Mccracken v Greenwood No. DCCIV-02-954

[2004] SADC 63

McCracken v Greenwood
[2004] SADC 63

Judge Simpson
Civil

1. The plaintiff in this action entered into a contract with the defendant for the sale and purchase of a house to be constructed by the defendant on land owned by him at St Mary’s, South Australia.  The plaintiff’s claim is for damages arising as a result of a breach of contract on the part of the defendant, or, alternatively, as a result of a breach of a duty of care owed by the defendant to the plaintiff, in carrying out the building work undertaken by him.

2. Judgment was entered for the plaintiff by default on 11 July 2003, with damages to be assessed.  It proceeded on 12 September 2003 as an assessment of damages.  There was no appearance by the defendant.

   Assessment of Damages

3. An affidavit sworn by the plaintiff’s husband on 10 September 2003 was tendered for the purposes of the assessment.  He was not a party to the action.  The affidavit was sworn by him, rather than the plaintiff, to minimise the stress on the plaintiff in having to give evidence about events which had caused a compromise to her mental health.  I accept the evidence in his affidavit as far as it goes.  A number of quotes, invoices and receipts were exhibited to his affidavit.  The report of an expert building consultant, Mr Peter Jankovic, SA Building Consultants, dated 18 March 1999, was also exhibited to the affidavit.  The plaintiff and her husband gave brief evidence.

   The Facts

4. In August 1994, the plaintiff entered into a contract with the defendant for the sale and purchase of the house being built on land at St Mary’s.  The defendant was constructing a house on the land as an owner/builder.  Settlement took place in October 1994 and the plaintiff moved into the house with her family. 

5. On 21 May 1997, the house was damaged by a backflow of street sewerage, which flowed into the house through wet areas, drains and outlets, including through the kitchen sink.  A blockage had been caused by tree roots and the backflow occurred as a result of the faulty installation of an overflow relief gully, by or on behalf of the defendant, in the course of construction of the premises.  There was extensive damage to the property.  The plaintiff paid for the damage to be repaired and for the replacement of the contents of the house affected by the overflow of sewerage. 

6. During the period when repairs were carried out, the plaintiff and her family were obliged to vacate the premises.  She and her husband moved in with her elderly parents, who were living in a one-bedroom unit.  The plaintiff’s two children went to stay with their father.  The plaintiff incurred expense as a result of having to move the family out of the house and, in the process, experienced significant physical inconvenience. 

7. As a further result of the damage to the house from the backflow of sewerage, the plaintiff became aware of defects arising from the faulty construction of the house.  The report of the building consultant, Mr Peter Jankovic, SA Building Consultants, was obtained on behalf of the plaintiff.  The report identified a number of defects in the building work performed by the defendant.  The defects require rectification.  The plaintiff has obtained a quotation for the work which needs to be done to rectify the defects.

8. The plaintiff has experienced mental stress and depression, which, she said, are associated with the consequences of the backflow of sewerage and the discovery of defects in the construction of the house.  Her condition was sufficient to require referral from her general practitioner, Dr Sage, to a psychiatrist, Dr Kinnane.  The plaintiff consulted Dr Kinnane for treatment for depression between August 1998 and June 2000.  The plaintiff had to pay the amount which represented the gap between the cover provided by Medicare for her treatment and the amount she was charged.

9. As a result of the expenses incurred as a consequence of the breach of contract and/or negligence of the defendant, the plaintiff and her husband said that they were obliged to reduce mortgage repayments in respect of the house and another property they owned, in order to make ends meet.

   The Plaintiff’s Claim

10. The plaintiff claims for the loss she incurred as a result of the flooding damage and for the cost of repairing defects in the construction of the house, as follows:

    1.     Extensive cleaning and repairs;

    2.     Alternative accommodation, storage and removalist fees;

    3.     Stress and inconvenience;

    4.     Replacement of furniture, fixtures and personal effects;

    5.     Repair and rectification building work;

    6.     Replacement of a washing machine, refrigerator and stove;

    7.     Connection of gas supply to the house;

    8.The cost of obtaining a building consultant’s report and quotations for repair and rectification work;

    9.     Associated and incidental costs;

    10.    Interest, including compound interest (Hungerfords  v Walker (1989) 171 CLR 125))

11. The principle to be applied in the assessment of damages generally, whether the damage has arisen as a result of a breach of contract or negligence on the part of the defendant, is that, in so far as an award of money can do it, the plaintiff is to be put in the same position as she would have been in, had she not sustained the loss occasioned by the conduct of the defendant. 

12. No relevant issue arises on the facts regarding a different measure of damages depending on whether the plaintiff’s damages are assessed as consequent on a breach of contract or the negligence of the defendant.  Subject to questions of remoteness of damage and the plaintiff’s duty to mitigate her loss, the plaintiff is to be compensated for the foreseeable consequences proved to be caused by the defendant’s breach.

    (Hungerfords v Walker (1989) 171 CLR 125;Czarnikow (C) Ltd v Koufos [1969] 1 AC 350 at 420; East Ham Corporation v Bernard Sunley [1966] AC 406)

    Damages in Relation to the Backflow of Sewerage

    Building Repairs

13. The plaintiff claims the cost of building repairs occasioned as a result of the damage caused by the backflow of sewerage.  The cost to the plaintiff was as follows:

Building Repairs
Greg Hopkins Constructions	26/2/1998	$14,440.00
Routley Trading (Plumbing Supplies)	30/10/97	$1,065.00
Beaumont Tiles	08/09/97	$1,574.80
Discount Tile Warehouse	11/09/97	$100.00
Delivery	08/09/97	$15.00
Bank cheque fee	08/09/97	$6.00
Ryan Fuel & Garden Supplies	14/10/99	$447.50
Total	$17,648.30

Removal and Storage

1. There were additional costs incurred as a result of the necessity of moving household effects into storage:

Storage
International Cleaning Services
1/7/97-4/8/97	$150.00
5/8/97-15/10/97	$306.00
U-Store it
15/10/97-8/11/97	$163.22        ($179.50 less credit $16.28)
Transport
15/10/97	$257.00
08/11/1997	$170.00
Total	$1,046.22

Replacement of Damaged Carpet

1. After the carpet was damaged by the flow of sewerage through the house, the plaintiff decided to replace the damaged carpet with a combination of tiles and carpet instead.  Quotes were obtained to provide a comparison between the replacement cost of the carpet, as compared to the cost of carpet and tiles. 

2. The cost of the installation of carpet and tiles was in the same order as that to replace the carpet:

Carpet
Replacement of Carpet	Date	Quotes	Paid by the Plaintiff
Solomons	30/5/97	$2,237.00
Zappia	28/5/97	$2,520.00
Carpet Call	27/5/96 (1997)	$2,760.00
Install Carpet and Tiles
Solomons  (Carpet)	11/04/1997	$1,361.00
Tile Supplies	6/08/1997	$200.00
Tile Supplies	8/09/1997	$1,134.70
Westpac Banking Corporation (Bank fee)	8/09/1997	$6.00
Tile Supplies	26/9/97	$29.55
Total	$2,731.25

Replacement of Appliances

1. Water damage caused rust to the washing machine and to the refrigerator. As a result of faulty electrical wiring, the electric stove had been continually tripping out, both before and after the backflow of sewerage.  The appliances were all replaced, the electric stove with a gas one, at the following cost:

Appliances
Eurolec gas stove	$1,940.00
Washing machine	$990.00
Refrigerator	$1,400.00	Estimate only
Total	$4,330.00

1. There is, in my view, no reason to reduce the quantum allowed for replacement of the old appliances with new in these circumstances, notwithstanding the incidental benefit to the plaintiff of having new appliances in place of used ones.

   (Hollebone v Midhurst and Fernhurst Builders [1968] 1 Lloyd’s Rep 38; Harbutt’s “Plasticine” v  Wayne Tank and Pump Co [1970] 1 QB 447 (CA))

   Loss of the Use of The House During Repairs

2. The plaintiff and her husband stayed with the plaintiff’s parents in a one-bedroom unit for about six months, while damage to the house from the sewerage backflow was repaired.  Her parents were in their seventies. The plaintiff had to arrange for her children from a previous marriage to stay with their father. There was no direct cost to the plaintiff related to the accommodation arrangements.

3. The plaintiff and her husband slept on a foldout bed in the dining room of her parents’ unit.  They were at the time, managing their own business and the accommodation arrangements were very trying for the whole family.

4. From time to time it was necessary for the plaintiff, and her husband, to obtain some relief from the cramped conditions in which they were living, while running a business, and to allow the plaintiff’s parents some time on their own. On about twelve days in the relevant period, the plaintiff and her husband stayed in motel accommodation. 

5. In the circumstances where the family lost the benefit of accommodation provided by the plaintiff’s house and the cost of the accommodation for both the plaintiff and her husband is unlikely to have been more than for the plaintiff alone, it is appropriate to calculate the loss by reference to the cost of motel or similar accommodation used by the plaintiff and her husband on a number of occasions during the six-month period.

6. The cost of their accommodation, after extracting miscellaneous charges for food and a bond which was returned to the plaintiff, was as follows:

Accommodation	Cost
31 May 97 Patawalonga Motor Inn	$82.00
7-8 June 1997 Lakes Resort Hotel	$250.00
20 June 1997 Tiffins on the Park	$79.00
4-5 July 1997 (Receipt produced)	$160.00
16 August 1997 Tarlee Antiques	$65.00
17 August 1997 Cabin Park Pt Pirie	$55.00
24 August 1997 James Craig Inn Hackham	$90.00
30 August 1997 Marineland Holiday Village	$134.00
20 September 1997 Marineland Holiday Village	$134.00
28 September 1997 Tarlee Antiques	$130.00
Total	$1,179.00

1. In my opinion, in view of the modest amount involved, and the fact that the cost is likely to have been the same if the accommodation were for the plaintiff alone, it is not appropriate to reduce the amount allowed on account of the fact that the plaintiff’s husband stayed in the accommodation with her.

2. Damages may be allowed for the physical inconvenience to the plaintiff on account of the necessity to move out of her home while repairs were effected.  The plaintiff claims an amount for the physical inconvenience attached to the temporary arrangements for accommodation between 21 May 1997 and 8 November 1997, some twenty four and a half weeks, while staying at her parents’ unit.  A further sum of $2,500 should be allowed to reflect the physical inconvenience during the time spent in difficult circumstances while staying with her parents and while living in a motel, to allow for some respite.

   (Bailey v Bullock and others [1950] 2 All ER 1167; Rawlings v Rentokil Laboratories [1972] EGD 744; Hipkiss v Gaydon [1961] CLY, 9042)

   Building Rectification Work

3. In the course of inspecting damage to the house and effecting repairs following the backflow of sewerage, the plaintiff discovered further defects in construction of the house.  The report of Mr Peter Jankovic, SA Building Consultants, dated 18 March 1999, was provided at a cost to the plaintiff of $720.  Mr Jankovic set out in detail the defects that he noted after inspection of the premises and his recommendations regarding rectification of the defects, including the replacement of fencing on the northern and western boundaries, and a possible encroachment of the southeast corner of the building on the adjoining block. 

4. C & R Complete Building Services provided a quotation, at a cost of $550 to the plaintiff, for the remedial work required.  The quotation included the cost for some work which was not recommended by SA Building Consultants (Items 3.1 and 16.7 in the report) and, in one case, an item which had already been rectified by the plaintiff, the cost of which was not provided (Item 5.3).  C & R Complete Building Services provided a separate quotation, dated 4 August 2002, for the demolition and replacement of the southern boundary fence, to be carried out following a site survey. 

5. It appears that an earlier quotation for fencing from Able Fencing, Ascot Park, dated 25 June 1996, is redundant.  It is of limited use, if any, in assessing the plaintiff’s damages.

   Cost of Rectification

C&R Complete Building Services

Quotation for
Rectification Work
22 January 2002

Plus GST

Total

$37625.00       

$3762.50

$41,387.50

Less

Work not included in SA Building Consultants’ Recommendations:

Item 3.1

Item 5.3

Item 16.7

Plus GST
Total

$37625.00    

          $90.00
         $790.00
         $250.00
     $36495.00
       $3649.50
    $40,144.50

Plus

C&R Complete Building Services
Quotation for Southern Boundary Fence Replacement

8 April 2002

(Incl GST)

       $8129.00

 Total

     $48273.50

1. The measure of damages for the defective building work is the cost of making the building work conform to the contract, which, I infer, required the defendant to perform the building work with reasonable care so as to avoid the defects discovered on inspection by Mr Jankovic.

   (East Ham Corporation v Bernard Sunley [1966] AC 406; Bellgrove v Eldridge (1954) 90 CLR 613 at 617-619; Junior Books Ltd v Veitchi Co Ltd [1983] AC 520; Carosella v Ginos & Gilbert (1981) 27 SASR 515 at 537-538)

   The Plaintiff’s Medical Condition

2. No medical report was provided regarding the diagnosis of the plaintiff’s condition, its likely cause, or the treatment she had for it.  The plaintiff said in evidence that she associated the stress and the symptoms of depression she experienced with the trauma of the backflow of sewerage and the discovery and rectification of building defects. 

3. Her symptoms took some time to develop into a medical condition which she could acknowledge.  The plaintiff said that she initially denied her symptoms.  It was only after being advised by her treating practitioners that there was no alternative, if she wanted to get better, that the plaintiff sought specialist psychiatric help.  She was eventually referred by her general practitioner, Dr Sage, to a psychiatrist, Dr Angela Kinnane, who treated her for depression between August 1998 and April 2000. 

4. The plaintiff claims her out of pocket expenses in the following amounts for the cost to her of the treatment:

Medical Expenses Dr Angela Kinnane	Paid by Medicare	Paid by Plaintiff	Comment
31-Aug-98	$111.10
14-Sep-98	$111.10	$19.60
16-Oct-98	$110.10	$19.60
29-Oct-98	$110.10	$19.60
11-Oct-98	$19.85
24-Nov-98	$19.85
8-Dec-98	$19.85
21-Dec-98	$112.80	$19.85
12-Jan-99	$338.40	(3 consults)
2-Feb-99	$112.80	$19.85
16-Feb-99	$112.80	$19.85
2-Mar-99	$112.80	$19.85
16-Mar-99	$112.80	$19.85
30-Mar-99	$112.80	$19.85
13-Apr-99	$112.80	$19.85
3-May-99	$112.80	$19.85
11-May-99	$112.80
25-May-99	$112.80	$19.85	(paid twice)
25-May-99	$19.85
8-Jun-99	$112.80	$19.85
20-Jul-99	$112.80	$19.85
26-Aug-99	$19.85
6-Sep-99	$19.85
13-Sep-99	$19.85
30-Sep-99	$19.85
18-Oct-99	$20.00
13-Dec-99	$20.00
24-Jan-00	$20.15
8-Feb-00	$114.50	$50.15	Gap & NAF 6/7/99
6-Mar-00	$114.50
21-Feb-00	$114.50
3-Apr-00	$20.15
Total	$2,477.90	$566.40

1. Although there is no expert evidence regarding the plaintiff’s medical condition, I accept her evidence that it was associated with the trauma attached to the backflow of sewerage through her house and the consequences of it, and to the discovery of significant defects in the house construction.  The claim for the cost to her of medical treatment is a modest one and is recoverable as damages under a head of mental distress.

   (See McGregor on Damages 14^th ed, [68]; Collard v Saunders [1971] CLY 11161; Batty v Metropolitan Property Realisations Ltd [1978] QB 554; Brickhill v Cooke [1984] 3 NSWLR 396 (CA))

   Interest on Money Paid Away

2. The plaintiff claims interest on money she has paid in respect of repairs to the house and incidental costs, and her medical expenses, on the basis that that money would have otherwise been used to reduce her existing indebtedness, by paying off loans the plaintiff had obtained in respect of the property at St Mary’s in the plaintiff’s name, the subject of the claim, and, with her husband, on a block of land at Victor Harbour, held in joint names with her husband.

3. There is no evidence of the amount of the loans, the financial institutions which had furnished each of the respective loans, the amount of the repayments initially, nor of what the repayments were after being reduced on account of payment by the plaintiff of the sums incurred as a result of the defendant’s breach.

4. There is very little evidence regarding what the plaintiff would have done with the money, had she not paid for repairs on the house, and associated costs, and for the gap in recovery of her medical expenses. 

5. In his evidence, the plaintiff’s husband said that the balance outstanding on the two loans together was a total of $88,000.  The land at Victor Harbour was purchased for $26,000.  A deposit of $1000 was paid and the rest was borrowed by the plaintiff and her husband.  At the time of the hearing, the amount outstanding on the loan was approximately $18,000.  The amount of the loan outstanding at the time of the hearing in respect of the house in the plaintiff’s name at St Mary’s was a sum of about $70,000.

6. The plaintiff and her husband said that the money the plaintiff had to pay as a result of loss occasioned by the defendant’s breach would have been used to reduce the indebtedness on the two properties.  The repayments on the loans had to be reduced because of the consequential financial difficulties the plaintiff experienced.  In my opinion,  it ought to have been in the reasonable contemplation of the parties that, as a consequence of money paid by the plaintiff to address the damage occasioned as a result of a faulty overflow relief gully in her house, the plaintiff may be unable to maintain her repayments on loans, in particular, on a mortgage in respect of the house sold to her by the defendant.

7. Interest rates over the period May 1997 to about April 2000, provided by Adelaide Bank and Westpac Banking Corporation, varied between 6.69% and 8%.  Taking into account the amounts set out in the schedules above as the loss incurred by the plaintiff, the total sum outlaid by the plaintiff is $27,501.17.  Adopting the interest rate of 7% suggested by the plaintiff, the total interest potentially associated with the loss to the plaintiff of the use of the money can be calculated in the sum of about $10,314 as at the date of the hearing.  As at the date of judgment, the total interest on the sum represented by money paid away is approximately $11,400.

1. The quantum of damages which represents appropriate compensation for loss consequential on the plaintiff’s payments for repair work and associated costs, and her medical expenses, is to be assessed by reference to rates of interest paid on borrowings which the plaintiff is able to establish would have been reduced, but for the money required to be paid away.

   (Hungerfords v Walker (1989) 171 CLR 125)

2. It is not appropriate, in my opinion, to allow the full amount in assessing any loss occasioned as a result of money paid away. First, the evidence does not go far enough in establishing the amount which would have been paid towards reducing debts owed by the plaintiff.  Secondly, one of the loans is in respect of property owned by the plaintiff and her husband.  Notwithstanding the evidence given by the plaintiff’s husband that their resources were pooled, the evidence does not support a conclusion that the plaintiff would have applied money she would otherwise have had to the benefit of her husband, in reducing the amount owed on the jointly owned property.

3. I am prepared to find that the plaintiff would have reduced her indebtedness on outstanding loans, had she had recourse to the money paid away, to a degree.  I am not prepared to find, on the evidence, that all of the money paid away would have been applied to that end.  There is little evidence to assist with any exact quantification of the plaintiff’s loss in that regard.  Doing the best I can, I start by allowing for the probability that the plaintiff would have used half the money paid away, had it been available to her, to reduce her debt on the two properties.   The interest on the balance would then have been approximately $5700.  I would further reduce the amount allowed by way of damages for the fact that one of the properties, on which there was a sum of about $18,000 outstanding as at the date of the hearing, was jointly owned by the plaintiff and her husband, who was not a party to the action. 

4. In the circumstances, I allow a sum of $4000 for the loss incurred by the plaintiff on account of money she used to pay for repairs to the house at St Mary’s, other associated expenses and her medical expenses, rather than applying that money to reducing her debt.

   Summary

   I assess damages in the action as follows:

   Building Repairs  $17,648.30
   Storage of Household Effects  $  1,046.22
   New Carpet and Tiles  $  2,731.25
   Replacement of Appliances  $  4,330.00
   Alternative Accommodation  $  1,179.00
   Physical Inconvenience  $  2,500.00
   Cost of Rectification of Building Defects            $48,273.50
   Medical Expenses  $     566.40
   Interest on Money Paid Away$   4000.00

   Total  $82,274.67

5. In my opinion, the cost to the plaintiff of the report from Mr Jankovic, SA Building Consultants and the cost of the quotation obtained from C&R Complete Building Service should be characterised as disbursements in the action and recoverable as part of her costs of the action, rather than as damages.

6. Judgment will be entered for the plaintiff in the sum of $82,274.67, together with interest on the judgment sum and costs to be taxed.