Dickinson v QBE Insurance (Australia) Limited
[2018] VCC 2074
•18 December 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-17-02380
| NAOMI DICKINSON | Plaintiff |
| v | |
| QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035) | First Defendant |
| and | |
| OWNERS CORPORATION PLAN NO RP16643 | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30, 31 October and 1, 2, 15 and 16 November 2018 | |
DATE OF JUDGMENT: | 18 December 2018 | |
CASE MAY BE CITED AS: | Dickinson v QBE Insurance (Australia) Limited & Anor | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 2074 | |
REASONS FOR JUDGMENT
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Subject: INSURANCE
Catchwords: Insurance claim in respect of storm damaged property – terms of insurance policy – interpretation of policy terms – whether damage to premises caused by the storm or resulted from wear and tear – cost of repair to premises – whether plaintiff able to claim damages in respect of inconvenience, mental anguish or distress
Legislation Cited: Insurance Contracts Act 1984 (Cth); Wrongs Act 1958 (Vic)
Cases Cited: Motor Accident Mutual Insurance Pty Ltd v Kelly (1999) 10 ANZ Ins Cas 61-420; Stone v Chappel (2017) 128 SASR 165; Thomas v Powercor Australia Ltd [2011] VSC 586; Boncristiano v Lohmann [1998] 4 VR 82; Nino v MLC Limited [2009] NSWSC 400; Sayseng v Kellogg Superannuation Pty Ltd [2007] NSWSC 857; Mutual Community General Insurance Pty Ltd v Khatchmanian [2013] VSCA 144
Judgment: Judgment for the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Bingham | Maurice Blackburn Lawyers |
| For the First Defendant | Mr J F Richardson | Meridian Lawyers |
| For the Second Defendant | No appearance |
HIS HONOUR:
1 The plaintiff is the owner of Unit 6, 47 Mitford Street, Elwood (“the Unit”). It was one of seven units at that address.
2 The second defendant is the Owners Corporation in respect of property at that address (“the OC”).
3 The Unit is and was insured by the first defendant (“QBE”) pursuant to a policy of insurance issued to the OC (“the Policy”).
4 The Policy covers Unit 6 and the six other units and common areas at that address.
5 On 23 October 2013, during the period of insurance covered by the Policy, the Unit was damaged in a storm (“the Storm”).
6 Although the Policy was issued by QBE to the OC, it is not in dispute that the plaintiff is a third party beneficiary entitled to claim under the Policy pursuant to s48 of the Insurance Contracts Act 1984 (Cth).
7 In this proceeding, the plaintiff claims pursuant to the Policy in respect of damage caused to the Unit by the Storm.
8 It is not in dispute that the Policy is one which covered damage to the Unit by the Storm.
9 The plaintiff seeks no direct relief from the OC in this proceeding.
The Policy
10 The Policy provided cover in respect of accidental loss or damage to the insured property that occurred during the period of insurance.
11 It excluded loss or damage caused by wear and tear, which is defined as being “damage or a reduction in value through age, ordinary use or lack of maintenance”. QBE alleges that much of the damage to the Unit the subject of this claim was caused by wear and tear and not by the Storm.
12 The Policy provides that where the property contains any architectural or structural feature of an ornamental, heritage or historical character or where materials used in the original construction are not readily available, QBE would use the nearest equivalent available to the original materials.[1]
[1]Page 27 of the Policy at Court Book (“CB”) 63
13 The Unit was constructed in an Art Deco style commonly seen in buildings in Melbourne constructed in the 1920s and 1930s. Common features of that style are ornate ceilings with roses, cornices and strapping.
14 The plaintiff submits that repairs or replacement of ceilings should be carried out using such decorative features. QBE does not take issue with this.
15 Further, the ceilings in the Unit were made from fibrous plaster commonly used in such Art Deco buildings at the time of its construction. The plaintiff claims that she is entitled to have those ceilings at the Unit requiring replacement, replaced with fibrous plaster as opposed to Gyprock plaster sheets, a simpler and cheaper alternative often used in modern times. QBE contends that Gyprock plaster is an adequate replacement for ceilings that need to be replaced.
16 The Policy provided that, if the property was damaged, QBE could “choose to either rebuild, replace, repair or pay the amount it would cost to rebuild, replace or repair”.[2]
[2]Page 27 of the Policy at CB 63
17 QBE has accepted the claim in respect of damage to the Unit. It has chosen to pay the amount that it would cost to rebuild, replace or repair the damage to the Unit caused by the Storm. To date, more than five years since the Storm, it has not paid any amount to the plaintiff. The parties are in dispute as to:
(a) What damage was caused by the Storm?
(b) What is the cost of rebuilding, replacing or repairing such damage?
The Unit
18 The Unit consists of an entry area, two bedrooms, a kitchen, a bathroom, adjacent living and dining rooms, and a balcony. A floor plan of the Unit was tendered as exhibit B.[3]
[3]CB 387
19 There was no precise evidence as to the age of the Unit, but it appears to have been built in the 1930s.
20 Each of the other units in the building and a number of homes in the immediate district feature the Art Deco architectural style. The plaintiff considered it a feature of the Unit and the area.
21 The plaintiff purchased the Unit in early 2007 and took possession of it in September of that year. In July 2010, she vacated the Unit and moved to work in Perth. She later worked overseas.
22 The Unit was leased out from about 2010 through a residential real estate agent, Hocking Stuart (“the Agent”). The tenant was still occupying the Unit as at the date of the Storm and moved out shortly afterwards.
23 From time to time during that tenancy, a representative of the Agent made inspections of the Unit, and, if necessary, took photographs of areas of concern and provided a report of the condition of the Unit to the plaintiff.
Pre-Storm damage to the Unit
24 It was not in dispute that, prior to the Storm, there had been some water damage to windows in the study (also at times referred to as the sunroom) which faced out onto Mitford Street. There is no claim in this proceeding in respect of damage to the study.
25 Both the plaintiff and Ms Drakulic, a property manager and employee of the Agent, gave evidence of the condition of the Unit prior to the Storm. The plaintiff had been present at, and had inspected the Unit in early August 2013, and also on 21 October 2013, only two days before the Storm.
26 Ms Drakulic had inspected the Unit in February and July of 2013 – about eight months and three months respectively, before the Storm. She had taken some photographs of the Unit at those inspections which were tendered. Her reports concerning those inspections and photographs taken by her on those occasions were tendered as exhibit T.
27 Both the plaintiff and Ms Drakulic gave evidence that, prior to the Storm, they had not observed any signs of the damage to the Unit that were evident after the Storm.
28 Their evidence was that, prior to the Storm, there was no water damage, or cracking of the walls or ceilings as had been observed after the Storm. Both were shown post-Storm photographs of damage to various walls and ceilings in the Unit and both expressed the view that such features of damage were only evident after the Storm. It was submitted that this gave rise to a strong inference that such damage had been caused by the Storm.
29 QBE submitted that much of the damage preceded the Storm and was wear and tear. This was disputed by a number of expert witnesses.
Expert witnesses
30 Issues upon which expert evidence was given were:
· Which ceilings required replacement as opposed to repair?
· Whether replaced ceilings should be of fibrous plaster or Gyprock?
· What was the cost of replacement of ceilings as opposed to repair of them?
· What was the cost of ceilings replaced with fibrous plaster as opposed to Gyprock plaster?
· Which damaged parts of the Unit (internal and external) were wear and tear as opposed to damage caused by the Storm?
31 On 3 March 2015, Harry Giofkou of Hawthorn Consulting Engineers Pty Ltd (“HCE”), at the request of QBE, prepared a document entitled ‘Scope of Works’ which set out what works were required to repair the damage to the Unit caused by the Storm. This document was tendered as exhibit G. Mr Giofkou was not called as a witness.
32 The HCE Scope of Works included work to all rooms of the Unit except the study.
33 HCE did not provide any costing in respect of such works.
34 Four expert witnesses gave evidence at the trial:
· Tom Carson, a registered building consultant of the firm Abode Restoration (retained by the plaintiff);
· Tim Gibney, a consulting, structural and geo-technical engineer of the firm TGA Engineers (retained by the plaintiff);
· Laurence Hargrave, a registered building practitioner of Hargrave Building Services Pty Ltd (retained by the plaintiff); and
· James Wilson, a registered building practitioner of the firm Buildspect (retained by the defendant).
35 The expertise of those four witnesses to give opinion evidence was not challenged at the trial. Each provided one or more reports which were tendered as exhibits W, U, V, 4, 5, and 6 respectively. Each of those experts had inspected the Unit in 2018.
36 The Unit, to this day, has not been repaired save for repairs to the roof performed soon after the Storm in order to prevent further water intrusion and further interior damage. As I understand it, the roof was repaired in late 2013 and a separate claim was made in respect of those repairs by the OC. The cost of repairing the roof has been met by QBE some time ago and has nothing to do with this claim.
Ceilings
37 There is a dispute between the parties as to which (if any) of the ceilings in the Unit were damaged by the Storm to the extent that they are required to be replaced, and, to the extent that replacement is necessary, what type of plaster should be used.
James Wilson
38 Mr Wilson’s cost estimate with regard to ceilings of the Unit included demolition and replacement of the ceilings in two areas - the main bedroom and the balcony. He considered that the remaining ceilings could be satisfactorily repaired by painting.
39 Other experts gave evidence that other ceilings also required demolition and replacement.
40 It was not in dispute that the damaged ceilings in the Unit had originally been constructed of fibrous plaster, a special type of ceiling plaster commonly used in some older buildings, including those designed in the Art Deco era.
41 Mr Wilson’s estimate of repairs to the ceilings did not involve the cost of fibrous plaster which he stated was an obsolete product and no longer available. He opined that new plasterboard (Gyprock) should be used and that once painted, it would not be discernible that it was not fibrous.
Tom Carson
42 Mr Carson prepared a report dated 13 April 2018, tendered as exhibit W. He had considerable experience in heritage building work, including Art Deco design features.
43 Much of his evidence concerned whether all or any of the ceilings required replacement, and, if so, with which type of plaster.
44 Mr Carson’s evidence was that fibrous plaster is a product which is available and in use today and that he regularly worked with it. He opined that the visual difference between fibrous plaster and the newer style plasterboard was of some significance and was discernible. Further, his evidence was that fibrous plaster would last longer than Gyprock.
45 Mr Carson’s amended report contained a quotation for the cost of repairing damage caused by the Storm which included an allowance for demolition and replacement of two ceilings – those referred to by Mr Wilson in his report which Mr Carson had been asked to review; however, in evidence, Mr Carson made clear that he considered that other ceiling areas also required replacement.
Lawrence Hargrave
46 Mr Hargrave’s evidence was that all of the ceilings in the Unit required replacement. In particular, he had observed sagging of the ceilings in the lounge room, the dining room, and the entry area.
Tim Gibney
47 Mr Gibney considered that the entire ceiling area of the Unit required replacement as opposed to mere repainting. He stated that there was cracking and sagging of the ceilings. He agreed that these were hard to see on the photographs tendered. He observed water damage to the dining room and lounge room ceilings which required replacement. The lounge room ceiling was sagging. In the dining room, the ceiling had distortion in the straps, with damage to the plaster panels. He could not say that there was sagging in the dining room.
48 Mr Gibney had observed that the kitchen ceiling had battens with cracking and distortion. No other witness observed such cracking or distortion.
49 Mr Gibney stated that, although the ceilings were structurally sound, they required replacement on aesthetic grounds. In case of doubt, I consider that the fact that a ceiling, wall or floor might be structurally sound is no reason not to allow for aesthetic repairs. The allowance for the costs of painting is a clear example.
50 I accept Mr Carson’s evidence that fibrous plaster is available to purchase, is not obsolete, and is discernible and of better quality than Gyprock plaster. Further, there are specialist tradesmen available to install such plaster.
51 Mr Hargrave had not considered the use of fibrous plaster, because his understanding was that it was no longer available. Clearly it is.
52 Mr Hargrave did not provide any estimate of the cost of replacement with fibrous plaster other than to say that he had called a Mr Vitale (at the suggestion of the plaintiff), a person who he understood had done Art Deco work around Melbourne and who had visited the Unit.
53 Evidence by way of a Notice to Admit concerning Mr Vitale was admitted.[4] There was an admission by QBE that Mr Vitale had quoted $85,000 to “supply all labour and materials to install new plastic [I consider this a misprint for “plaster”] sheets, cornices, panels (where required), and strapping to each room, entry and rear porch”.
[4]Transcript (“T”) 346
54 The evidence of that quotation was, in my view, of little assistance. Firstly, the use of the expression “where required” indicates, in my opinion, that Mr Vitale envisaged that it may not be necessary to install a new ceiling in each area. Secondly, it is unclear from the admission referred to as to whether Mr Vitale’s quotation related to fibrous or Gyprock plaster.
55 Mr Vitale was not called to give evidence; however, I do not consider that I should draw any inference against either party for not calling him. The evidence does not indicate that he was in the camp of either party.
56 Doing the best I can on the evidence before me, I find that the plaintiff is entitled to have ceilings in the main bedroom, balcony, lounge room, dining room and entry area demolished and replaced with fibrous plaster, including appropriate roses, cornices and strapping.
57 The evidence was that it may not be possible to locate a tradesman with identical moulds for the roses, cornices and strapping currently installed in the damaged ceilings. If this is so, it will be considerably more expensive to have new moulds made up to match the existing decoration. I do not consider that it would be reasonable to insist on the make-up of new moulds when similar style moulds are likely to be available so as to produce a ceiling decoration similar to the existing and which will be adequate. Put another way, I am not satisfied that the plaintiff has proven, on the balance of probabilities, that she will need to have new moulds made up. There was no evidence as to what other moulds are currently available.
Painting and preparation
58 With regard to the allowance for painting of ceilings and walls, I accept Mr Carson’s evidence that the allowance made by Mr Wilson is about one half of what it would cost to use a reputable painting firm.
Tradesmen
59 I accept that the costs of the specialist tradesmen referred to in Mr Carson’s report are reasonable and should be paid for by QBE.
Wardrobes
60 I accept Mr Carson’s evidence that Mr Wilson’s allowance for dismantling and reassembly of wardrobes is about 30 per cent of the actual cost to remove, store and reassemble those items.
Kitchen floor
61 With regard to the kitchen floor, Mr Wilson considered that there was no observable damage that required any repair. Mr Hargrave conceded that the boards were not cupping and that any staining may not have been caused by the Storm; however, he considered that, if I accepted the owner’s evidence that there was post-Storm staining of the boards that was not evident pre-Storm, they may need to be re-sanded and coated to bring them back to their original condition.
62 Mr Gibney observed no structural damage to the kitchen floor but noted that it was water stained.
63 He opined that the damage that he had observed and referred to in his report had been caused by storm water damage – a one-off event – and were not caused by wear and tear.
64 In all, I am satisfied that there is staining of those boards caused by the Storm which requires sanding and coating. Mr Carson did not, however, provide evidence as to the cost of such work in his quotation. Mr Hargrave estimated the cost of such work at $962.50 (including profit margin and GST)[5] which was not challenged and which I consider to be reasonable.
[5]Item 9 of Mr Hargrave’s costing – exhibit V
Time allowed for repairs
65 A number of items, the subject of the plaintiff’s claim and costed by Mr Wilson, Mr Hargrave and Mr Carson depended on an estimate of the time it would take to perform the repairs. For instance with regard to hire of a generator and flood lights (which QBE conceded would be required), Mr Hargrave allowed for fifteen weeks and four weeks for those items respectively. Mr Wilson considered the whole repair job would take between four and eight weeks to complete. Mr Carson was of the view that the work specified by him would take between six and eight weeks. These are significant discrepancies.
66 I consider that it is common knowledge that builders are prone to underestimate timeframes. I will allow a period of eight weeks to complete the work.
67 My allowance of eight weeks of building time should allow the parties to calculate and agree upon an appropriate allowance for a number of items claimed by the plaintiff. These include:
· Hire of generator
· Hire of a portable lavatory, which I consider is reasonable for the period of the works
· Rent of alternative accommodation at a Quest unit or similar
· Storage of chattels and furniture
· Contributions, levies, maintenance and other sundry fees
· Insurance of contents during such period
· Cost of metred electricity, gas, sewerage, oil and water
· Sundry management charges; and
· Transport of goods to and from storage.
68 I would expect the parties to be able to agree as to the calculation of the cost of those items on the basis of my allowance for the period of repairs.
Estimates/Quotations
69 Plainly, there is considerable variation between the quotations of the experts. The plaintiff carries the onus of establishing her claim. I must come to my decision on the basis of the evidence put before me.
70 Mr Carson’s quotation of 14 February 2017 was amended so as to reduce his estimate of costs of repairs. He explained that he had done so as a consequence of evidence of other witnesses of which he had taken note during the trial. His amended quotation is exhibit W.
71 His initial quotation was for $193,785.90.[6] This quotation was amended down to $176,635.20 after amendments to:
[6]See Schedule 2 annexed to the Statement of Claim
· Protection of windows, leadlight windows, floors and doors, and the disassembly of wardrobes and fittings
· The removal and replacement of the damaged manhole
· The repair, preparation and re-painting of the living room window, internal and external repairs, and replacement of the window head
· The repair, preparation and re-painting of the timber work to the window internally and externally in the dining room
· The deletion of the need to supply a cupboard in Bedroom 2; and
· Alteration to the cost of demolishing and replacing the ceiling in the rear balcony.[7]
[7]Exhibit W at CB 18A-22A
72 This costing did not include the cost of sanding and recoating the kitchen floor.
73 Further, it is not clear whether Mr Carson had made allowance in his costing for the use of fibrous plaster in ceiling replacement.
74 The total allowance included in Mr Carson’s amended quotation for demolition and replacement of the two ceilings in the main bedroom and the balcony was $35,256.00.
75 His evidence as to the cost of replacement of ceilings with fibrous plaster was in answer to a question as to what the cost would be to replace all ceilings with fibrous plaster. He estimated that it would not be less than $85,000.[8]
[8]T339, lines 3-4
76 I considered it was relevant and important that Mr Carson was prepared to actually perform the work nominated in his amended quotation – the works required to repair or, if necessary, replace, items damaged in the Storm[9] - at the price quoted by him. On that basis, I considered that his costing was more likely to reflect a realistic cost of repairing the Storm damage to the Unit. Where Mr Carson’s evidence conflicted with the evidence of one or more of the other expert witnesses, I preferred his evidence. I thought he was an impressive witness who was prepared to make concessions when appropriate. I considered his costing of the required work was measured and reasonable.
[9]T276, lines 23-28
Conclusions with regard to repairs
77 Numerous photographs were tendered which I understand were taken in an attempt to demonstrate damage to various parts of the Unit. Most of these were of average quality and generally unhelpful in my attempts to identify the presence of specific items of damage. During the trial, a USB containing many of those photographs was provided to me in the hope that the photographs would be clearer. It was of no additional assistance.
78 Accordingly, it was rarely possible for me to make my own assessment of the full extent or location of damage and my findings are based upon the evidence of witnesses who had inspected the Unit and identified damage to it.
79 For the reasons referred to earlier in these Reasons, I consider that the Policy provides for the use of fibrous plaster where ceilings were required to be replaced.
80 Taking account of all of the evidence, I am not satisfied that the plaintiff has established that all of the ceilings require replacement. I am satisfied that the ceilings in the main bedroom, rear balcony, lounge room, dining room and entrance do require replacement and that I should allow their replacement with fibrous plaster, including cornices, roses and strapping. I am not satisfied that Bedroom 2, the kitchen, the study or the bathroom ceilings require replacement as opposed to preparation and repainting.
81 My view of Mr Carson’s evidence concerning his quotation is that he has made no allowance for the supply and instalment of fibrous plaster in either of the five areas where I find ceilings required replacement, or for cost of re-sanding and polishing of the kitchen floor.
82 I consider that the evidence concerning the cost of replacement of the ceilings to which I have referred is somewhat vague. Notwithstanding, my task is to do the best I can, on the basis of that evidence, to fairly estimate the cost of supplying and installing fibrous plaster to the ceilings in question.
83 I reject the submission made in paragraph 43 of the written submissions for the plaintiff that I should allow an amount in excess of $200,000 inclusive of GST for replacement of ceilings.
84 I consider that I should use as a starting point the amended quotation by Mr Carson. With regard to ceilings, he makes the following allowances (not including GST):
(a) Dining Room - $3,732. This does not include replacement of the ceiling.
(b) Lounge (Living) Room - $5,200. Again, this does not include the cost of replacement.
(c) Main Bedroom - $30,480. This includes demolition and replacement of the ceiling, cornices, rose and straps. He does not specify whether this figure allows for fibrous plaster or Gyprock.
(d) Rear Balcony - $7,176. This includes demolition and replacement of the ceiling, including cornices, and joint covers. He does not specify whether this figure allows for fibrous plaster or Gyprock.
85 On the basis of my findings, I should include additional allowances for the cost of demolition and replacement of the ceilings in the dining room, lounge room and entry area. In this regard, there is a paucity of evidence as to what amounts should be allowed.
86 There is the evidence of Mr Carson that the replacement of all of the ceilings in the house with fibrous plaster would cost not less than $85,000.[10] It is unclear as to whether he was including the cost of demolition of ceilings in that figure.
[10]T339
87 There was the evidence of Mr Vitale’s “quote” to which I have previously referred to which I place little weight for the reasons set out above.
88 If Mr Carson’s figure in respect of the installation of the new ceiling in the main bedroom ($26,400) is for Gyprock, it is hard to equate that amount with his estimate for replacement of all ceilings in fibrous plaster for “not less than $85,000”. The evidence of Mr Carson was that the cost of fibrous plaster was two to three times the cost of Gyprock.[11] If Mr Carson’s allowance of $26,400 was for Gyprock, presumably his allowance for fibrous plaster would be in the region of $50,000 to $75,000 for that one room. An allowance for all rooms of $85,000 seems quite unrealistic.
[11]T328
89 On that basis, I conclude that Mr Carson’s allowance for a new ceiling in the main bedroom must have been for fibrous plaster.
90 Whilst it is arguable that the cost of replacing ceilings in the main bedroom, rear balcony, dining room and lounge might be considerably more than $85,000, on the evidence before me, I am unable to conclude on the evidence that an allowance of a sum greater than that amount should be made for replacement of all ceilings.
91 I shall allow a sum of $75,000 to cover the replacement of those five nominated ceilings, including cornices, roses and strapping, but not including painting. This figure is somewhat less than Mr Carson’s estimate of not less than $85,000 for replacement of all ceilings.
92 On balance, I consider it unlikely that Mr Carson’s estimate of $85,000 covered the cost of demolition of all ceilings and I shall allow an additional sum of $10,000 for demolition of the five ceilings to be replaced.
93 However, I consider that I should not include on top of those amounts the sum of $29,160, originally included by Mr Carson in respect of the main bedroom and rear balcony ceilings alone. To do so would amount, in my opinion, to double counting.
94 I shall adopt as a starting point for determination of the cost of repairs and reinstatement of the Unit necessitated by damage caused by the Storm the costing of Mr Carson set out in exhibit W (as amended).
95 It is appropriate that I should make some adjustments (positive and negative) to the items which are set out in Mr Carson’s costing.
96 Firstly, I shall allow an additional sum of $45,840 to allow for the replacement of ceilings in the lounge room and dining room for the reasons set out above. This amount is $75,000 less $29,160.
97 Secondly, I shall allow a sum of $10,000 for demolition of the five ceilings to be replaced.
98 Thirdly, I should also allow an extra $700, being the allowance made by Mr Hargrave to sand and polish the kitchen floor.
99 Fourthly, I shall allow an amount in respect of contingencies of 10 per cent of the total sum assessed. The evidence was that builders would include such a percentage in any quotation given in respect of a building job to allow for a variety of additional costs that are not foreseeable prior to the work commencing. The expert witnesses to whom I have referred considered such a percentage to be reasonable.
100 Further, I shall not allow Mr Carson’s allowance for repairs to the internal timber work on windows in the dining room of $3,432.
101 The Agent’s pre-storm photographs showed what appeared to be damage to internal woodwork of windows in the dining room and bubbling of plaster on a wall in the kitchen.
102 The significance of the report concerning the inspection on 28 August 2012 is that it contains the following entries made, on Ms Drakulic’s evidence, by Ms Deliha:
·“I took a couple of photographs of the wood on the windows in the dining room, which we noticed when we were there last were starting to rot.”
·“The bubbling on the wall in the kitchen does not seem to have worsened.”
·“Took a couple of photos of the rotting wood on the sash windows. Landlord is aware.”
103 I am not satisfied that the plaintiff has discharged the onus of establishing that the damage to the dining room windows was caused by the Storm.
104 Mr Carson has allowed an amount of $9,600 in respect of sanding and polishing all floors and replacing all carpets. On the evidence before me, I am not satisfied that such amounts are justified.
105 On the balance of probabilities, I accept that the balance of the damage reported by Mr Carson, and for which allowance has been made in his costings, was caused by the Storm and is not properly classified as wear and tear.
The claim for damages for inconvenience
106 The plaintiff seeks damages for inconvenience caused by the alleged breach by QBE of the terms of the Policy.
107 The plaintiff has pleaded that, in breach of the Policy, QBE has refused to pay to the plaintiff the cost of rebuilding, replacing or repairing the Unit, the cost of which is contained in Schedule B annexed to the Statement of Claim – that is, Mr Carson’s costing. She further claims the expenses referred to in paragraph 9(a) to (j) of the Statement of Claim, particulars of which, dated 26 October 2018, appear at CB 26.
108 Paragraph 18 pleads that “further, in the alternative, or in the premises”, the plaintiff suffered loss and damage, particulars of which include “inconvenience, mental anguish, personal insecurity, and distress” suffered by her.
109 Although paragraph 18 is pleaded in vague and imprecise terms, I consider that it alleges, sufficiently clearly, that the plaintiff suffered the loss and damage referred to in those particulars as a consequence of the breach of the Policy by QBE referred to in paragraph 17.
110 I accept that the plaintiff’s claim is not made in respect of an alleged breach by QBE of its duty of utmost good faith – it is based on the alleged breach by QBE of the terms of the Policy.
111 The plaintiff submits that there has been such breach, because QBE has declined to pay to the plaintiff the amounts due to her under the Policy – namely the amounts specified in paragraphs 8 and 9 of the Statement of Claim.
112 Under the Policy, QBE, having accepted the claim, had the choice of rebuilding, replacing or repairing the Unit, or paying the amount it would cost to rebuild, replace or repair the Unit.
113 It chose the latter – to pay the amount it would cost to rebuild, replace or repair the Unit. The precise date upon which QBE conveyed that choice to the plaintiff was not disclosed in the evidence but I infer that it was well prior to the issue of the Writ in May 2017.
114 QBE’s only defence to the plaintiff’s claim appears to be that it denies the quantum of the plaintiff’s claim. It called evidence from Mr Wilson concerning that quantum.
115 On 3 March 2017, QBE offered the sum of $58,500 in settlement of the claim.
116 On 10 April 2017, QBE offered the sum of $67,650 in settlement of the claim.
117 The plaintiff rejected both offers. The matter proceeded to trial. Pursuant to these reasons, the plaintiff will obtain a judgment more favourable to her than either of those offers. It follows that I do not consider that QBE ever offered to pay the amount required to rebuild, replace or repair the damage to the Unit caused by the Storm.
118 Following QBE’s choice to pay a cash amount to rebuild, replace or repair the Unit in accordance with the terms of the Policy, I consider that QBE was obliged to do so within a reasonable time.
119 On the evidence before me, I am satisfied that QBE has breached the terms of the Policy by failing to pay, or at least tender, a sum that was an amount sufficient to cover what it was obliged to pay under the Policy – that is, an amount sufficient to rebuild, replace or repair the Unit. The evidence is that it still has not done so.
120 The plaintiff was not residing in the Unit at the time of the Storm. It was tenanted. She had intended to move back into the Unit in July 2014 in the belief that the repairs would have been completed by then. She chose to move back to the Unit in its unrepaired state in October 2014. She has resided in the Unit since - a period of more than four years.
121 I am satisfied that, as a consequence of QBE’s breach of the Policy, the Unit has not been repaired. The plaintiff has, on any view, lived in somewhat trying conditions. She described the Unit as dank, smelling and unrepaired. There are drafts that enter the Unit, making it a cold place in which to live. She has not been able to do anything to smarten up the Unit because of the inevitable repairs to be carried out.
122 Rather than simply moving into the Unit after the repairs were completed – which I consider she would rightfully have expected to have been within a year of the Storm – she moved back, presumably to avoid payment of rent, and will need to fully vacate the Unit in due course when it is eventually repaired. This will involve finding alternative accommodation, packing up, moving out, and on completion of the work, packing up again, and moving back to the Unit.
123 She has had to get various quotations refreshed on multiple occasions, as money to fund the anticipated repairs was not paid by QBE and the expected repairs did not proceed.
124 She has been reluctant to fully unpack, in anticipation of having to move out when the repairs do take place. She is frustrated, in that she looks at the damaged Unit every day.
125 Counsel for QBE conceded that he would be stunned if she had not been inconvenienced.[12] I accept that she has been inconvenienced.
[12]T129
126 QBE submits, and I accept, that the plaintiff is not entitled to claim damages in respect of non-economic loss in respect of an injury caused by the fault of another person by reason of Part VBA of the Wrongs Act 1958 (save for certain exceptions which are not relevant here).
127 The term “injury” is defined in s28LB of that Act as including psychological or psychiatric injury.
128 I consider that a claim in respect of depression, anxiety or mental anguish would come within that definition.
129 It might sometimes be the case that a person suffers substantial inconvenience which later leads to emotional distress as was the case in Motor Accident Mutual Insurance Pty Ltd v Kelly.[13]
[13](1999) 10 ANZ Insurance Cases 61-420
130 On the basis of the authorities cited to me, I consider that it is open to a plaintiff to claim damages for physical inconvenience caused by breach of contract[14] but not (at least in Victoria) to claim damages in respect of non-economic loss relating to injury - unless Part VBA is complied with. In Stone v Chappel,[15] the Full Court of the South Australian Supreme Court approved an award of damages for “loss of amenity” caused by a breach of a building contract.
[14]See Thomas v Powercor Australia Ltd [2011] VSC 586; Boncristiano v Lohmann [1998] 4 VR 82
[15](2017) 128 SASR 165
131 Here, the plaintiff claims damages for inconvenience caused by QBE’s breach of the terms of the Policy.
132 In summary, the plaintiff’s claim for inconvenience, and my comments in relation to it, are:
(i) She had been involved in extensive effort and involvement meeting with various builders, loss adjusters and the like about the damage to the Unit which took a great deal of time.[16]She had spent much time obtaining quotations and dealing with the insurance company from July 2014 until the commencement of this proceeding, including preparing submissions for the Financial Ombudsman Service for up to 8 hours per day;[17] she had spent about six months of those years on insurance matters.[18]
[16]T58
[17]T73-5
[18]T76
This evidence is vague to say the least. More importantly, these issues were not referred to in the Statement of Claim or in the Further and Better Particulars dated 26 October 2018.
I shall not take that evidence into account;
(ii) She had spent about six weeks processing the roof claim
I am not satisfied that this issue has any connection with QBE’s breach the subject of this proceeding;[19]
[19]T64
(iii) She was unable to unpack her belongings when she did move back to the Unit in October 2014 because she anticipated that the repairs would soon commence and she would have to move out[20]
[20]T80
I accept that this was a matter of some inconvenience to her;
(iv) She was unable to have guests to stay at the Unit since she moved into the Unit because the extra bedroom was being used for storage[21]
[21]T84
I accept that this may have been a matter of some disappointment for her but I consider that it is not a matter of any inconvenience of substance to her. In any event, it seems to be closely related to the matter referred to in part (iii) above and adds little to it.
(v) She is able to hear her neighbours from next door[22]
[22]T94
This evidence was not referred to by any of the experts as being something caused by the Storm. Nor is it a matter referred to in the further and better particulars of the inconvenience. If the Storm damage is responsible for this, I do not regard the evidence as demonstrating it as being a matter of any inconvenience of substance for her.
(vi) The Unit is draughty and cold. It has a dank, dusty smell[23]
Although these matters were not addressed by any of the expert witnesses, I accept that they were caused by the Storm damage and have been matters of inconvenience to her.
[23]T94
133 The plaintiff’s claim is based on the delay from October 2014 when she moved into the Unit until the present time. QBE has not pleaded or alleged that the plaintiff has failed to mitigate her loss by contributing in any way to that delay.
134 I consider that most persons involved in a dispute that fails to resolve and finds its way to litigation and to a trial will experience degrees of frustration and stress. Litigation is often a drawn out procedure. This case, I am sure, is no exception with regard to the plaintiff. She appears to have personally involved herself in the matters relating to repairs, replacement, costings, and the search for contractors. However, I do not consider that matters pertaining to such frustrations, or unsuccessful negotiations, and general litigation stresses are compensable as being matters of inconvenience caused by the breach the subject of the claim.
135 Taking all of the evidence into account, I consider that an award of $15,000 is a fair and reasonable sum to compensate the plaintiff in respect of inconvenience over some years caused by the breach of the Policy by QBE.
Conclusion
136 In summary, I shall allow an amount of $242,445 (inclusive of GST) as being a reasonable sum to cover the repairs and replacement of damage caused to the Unit by the Storm. This calculated as follows:
· Starting point – Mr Carson’s amended costing $176,635.00
· Plus allowance in respect of fibrous ceilings $45,840.00
· Plus allowance in respect of the kitchen floor $962.00
· Plus allowance in respect of demolition of ceilings $10,000.00
· Less allowance for dining room windows -$3,432.00
· Less allowance for all floors and carpets -$9,600.00 __________
Sub-Total $220,405.00
Plus allowance of 10% for contingencies $22,040.00
__________
Total: $242,445.00
=========
137 To this sum, an additional allowance should be made in respect of the expenses set out in paragraph 2(a) to (e) of the updated Further and Better Particulars of Statement of Claim at CB 26. My finding that the proposed repairs are likely to take eight weeks should allow the parties to calculate the amounts of each such item. Such calculation should include GST.
138 In addition, I shall order QBE to the plaintiff damages in respect of inconvenience in the sum of $15,000.
139 I shall hear the parties as to:
(i) The calculation of expenses referred to in paragraph 138 above
(i) Interest
(ii) Costs
(iii) The precise form of orders to be made.
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140 On 18 December 2018, I heard submissions from the parties concerning the additional allowances to be made in respect of the expenses referred to in paragraph 137 of this Judgment. These were not in dispute between the parties save for the daily allowance for accommodation over the eight-week period of works to the Unit. The plaintiff had claimed $230 per day from the commencement and throughout the trial. She now seeks $260 per day. I consider that the amount claimed throughout the trial, and no more, should be allowed. On that basis, the expenses to be included in the Judgment are:
Item
Days
Cost per day
Total
Accommodation
56
$230
$12,880.00
OC Levy
56
$10.82
$606.03
Removal
$7,754.84
Storage
56
$11.31
$633.60
Insurance
56
$11.35
$635.84
Handling/Delivery
$3,070.99
Storage
$3,289.00
Water
56
$3.54
$198.24
Gas
56
$1.15
$64.40
Electricity
56
$2.16
$120.96
Lavatory
56
$378.00
GST
$37.80
Generator
56
$8,625.00
GST
$862.50
Total
$39,209.00
141 In regards to interest, the parties were in agreement that a rate of 5.5 per cent should be applied in accordance with Regulation 32 of the Insurance Contracts Regulations 1985. The plaintiff submitted that interest should be calculated from 1 October 2014, being about one year after the date of the Storm. The defendant submitted that interest should be calculated from a later date.
142 After taking into account principles enunciated in Nino v MLC Limited,[24] Sayseng v Kellogg Superannuation Pty Ltd[25] and Mutual Community General Insurance Pty Ltd v Khatchmanian,[26] I consider that the interest should be calculated from 1 October 2014. I consider that QBE had had ample time to consider the extent of damage to the Unit, and the cost of replacing, repairing or rebuilding the Unit by that date. The parties were in agreement that, calculated on that basis, $68,795.00 in interest is payable.
[24][2009] NSWSC 400
[25][2007] NSWSC 857
[26][2013] VSCA 144
143 Accordingly, I shall order Judgment in favour of the plaintiff for the sum of $296,654.00, together with damages in the nature of interest to date of $68,795.00, a total judgment sum of $365,449.00.
144 I shall order there be a stay on payment of the Judgment sum of 28 days.
145 I shall order that the defendant pay the plaintiff’s costs of and incidental to this proceeding, including any reserved costs, to be determined on a standard basis by the Costs Court in default of agreement.
146 I shall certify the plaintiff’s counsel’s fees as follows:
· Brief Fee on Trial – 6 days at $4,400 per day
· Preparation – 2 days at $4,400 per day.
· Special conferences – 5 hours at $440 per hour.
· Preparation of written closing submissions and reply – 1 day at $4,400.
· For hearing Judgment at $2,200.
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