Powercor Australia Ltd v Thomas
[2012] VSCA 87
•9 May 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2011 0196
| POWERCOR AUSTRALIA LTD (ACN 064 651 109) | Appellant |
| v | |
| LAURENCE PETER THOMAS | Respondent |
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| JUDGES | WARREN CJ, BONGIORNO and OSBORN JJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 15 March 2012 |
| DATE OF JUDGMENT | 9 May 2012 |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 87 |
| JUDGMENT APPEALED FROM | Thomas v Powercor Australia Limited [2011] VSC 586 (J Forrest J) |
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DAMAGES – Measure of damage for damage to fixtures – Loss of fences arising out of bushfire – Whether damages recoverable where fixtures reinstated by plaintiff’s own labour or by labour of volunteers – Measure of damage the reasonable commercial cost of reinstatement or repair – Jones v Stroud District Council [1988] 1 All ER 5 – Burdis v Livsey [2003] QB 36 – Labour of volunteers was not intended to relieve the tortfeasor of liability – The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569.
DAMAGES – Mitigation of loss – Applicability to claim for direct damage.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D E Curtain QC with Mr D McWilliams and Mr D J Wallis | Wotten + Keaney |
| For the Respondent | Mr J G Santamaria QC with Mr T P Tobin SC and Mr A J Fraatz | Maddens Lawyers |
WARREN CJ:
I have had the benefit of reading in draft form the reasons for judgment of Osborn JA. I agree with his Honour, for the reasons that he gives, that the appeal should be dismissed.
BONGIORNO JA:
I also agree with Osborn JA.
OSBORN JA:
The respondent (‘Thomas’) is the owner of a farm at Drung, approximately six kilometres south-east of Horsham. On Black Saturday, 7 February 2009, his property suffered significant damage as a result of a fire.
The fire was caused by the fall of the assembly at the top of a power pole to the ground and the consequent arcing of electricity which ignited stubble in the surrounding paddock.
The fire burnt approximately 2,346 hectares. It destroyed 13 houses; two commercial premises; 31 sheds; 47 other outbuildings; 160 kilometres of fencing; 54 sheep; 226 other stock; and various pieces of machinery and equipment.
A group proceeding was brought under pt 4A of the Supreme Court Act 1986 against the appellant (‘Powercor’) on behalf of those whose property was damaged by the fire. The claim alleged breach of statutory duties and common law duties of care, and in the further alternative nuisance.
The matter proceeded to trial before J Forrest J at Horsham. On the 24th day of the trial (7 October 2011), the question of Powercor’s liability to Thomas and other group members was resolved by agreement, subject to approval of the compromise pursuant to s 33V of the Supreme Court Act 1986. Beach J subsequently approved the compromise.
After resolution by agreement of the liability issues and some issues relating to quantum, 11 residual questions relevant to damages were formulated by the parties for the determination of the trial judge. These questions related to some only of the heads of damage claimed. A number of issues ventilated at the trial were settled by agreement, including several components of Thomas’s claim.
The questions referred to J Forrest J raised some discrete points of principle, including the questions whether:
(a) Thomas could claim for the cost of the reinstatement and repair of farm fixtures (fences, sheds and stockyards) if such fixtures were reinstated by work carried out:
(1) by himself; or
(2) by volunteers; and
(b) if yes, what was the appropriate method of assessment of damages; and
(c) were damages available for administration and inconvenience.
Each of his Honour’s decisions with respect to these questions has been appealed to this Court, together with a number of subsidiary issues consequent upon the resolution of these questions.
Upon the hearing of the appeal, the grounds relating to damages for administration and inconvenience were abandoned.
In consequence, the remaining issues before the Court relate to the question whether Thomas should be compensated for fire damage to farm fixtures and, if so, on what basis should those damages be assessed.
For the reasons set out below, I am of the view that his Honour was correct to conclude that:
(a) in general, the basis of assessment of damages in respect of the loss of or damage to farm fixtures due to negligence is the reasonable commercial cost of repairing and/or reinstating the damaged fixtures;
(b) the fact that fences and other fixtures were repaired by Thomas himself does not preclude him from claiming for their damage on this ordinary basis; and
(c) the fact that fences and other fixtures were repaired in part by volunteers does not preclude Thomas from claiming for the damage to them on the ordinary basis.
The definition of the issues
Thomas’s statement of claim particularised his loss and damage as follows:
Particulars of loss and damage
The plaintiff suffered:
Estimated loss value not less than
i. destruction of approximately 8km boundary and subdivisional fencing $68070 ii. damage to residence and farm buildings, including gates, bridges, cattle shed, cattle yard and cattle ramp (including electricity reconnection costs) $37900 iii. destruction of 150ha crops requiring purchase of replacement fodder $3663 iv. agistment costs due to destruction of pasture $1638 v. destruction of 40 lambs $4000 vi. destruction of stored fodder $15440 vii. destruction of farm machinery, trailers, cattle spreader, cattle scales, water tanks and pipes $9000 viii. destruction of farm trees; $48074 ix. crop and soil damage requiring rehabilitation and re-sowing of pasture; tba x. loss of business income including loss of profit from sale of livestock tba Further particulars of the plaintiff’s loss and damage will be provided prior to trial.
Particulars relating to individual group members will be provided following the trial of common questions or otherwise as the Court may direct.[1]
[1]Agreed summary of proceedings, facts and issues, [4] (citations omitted).
A further claim was subsequently made for ‘administration and inconvenience’.
Prior to the trial, J Forrest J formulated the questions relevant to the determination of all issues in the group proceeding. These included:
(h)What are the appropriate principles to be applied in determining Mr Thomas’ and the group members’ damages in relation to:
.....
(iii) loss consequential upon damage to his property.
(i) What loss or damage did Mr Thomas sustain as a result of:
(i) breach of duty by Powercor;
(ii) breach of statutory duty by Powercor; and
(iii) interference with his enjoyment of his property.[2]
[2]Agreed summary of proceedings, facts and issues, [9].
After the partial settlement of the proceeding and the hearing of further argument, J Forrest J delivered judgment and made orders pursuant to s 33Z of the Supreme Court Act 1986 as follows:
A.That the appropriate method of assessment of damages in respect of items used in connection with a farming enterprise (such as loss of fencing, sheds and damage to stockyards) is the reasonable commercial cost of repairing and/or reinstating the damaged items.
B.That in general it is appropriate in determining damages which are to be awarded for the replacement of an item which is destroyed or damaged beyond repair to allow the cost of a new replacement. In the event that this leads to a superior replacement then an allowance should, if practicable, be made for that improvement or betterment. The onus of proving the level of improvement or betterment lies with the Defendant.
C.Where the Defendant contends that it is practicable to replace the damaged or destroyed items with a substitute (other than a new replacement) then the Defendant bears the onus of establishing:
(a) that a market exists for an available substitute
(b)the cost of such a substitute can be obtained at less than the replacement cost.
D.That a claim for damages for physical inconvenience is available to group members. Such a claim is only maintainable where such inconvenience is of significance (be it in terms of impact or duration).
Powercor appealed from orders A and D above, but abandoned its appeal with respect to D.
His Honour also answered 11 questions relevant to the damages payable to Thomas.
Q.1What is the appropriate method of assessment of damages in respect of items such as loss of fencing, sheds and damage to stockyards?
A.The reasonable commercial cost of removing, repairing and reinstating the damaged parts of fencing, sheds and stock yards.
Q.2If repair or rectification of the damaged item has been or is to be undertaken by the Plaintiff’s labour, is the Plaintiff entitled to damages for the labour component of that item?
A.Yes, insofar as he is entitled to damages based upon the reasonable commercial cost of effecting the repairs and rectification. It is immaterial that he carried out the work himself or with the help of volunteers.
Q.3 If yes to 2, are the damages to be measured by reference to:
(a)The value of the work done if it were to be purchased commercially – Yes.
(b)The hours that the Plaintiff spent or is to spend in such work – No.
(c)Some other and if so what measure? – Not applicable.
Q.4If repair or rectification of the damaged item has been or is to be undertaken by the labours of persons other than the Plaintiff, without charges to the Plaintiff but for the intended benefit of the Plaintiff, is the Plaintiff entitled to damages in respect of that labour component?
A.Yes, insofar as he is entitled to damages based upon the reasonable commercial cost of effecting the repairs or rectification. It is immaterial that he carried out the work himself or with volunteer labour.
Q.5 If yes to 4, are the damages to be measured by reference to:
(a)The value of the work done if it were to be purchased commercially; - Yes.
(b)The hours that the volunteer(s) spent or are to spend in such work; - No.
(c)Some other, and if so what measure? – Not applicable.
Q.6What is the quantum of the Plaintiff’s claim for the labour component of fencing, it being agreed that the material cost $4,591 per km?
A. $2,830 per km.
Q.7What is the quantum of the Plaintiff’s claim for the damage to his stock yards?
A. $11,982.00
Q.8 What is the quantum of the Plaintiff’s claim for his farm shed?
A. $15,000.
Q.9What is the quantum of the Plaintiff’s claim for the contents of his farm shed?
A. $5,296.00
Q.10Is the Plaintiff entitled to compensation for losses described as “administration and inconvenience”?
A. No.
Q.11If yes to question 10, what is the quantum of the Plaintiff’s claim under the head of damage?
A. Not applicable.[3]
[3]Thomas v Powercor Australia Limited [2011] VSC 586, [138].
Powercor appeals from the answers to questions 1, 2, 3(a), 4, 5(a), 6, and 7 above.
The facts
At the time of settlement, the lay and expert evidence as to damages had concluded. It is agreed that the relevant evidence was as follows:
30.At the trial, evidence as to quantum was given by the respondent. Three expert witnesses, Messrs Aberdeen, McGuckian and Stafford (on behalf of the respondent) and Mr Hartley (on behalf of the appellant) gave concurrent evidence on the relevant quantum issues. Prior to trial, these witnesses had met in a court ordered conclave and provided a report as to the areas of agreement and disagreement as to damages.
31.The question of liability for damage having been settled, the specific evidence relevant to the subject matter of the Appeal as to damages is:
(a)the fire burnt out about 100 hectares of grazing and cropping land and killed 40 sheep on the respondent’s farm. The shearing shed, stockyards, and garage/farm shed were damaged or destroyed;
(b)the respondent’s farm was divided into approximately a dozen paddocks with both timber post and steel post fences. About 75% to 80% of the boundary and internal fences (5,580 metres was agreed in total) were destroyed or damaged;
(c)the stockyards were situated close to the house and the shearing shed on the property, and were used to draft and manage cattle as part of the respondent’s livestock business. The respondent dealt regularly in the sale and purchase of cattle. Any shipping or treatment of the cattle had to be organised using the yards. It was necessary to have a cattle facility given that his income was produced by buying and selling cattle. There was significant damage to the yards in the fire;
(d)the respondent, with assistance from friends, carried out the fencing repairs over the year after the fire. Some of the repair work on the fences was carried out by Mr Brennan, a man in his early 70’s who worked for five weeks commencing the day after the fire. Brennan assisted in the removal of the fences and the cleaning up and also brought his tractor in to dig out the culverts;
(e)the respondent performed the vast bulk of the fencing repairs;
(f)a local Wimmera based fencing contractor, Mr Guest quoted the labour component for the reinstatement of the fencing at $2.83 per metre ($1.83 per metre, plus $1 for the clear up) or $2,830 per kilometre;
(g)the respondent performed the vast bulk of the work on the stockyards. He managed the repair and reinstatement of the yards using his own labour, with assistance from contractors. He organised the rebuilding of the yards with steel components, purchasing the steel himself and engaging a contractor to carry out the welding. It took him three to four days to clear up the yards and effect the repairs with the assistance of the contractor;
(h)the respondent expended $3,312 to render the yards serviceable, however the repairs to the yards are not yet complete;
(i)Messrs Aberdeen and McGuckian arrived at a total cost of rebuilding and repairing the stockyards at $11,962 including expenses paid by the respondent. Mr Hartley arrived at a figure of $5,463, but did not include any allowance for the cattle ramp which had been rebuilt by the respondent, nor for the time and labour spent by the respondent in carrying out the repairs to the yards; and
(j)the respondent’s cousin, a qualified electrician, came to Horsham for a couple of days and assisted in the reconnection of electrical services to the farmhouse and the outbuildings.[4]
[4]Agreed summary of proceedings, facts and issues, [30] and [31] (citations omitted).
In consequence of the judgment, and various matters settled between the parties, the respondent’s damages were agreed at $180,559.00, including:
(a) fencing labour costs (5.58km x $2,830 per km), $15,791.00;
(b) stockyards, $11,962.00;
(c) reconnect electricity, labour component, $800.00.
The grounds of appeal
Grounds 1 and 2 of the notice of appeal are as follows:
1.The learned trial judge erred in holding that the appropriate method of assessment in respect of items used in connection with a farming enterprise is the reasonable commercial cost of repairing and/or reinstating the damaged items.
2.The learned trial judge ought to have determined that:
(a)in respect of any work performed by the respondent in repairing and/or reinstating damaged items, the claims for his own labour must be disallowed;
(b)in respect of any work performed by volunteers in repairing and/or reinstating damaged items, the claims for the labour of volunteers must be disallowed.
Grounds 3 and 4 are, in truth, particulars of the first two grounds and I will deal with them in the course of addressing grounds 1 and 2:
3. The learned trial judge:
(a)at [52] addressed but failed to apply correctly the principles stated in Hicks v Lake Macquarie City Council;
(b)failed to consider or consider properly and/or failed to give any or any sufficient reasons for his consideration and non-acceptance of the principles in Roads Corporation v Love; and
(c)ought to have held that the claims for the respondent’s own labour in repairing and/or reinstating damaged items should be disallowed.
4.The learned trial judge failed to consider or consider properly and/or failed to give any or any sufficient reasons for his consideration and non-acceptance of the principles in Griffiths v Kerkemeyer, Donnelly v Joyce, Van Gervan v Fenton, CSR Limited v Eddy and Diamond v Simpson (No 1).[5]
[5]Citations omitted.
The reasonable commercial cost of repair
His Honour was correct to hold that, in general, the measure of tortious damage to fixtures such as fencing, sheds and stockyards is the reasonable commercial cost of repairing and/or reinstating them.[6]
[6]Thomas v Powercor Australia Limited [2011] VSC 586, [35], [54].
His Honour was also correct to hold that there is an exception where a reasonable substitute is available for a price significantly less than the cost of repair. In that situation the replacement cost is the measure of damages.[7]
[7]Ibid, [35].
His Honour was further correct to recognise the underlying principle as being that when goods are damaged by the negligence of a tortfeasor, the owner of the goods suffers immediate loss represented by the diminution in the value of the goods.[8] The principle that the measure of this damage is ordinarily the reasonable cost of repair, will ordinarily apply to fixtures unless reinstatement is not practicable or sensible.[9]
[8]Ibid, [36].
[9]Hollebone v Midhurst & Fernhurst Builders (1968) 1 Lloyd’s Rep 38 applied in the context of a claim for breach of contract in Harbutt’s Plasticine Ltd v Wayne Tank & Pump CompanyLtd [1970] 1 QB 447, CA.
As I have said, there is no appeal against his Honour’s orders B and C with respect to the following general principles:
B.That in general it is appropriate in determining damages which are to be awarded for the replacement of an item which is destroyed or damaged beyond repair to allow the cost of a new replacement. In the event that this leads to a superior replacement then an allowance should, if practicable, be made for that improvement or betterment. The onus of proving the level of improvement or betterment lies with the Defendant.
C.Where the Defendant contends that it is practicable to replace the damaged or destroyed items with a substitute (other than a new replacement) then the Defendant bears the onus of establishing:
(a) that a market exists for an available substitute
(b)the cost of such a substitute can be obtained at less than the replacement cost.[10]
[10]Emphasis added.
Insofar as damage to fixtures upon land – as distinct from chattels – is concerned, as McGregor on Damages[11] explains the old case of Jones v Gooday[12] is to be understood as standing not for the general proposition that the normal measure of damages is the amount of diminution of the value of the land upon which the fixtures stand, but rather that the cost of replacement or repair of fixtures will not be the appropriate measure of damages if they are out of all proportion to the injury to the claimant.[13] There is other authority to support the view that the costs of reinstatement of fixtures will not be allowed where it is clear that reinstatement is not contemplated.[14]
[11]18th Edition, 34-003, 34-004.
[12](1841) 8 M&W 146.
[13]Conversely, in Davidson v J S Gilbert Fabrications Pty Ltd (1986) 1 Qd R 1 the Full Court of the Supreme Court of Queensland held that insofar as there is a prima facie rule that damages for injuries to chattels must be measured by the cost of repairs, the rule may be displaced by evidence that the plaintiff suffered a loss going beyond that measure in the form of diminution of market value of the chattels.
[14]Hole & Son (Sayers Common) v Harrisons of Thurnscoe (1973) 1 Lloyd’s Rep 347; Taylor (Wholesale) v Hepworths (1977) 1 WLR 659. In some cases the measure of damages will be the cost of replacement premises: British Coal Corp v Gwent County Council (1995) 71 P & CR 482, CA; Dominion Mosaics & Tile Company v Trafalgar Trucking Company (1992) All ER 246, CA.
Neither of these exceptions is applicable to the destruction of farm fences and stockyards, where it is plain the restoration of such fixtures is essential to the continuing highest and best use of the land and that the restoration has been or will be carried out. In the present case, the claims for damage to fixtures (fences, structures and trees) constituted the most significant items for which Thomas claimed damage. Self-evidently, if he received compensation for damage to individual fixtures, he could not also recover damage for loss of value of the land as a whole calculated on a basis which included loss of such fixtures.
Conversely, Thomas might receive compensation for loss of value of the land as a whole if such loss was calculated disregarding the damage to specific fixtures. Such an approach would, in effect, treat the specific fixtures as having special value to the owner which it was necessary to make the subject of specific compensation.
At one point in argument, counsel for Powercor submitted that agreement had been reached at trial between the parties that the diminution of value of the property was $10,000. No claim for such diminution in value was made in the particulars of Thomas’s claim. Nor did the questions put to the trial judge raise or refer to the alleged agreement. The respondent’s position before this Court was that there was no such claim before the trial judge and no evidence was led relating to value. There is no satisfactory evidence before us of the fact, basis or nature of any agreement of the type alleged and it cannot be said that such an agreement was necessarily inconsistent with a primary claim for damage to fixtures. Any such valuation may have related to market value rather than value to the owner.[15] In turn, it may or may not have purported to take account of the damage caused to specific fixtures. No error has been demonstrated on the part of the judge in failing to advert to it and it is not sufficiently evidenced for this Court to draw any conclusions in respect of it.
[15]Cf Spencer v The Commonwealth of Australia [1907] 5 CLR 418.
Save for this aspect of the matter, Powercor did not in submission to this Court directly dispute the trial judge’s findings as to the general principles ordinarily applicable to the assessment of a claim of the type in issue, but went directly to the question of the appropriateness of an award of damages calculated by reference to the reasonable commercial cost of repair in circumstances where repairs have in fact been effected by Thomas himself or volunteers.
Powercor’s outline of submission with respect to ground 1 commences:
If the respondent is entitled to damages for his own labour and/or the labour of others, such damage should not be awarded at full commercial rates.[16]
[16]Appellant’s outline of submissions, [1].
The outline with respect to grounds 2(a) and 3 commences:
The respondent should only be entitled to compensation for his own labour if he can establish there is a consequential loss to his income producing activities as a farmer.[17]
[17]Appellant’s outline of submissions, [3].
These submissions avoid the primary conceptual basis on which the trial judge found damages were payable. This is that Thomas is entitled to compensation for the damage suffered directly to the fixtures at the time of the fire. His claim in this respect is not a claim for consequential loss.
As the trial judge held, the basic principle was stated in the case of The Endeavour.[18] The SS Endeavour was damaged without fault on the part of those sailing her as the result of a collision with another ship. The defendant owner of The Endeavour counterclaimed the cost of repairing the ship, but had not paid the shipwright because, since the repairs were effected, it had gone into liquidation. Sir James Hannen said:
The Endeavour has been injured. Her owners are entitled to be paid the amount of such injuries. It has been ascertained that the amount is [₤]464... That is the measure of the defendants’ damages, and is the amount they are entitled to recover. If somebody out of kindness were to repair the injury and make no charge for it, the wrongdoer would not be entitled to refuse to pay as part of the damages the cost of repairs the to the owner.[19]
[18](1890) 6 Asp Mar Law Cas 511.
[19]Ibid 512.
The principle has been applied in a series of shipping cases[20] concerning negligent damage, summarised by Mandie JA (with whom Harper JA and Robson AJA agreed) in his judgment in Saric v Tehan.[21]
[20]The Greta Holme [1897] AC 596; The Glenfinlas [1918] P 363 (Note of a Decision of Registrar Roscoe); The London Corporation [1935] P 70.
[21][2011] VSCA 421.
In turn, the principle has been applied to claims for negligent damage to a motor vehicle.[22]
[22]Freese v Collins [1948] St R Qd 180; Burdis v Livsey [2003] QB 36; Athanasopoulos v Moseley (2001) 52 NSWLR 262; Tehan v Saric [2010] VSC 175; in Saric v Tehan [2011] VSCA 421 Mandie JA at [62] recognised the principle as supporting his conclusion but preferred to rest his decision on The National Insurance Company of New Zealand Ltd v Espagne (1961) 105 CLR 569 discussed below.
In Dimond v Lovell,[23] Lord Hobhouse of Woodborough put the principle this way:
[The plaintiff] was at the time of the accident the owner and person in possession of her car. It was damaged. Its value was reduced. This can be expressed as a capital account loss. This loss can be measured as being the cost of making good the damage plus the value of the loss of its use for a week. Since her car was not unrepairable and was not commercially not worth repairing, she was entitled to have her car repaired at the cost of the wrongdoer. Thus the measure of loss is the expenditure required to put it back into the same state as it was in before the accident. This loss is suffered as soon as the car is damaged. If it were destroyed by fire the next day by the negligence of another, the second tortfeasor would only have to pay damages equal to the reduced value of the car and the original tortfeasor would still have to pay damages corresponding to the cost of putting right the damage which he caused to the car. These questions are liable to arise in relation to any damaged chattel and have long ago received authoritative answers in cases concerning ships. [citations omitted] These cases also distinguish between the cost of the damage to the chattel and consequential losses to the owner of the chattel such as loss of revenue. However, even where the chattel is non profit earning (as was [the plaintiff’s] car) there may still be scope for awarding general damages for loss of use …[24]
[23][2002] 1 AC 384.
[24]Ibid 406.
The relevant principle has been applied to fixtures. In Gagner Pty Ltd (trading as Indochine Café) v Canturi Corporation Pty Ltd,[25] the New South Wales Court of Appeal upheld the decision of the judge at first instance that the plaintiff was entitled to reasonable costs of rectification of damage resulting from flooding of a shop caused by negligence. The fact that the plaintiff chose to go beyond such rectification to effect a total refurbishment did not preclude recovery of an amount that a precise rectification of water damage would have cost.[26]
[25](2009) 262 ALR 691.
[26]See also Badham v Williams (1968) NZLR 728.
In Jones v Stroud District Council,[27] the owner of a property sued the local planning authority for damage resulting from the negligent approval of building plans. Evidence was given of the cost of repairs, but no evidence was given of any payment or liability to pay the builders. Neil LJ (with whom Fox and Ralph-Gibson LJJ agreed) said:
The plaintiffs failed to provide any documents relating to the work carried out by Marlothian Ltd and there is no evidence that the plaintiffs had paid or are liable to pay any sum to Marlothian in respect of that work. It was submitted on behalf of the plaintiffs, however, that if the repairs were necessary and were carried out it was not to the point that the plaintiffs had not proved that they had paid for the repairs themselves…
In my judgment, on the facts of this case this submission is correct.
It is true that as a general principle a plaintiff who seeks to recover damages must prove that he has suffered a loss, but if property belonging to him has been damaged to an extent which is proved and the court is satisfied that the property has been or will be repaired I do not consider that the court is further concerned with the question whether the owner has had to pay for the repairs out of his own pocket or whether the funds have come from some other source.[28]
[27]Jones v Stroud District Council [1988] 1 All ER 5; [1986] 1 WLR 1141.
[28]Ibid 13-14 (emphasis added).
The correctness of Jones v Stroud District Council[29] was affirmed in Burdis v Livsey,[30] where Neill LJ’s statement in Jones v Stroud District Council was referred to as a modern restatement of a principle established by the earlier authorities.[31]
[29][1988] 1 All ER 5; [1986] 1 WLR 1141.
[30][2003] QB 36.
[31]Ibid [95]-[96].
In Burdis v Livsey, the English Court of Appeal decided five appeals. The first appeal concerned a claim for damage to the plaintiff’s car as a result of the defendant’s negligence. Burdis borrowed money from a finance company to cover the cost of the damage so that repairs could be carried out without waiting for liability to be established against the defendant. Burdis sued the defendant in the County Court. The judge held that Burdis did not have to repay the money borrowed from the finance company because the credit agreement was unenforceable due to non-compliance with relevant consumer credit legislation. Nevertheless, Burdis could recover the cost of repairs from the defendant. On appeal, a High Court judge reversed this decision, holding there was no valid reason of public policy why Burdis should have the double benefit of having her car repaired free of cost to her and of recovering damages in the amount of the repair costs which she would not have to meet.[32]
[32]The appeals in the other actions related to claims for the hire of replacement cars.
The Court of Appeal allowed the further appeal by Burdis, stating that a fundamental distinction had to be drawn between vehicle repair costs which represented the measure of a claimant’s direct and immediate loss resulting from the defendant’s negligence, and hire charges which represented potential future or consequential loss.
87The distinction between an immediate and direct loss on the one hand and a potential future loss on the other is of importance for present purposes because it leads to different treatment of benefits derived from a third party after the commission of the tort. In every case a claimant's recoverable loss is limited to the loss which he has actually suffered—damages in the tort of negligence are, after all, ‘purely compensatory’ (see per Lord Bridge of Harwich in Hunt v Severs[33])—but the process of determining, in the light of subsequent events, what loss the claimant has actually suffered differs according to whether the loss was suffered when the tort was committed (direct loss) or whether it was suffered subsequently (consequential loss).
88In a case of direct loss, subsequent events will operate to reduce or extinguish the loss only in so far as such events are referable to the claimant's duty to mitigate his loss, and hence referable in a causative sense to the commission of the tort: see the British Westinghouse case[34] and Koch Marine Inc v D'Amica Societa di Navigazione ARL.[35] In the Koch Marine case Robert Goff J said, at p 88: ‘what is alleged to constitute mitigation in law can only have that effect if there is a causative link between the wrong in respect of which damages are claimed and the action or inaction of the plaintiff.’
....
91In our judgment, the authorities to which we have so far referred establish that subsequent events which are not referable in a causative sense to the commission of the tort, that is to say events which, on a true analysis, are collateral to the commission of the tort, or res inter alios acta, or too remote—we regard these expressions as interchangeable—do not affect the measure of a direct loss suffered when the tort was committed.
92In the case of potential future losses, on the other hand, the general rule is that to the extent that such a loss is in fact avoided, for whatever reason, it is a loss which is never suffered and which is accordingly irrecoverable for that reason…[36]
[33][1994] 2 AC 350, 357.
[34][1912] AC 673.
[35][1980] 1 Lloyd's Rep 75.
[36]Burdis v Livsey [2003] QB 36, 75.
In argument, counsel for Powercor did not quarrel with this statement of principle but submitted that the obligation to compensate Thomas for his direct damage was subject to his duty to mitigate that damage.
In turn, it was submitted that where a plaintiff had the personal capacity to undertake repairs he was required to do so in order to mitigate his own damage. A distinction was drawn in the present case between the claim for work done by the electrician, who was a relative of Thomas, which it was conceded Thomas was not qualified to carry out and the fencing works which were done by Thomas personally.
The evidence demonstrated that Thomas was not, in fact, capable of carrying out the extensive fencing required after the fire in a professionally competent manner at the time the damage was suffered, but undertook on the job training with a professional fencer in order to qualify himself to do such work. Presumably, Powercor’s submission is therefore to be understood to further extend to an obligation to undertake appropriate retraining at the claimant’s own cost.
Whatever its ambit, the submission is misconceived. The right to claim for direct damage in the relevant sense is subject to the obligation of the plaintiff to mitigate that direct damage. The damage here in issue was the destruction of the fences by fire without opportunity to mitigate that damage. No relevant question of mitigation arises.
Conversely, a claim for consequential loss such as agistment and/or loss of business might require a claimant to establish that the direct damage to fencing was repaired reasonably expeditiously. Thus, in Harbutt’s Plasticine v Wayne Tank & Pump Co Ltd.[37] Lord Denning MR noted in rejecting the claim for betterment:
But when this mill was destroyed, the plasticine company had no choice. They were bound to replace it as soon as they could, not only to keep their business going, but also to mitigate the loss of profit (for which they would be able to charge the defendants). They replaced it in the only possible way, without adding any extras. I think they should be allowed the cost of replacement. True it is that they got new for old: but I do not think the wrongdoers can diminish the claim on that account. If they had added extra accommodation or made extra improvements, they would have to give credit.[38]
[37][1970] 1 QB 447.
[38]Ibid 468. See also the observations of Widgery LJ.
The test hypothesised on behalf of Powercor would require the Court to undertake a detailed collateral enquiry into the capacity of individual claimants to carry out particular repairs. There is no authority that such an enquiry is necessary. It would be a peculiar rule that required a claimant to rectify, by his own labour, direct damage which the tortfeasor had caused.
Counsel for Powercor referred to the decision of the Full Court in Tuncel v Renown Plate Company Pty Ltd,[39] where the Court adopted the following statement of principle from McGregor on Damages.
The three rules are these: -
(1)The first and most important rule is that the plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the defendant's wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid. Put shortly, the plaintiff cannot recover for avoidable loss.
(2)The second rule is the corollary of the first and is that where the plaintiff does take reasonable steps to mitigate the loss to him consequent upon the defendant's wrong he can recover for loss incurred in so doing; this is so even although the resulting damage is in the event greater than it would have been had the mitigating steps not been taken. Put shortly, the plaintiff can recover for loss incurred in reasonable attempts to avoid loss.
(3)The third rule is that where the plaintiff does take steps to mitigate the loss to him consequent upon the defendant's wrong and these steps are successful, the defendant is entitled to the benefit accruing from the plaintiff's action and is liable only for the loss as lessened; this is so even although the plaintiff would not have been debarred under the first rule form recovering the whole loss, which would have accrued in the absence of his successful mitigating steps, by reason of these steps not being ones which were required of him under the first rule. Put shortly, the plaintiff cannot recover for avoided loss.[40]
[39](1976) VR 501.
[40]McGregor on Damages cited in Tuncel v Renown Plate Company Pty Ltd [1976] VR 501, 503.
These rules have been reiterated in subsequent editions of McGregor[41] and I accept they are correct in principle.
[41]See the 18th Edition, [7-002]-[7-006].
In the present case, however, the damage to the fences was not an ‘avoidable loss’ in the sense envisaged in the authorities.
In Davidson v J S Gilbert Fabrications Pty Ltd,[42] the Full Court of the Supreme Court of Queensland considered a claim for damage resulting from negligent welding which caused a yacht to catch fire. McPherson J (with whom Andrews ACJ agreed) stated in part: [43]
The decision in Dodd Properties (Kent) Ltd. v. Canterbury City Council[44] leaves untouched the question whether a plaintiff who has sustained damage to his chattel is obliged to sell it unrepaired in an effort to reduce the loss for which the defendant may be bound to compensate him. In principle I cannot see that he should be required to do so. As a general proposition a plaintiff cannot be called on to spend money to enable him to mitigate or minimize the damages payable by the defendant: Jeweloski v. Propp.[45] It is true that, where the plaintiff’s claim is for consequential losses consisting, for example, of loss of use of a profit earning chattel or the costs of hiring a substitute, he may forfeit his claim to some part of those continuing losses allegedly sustained if he fails to take reasonably sufficient and expeditious steps to repair or replace it: Liesbosch Dredger v. Edison;[46] and cf. Martindale v. Duncan[47] (where, however, the delay was in the circumstances held not to be unreasonable). But those are cases of consequential damages, which can be prevented from accruing. The loss sought to be recovered in the present case is essentially a capital loss that accrued at the time of the wrongful act. To a loss of that kind the duty to mitigate has, in general, no application: see 25 Corpus Juris Secundum, Damages, para. 33, p. 701, cited in Newman v. Brown.[48]
[42][1986] 1 Qd R 1.
[43]Ibid 7-8.
[44][1979] 2 All ER 118.
[45][1944] KB 511.
[46][1933] AC 449.
[47][1973] 1 WLR 574.
[48]90 SE 2d 649 (1955).
Likewise, in the present case, the loss occurred at the time of the destruction of the fences and other fixtures by fire. The duty to mitigate has no relevant application, although the best method for calculation of appropriate damages will necessarily depend upon all the circumstances of the case.
Further, after stating the rules previously set out above, McGregor goes on subsequently to observe:
It is important to be certain what the normal measure of damages is, before deciding what form of mitigation is properly incorporated within it. Thus one may compare the normal measure of damages where goods sold are not delivered in breach of contract and the normal measure where goods are tortiously misappropriated. In the case of sale of goods the buyer must go into the market for a replacement, or at least cannot sit back on a rising market and then claim damages on the basis of the increased price: but no such step towards replacement need be taken by the victim of a misappropriation.[49]
[49]McGregor on Damages, 18th Edition [7-036].
In the present case, the normal measure of damages is the reasonable cost of repair of the damaged fixtures. The alleged obligation to mitigate does not bear on the relevant measure of direct loss.
Counsel for Powercor submitted at one point that there are no reported cases of a claimant recovering for the cost of his or her own repairs to tortious damage to property. Conversely, it was conceded that there are no reported cases of a claimant failing to recover damages in respect of direct tortious damage to property because he or she effected repairs himself or herself. I do not accept that the fact a claimant undertakes or proposes to undertake repairs himself or herself displaces the ordinary measure of loss resulting from direct damage to chattels including fixtures.
It was also submitted that if a claimant repairs fences himself and is reimbursed for the cost of materials he will have had the fences fixed ‘for nothing’. This is self-evidently incorrect. The claimant will not only have expended the reimbursed costs of materials but also incurred the cost of his own labour. The proper measure of damages is ordinarily the reasonable cost of effecting such repairs. In some cases, the reasonable cost of labour may exceed and, in other cases, may be less than the cost to the claimant of labour actually expended.
The notice of appeal further specifically alleges that the trial judge failed to correctly apply the decision of the Supreme Court of New South Wales in Hicks v Lake Macquarie City Council.[50] In that case, the plaintiffs claimed for damages suffered as a result of the wrongful slippage of fill onto their property. The main claim made was for diminution in value of the property. Because of limitations issues, damages were assessed by agreement in nuisance. The principal quantum of damages was awarded for diminution in the value of the property. Some additional small claims were allowed for the repair or replacement of specific items of property damaged. A claim for Mr Hicks’s labour was disallowed. Mr Hicks had undertaken clean up works both on his own and on the council’s adjoining land. His Honour stated:
The claims for the value of Mr Hicks’ labour must also be disallowed – even that relating to work in his own property. It seems odd that if Mr Hicks had expended money in employing someone to remove debris from the land he could have recovered that cost but that he cannot recover the value of his own labour to do the same job. The reason as I understand it is that you can recover only economic loss to him and his wife and the expenditure of his labour did not cause any economic loss. I acknowledge the principle. I do not seek to defend its morality.[51]
[50](Unreported, Supreme Court of New South Wales, Loveday J, 9 October 1992).
[51]Ibid 8.
It is unnecessary to embark on a general discussion of the law with respect to claims in tort for economic loss. It is sufficient for present purposes to observe that the case cannot be treated as authority for the proposition that a claim for direct damage to fixtures cannot be assessed by reference to the reasonable costs of repair or reinstatement, if such repair and reinstatement are effected by the owner. The trial judge in the present case was correct to distinguish Hicks. The primary measure of damages in Hicks was that of diminution in value of the property. A further claim was made for the plaintiff’s labour. In contrast, in the present case, the primary measure of damage is the cost of reinstatement of the fixtures destroyed. The
present case is not one where the plaintiff’s labour is claimed by way of further consequential loss.
Counsel for Powercor also sought to rely on the decision in Roads Corporation v Love.[52] Mr Love was the owner of land fronting Cooper Street, Epping. The Roads Corporation compulsorily purchased a narrow strip of land along the street frontage in order to facilitate road widening. The Roads Corporation replaced the fences thereby disturbed. Mr Love made a series of claims for compensation[53] including claims for loss of market value, special value, severance, disturbance[54] and solatium. One of the disturbance claims which was disallowed related to a claim made with respect to alleged pecuniary loss resulting from time spent by Mr Love in arranging improved access to his property following the acquisition. There were two fundamental problems with this claim. First it was advanced on the basis that Mr Love expended time which he would otherwise have spent on other litigation and as consequence suffered increased legal costs in respect of that litigation.[55] The amount claimed did not reflect this hypothesis, nor was the fact of loss from increased legal costs actually established. Moreover, that cost was claimed or claimable in the other proceedings. Secondly, Mr Love in fact obtained a material betterment of his property and significant financial benefit as a result of significantly improved access constructed to it following the road widening. He conceded that, absent the acquisition and road widening, he could not have obtained such improved access without substantial cost.[56]
[52][2010] VSC 32. This decision was affirmed on appeal - Love v Roads Corporation [2011] VSCA 434.
[53]Section 41(1) of the Land Acquisition and Compensation Act 1986 (Vic) provides:
41General principles on which compensation is to be based
(1)Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors—
(a)the market value of the interest on the date of acquisition;
(b)any special value to the claimant on the date of acquisition;
(c)any loss attributable to severance;
(d)any loss attributable to disturbance;
(e)the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;
(f)any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.
[54]Loss attributable to disturbance is relevantly defined to mean any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of the fact that interest of the claimant in land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in pt IV of the Land Acquisition and Compensation Act 1986.
[55]Roads Corporation v Love, [749].
[56]Ibid [750]-[751].
The particular finding upon which Powercor relies that Mr Love suffered no pecuniary loss additional to loss of value of land was thus grounded in the facts. It bears no analogy to the present case.
Powercor’s case was also argued by reference to the concept of double dipping. Powercor submits that the award of damages measured by reference to the reasonable cost of reinstatement of the fences involved double dipping because the plaintiff’s consequential losses for interruption to his farming business (including loss as a result of time spent reinstating fences) had been agreed. There are a series of difficulties with this submission:
(a) the questions referred to the trial judge did not raise this issue;
(b) the trial judge was not advised of the quantum of, or the basis of, the agreed figure for loss of livestock and business;
(c) the neutral summary of facts agreed for the purposes of the appeal between the parties does not state the fact or basis of the agreement in respect of the loss of livestock and business;
(d) the grounds of appeal do not in terms raise the point.
Even more fundamentally, the conceptual premise of the submission is that both the claim for the cost of repairs to fences and the claim for loss of profits are species of consequential loss claims. As I have sought to explain, they are not. The cost of repairs is simply the measure of the direct damage suffered as a result of the destruction of the fences. It may be that, in some circumstances, the damages awarded for direct loss may limit a further claim for consequential loss, but I am unable to see how, in principle, an award for consequential loss could cut back an award for direct damage.
Moreover, in cases such as the present, the undertaking of fence repairs may itself be reasonably necessary to mitigate consequential losses which would otherwise be suffered by way of agistment costs or loss of profit. Counsel for Powercor acknowledged in the course of argument that professional fencers were in short supply after the Horsham fire. There was no suggestion that it was unreasonable for Thomas to himself repair his fences.
In such circumstances, there is no necessary inconsistency between a claim for loss measured by reference to the reasonable cost of fencing and a claim for loss of profits in part resulting from the time spent effecting repairs.
This said, it is, of course, possible that the pursuit of an element of a claim not settled is inconsistent with the terms of settlement reached in respect of the balance of the claim. Such an argument was never clearly articulated on behalf of Powercor, rather it was put that in principle recovery for both types of loss was necessarily inconsistent. Insofar as argument is based upon the terms of settlement, however, that argument faces a series of fundamental problems which I have summarised above. The issue is not raised by the questions referred to the trial judge; the terms and basis of the settlement were not evidenced before the trial judge; and there is no evidence before the Court as to the relevant facts.
We do not know what amount was agreed for loss of business, as distinct from loss of livestock and business (if any). We do not know whether the figure for loss of business had an agreed basis of calculation. We do not know if that agreed basis gives rise to an inconsistency between the settlement and the claim for direct
loss. The fact of the settlement, without more, cannot, of itself, estop Thomas from making a direct loss claim.
In the course of submissions, counsel for Powercor drew specific attention to the statement at paragraph [53] of the trial judge’s decision in which his Honour stated that ‘this is not a claim in which the tortfeasor asserts that there is any element of double recovery’. It was submitted that his Honour erred in making this statement.[57] The short answer to this submission is that the statement made by his Honour in this regard was, at best, obiter and, even if erroneous, did not invalidate his Honour’s reasoning with respect to damages relating to the destruction of the fences.
[57]His Honour said:
Finally, there is another matter of some significance. This is not a claim in which the tortfeasor asserts that there is any element of double recovery by Mr Thomas – rather that absent any direct financial loss on his part he is not entitled to damages for the reinstatement and repair of the fences.
Further, the error complained of was not properly raised on this appeal. At the hearing of the appeal, counsel for Powercor sought to put before the Court sections of the trial transcript and written submissions which were not previously included in the appeal book. In my view, this evidence should not be received. It is not relevant to the issues raised by the notice of appeal. When notice was given of the intention to seek to adduce such evidence in January 2012, the respondent’s solicitors objected to its introduction unless its relevance could be demonstrated by reference to amended grounds of appeal. No response was made to this objection and no amendment to the appellant’s notice of appeal was sought. The now tendered evidence is not relevant to the issues raised by the notice of appeal before this Court.
For the above reasons, grounds 1 and 2(a) of the notice of appeal fail. His Honour did not err in holding that the appropriate method of assessing damages with respect to items used in the farming enterprise and damaged or destroyed by
the fire was the reasonable commercial cost of repairing or reinstating such items, despite the fact Thomas had himself carried out repair or reinstatement works.
The reinstatement of farm fixtures by volunteers
Powercor also contends that Thomas cannot recover in respect of damage to fences or other fixtures if that damage was repaired by volunteers. In Insurance Australia v HIH Casualty and General Insurance Limited (in liq),[58] Ashley JA observed at [160]:
There is a broad principle, applicable at least in insurance law and torts law, that credit need not be given by an injured party for moneys received by it which are not to be characterised as extinguishing or reducing that party’s loss, but are rather to be characterised as having been received independently of right of redress. In the field of insurance, the principle is exposed in cases such as Burnand v Rodocanachi Sons & Co and Merrett v Capitol Indemnity Corporation. In torts law it is seen in personal injury cases such as National Insurance Co of New Zealand v Espagne and Redding v Lee; Evans v Muller, and in claims for property and other damage such as Wollington v State Electricity Commissions of Victoria (No 2) and Monroe Schneider Associates Inc v No 1 Raberem Pty Ltd.[59]
[58](2007) 18 VR 528.
[59]Ibid [160] (citations omitted).
In the present case, the trial judge held that this line of authority supported the proposition that where an injured party has benefitted from the kindness of others not intended to relieve the wrongdoer of his or her obligation, then such benefits should be ignored in the assessment of damages. [60]
[60]Thomas v Powercor Australia Limited [2011] VSC 586 [51].
Once again, many of the relevant authorities are summarised in the decision of Mandie JA in Saric v Tehan.[61] It is unnecessary to canvass each of the authorities to which his Honour refers. It is sufficient, for present purposes, first to refer to the statements of principle in the leading case of Espagne,[62] secondly to refer to the decision of this Court in Wollington v State Electricity Commission of Victoria (No 2),[63] and thirdly to refer to the most recent restatement of principle by the High Court in Zheng v Cai.[64]
[61][2011] VSCA 421. Bradburn v Great Western Railway Company (1874) LR 10 Ex 1; Cusack v Heath (1950) QWN 16, 26; The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569 (‘Espagne’); Adams v Ascot Iron Foundry Pty Ltd [1968] 72 SR (NSW) 120; Parry v Cleaver [1970] AC 1; Redding v Lee (1983) 151 CLR 117; Wollington v State Electricity Commission of Victoria (No 2) [1980] VR 91 (’Wollington’); Manser v Spry (1994) 181 CLR 428; Dimond v Lovell [2002] 1 AC 384; Athanasopoulos & ors v Moseley & ors (2001) 52 NSWLR 262; Burdis v Livsey [2003] QB 36.
[62]National Insurance Co of New Zealand v Espagne (1961) 105 CLR 569.
[63][1980] VR 91.
[64](2009) 239 CLR 446.
In Espagne, the High Court held that, in assessing damages for the plaintiff’s loss of sight caused by the negligence of the defendant, the award of an invalid pension for total permanent blindness pursuant to the Social Services Act was to be disregarded. Dixon CJ stated in part:
There are certain special services, aids, benefits, subventions and the like which in most communities are available to injured people. Simple examples are hospital and pharmaceutical benefits which lighten the monetary burden of illness. If the injured plaintiff has availed himself of these, he cannot establish or calculate his damages on the footing that he did not do so. On the other hand there may be advantages which accrue to the injured plaintiff, whether as a result of legislation or of contract or of benevolence, which have an additional characteristic. It may be true that they are conferred because he is intended to enjoy them in the events which have happened. Yet they have this distinguishing characteristic, namely they are conferred on him not only independently of the existence in him of a right of redress against others but so that they may be enjoyed by him although he may enforce that right: they are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him. This is readily seen in the case of benevolence. If a fund is raised by subscription for the benefit of a badly injured neighbour obviously this cannot operate in relief of the liability of a man who negligently caused the injury. So in a contract of accident insurance; where in the absence of special stipulation the insurer will not succeed by subrogation or otherwise to the insured's right of recourse against others in the case of injury by their negligence.[65]
[65]The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569, 573 cited in Redding v Lee (1983) 151 CLR 117 (emphasis added).
Windeyer J stated in part:
In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause.[66]
[66]The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569, 599-600 cited in Redding v Lee (1983) 151 CLR 117 (emphasis added).
In Wollington, the plaintiff claimed in respect of damage to chattels resulting from a bushfire caused by the defendant’s negligence. The defendant contended that ex gratia payments made by the State Government to bushfire victims should be deducted from any damages awarded. On appeal, Young CJ and Menhennitt J said:
The answer to the question whether a particular receipt by a plaintiff does or does not diminish the liability of the wrongdoer must in our opinion in the absence of any other rule of law depend as a matter of principle upon the character of the receipt. In other words, it is necessary to ask whether the receipt is of such a character that it does diminish the liability of the wrongdoer. No legal rule exists which enables a court to say whether this or that receipt by a plaintiff does diminish the liability of a wrongdoer and the Court is thus perforce thrown back upon general reasoning. It is in that way that the cases concerned with personal injuries approach the question and accordingly we think that the principles to be extracted from those cases are applicable to the present problem. No real reason was in our view advanced against the application of such principles. We therefore think that Fullagar J was correct when he said (at p. 116): ‘The decided cases make it clear that my decision on the question at issue must turn upon the proper characterization of the payments made to and received by the plaintiff…’[67]
[67][1980] VR 91, 98 cited in Thomas v Powercor Australia Limited [2011] VSC 586, [48].
The Court held that the ex gratia payments were to be disregarded. The case is significant in the present context, first, because it applies the Espagne principle to claims in respect of tortious damage to property and, secondly, because the underlying facts are similar to the present case.
Powercor seeks to distinguish Wollington on the basis that it was concerned with the receipt of moneys whereas the present case is relevantly concerned with the receipt of voluntary labour. I do not accept that this distinction is material. The question is simply whether the benefit received was conferred independently of any right of redress against Powercor and not by reference to that right. The produce of private benevolence as Windeyer J described it in Espagne is not limited to payments of money.
The Espagne principle has been applied in cases where benefits were conferred which were not constituted by the payment of moneys but rather by relief from the claimant’s liability to a repairer.[68]
[68]Saric v Tehan [2011] VSCA 421; Burdis v Livsey [2003] QB 36; Athanasopoulos & ors v Moseley & ors (2001) 52 NSWLR 262. In Athanasopolous, Ipp AJA stated in response to a similar argument that ‘[i]n my opinion, there is no relevant distinction between a financial benefit, a benefit in the form of services, and a benefit in the form of a replacement vehicle provided to the owner of a vehicle damaged by the negligence of another’.
Furthermore, Gordon v Ross, a decision of the New South Wales Court of Appeal, was specifically concerned with whether the plaintiff’s damages should be reduced on account of board and lodging provided by friends.[69]
[69][2006] NSWCA 157.
In my view, there is no distinction in principle between Wollington and the present case.
The underlying principles were reiterated in the High Court’s decision in Zheng v Cai.[70] In that case, a passenger who suffered injury in a car recovered damages from the negligent driver. The High Court held that payments made to the plaintiff by a religious organisation for whom she did voluntary work were not to be taken into account in assessing damages for economic loss.
[70](2009) 239 CLR 446.
The High Court expressed the fundamental principles as follows:
18In Parry v Cleaver Lord Wilberforce remarked that the decision not to make a deduction from damages for receipts from voluntary funds had been put either on public policy or the intention of the subscribers. His Lordship referred to what had been said to that effect by Andrews CJ in Redpath v Belfast and County Down Railway. But these considerations are not discrete; rather, it is the policy of the law which
informs the importance of the wishes of those providing the benefaction.
19This is apparent from the treatment of the subject by Windeyer J in Espagne. His Honour began with the propositions that damages for personal injuries are not to be assessed by constructing a profit and loss account and that the compassion, kindness and sympathy of friends and the gifts of charitable persons cannot be weighed against pain and suffering caused by the wrongdoer, such that the balance of account favours that wrongdoer. From that basis his Honour reasoned that voluntary gifts should not diminish damages because ‘they are given for the benefit of the sufferer and not for the benefit of the wrongdoer’.
20The ‘intent’ of the donor thus assumed great importance, but it was an intent of a particular character, contrasting an intention to benefit the wrongdoer with an intention to benefit the victim. Thus, Windeyer J said:
‘If, out of sympathy for a man unfortunately responsible for a motor accident, someone gives money to the victim, stating that he does so in the interest of the tortfeasor and to diminish the damages he must pay, effect must be given to his intention. If, on the other hand, the donor's expressed intention is that the injured man shall enjoy his bounty in addition to whatever rights he may have to recover damages from the tortfeasor, effect must in my opinion, be given to that intention. And if nothing be said, the intention of the giver may be inferred from the circumstances.’
To that there may be added the observation by Professors Harper, James and Gray in their treatise upon United States tort law:
‘Often of course the intent was never even thought out by the donor, certainly not expressed. In these cases of private generosity the best solution seems to be a rule of thumb that would give greatest scope to the donor's generosity and to the adjustment of moral obligations within the more or less intimate relationships that usually bring such generosity into play. The gift should be disregarded in assessing damages.’[71]
[71]Ibid [18]-[20] (citations omitted).
The Court observed that the critical question on the respondent’s case was whether the payments by the religious organisation were intended by it to operate in the interests of the respondent and diminish the damages he otherwise would be liable to pay. If that critical question is asked in the present case, there can be only one answer because question 4 asked of the trial judge was expressed on the basis that the labour of volunteers was ‘for the intended benefit of the plaintiff’. Further, it is not suggested there was evidence that the work done by volunteers was intended to benefit Powercor and it is inherently improbable that it was.
In Zheng v Cai[72] the Court said further:
[72](2009) 239 CLR 446.
29What these situations, whether or not arising under statute, have in common is the need to answer the ultimate question, framed by Mason and Dawson JJ in Redding v Lee as being:
‘Was the benefit conferred on [the plaintiff] independently of any right or redress against others and so that he might enjoy the benefit even if he enforced the right?’
In Evans v Muller (reported with Redding v Lee) their Honours, who were part of the majority, concluded that unemployment benefits provided by the federal law had the character of a partial substitute for wages. But that holding does not support the denial by the Court of Appeal that the private benefaction conferred upon the applicant by the Assembly was to be enjoyed by her independently of redress against the respondent.[73]
[73]Ibid [29] (citations omitted).
In the present case, the answer to the ultimate question identified above is ‘yes’. In the course of its judgment in Zheng v Cai, the High Court also endorsed the justice and wisdom of the statement of Professors Harper, James and Gray quoted above. Consistently with that approach, the gifts of voluntary labour received by Thomas should be disregarded from the assessment of damages.
In Redding v Lee,[74] having postulated the ‘ultimate question’ reiterated in Zheng v Cai,[75] Mason and Dawson JJ went on to say:
Again, it has been acknowledged that it would be unjust and unreasonable to reduce damages on account of benefits received by the plaintiff resulting from benevolence. Benefits of this kind spring from a desire to assist the plaintiff, not from any wish to relieve against the tortfeasor's liability (Espagne (11)).[76]
[74](1983) 151 CLR 117.
[75](2009) 239 CLR 446.
[76]Redding v Lee (1983) 151 CLR 117, 138.
This must be the conclusion in the present case.
Lastly, the notice of appeal also made specific reference to failure to consider Griffiths v Kerkemeyer[77] and other personal injury cases. This case does not fall to be determined by reference to the principles stated in Griffiths v Kerkemeyer but by reference to the principles stated above.
[77](1977) 139 CLR 161.
Conclusion
It follows that the appeal should be dismissed.
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