. The approach to construing an exclusion clause was outlined in Darlington Futures Limited v Delco Australia Pty Ltd (1986) 161 CLR 500 at [510] – [511]:

[T]he interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity … [T]he principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of the reasonableness or fairness of the clause arises.

275. These exclusion clauses must be construed so as to not inappropriately circumscribe the object of the contract. Their purpose is to affect the contractual prescription of the promised field of cover by providing the boundaries to the scope of cover.

276. In respect of a professional services exclusion clause, in Fitzpatrick v Job (2007) ANZ Ins Cas ¶61-731 at [76,076], as agreed to by the Full Court in Chubb Insurance Company of Australia Limited v Robinson (2016) 239 FCR 300 at [641]-[643]; FCAFC 17 at [142]-[143], Buss JA held that the term “professional” in an exclusion clause does not necessarily bear an identical meaning to the term’s use in the insuring clause of a products liability policy. The context in which the term professional is used in an insurance policy may be significant in determining its meaning.

277. In the Professional Indemnity Policy, the exclusion upon which the cross-defendant relies is expressed as follows:

Section 7 Exclusions: this Policy does not provide indemnity or cover for any liability, Costs and Expenses, loss, damage or destruction, or Costs, Charges and Expenses, directly or indirectly caused by or arising out of or in any way connected with:

Personal Injury and Property Damage

(a)   Any Personal Injury or Property Damage.

278. The claims the subject of these proceedings fall within the wording definition of Personal Injury.

279. In my opinion, the words “caused by” are operative within the further broader expression of the Section 7 “directly or indirectly caused by or arising out of or in any way connected with” because each of the identified exclusions defines that which is excluded as a state or a condition from which legal liability might arise. There is a causative context in each of the definitions. For example, Exclusion 7.4 Conduct, clearly describes that the promised cover within the Business Activity does not include or extend to:

Any wilful, dishonest, fraudulent, criminal or malicious conduct on Your part or on the part of another person committed with Your knowledge of consent or connivance.

and Exclusion 7.9 Faulty Workmanship clearly excludes the liability arising from the state of work or service provided in the words:

“The cost of performing, completing, correcting or improving any work or service undertaken or provided by You or on Your behalf”.

280. In relation to Exclusion 7.4, the activity excluded would be outside of the Business Activity defined, as would the “work or service” described in Exclusion 7.9.

281. That clause 7.17 identifies two consequences of damage compensating for a causal activity or state, that is damage being compensation for rather than the reason for liability; in my opinion means that the identified item for focus for consideration of exclusion of cover does not easily fit within clause 7’s described excluded causes or states for liability unless it is read to mean liability for error of professional service in the Business Activity such as reporting on personal injury or property damage potential of a feature of a property.

282. Because of the view to which I have come in relation to construction of the General and Public Liability wording, it is not necessary for me to determine the legal effect, if any, of clause 7.17. This is particularly so because there is a single cover by premium and description provided across the separate Professional indemnity and General Liability wordings.

283. A commercial construction properly available is to take the Professional Indemnity wording in the context of it being a component of the overall contracted cover so that clause 7.17 does exclude cover for personal injury damages in the event of professional error in the provision of inspection and/or report, because that is being covered under the General and Public Liability wording. In other words, the Insurer’s argument in relation to clause 7.17 is available, in my view, in circumstances where the Professional Indemnity and General Liability wording, read together, do not make the clearly expressed object and purpose of the cover inconvenient or illusory.

284. The Insuring Clause of the General and Public Liability wording provides that the cross-defendant will pay for:

all sums which You become legally liable to pay for Claims …

(b)    for Personal Injury or Property Damage occurring in connection with the Business Activities: clause 1.1.

285. As I have said, the Business Activities applies in each of the two wordings which provide overall cover.

286. In my opinion, a reasonable business person reading that the definition of “Business Activities” which includes the provision of inspection and report precisely of the category of the subject report, would interpret the wording of the Insuring Clause of the General and Public Liability wording as promising that the object of the cover was to indemnify for Personal Injury as claimed in this case. The personal injury the subject of these proceedings plainly falls within defined Personal Injury: see clause 3.22.

287. For these reasons, clause 6.19 is to be read as not inconsistent with that commercial object such as would make the promised cover a commercial nonsense or to work a commercial inconvenience: Mount Bruce Mining Pty. Ltd. v Wright Prospecting Pty. Ltd. (2015) 256 CLR 104 per French CJ, Nettle and Gordon AJ at [51].

288. Clause 6.19 provides:

Professional Liability

(a)   Your provision of, or failure to provide, any professional advice or services, or any related error of omission.

(b)   Advice, design or specification given by You for a fee or otherwise in carrying out any Business Activities.

289. In my opinion, the contractual promise to pay liability, costs and expenses covered by provision of the inspection and report services must prevail so that clause 6.19 is not to be inappropriately read as avoiding liability arising out of the provision of the inspection and report services.

290. In my opinion, clause 6.19, when read with the General and Public Liability wording, has a clear effect of prescribing the boundary of the field of cover so as to contain cover to all Business Activities but to exclude cover for professional advice and services beyond Business Activities. The words “professional advice or services” in clause 6.19 (a) are not the defined “Professional Service” (clause 3.26) meaning “any Business Activity listed in Your Schedule”: This follows from the use of the lower-case, rather than upper case, meaning the use of “professional” is normally adjectival.

291. After lunch on Day 3 of the 8 day hearing (Transcript Day 3, page 155 at paragraph 20), it was apparent that the insurer did not, in its approach to the construction of clause 6.19, address the point that the draftsman of the wording had not employed capital P for “professional” and S for “service” in the expression “any professional advice or services”. I invited the Insurer to address this point in later submissions. In closing written and oral submissions, the Insurer did not address the point.

289. Not only is there not a capital “P” in the word “professional” and a capital “S” in the word “services” in clause 6.19 (a), but the words “professional” and “services” do not appear together as descriptives of the single thing.

290. The words “any professional advice or service” are to be given their normal meaning, and in construing this contract, for the reasons given, a meaning which defines activities out of which liability arises, other than the Business Activities of the provision of the subject inspection and report.

291. Clause 6.19(a) would prevail and cover would be excluded where the liability arose out of the provision of a professional advice or service other than the activity required for the inspection and report under AS4349.1-2007 (or other Business Activities). For instance, the inspector might advise a prospective homeowner of an approach to work or improvement of the building, recommend a particular brand of product or design for construction of a balustrade. That would be advice outside that required for his inspection and provision of the pre-purchase report described in the Schedule as Business Activities.

292. That this is the correct reading of clause 6.19, in my view, is confirmed by its consistency with the Building Inspection Endorsement. Clause 1 of the Endorsement confirms that Business Activities includes Pre-Purchase Building Inspections on the condition that (at 1.1) the paperwork completed (the subject report) complies with the applicable Australian Standard, in this case Residential Building Inspections AS4349.1-2007 described in the Schedule as included in Business Activities. See also Building Inspection Endorsement 5.1.

293. My above determined construction of clause 6.19 is equally consistent with Building Inspection Endorsement paragraphs 3 and 4, which promise cover in the special circumstances of particular discoveries on inspection on condition that the building report make the defined recommendations in relation to those discoveries.

294. In my opinion, the word “any” in clause 6.19 preceding the words “professional advice or services” compels this construction, and is inconsistent with exclusion from cover of liability for the very advice or service in this case which falls within the defined Business Activities for which cover is promised.

295. That clause 6.19 (b) excludes cover for advice, design or specification otherwise than in the course of carrying out the defined Business Activities, for which a fee is collected; is consistent with clause 6.19 (a) excluding the provision of services outside of those required for carrying out of any Business Activities.

296. The Insurer submits that clause 6.19 excludes all liability for the inspector’s professional provision of the Australian Standard inspection and report. This submission proposes that the word “professional” in clause 6.19 (a) was used to exclude that liability without making the object of a Policy illusory because, so read, it preserved general common law liability such as where the inspector might have left a tool causing a person during the course of his inspection to slip and fall, suffering personal injury.

297. In my opinion, the Insurer’s submission invites a construction which is not commercial and which is inconvenient and awkward in the context of the contract as a whole. It does not affect the promised object of cover for liability for personal injury damages occurring in connection with conduct of Business Activities; but rather, the Insurer’s submitted construction would inappropriately limit that cover to a point of virtually defeating it.

298. It was put to me by the insurer that a plain reading of the words of the exclusion clause invited no ambiguity. I agree with that submission, albeit coming to a different conclusion on the plain meaning of those terms.

299. In the alternative, the Insurer put that were there to be ambiguity and the need for less direct policy construction arose, the judgment of Kirby P GIO General v Newcastle City Council (1996) 38 NSWLR 558 at [568] was instructive, in which His Honour provided that ‘professional’ in this context involves “no more than advice and services of a skilful character according to an established discipline”. In that case, His Honour held that the examination and analysis of building proposals by workers who were not professionally qualified for the purpose of granting consent. characterised a professional service.

300. Not only is the clause not ambiguous but the inclusion of the category of inspection and report by the defendants in “Business Activities” renders the submission not more than a distraction. The word “professional” here does not participate in any ambiguity or difficulty of meaning.

301. Counsel went on to submit that although the term “professional” may vary as between insuring clauses and exclusion clauses, not least as a result of the contra proferentem rule, in this case the term comfortably encompasses the activities of the cross-claimant.

302. I reject this submission for the same reasons as outlined above. The Definitions, Schedule and Endorsement of the policy plainly invite a construction of the term “Business Activities” to include Pre-Purchase Building Inspections and the provisioning of reports of same.

Orders

1. In proceedings numbered 2014/224296, plaintiff Cate Doosey, I give judgment for the plaintiff against the defendants jointly and severally in the sum to be calculated by agreement between the parties in accordance with these reasons.

2. In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I give judgment for the plaintiff against the defendants jointly and severally, damages to be assessed.

3. In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I dismiss the Second Cross-Claim.

4. In proceedings numbered 2014/224296, plaintiff Cate Doosey, on the First Cross-Claim I give judgment for the Cross-Claimants against the Cross-Defendant.

5. In proceedings numbered 2014/224312, plaintiff Evangeline Doosey-Shaw (by her next friend Cate Doosey), I give judgment for the Cross-Claimants against the Cross-Defendant.

6. In both proceedings, the First and Second Defendants pay the Plaintiffs' costs of the proceedings.
     

7. In both proceedings, the Cross Defendant to the First Cross Claim pay to the First and Second Defendants the costs payable by the First and Second Defendants pursuant to order 6.
    

8. In both proceedings, the Cross Defendant to the First Cross Claim pay the First and Second Cross Claimants' own costs of the proceedings.

Amendments

06 February 2017 - Typographical error.

06 March 2017 - Substitute Orders 6-9 of original judgment of 3 February 2017 with Orders 3-5 of Consent Orders handed up in court on 14 February 2017, pursuant to orders made by Judge Montgomery in court on 14 February 2017.

Decision last updated: 06 March 2017