Alexandrou v Pacific Pest Control Pty Ltd

Liability

1. The question of liability proceeded for determination on the bases that: 1. The plaintiffs did not identify any sign or other presentation of termite infestation or damage which Mr Francis failed to observe at his inspection on 16 December 2013; and 2. Commencing 40 days after Mr Francis' inspection, on 25 January 2014, extensive termite damage and some termite activity was found in the main bedroom window sill after application of force, in the studs and noggins within the bathroom walls after removal of wall linings, in the roof void and externally, particularly around some identified window frames; and further 3. The plaintiffs alleged that during his inspection on 28 January 2014 Mr Francis admitted that he had missed the termites during his inspection on 16 December 2013.
2. For the purposes of consideration of the exercise of due skill and care and the content of the scope of duty incumbent upon Mr Francis to exercise during his inspection on 16 December 2013, the evidence shows that visual inspection included the task of testing by tapping surfaces and making an assessment of the sound emitted.
3. By Statement of Claim filed 29 September 2014 the plaintiffs proceed for recovery of damages consequent of breach of an implied term or condition of the contract made 12 December 2013 between Mr Kartsaunis for and on behalf of the plaintiffs and Mr Francis for the first defendant (his company) that both the visual inspection and the report provided by the defendant would be performed with due skill and care. Those terms were implied at common law and pursuant to s 60 Australian Consumer Law (ACL).
4. By identical defences filed 15 May 2015 at paragraphs 21 to 24 the defendants rely on disclaimers appearing at pages 3 and 39 of the subject defendant report to the effect that the report did not guarantee that there was not termite damage nor notify of termite activity or damage in areas of the property not accessible for visual inspection. Whilst, in my opinion, the scope of the defendants' duty as defined in the description of visual inspection contained within the contract and set out above in these reasons, bears out the appropriate approach contained within that pleading of the defence; little turns on it because the plaintiffs, as properly conceded by counsel in final oral submissions, did not prove identifiable signs of termite activity or termite damage observable or detectable on visual inspection by Mr Francis at the time of his inspection on 16 December 2013.
5. The plaintiffs also proceed in common law negligence. Again, the scope of the duty to investigate and to report is defined by the limitations of visual inspection expressed in the retainer as evidenced by the report. These terms define the relationship of the parties including as to scope of the duty to inspect: Astley v Austrust Limited (1999) 197 CLR 1. By so defining the service contracted, consistently with the balance of the contract, the disclaimers do not limit the obligation of due skill and care in the performance of that defined inspection and therefore do offend s 64 ACL. The guarantee of due care and skill implied into the contract by s 60 ACL is assessed at a common law negligence standard. The provisions of the Civil Liability Act (CLA) apply to both the claim in contract and the claim in tort; s 5A CLA. Negligence is to be assessed pursuant to the provisions of s 5B CLA.
6. That the risk of harm that might be suffered by the plaintiffs in the event of Mr Francis failing to exercise due skill and care in the provision of his report was foreseeable and not insignificant and that a reasonably prudent pest inspector in Mr Francis' position would have taken that care, in my opinion, for the purposes of s 5B CLA is beyond question. Indeed, Mr Francis personally accepted that clients receiving his reports prior to purchase of property would rely on them and might suffer harm in the event that he were careless in his inspection or in his report of what he found on inspection. He gave the following evidence in cross examination (transcript page 224 line 50 to 225 line 45). "You understand that people generally in that position are looking to the report you provide to get assurance that, notwithstanding what they're seeing, there are no structural defects in the property and there's no termite damage to the property. Correct? Objection - allowed. Q: That was your understanding, wasn't it? A: Yes, it was my understanding. Q: In providing that report or reports of that nature, you understood that if you made a mistake in the report, in other words if you got it wrong, to use the vernacular, your client could lose money. A: Yes. Q: Because they might pay, for example, for a property that they would not have bought had they known that it was truly, for example, termite infested when you reported that it wasn't. A: Yes. Q: That was quite foreseeable to you, wasn't it? A: Yes. Q: You are actually the sole employee and operator of your company, aren't you? A: Yes. Q: So you are the alter ego of the company, or the company is your alter ego? A: Yes. Q: You are the sole director, shareholder and employee? A: That's correct. Q: You would accept, wouldn't you, that in the business of providing reports of this nature, you are obliged to exercise reasonable skill and care? A: Yes. Q: All of those matters that I just put to you are matters which in your mind were applicable to this job? A: That's correct."
7. I repeat, the plaintiffs' approach to proof of breach was not on the basis of identifying signs of termites or of termite damage overlooked by Mr Francis. The plaintiffs' case did not identify precautions which Mr Francis failed to take during his inspection and reporting. Whereas in paragraph 10 of the Statement of Claim the plaintiffs pleaded the allegation of breach of contract and of common law as failures to report "the presence" of termite activity and of termite damage in the property; in fact the plaintiffs' approach to proof of the case on liability was to rely upon the extent of infestation discovered after completion of the purchase (24 January 2014). The plaintiffs relied upon photographs taken from about the end of January and during the period to about September 2014 of the extensive damage to the property and extensive termite activity. During that period the plaintiffs engaged Mr Howard of Elite Pest Management whose report dated 31 January 2014 (Exhibit B) identified termite activity and damage and several pest exterminators including Clever Pest Control (alter ego Mr Roubin). Only Mr Roubin gave affidavit and oral evidence in the plaintiff case.
8. The plaintiffs did not rely on expert opinion evidence that the damage and termite activity found after completion of the purchase was: 1. Activity and damage observable to an inspector prudently conducting a visual inspection on 16 December 2013; or 2. Damage or activity of which presentation ought to have been detected by a prudent pest inspector in the course of performing a visual inspection of the property on 16 December 2013.
9. Putting aside the reference to coptotermes in paragraph 10 of the Statement of Claim, of which neither party made anything in the running of the case, there was no evidence of admissible opinion exposing specialist reasoning on a scientific basis whereby analysis of the damage discovered after settlement of purchase of the property and infestation observed at that time, was identified with presence in the property of active termite or of termite damage and/or workings in the interior or about the exterior of the house, in the roof void or the subfloor of the property observable to a prudent licensed pest inspector performing a visual inspection on 16 December 2013.
10. In written closing submissions at paragraph 18 the plaintiffs put proof of their case as follows: "If the Court finds that evidence of termite damage and/or infestation would have been observable with reasonable skill and care in late January/early February 2014, it would infer that it would have been so observable on 16 December 2013: 1. There is a presumption of continuity in view of the brevity of the period 16 December 2013 to 25 January 2014 (40 days). 2. The extent of the damage is such that, absent evidence to the contrary, a lay observer would conclude that it must have occurred over a long period. 3. [The defendants'] insurer had [the] property assessed by an expert, Mr Starkey, on 2 April 2014 following notification of [the] claim. There is no evidence concerning the results of the inspection nor of his opinion. The Court would draw the inference more comfortably in view [the defendants] failure to adduce such evidence - Jones v Dunkell per Kitto J [footnote omitted]. 4. The weight to be attached to evidence is determined with reference to the capacity of a party to adduce it [authorities cited]. 5. There was extensive termite damage to the studs and noggins in the bathroom wall which damage had been partially repaired before [Mr Francis'] inspection. It is common ground that [Mr Francis] found no evidence that the property had been the subject of termite treatment (which is effected by installation of a chemical barrier in holes drilled in concrete around the perimeter of the building). He so stated in his report. In those circumstances it is unlikely that termite infestation occurred, ceased spontaneously (i.e. without treatment) such as to be not evidenced on 16 December 2013 and then re-occurred on or before 25 January 2014." (Words within brackets inserted and bold added).
11. In my opinion, the inference for which the plaintiffs submit is not available on the evidence for the following reasons: 1. I do not accept the presumption of continuity submitted by the plaintiffs in paragraphs 18(a) and (e) because termite damage and indeed the presence of active termites is not shown on the evidence to be a progressive condition or a continuing condition. Damage caused by termites over one or more events of infestation over the history of the property would be cumulative but that does not infer that the progress of the damage was a continuing course. In the reports of pest inspectors and in the oral evidence of pest inspectors it is commonly stated that termites move away if disturbed. There is no direct or opinion evidence of continuity of infestation. Indeed, there is no evidence of how long ago the damage that was found after removal of wall linings and invasive inspection after purchase had existed. There is no evidence of when the infestations which caused the damage occurred. There is no evidence that the termite activity including mud trails found after purchase was a condition, the progressive development of which was explainable so as to identify presentation of termite activity on 16 December 2013 detectable by a prudent pest inspector; 2. I do not agree with the plaintiffs' submission 18(b) and (e) that the post purchase discovery of termites, termite workings and termite damage, permit me as a lay observer to conclude that signs of it ought to have been detected by Mr Francis on 16 December 2013, albeit I agree that the evidence, particularly the photograph Exhibit H, which I discuss below, establishes that, at least in some locations, termite damage did occur sometime prior to 16 December 2013. 3. Whilst the parties agree that on 2 April 2014 Mr Laurie Starkey inspected the property on behalf of Proclaim, the defendants' insurer's claims manager, there is no concession that Mr Starkey in fact provided a report. Mr Starkey's inspection preceded the issue of proceedings by the plaintiffs. There is no evidence of the questions upon which Mr Starkey was retained to express his, assumedly, expert opinion. There is no defendant argument claiming privilege of the report. For the purposes of argument, if we assume that Mr Starkey's written opinion dealt with the issues of termite infestation, termite workings and termite damage and the issue of breach subsequently pleaded in paragraph 10 of the Statement of Claim; that the defendant did not serve the report does not raise an inference filling a gap in the plaintiffs' evidence. At best, that the defendant has not relied upon evidence of Mr Starkey could have the effect that an inference favourable to the plaintiffs for which there was ground in the evidence, might be more confidently drawn - Jones v Dunkell (1959) 101 CLR 298 per Kitto J at 308.
12. For consideration in this case is the evidence of inspection in fact undertaken on 16 December 2013, which evidence is only given by Mr Francis, contained in his report and in the photographs taken by him during the course of that inspection, on the one hand; in the absence of any expert opinion in the plaintiffs' case to the effect that termite activity or damage leading to that discovered after purchase, presented for detection during prudently conducted visual inspection on 16 December 2013.
13. On the other hand, there is positive evidence against a finding of the presentation of signs of infestation on 16 December 2013. In addition to evidence given by Mr Francis during cross examination, to which I come later in these reasons, there were photographs contained within a Ray White Lakemba sales brochure (Exhibit F) and photographs taken by Mr Francis during the course of 16 December 2013 inspection, being Exhibits 4, 6 and 7.
14. When shown the photographs taken by Mr Francis during cross examination, the plaintiffs did not dispute the state of the property depicted. Mrs Alexandrou was shown the collection of photographs contained in Exhibit 4, being enlargements of those contained within the subject defendants' report Exhibit D. Whilst Mrs Alexandrou denied noticing cracks in the wall and in the ceiling joists as shown in the photographs, she conceded that during her inspection of the property she had noticed the deteriorated and peeling paint depicted. Her evidence was consistent with her recollection based on a superficial inspection lasting only ten or fifteen minutes. Indeed, she could not recall a window with bars on it as shown in a photograph contained within the exhibit, which feature one would think to be reasonably memorable.
15. There is no evidence contesting the accuracy of the photographs taken by Mr Francis at the time of his inspection. Those photographs compose a record consistent with a thorough visual inspection of the property and inconsistent with a suggestion that Mr Francis did not attentively perform a visual inspection. The only other relevance of the photographs to me is that they do not show any distortion or other visible physical features of the property identifiable by me or otherwise identified in the evidence as presentation of active termite infestation in the roof void or of termite damage and/or workings otherwise about the property.
16. Ultimately, the question for consideration is whether the fact of what was discovered from 25 January 2014 supports a positive inference that the presence of termites and/or termite damage was available to visual inspection on 16 December 2013 such as would imply negligence by Mr Francis, as an affirmative conclusion established to the reasonable satisfaction of a judicial mind: Jones v Dunkell (1959) 101 CLR 298 per Dixon CJ at 304. In my opinion, it does not.
17. In response to the plaintiffs' written submission 18(d), referring to their capacity to adduce evidence, early on the first morning of the hearing and again on the second day of the hearing I enquired of the evidence connecting the fact of discovery of termite infestation and termite damage after settlement of the purchase, with the allegation of what ought to have been found and reported on 16 December 2013 by the defendants. Late on the second day of the hearing, the plaintiffs introduced the affidavit of Mr Roubin, a qualified pest inspector, who had attended the property on 6 February 2014 for the purpose of providing termite treatment. Counsel for the defendants pointed to the plaintiffs' breach of the Court directed timetable for service of expert reports and informed me that coming late in the hearing as it did, he was significantly disadvantaged in regard to the opportunity of obtaining proper instructions to cross examine Mr Roubin on that part of his affidavit which contained expert evidence. The plaintiff made no application for adjournment.
18. I admitted the affidavit of Mr Roubin, including his report (Exhibit B) annexed to his affidavit, but limited to the facts of his inspection of the property. I rejected paragraph 17 of his affidavit which contained a bald statement of opinion, not satisfying the requirements of expression of reasoning and expert opinion explained by the Chief Justice in HG v The Queen (1999) 197 CLR 414 and as set out in UCPR 31.27, as well as on the basis a failure to comply with the UCPR and the court ordered timetable in regard to service of expert opinion report evidence. Indeed, I was informed from the bar table by counsel for the defendants, without objection from counsel for the plaintiffs, that upon receipt of Mr Roubin's affidavit, solicitors for the defendants on 27 May 2016 had written to the plaintiffs' solicitors advising that they would object to Mr Roubin's affidavit.
19. Whereas when Mr Francis inspected the property on 16 December 2013 the property was tenanted, at the time of Mr Roubin's inspection post-purchase on 6 February 2014 the property was vacant and furniture had been removed. In his report Mr Roubin informed that no inspection was made and no report was submitted in regard to inaccessible areas which included but were not limited to concealed frame timbers, eaves, areas concealed by concrete floors, wall linings, floor coverings, furniture, pictures, appliances, insulation and other items. Such a clause appears from the reports exhibited in the case to be a standard provision limiting the scope of visual inspection.
20. At paragraph 2.1 Mr Roubin's report confirms his having found active termites (live termites) in the interior subfloor. He did not find a termite nest. At Clause 2.2 he reported that termite workings and/or damage were found mainly in the laundry area at the rear of the property, ceiling joists, subfloor timbers, wall studs, skirting boards and a window sill. It is to be remembered that at the time of Mr Roubin's inspection wall linings had been removed at least in the kitchen, bathroom and master bedroom, which wall linings were in situ at the time of Mr Francis' inspection on 16 December 2013. At Clause 2.3 of his report Mr Roubin provided the warning to: "Be aware that at the initial stages of termite attack there is often no evidence that an attack has commenced …" Clause 2.3 is not supportive of the plaintiffs' submission that because the termite activity was found post-purchase, it ought to have been detected on 16 December 2013.
21. In chief his oral evidence was (transcript page 173 line 10): "So I found termites, active termites, in the laundry area at the back; active termites underneath the house, so the sub-floor; roof void as well, I believe; there was damage throughout the entire property, inside the roof, sub-floor, bedroom walls, bathroom walls, workings discovered externally on the cladding window, joists - it was pretty far, it was a lot of damage, a lot of workings and activity as well."
22. In my opinion, Mr Roubin's evidence does not advance proof of presentation of termite activity or termite damage on 16 December 2013. In reality it goes only to the undisputed fact of presentation of termite activity and termite damage after purchase.
23. Generally, as to the plaintiffs' case, exhibits A, G, H, J and K show extensive deterioration of structural wall timbers being studs and noggins in the areas of the master bedroom, kitchen, bathroom and laundry. Exhibit A contained a collection of six photographs of the internal wall of the laundry showing what Mr and Mrs Alexandrou described as a "termite sub-nest". Exhibit A photographs were taken in or about July or August 2014.
24. Mrs Alexandrou described Exhibit G as showing the exposed timbers within the bathroom wall. In fact the photograph shows the exposed timbers of two rooms being the dividing walls, the linings having been removed such that one can see the corner of what in the evidence of the other photographs and as described by Mr Alexandrou is the laundry and the sub-nest. I accept that Exhibit G was taken in about September 2014 after wall linings were removed in the course of termite treatment.
25. Exhibit M is a collection of seven photographs taken by Mr Alexandrou in about February 2014 of timber under the tiles in the roof void showing substantial termite workings and damage.
26. Exhibit N is a photograph taken by Mr Alexandrou showing the external bathroom window architrave which is broken away. This was again a post purchase settlement discovery.
27. The plaintiffs put to Mr Francis the evidence of post-purchase discovery of termites including the photographic evidence. Mr Francis had performed hundreds if not thousands of pre-purchase inspections and he must be accepted as a pest inspector of significant experience.
28. It was put to him that he ought to have inspected the main bedroom window sill upon which Mr Alexandrou was leaning on 25 January 2014, when it crumbled and the damage below was discovered. Mr Francis said he could not access the window sill inside the master bedroom because the property was tenanted and at the time of his inspection a mother and child were asleep in the bed. He did, however, perform an external examination of the window sill. There was external cladding fixed to it which made percussion testing by tapping ineffective because an accurate sound from the wood below could not be detected. Mr Francis gave evidence that hollow sounds are also heard from tapping when the wood is rotten, not just because of tunnelling by termites. In cross-examination he was challenged on his evidence of having found normal ants in the damaged window sill timber. Mr Francis said that he found, and his report recorded, rotten timbers surrounding windows and ants are found in rotten timber. Having observed Mr Francis in the witness box, I accept his answers.
29. Mr Francis did not dispute that the photographs of the roof void taken after settlement of the purchase and as contained in Exhibit M showed substantial termite workings. When shown Exhibit L which depicted timbers under tiles within the roof void, he also readily accepted that those photographs showed significant termite damage which he would have reported if he had seen it on 16 December 2013. When shown Exhibit N which is a photograph of the external bathroom window with cracks in the window architrave as if it were breaking away from the wall, Mr Francis immediately agreed that the photograph depicted termite damage. In relation to each of these photographs he denied that what is depicted was available to him to see on his inspection on 16 December 2013. I accept his evidence in that regard.
30. In relation to plaintiff written submission 18(b), the damage shown in photograph Exhibit N is put as evidence which the lay observer would conclude occurred over a long period. I do not consider assessment of time taken for deterioration of timber by termites to be a matter for lay opinion. That said, Exhibit N depicts a separation of timber of a window frame and what appears to be loose flaking paint about the separation crack. As a lay observer, that would not be something indicating to me that the crack had been open and the paint membrane separated for an extended period. I say this merely in order to address the plaintiffs' submission.
31. Mr Francis was shown Exhibit H, a photograph in which I understood plaintiffs' counsel to place particular significance. It shows internal wall timbers of noggins and studs so consumed by termites that the timbers are not continuous for what appears to be substantial lengths of perhaps half of the height from the floor to the ceiling. The timbers are of different colours. The brighter timbers are fixed to the darker coloured timbers which are obviously damaged. The repair was referred to as double studs. Mr Francis properly conceded the old timber showed termite damage pre-existing the date of his report. Again, when Mr Francis inspected that part of the house the wall linings were in place and the damaged timbers were not exposed and there was no evidence of physical presentation or otherwise signs detectable on visual inspection of that termite damage which he missed.
32. In further answer to plaintiff submissions 18(a), (b) and (e), Exhibit H viewed in context with the evidence infers termite damage at least several years earlier. I say this because the Oregan double studs were placed in the course of a repair of that damage, and then covered by wall linings, which internal walls were painted. It is uncontested that at the time of Mr Francis' inspection, paint on surfaces was so old as to be deteriorated. Whether the termite infestation which caused that damage and repair would have continued and, if so, how it would have likely progressed is beyond the realm of lay opinion and a matter for specialist knowledge exposed by expert opinion evidence in admissible form. In addition, Exhibit H must be taken as showing an historically distant repair of termite damage, which repair would necessarily have disturbed the termites. Combined with the facts that the repair remained visually intact over the intervening years, was not observed by any of the plaintiffs on 12 December 2013, Mr Francis on 16 December 2013 or by Mr Tsikouris or Mr Georgios Alexandrou and Mr Alexandrou, before removal of wall linings, on 24 and 25 January 2014; if there is any inference to be found, that inference is that the termite activity which caused the damage seen in Exhibit H did not continue.
33. The high point of the plaintiffs' challenge to Mr Francis' evidence (transcript page 255 lines 10-30) was cross-examination of his use of the word "possible" in his earlier, unread affidavit. He was challenged on the basis of having said "possible" rather than "probable" when expressing his opinion that what was found by Mr Roubin could have occurred in the seven weeks between their respective inspections of the property. Mr Francis whilst capable in the English language, spoke with a strong accent. The transcript reads: "Q: And that's the fact, isn't it? It's possible? A: Yes. Q: But you cannot say probable? A: Probable too. Q: But you didn't say that in your affidavit did you? A: I am, I can only write English as much as I, you know, I can. I cannot, I don't know the legal term, I am not put not putting "probable" or "possible"."
34. Having observed Mr Francis as he gave his evidence, I accept that his opinion was that the termite workings and damage, and active termites, commented upon by Mr Roubin, occurred after his inspection. He was adamant in his denial that it presented in a way reasonably available for detection by him in the course of his visual inspection on 16 December 2013. Mr Francis said transcript page 235 line 50 to page 236: "Q: In your experience, it is extremely unlikely that that would have occurred in six to seven weeks before the photograph was taken is it not? A: In summer it can happen. Q: I appreciate that anything can happen, what I am putting to you is it is extremely unlikely isn't it? A: No it's not. Q. Are you sure you're not just saying that because you realise that you're being criticised for missing damage in this roof? A. No, I'm not saying that because of that. I have seen lots of damage happen within six weeks.
35. In conclusion, I find that the evidence of the report made by the defendants on 16 December 2013, corroborated by the volume of photographs taken at the time of that inspection, is evidence of the visual inspection carried out. None of the photographs show identifiable signs of termite activity or termite damage which ought to have been detected by a prudent pest inspector. There is no evidence of omission, inadequacy or lack of thoroughness during investigation or reporting by the defendants on 16 December 2013. Combined with my consideration of the oral evidence, particularly that given by Mr Francis; these facts are not successfully challenged or defeated by the fact of extensive termite activity and damage discovered by the plaintiffs and pest inspectors retained by them after purchase of the property, forty days or more after the date of the subject inspection. On the basis of that evidence I do not find that the defendants failed to take any precaution, made errors or omissions in the course of Mr Francis' inspection and reporting against the acknowledged or foreseeable and not insignificant risk of harm had he done so.
36. On the physical evidence, and subject to the plaintiffs' case of defendant admission, I do not find that the defendants failed to exercise due skill and care within the meaning of s 60 ACL, nor do I find the defendants negligent pursuant to the provisions of s 5B CLA.
37. This leaves consideration of the plaintiffs' case that on 28 January 2014, Mr Francis admitted that he had missed the termite infestation during his inspection. Mr Francis denied the admission. The contest came down to recollections of what was said during an argument. It is to be viewed in the context of the independent evidence of the subject defendant report and photographs taken on 16 December 2013, which I have found to be consistent with a thorough and complete inspection, and a photographic recording of the house not revealing evidence of termite infestation detectable on visual inspection.
38. Prior to the disputed discussion, on 28 January 2014, Mr Alexandrou had shown Mr Francis the damaged studs and noggins exposed by Mr Alexandrou having removed the wall linings in the main bedroom and the bathroom. Mr Francis responded with words to the effect: "I can't look behind walls". Mr Francis then obtained access to the roof void into which he briefly looked through the manhole and on his return down the ladder, according to the plaintiffs, Mr Francis said words to the effect: "To be honest, I missed the termites in the roof". According to the plaintiffs' version of the conversation Mr Francis offered to replace the joist in the roof and to provide a free pest treatment.
39. Mr Francis denied stating that he had missed termites in the roof and that he had offered those compensations. His evidence was that on 28 January 2014 he looked inside the roof but did not perform a detailed inspection and climbed down the ladder in order to get his camera. As we have seen from his report and from Exhibits 4, 6 and 7 it was his usual practice to photograph the course of the inspection undertaken by him.
40. Each of the plaintiffs gave evidence that they were 100% sure in their recollection that Mr Francis made the admission. Mr Francis also claimed to have a complete recollection such that he was definite in his denial of having made the admission. Each of the plaintiffs and Mr Francis is guilty of having claimed perfect recollection in this regard.
41. On the whole of the evidence, I do not find that Mr Francis made the admission and in rejecting that submission from the plaintiffs, I accept that each of them and Mr Francis gave evidence honestly. In coming to this finding, I am mindful that preceding the conversation Mr and Mrs Alexandrou had already formed the view that the termite damage to the property exposed to them after removal of the wall linings, was so substantial that they were, as stated by Mrs Alexandrou at paragraph 23 of her affidavit made 4 August, 2015 "devastated and in shock". The plaintiffs accessed Google to search about termites. No party made a contemporaneous note of the discussion.
42. I am also mindful that the discussion was so heated that Mr Alexandrou had to restrain or calm Mrs Alexandrou. Naturally, the making of an admission would not be expected to incite that heat within the discussion. I am concerned that the plaintiffs' recollection is affected by their preconceived opinion of fault of Mr Francis. The plaintiffs do not describe the meeting of 28 January 2014 as an engagement with Mr Francis for the purpose of seeking his advice but rather as an engagement to point out to him his wrongdoing. It occurs to me that the making of such an admission is unlikely when photographs, particularly the photograph appearing on page 30 of his report, shows that on 16 December 2013 he did inspect the roof void and that the timbers did not show mud trails, termite activity or termite damage. Mr Francis readily conceded activity and damage was visible in post-purchase photographs.
43. Weighing recollections of what was said during a heated discussion one and a half years before the plaintiffs made their affidavits, against the 16 December 2013 photographic evidence, the proper approach is to prefer that Mr Francis did not miss termite activity on 16 December 2013 and therefore would be unlikely to have admitted that he had done so when arguing with the plaintiffs on 28 January 2014. In the heat of argument, Mr and Mrs Alexandrou have misheard or misinterpreted something said: Effem Foods Pty Limited v Lake Cumbeline Pty Limited (1999) 161 ALR 599; HCA 15 at [15] and [16]. I prefer the evidence of Mr Francis in this regard. I reject the plaintiff case of admission and confirm my finding that the plaintiffs have failed to prove breach of the implied term of contract or guarantee (s 60 ACL) or that the defendants were negligent.

Damages

1. At paragraph 28 to 30 of the identical defences, the defendants plead the consumer complaints procedure set out in the defendant report Exhibit D as terms of agreement between the parties. The plaintiffs contest whether those terms were part of a contract, the only evidence being that the defendants were retained by telephone instructions from the plaintiffs' solicitor Mr Kartsaunis I do not need to resolve the issue because paragraph 30 of the defences pleads only relief in costs consequent of the proceedings being set aside or otherwise adjourned, neither of which forms of relief the defendants sought.
2. The plaintiffs entitlement to damages is to be determined pursuant to the provisions of Clause 5D CLA in relation to the claims of tort and s 267(4) ACL in relation to the claim for breach of s 60 ACL, guarantee under contract, or otherwise as damages for breach of contract.
3. The plaintiffs describe their financial loss suffered in paragraph 11 of the Statement of Claim, stating that in reliance upon the said report they purchased the property for the sum of $570,000 and that had they been aware of the nature and extent of the termite infestation and damage, they would not have proceeded to purchase the property. In each of their affidavits the plaintiffs say they would not have gone ahead with a purchase if the building and pest inspection report had identified the active termites and termite damage which was subsequently discovered.
4. A fundamental problem for the plaintiffs in their claim that they would have exercised the right of rescission under s 66U of the Conveyancing Act is that there is no evidence of what they say should have been reported in the visual inspection report because there is no evidence of the content of what Mr Francis ought to have reported but failed to do. There is therefore no evidence supportive of the proposition that a report of, for instance, termites found in the roof void, would have led to an invasive investigation discovering the extensive damage including such as that to the studs and noggins behind the wall linings. Hypothetically, had termite activity only in the roof void been discovered, the plaintiffs might have completed the purchase with a determination to have the property treated for termites, not realising the extent of the damage hidden behind wall linings; but thereafter, perhaps in the course of their improvement work, have found that extensive damage. For these reasons, damages to which the plaintiffs would be entitled had they been successful in the action, would be limited to compensation for repair cost and inconvenience such as would repair them to the position they would have been in but for the defendants' breach. In any event, closing oral submissions, counsel for the plaintiffs described the claim for damages as costs of repair and inconvenience.
5. At the commencement of the case I was presented with a Court bundle which included a substantial collection of invoices and receipts documenting the work which the plaintiffs in fact caused to be carried out. I invited the parties to try to come to an accommodation as closely as they could and if there were any issues of substance which were worthy of dispute by hearing in court, then we would see what the parameters of that hearing would entail. I voiced consideration of referring out assessment of the question of the quantum of building works. The parties embraced that approach and there was very little oral evidence on the question of damages.
6. In oral submissions counsel for the plaintiffs put assessment of damages in the following terms (transcript page 263 line 40 to 44: "The real measure of their loss is what they've lost in addition to the purchase price irrespective of what they paid for the property. In other words, had they paid $1 million for the property and found that it still needed $100,000 worth of work, their loss would still be $100,000." I was invited to take a "broad brush" approach. The plaintiffs submitted that the cost of restoring the property to a state as if it had been termite free at purchase, would have been "a figure of about $80,000" (transcript page 264 line 45).
7. The repair works were undertaken by the plaintiffs personally outside of working hours and on weekends. On the one hand the defendants were saved the cost of a professional builder but on the other hand the expenses incurred by the plaintiffs, even taking into consideration the approach adopted by Mr Mangioni upon which the plaintiffs relied are, in my view, an imprecise measure of reasonable cost.
8. In order to illustrate my concern I chose as an example from the documentation of the costs, the cost of a kitchen tap in the sum of $391.00. A schedule of the damages recorded "kitchen tap, had to buy a new one as the old one could not be saved". Bearing in mind the dilapidated state of the kitchen within the below average condition premises at the time of purchase, plus, the intended improvements already contemplated by the plaintiffs without precision down to the cost of specific items; I was concerned as to whether if a loss was to be incurred for the tap at all, it would not be a much less expensive tap, such as any plumber may already have in his vehicle. I floated the idea of a cost at $100.00. Counsel for the plaintiffs responded reasonably (transcript day 4 page 266 line 36 to 40): 'Let me say, to answer Your Honour's questions. The first is I wholeheartedly accept them and with respect embrace what Your Honour says about the cost delving into a further enquiry in relation to whether this is in fact $80,000.00 or $70,000.00."
9. In my view a conservative approach to repair costs including costs of utilities but excluding rent, is warranted because the plaintiffs must have gone about that work making personal choices in relation to improvement of the property in the course of the repairs which improvements would, in the same way as the example I chose in relation to the tap, have likely exceeded the cost of restoring the property to its standard of finish and facility at the time of purchase.
10. Counsel for the defendants joined in the adoption of the "broad brush" approach. I indicated assessment of the building costs at $65,000.00 and he responded, calling that indication "a pragmatic way forward". I do not suggest that the defendants became fixed with that figure and subsequently plaintiffs' counsel suggested that some additional sum be added on account of the value of the plaintiffs' time in carrying out the work.
11. Adopting the "broad brush" approach and having considered the evidence to the extent to which the parties required me to do so, I am of the view that repair costs carried out by the plaintiffs after purchase and concluding in February 2015 be assessed in the sum of $65,000.00, including the cost of utilities.
12. There is no contest that the plaintiffs were forced to pay rent at the rate of $480.00 per week for the time that they were out of the property. Counsel for the plaintiffs invited me to conclude the rental period at February 2015, made up of the time taken to complete pest treatment plus the time taken for repair works. Counsel for the defendant, in my view, appropriately challenged the length of that period on the bases that the extent of the works identified ought not, on a reasonable assessment basis, be allowed at a duration of a year. Counsel for the parties agreed that actual repair work only commenced in October 2014, the plaintiffs having taken the interim period of between 24 January 2014 and the end of September 2014 to have the termite situation investigated and treated. In my view, that is an excessively long period. At paragraphs 41 to 50 of her affidavit made 4 August 2015, Mrs Alexandrou provides a sparse sketch of the order of events of the carrying out of the work, including that tradesmen were contracted to repair the dining room, laundry, main bedroom, bathroom, kitchen, some of the roof and half of the floor. I allow the period from October 2014 to the end of January 2015 for the carrying out of the repair work; however damages for rental incurred must be assessed at a reasonable period for conduct of pest eradication treatment.
13. Treatment of the termite infestation commenced with the retaining of Pink Pest Control for the installation of a bait system, which included checking of the termite traps on a monthly basis. Mrs Alexandrou's affidavit discloses that when the termite traps provided "no result" by July she and her husband were "fed up" and retained Clever Pest Control, which employed a chemical treatment to the house. I was directed to invoices from Pink Pest Control showing that baited traps were trialled for five months. There was no opposition from counsel for the plaintiffs to my suggestion of allowance of a few weeks between implementation of chemical treatment and the commencement of building works.
14. The first report of Pink Pest Services appearing in the documents contained within the Court book tendered by the plaintiffs is dated 26 March 2014. In my view, two months to commencement of termite eradication is an unreasonably long period. In my view, five months trialling termite baited traps is an unreasonably long period for the purposes of compensation. The defendants, appropriately in my view, did not contest that it was not unreasonable for the plaintiffs to first attempt baiting by traps and then the alternative eradication method of chemical treatment.
15. On the basis of the evidence to which I was directed and applying the "broad brush" approach as I was invited to do by the parties, in addition to the three months (incorporating the Christmas shutdown for tradesmen) which I have allowed for the carrying out of the repair works, I allow four months compensation on account of rental. In this latter allowance, I contemplate the reasonable period for termite eradication, firstly by baited traps and subsequently by chemical treatment, and one month for investigation, organisation and administration, noting that the defendants have saved the cost of a professional builder coordinating the works. This makes a total allowance of seven months (say thirty weeks) at $480.00 equals $14,400.00, which I round to $14,000.00.
16. Of the total damages for building costs and rental in the sum of $79,000.00, obviously the vast majority was incurred in the few months between October 2014 and the start of February 2015. Interest pursuant to s100 CPA approximates at about 6% over the relevant period up to judgment. Applying the "broad brush" approach which the parties have invited me to take, I allow interest at 6% for a period of 1.7 years equals (rounded) $8,000.00.
17. Had the plaintiffs been successful in the proceedings I would have awarded damages in the sum of $87,000.00 inclusive of interest.

Orders

1. The orders I make are as follows: 1. Judgment for the defendants. 2. Plaintiffs to pay the defendants' costs of proceedings.

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