Boncristiano v Lohmann [1998] VSC 228; [1998] VICSC 5

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WINNEKE, P.: In my opinion this appeal should be allowed, but only to the extent of increasing the damages awarded against the builders by an amount of $1,296.50 to accommodate the cost of flashings, and, apart from reconstructing the orders to make them accord with the learned judge's findings, the appeal should otherwise be dismissed. I publish my reasons.

BATT, J.A.: I also agree. I publish my concurrence in the reasons of the President.

WINNEKE, P.: Gentlemen, it is a bit awkward because, as you recall, his Honour published his orders in a global form when in fact he found against the builders alone in respect of the deficient workmanship on the super-structure, that is what was referred to here as the red cedar cladding, and what we have done, if I might say so, is to find that, in failing to allow an amount for the making of the building watertight, that is the flashings, his Honour was in error. The appeal is allowed in so far as his Honour erred in that respect, and we have ordered that an extra amount of $1,296.50 be added. That, of course, will mean that the amount awarded in total against the builders will be increased to that extent, and that will come to about $9,399.16, together with such additional component for additional interest that that sum will carry. That will have to be calculated. I am not sure just what it is worth because the builders are not here to agree to it, but it is going to be necessary, I think, Mr Wilmoth, just to try and quickly work out a figure to add to the $9399.16. Otherwise the judgment for the plaintiffs against the Shire, or what should have been judgments against the Shire, namely in the sum of $3,746.73, will remain the same, that is, in respect of the sub-structure, the appeal having been dismissed in that regard.

What we have proposed by way of orders is the following. You might just take these down:

1. That the appeal against the judgment and orders made by Judge White in the County Court on 24 August 1995 is allowed.

2. That orders 1 and 2 of his Honour's said orders are set aside and in lieu thereof it is ordered:

1.(a) There be judgment for the plaintiffs against the first defendant builders in the sum of $9,399.16 together with an additional amount of interest in the sum of $718.80; that is a total of $10,117.96.

(b) There be judgment for the plaintiffs against the second defendant Shire in the sum of $3,746.73;

2. The contribution notices filed respectively by the first defendant builders and the second defendant Shire be dismissed.

3. The appeal against the damages awarded against the second defendant Shire Council is dismissed with costs, including reserved costs.

The reason why, gentlemen, it does not seem to me to be necessary to set aside the other orders is that I doubt very much that what we have done is going to affect the orders for costs which were made down below. Whether or not you want to read what we have said and make some submissions to us is a matter I leave in your hands.

MR WILMOTH: Your Honour, we believe we may be able to agree on those matters. I wonder if there might be liberty to mention it if necessary.

WINNEKE, P.: Can I leave it on this basis? I think there ought to be a fourth order. My recollection was that at the hearing of this appeal we did in fact give leave to amend the name of the second respondent Shire to the Hume Shire Council, did we not?

WINNEKE, P.: I think we had better formally make that an order, that the name of the respondent Bulla Shire Council be amended to read "Hume Shire Council".

Do you have a note of the proposed orders, Mr Wilmoth and Mr Clarke, so that you can have a look at them and, if there is any alteration to be made, let us know?

WINNEKE, P.: If you can work out a sum for the additional interest on that amount against the builders, simply let the Registrar know and we can include it in the order. I do not think you can agree upon that. It is really a matter you will just have to work out.

WINNEKE, P.: It cannot be done by consent, but if you can work it out let us know and we will put it in.

Subject to hearing from you about the matters, the orders will be in that form.

Building - Claim for damages against builders, shire and former solicitors - Compromise of claim against solicitors -- Whether settlement sum required to be taken into account in assessing damages against builders - Double compensation - Discussion of principles.

Claim for general damages by building owners for inconvenience and distress - Principles in accordance with which such an award can be made discussed - Whether such award required to be "modest" - Clarke & Anor. v. Shire of Gisborne [1984] V.R. 1971 considered.

For the Appellants Mr. G.R. Ritter Q.C. and Trumble Szanto Braham

For the Third Respondent Mr. Marcus Clarke Michael G. Beasley

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WINNEKE, P.: This appeal is the product of a building dispute which first arose some ten years ago when the first and second respondents, Mr. and Mrs. Lohmann (whom I shall call "the builders") constructed to "lock-up" stage a house for the appellants, Mr. and Mrs. Boncristiano (whom I shall call "the owners") upon the owners' property at 700 Riddell's Road, Sunbury. The third respondent, which was then the Bulla Shire Council, but which is now the Hume Shire Council (whom I shall call "the Shire") was the relevant local authority responsible for approving building plans and specifications and, through its officers, for inspecting the building at relevant times during its construction. The building agreement, which was negotiated between the builders and the owners in July 1987, required the builders to prepare plans and specifications and to construct in accordance with them the house to "lock-up" stage for the sum of $49,000, such sum to be paid in accordance with a schedule of payment set out in the contract.

Very little appears to have gone right between the parties from the outset of construction and, by January 1988, they were in heated dispute as to the quality of workmanship. In that month, at which time some $40,000 was still owing to the builders, the owners provided them with a long list of defects which the builders passed on to the Housing Industry Association. In the same month the Association sent its technical officer, Mr. Parker, to the site where he met with the owners and their solicitor, Mr. Carullo of Messrs. Arthur Phillips & Just (whom I shall call "the solicitors"). Following this meeting Mr. Parker prepared a report setting out such defects, as he saw them, and following advice from the solicitors, the owners reached an agreement with the builders pursuant to which the builders agreed to perform certain rectification work and to reduce the balance of the contract price outstanding by the sum of $4,500, thus leaving a balance to be paid by the owners in the amount of $35,500. The agreement was expressed to be "in full and final settlement of the grievances outlined in the list referred to in the ... report of Mr. Parker".

Unfortunately this agreement did not resolve the differences existing between the owners and the builders. Although a certificate of occupancy was given by the Shire in July 1988 the owners continued to complain that the work carried out by the builders was sub-standard. Throughout the latter part of 1998 and through to 1990 they made a number of claims upon the Housing Guarantee Fund seeking rectification of, or compensation for, a number of defects claimed to have resulted from faulty workmanship. The complaints related largely to the instability of the structure and water penetration which were claimed to be due to deficiencies in both the sub-structure and super-structure of the building. The owners' complaints were rejected by the Housing Guarantee Fund principally on the grounds, so it would seem, that the problems identified were not the consequence of any deficiency in workmanship by the builders, but rather were the product of a failure by the owners to complete the building beyond "lock-up" stage to the point where it was properly protected from the elements.

Ultimately the owners took their dispute to court. By writ issued in the County Court on 1 November 1993, the owners initially claimed damages against the builders and the Shire, alleging that the builders had failed to construct the house in a proper and workmanlike manner and in accordance with the plans and specifications which formed part of the contract; and that the Shire had been negligent in giving its approval to the plans and specifications and in giving its approval to the foundations for the house which had been inspected in July 1987. The claim by the owners was largely focused upon two aspects of the construction:

i. Firstly it was claimed that the exterior cladding of the house, namely the western red cedar weather-boards, was of inferior quality to that specified and had been improperly affixed to the timber frame so as to permit water and wind penetration.

ii. Secondly it was claimed that the sub-structure of the house was inadequate to support the loads imposed by the super-structure. Specifically it was contended that the stumps, bearers and joists were of insufficient number or size to give such support.

The owners claimed a sum of damages in an amount of approximately $9,437 to rectify the deficiencies in the sub-structure and an amount of approximately $11,780 to wholly remove and replace the red cedar cladding, which sum was expressed to include an amount to replace the "anti-blaze" insulation and to replace window and door "flashings". They further claimed an amount of general damages against the builder for "the inconvenience, distress and worry" occasioned to them as a result of living in the deficiently constructed house. In respect of the deficiencies in the sub-structure the owners claimed the same sum of damages (namely $9,437) "further or alternatively" against the Shire, alleging that the deficiencies had resulted from its negligent approval of the plans and specifications and its approval given to the foundations in situ following inspection. It was alleged that the Shire negligently failed to ensure that the foundations complied with the Victorian Uniform Building Regulations and Australian Building Standard A.S.1684.

In their defence delivered to the claim by the owners, the builders, in addition to denying the claims made against them by the owners, claimed that the owners were "estopped from making any claim in respect of the alleged defects" as a result of the settlement which they had made with the owners in February 1988 following the inspection of the premises by Mr. Parker. It was the builders' contention that the settlement had covered the defects in respect of which the owners were now seeking to be further compensated.

In response to this defence the owners sought and obtained leave to add the solicitors who had advised them in respect of the settlement (i.e. Arthur Phillips & Just) as a fourth defendant to the proceedings. In their amended statement of claim the owners contended that they had retained the solicitors to act for them in their 1988 dispute with the builders and that the solicitors had advised them "to settle the dispute on the terms" to which I have earlier referred. The plaintiffs then referred to the "estoppel" claimed by the builders and further alleged that:

"In the event of the Court finding such an estoppel, (the owners) claim that (the solicitors) were in breach of (their) duty of care and (were) negligent and in breach of the retainer in giving the advice referred to ... ."

The owners went on to allege that, as a consequence of the solicitors' negligence they "will have suffered loss and damage (by) being estopped from claiming the damages (alleged against the builders)".

On 10 March 1995, which was shortly before the trial of the action commenced, the owners settled their claim made against the solicitors. The terms of that settlement, which were put in evidence before the trial judge, recited (inter alia) that:

"1. The 4th Defendant [i.e. the solicitors] agrees to pay to the Plaintiffs [the owners] the sum of $5,000.00 within 30 days in full settlement of the Plaintiffs' proceeding herein against the 4th Defendant ... .

4. The Plaintiffs and the 4th Defendant mutually release each other from any liability arising between themselves as a result of the subject matter of this proceeding."

The trial before the County Court commenced on 6 June 1995 and lasted for some eleven days. The owners and the Shire were represented by counsel and the builders, whose business by then was in financial difficulty, appeared in person. It should be noted that between the date of judgment and the date of the hearing of this appeal the builders had been declared bankrupt and, after notification to their trustee in bankruptcy, took no part in the hearing of the appeal.

During the course of the trial a number of experts were called on behalf of the parties. Their evidence was directed, inter alia, to the deficiencies (or otherwise) in the external cladding of the house and the sub-structure thereof. In addition various estimates were put before the judge as to the cost of rectifying the defects. In respect of the external cladding the owners called a Mr. Keith Baglin and, in respect of the sub-structure, they called a Mr. Francis Cichello. On behalf of the builders a Mr. Kevin Hegarty gave evidence in respect of the cladding whilst the Shire called Mr. Robert Lorich, Mr. Ross Greer and Mr. Andrew Anderson in respect of the sub-structure.

Additionally the owners called a treating doctor (Dr. King) and a consultant psychologist (Mr. Walton) to give evidence of the consequences suffered in particular by Mr. Boncristiano as a result of living in the premises.

No challenge was made by any party to the qualifications of the experts so called.

The learned judge published his reasons for judgment and the orders made in consequence thereof on 24 August 1995. Before doing so he summarized his reasons (inter alia) in the following manner:

"In accordance with the conduct of the trial I have dealt with the issues as three discrete claims being, first, the western red cedar and associated secondary matters, the second being the substructure and associated matters, and the third being general damages.

As to the western red cedar I find for the [owners] against [the builders] and allow the sum of $7,600, being the cost of rectification of the whole of the weatherboards as costed by Mr. Hegarty.

As to the sub-structure I find for the [owners] against the ... Shire, and allow the sum of $3,323 for the cost of rectification based on the Lorich solution, plus $700 allowed for making good. I find there is no evidence of sub-structure loss and damage flowing from the actions of the builders ... .

As to the general damages I find for the [owners] in the total sum of $1,750, being a total of $1,500 damages for Mr. Boncristiano and $250 for Mrs. Boncristiano. I find that there is no evidence to associate such general damages with defective sub-structure and accordingly such damages are the responsibility of [the builders]."

The learned judge then raised with counsel the question of whether the owners should give credit in respect of the $5,000 representing the settlement sum paid by the solicitors. Having heard submissions in relation to this matter, his Honour concluded that:

"I propose to allow the sum of $3,000 as being an amount allowed for damages, as such damages would have been occasioned by the building of the subject property and would have related to defects in such building ... . So accordingly I do propose to allow the sum of $3,000 by way of deduction from the total damages in this claim."

In accordance with the sums allowed his Honour ordered that there be judgment for the owners against "the defendants" in the sum of $12,249.52 inclusive of interest.

It appears that the learned judge then received submissions by the parties on the question of costs. These submissions were very much influenced, as I suspect is this appeal, by the fact that on 19 May 1995 the builders and the Shire had joined in making an "offer of compromise" to the owners in the sum of $15,000 together with costs on the appropriate County Court Scale. This offer was expressed to be made and served in accordance with Rule 26 of the County Court Rules. The notice of offer of compromise, it would seem, was included in the Appeal Book with the consent of the parties. It perhaps would have been desirable if it had not been included as it had no relevance to the issues raised on the appeal (see Skafidas v. A.T.M. Industries Pty. Ltd. [1979] VicRp 16; [1979] V.R. 164). No suggestion has been made either at trial or on appeal that the notice was in any way deficient. In accordance with the Rules of Court which take effect in circumstances where a sum offered in compromise exceeds the sum recovered, his Honour ordered that the owners have their costs on the appropriate scale up to 19 May 1995 but that the owners should pay the costs of the defendants from that date. The effect of this order was that the owners became subject to a liability to pay the costs of the trial of the builders and the Shire, a liability which no doubt rendered their judgment, if not wholly, then largely nugatory. As his Honour noted:

His Honour then turned his attention to the cross notices of contribution which had been filed and served upon each other by the builders and the Shire; and ordered that "contribution be apportioned as to 70% [against the builders] and as to 30% [against the Shire]." A counterclaim by the builders was dismissed.

It was accepted by the parties who participated in the appeal that the orders which were ultimately made by the judge were defective both as to amount and form. As to the arithmetic, the parties are now in agreement that the sum allowed by his Honour for the rectification of sub-structure was erroneous in that he allowed the sum of $3,323 which he stated was based on "the Lorich solution" when, in fact, the sum quoted by Mr. Lorich was $2,323. Further, the figure for rectification of sub-structure allowed by his Honour did not allow for the sum of $700 which he had ordered should be added to such cost of rectification for "making good". When allowance is made for these matters and further adjustment is made to the interest sums which are consequentially affected, the parties agreed that the total sum of damages awarded in favour of the owners should not have been $12,249.52, as his Honour ordered, but $11,849.39. Of course these arithmetical errors, being against the interests of the builders and the Shire, have no effect on the consequential costs orders which the learned judge made.

Although the owners/appellants made no complaint against the form of his Honour's orders, it is clear that the "global" form in which they were made does not accord with the findings which had been made. In accordance with those findings his Honour should have entered judgment for the owners against the Shire in the sum of $3,746.73 which was that portion of the total sum awarded attributable to the cost of rectifying the sub-structure (inclusive of interest) a liability which his Honour had found was to be solely imposed upon the Shire. The remainder of the judgment sum, namely, $8,102.66 (which comprised the cost of rectifying the cladding together with the general damages awarded, plus interest but less the $3,000 credited in respect of the "solicitors settlement") should have been awarded against the builders whom his Honour had found were solely responsible for these sums. Indeed, if his Honour had been complying strictly with form, his orders should have distinguished between the awards of $1,500 and $250 which he made respectively in favour of Mr. and Mrs. Boncristiano in respect of "general damages". However such a distinction is, I think, de minimis in the circumstances and, no complaint having been made about it by the owners, I will say no more about it.

If, however, his Honour had made the orders in the form which his findings required, it would have been apparent to him that no order was required on the contribution notices filed by the builders and the Shire and that the proper order should have been one dismissing both such notices.

Ultimately, it is proper, I think, that this Court should ensure that orders are made to properly accord with his Honour's findings even though no complaint has been made about the form of the orders in the notice of appeal. This Court has the power to rectify the orders made notwithstanding the absence of complaint about them in the notice of appeal (Rule 64.22(7)).

It seems to me that the "tragedy", which was his Honour's description of the trial, is only being accentuated by this appeal. As I have already indicated, I suspect that the owners have brought this appeal in the hope and expectation that its outcome will allow them to salvage something from the wreck. Regrettably, they have not, in my view, succeeded in this objective.

By their notice of appeal, the owners have challenged the findings made by the judge on four grounds:

(a) that he was in error in finding that they should give credit for $3,000 of the settlement sum received from the solicitors (grounds 1, 2 and 3);

(b) that he erred in rejecting the evidence of the witness Cichello as to the method of rectifying the sub-floor defects and the appropriate cost thereof (grounds 4 and 5);

(c) that he erred in rejecting the evidence of the witness Baglin as to the cost of complete replacement of the red cedar cladding to the house (grounds 6 and 7);

(d) that his assessment of damages for physical inconvenience in the sums of $500 and $250 respectively for Mr. and Mrs. Boncristiano was manifestly inadequate (ground 8).

The trial judge was, in my opinion, correct in requiring an allowance to be made by the owners for the settlement sum received from the solicitors. Indeed, in the circumstances of this case, it may well have been appropriate for the trial judge to have required the owners to give credit to the builders for the whole of the $5,000 received from the solicitors. However no complaint has been made on this appeal on behalf of the builders that his Honour was in error in deducting only $3,000 and the only matter which falls to be considered is whether his Honour was in error in making allowance for that sum.

The General Rules of Procedure in Civil Proceedings 1986 entitle a plaintiff to sue several defendants upon different causes of action. However in cases where the plaintiff seeks to recover from the several defendants compensation in respect of the same damage it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained. Where the claims for damages are concurrent, in the sense that the claims "overlap", recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other. The principle was discussed in the judgments of Oliver, L.J. and Purchas, L.J. in the case of Townsend and Anor. v. Stone Toms and Partners (1984) 27 Build.L.R. 32, a case not dissimilar to this case. In Townsend's case a building owner, as plaintiff, had sought to recover damages from a builder for defective workmanship and over-payment; and from the building architect for, inter alia, breach of duty to properly supervise the works and wrongful certification. In these respects the claims for damages were "concurrent" or "over-lapping". The building owner "settled" his claim against the builder by accepting a payment into court of oe30,000 and proceeded with his claim against the architect. In upholding the judge's decision that the owner should be required to give credit for the sum received from the builder, the Court of Appeal considered a submission made on behalf of the building owner that the proper course was for the trial judge to have ignored altogether the monies accepted from the builder and to enter judgment against the architects for the full amount of any damages for which they were liable even though there may have been a concurrent liability in the builder which had already been satisfied. Such satisfaction, it was submitted, should only be taken into account at the time when the plaintiff came to execute judgment against the defendant.

The Court of Appeal rejected these submissions. Oliver, L.J. (at p.38) said:

"The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant.

A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due."

Purchas, L.J. (48) stated the principle in similar terms. The principle so stated is sometimes called the "rule against double compensation". The law, which now embraces equity, will not permit a plaintiff, whatever procedural device is used, to recover more than the damages which have been suffered, no matter what the cause of action upon which he proceeds against the various defendants (see per Purchas, L.J. in Townsend's case at 49). This principle was accepted by Steyn, J. (as he then was) in Banque Keyser Ullman SA v. Skandia (UK) Insurance Co. Ltd. & Ors (No.2) [1988] 2 All.E.R. 880 at 881-2.

It is not to the point to argue, as Mr. Ritter who appeared on this appeal with Mr. Wilmoth for the owners was inclined to argue, that the claims made against the various defendants proceed from different causes of action. The fundamental question is whether the claims against the various defendants are "concurrent" in the sense that the relief sought is the same. Nor is it to the point that the damages received from one defendant have been received pursuant to a compromise of the claim against that defendant, by way of acceptance of monies in court or otherwise (cf. Townsend's case, supra; Bryanston Finance Ltd. v. De Vries [1975] 1 Q.B. 703 at 722 per Lord Denning, M.R.).

It was contended by Mr. Ritter that the learned judge was in no position in this case to call upon the owners to bring to account a portion of the settlement sum paid by the solicitors because there was nothing in the material before him which could have enabled him to find what, if any, portion of the settlement sum was attributable to the satisfaction of the substance of the owners' claim as distinct from a claim, say, for the costs of that claim. However the paucity of that material cannot, as I understand the law, affect the application of the principle to which I have referred. Quite apart from the fact that the terms of the settlement between the owners and the solicitors stipulated that the sum paid was "in settlement of the claim made" against the solicitors (as to which compare the terms of settlement in the Banque Keyser case, supra at 881), it seems to me that the fact of payment raises against the owners a presumption that the amount of the settlement was offered and accepted in satisfaction of the concurrent claim made by the owners against the solicitors and the builders. As Oliver, L.J. said in Townsend's case, supra, at 41:

"It is said that the burden lies on the defendant to show that a part of the claim against him has already been satisfied and to demonstrate the extent to which recovery has already been completed by the plaintiff ... . Allowing this, however, it seems to me that the initial burden is discharged when the defendant shows acceptance of a payment-in, in causes of action where there are concurrent claims against him. If it is to be said that the payment-in relates to some claims which are not concurrent, or which could not succeed against the defendant, the only person capable of providing that guidance is the plaintiff himself, who has accepted the payment."

(See also Purchas, L.J. at 51 and Waller, L.J. at 56.)

In this case it cannot, I think, be doubted that the claims which were mounted by the owners against the builders and the solicitors were concurrent in the sense that they were claims being made to recover the same damage. In its essence the claim being made against the solicitors was that the owners should be entitled to recover from the solicitors whatever amount they could not recover from the builders on account of their faulty workmanship. The claim so made was a truly alternative claim for the same damage. The claim was made by the owners against the solicitors in response to the builders' contention that the owners were estopped from claiming damages against them for faulty workmanship because of the 1988 settlement which the solicitors had negotiated with them on behalf of the owners. The ultimate finding by his Honour that such an estoppel was not made out cannot affect the application of the principles to which I refer. Those principles, as explained in Townsend's case, must a fortiori apply to this case. The builders having proved that the owners had accepted the sum of $5,000 from the solicitors in "full and final settlement of the ... proceeding" against them, the builders were entitled to claim, as they did, that such sum should be presumed to have been accepted in fulfilment of the concurrent claims made by the owners against them and the solicitors. Indeed it might be said that the learned judge was being generous to the owners in not requiring the owners to account for the whole of the $5,000. However, as I have already said, it has not been suggested on this appeal that he was in error in not doing so.

It remains to be said that the $3,000 which the learned judge ordered to be deducted, was deductible only from the damages which the builders were found liable to pay. The learned judge did not turn his mind to this question because, as I have already stated, he dealt with the question of damages in a "global" fashion. However, the concurrent claims made in respect of the same damage were the claims against the solicitors and the builders and it is for this reason that it was only the builders who could require the owners to account for sums already received in respect of that damage. I did not understand Mr. M. Clarke, who appeared for the Shire, to contend to the contrary.

For these reasons, this ground of appeal has not been made out.

The learned judge found that the sub-structure of the house was defective because it complied neither with the relevant building regulations nor the Timber Framing Code. This, he found, was the fault of the Shire which approved both the plans and specifications and the foundations in situ. On this appeal no contest has been raised by the Shire as to these findings. The appellant owners, however, contend that his Honour was in error in accepting the evidence of Mr. Lorich, an expert called by the Shire, as to the cost of rectification.

At the trial, three possible solutions as to the rectification of the sub-floor were canvassed; one by Mr. Lorich; one by Mr. Baglin and one by Mr. Cichello. The solution proposed by Mr. Lorich was of a less extensive nature, and thus less expensive, than those proposed by Messrs. Baglin and Cichello. On this appeal, it was not suggested on behalf of the owners that his Honour was in error in not accepting the solution proposed by Baglin. The only contention was that his Honour was in error in not accepting the solution, and the cost thereof, proposed by Mr. Cichello.

"In general I accept the appropriate form of rectification (i.e. of the sub-floor) to be the solution proposed by Mr. Lorich and it is to be noted that Mr. Frank Cichello, the consulting engineer called on behalf of the owners, gave evidence that he accepted the solution as proposed by Mr. Lorich as being reasonable subject to acceptable engineering computations. Mr. Greer, ... gave evidence that he had sighted the necessary engineering computations and that same had been incorporated in relation to the solution of Mr. Lorich."

It was submitted to us that the evidence of Cichello was so overwhelmingly superior to that of Lorich that his Honour was in error in preferring Lorich's evidence. Such a submission immediately runs into difficulties. It was clear from the evidence at the trial that, once it had been accepted that the sub-floor structure of the house was deficient and required rectification, there was a clear division between the competing experts as to the appropriate solution in accordance with which such rectification was to be carried out. Each expert was closely examined and cross-examined about the solution which he proposed. Essentially it was the Shire's contention that the solution proposed by Cichello was an "over-kill" in that it required jacking of the entire floor of the house and the provision of an over-abundance of stumps and joists. It was further contended that, in any event, he had not appropriately costed his solution. For the owners, it was contended that Lorich's solution would be insufficient to enable the loads imposed by the upper storey of the house to be properly supported.

It has not been, and could not be, suggested that Mr. Lorich was inherently unreliable as a witness or that there was some incontrovertible basis upon which his evidence was rendered suspect; or that he had misconceived basic facts upon which his opinions were founded. Indeed, as the learned judge noted, Mr. Cichello conceded in cross-examination that the solution proposed by Lorich was an "acceptable" one subject to it being supported by appropriate engineering computations. Such support was given by the expert engineer, Greer, who said that in his opinion the solution proposed by Lorich would bring the structure within the relevant Timber Frame Code.

Even though the witnesses, whose competing evidence fell to be assessed and evaluated by the trial judge, were experts, he was in the best position to make the assessment of that evidence. A Court of Appeal, as has often been said, is in a "permanent position of disadvantage" to the trial judge whose decision on matters such as this it is asked to overturn (S.S. Hontestroom v. S.S. Sagaporack [1927] A.C. 37 at 47 per Lord Sumner). In my view there is nothing in the evidence or in the arguments of counsel on this appeal which would suggest that the findings made by the judge on this aspect of the case are in any manner unacceptable or improbable or stemmed from a misconception of the evidence. The evidence of the competing witnesses fell to be assessed in the context of a bitterly contested dispute; one in which the judge was bound to consider the demeanour and credibility of those witnesses. In my view nothing has been put to this Court which would suggest that the trial judge, in preferring the evidence of Mr. Lorich to that of Mr. Cichello misused the decided advantage which he had of seeing and hearing those witnesses (cf. Abalos v. Australian Postal Commission [1990] HCA 47; (1990) 171 C.L.R. 167 at 179 per McHugh, J.).

It was contended by the appellants that, in selecting a figure of $700 as an allowance for "making good" after carrying out the works of rectification which Mr. Lorich proposed, his Honour had erred in his discretion. This figure, it was contended, was unsupported by any specific evidence and was well below the figures suggested by both Baglin and Cichello. Again, in my opinion, there is no substance in this argument. His Honour had noted that Lorich, although giving detailed costings as to other aspects of the rectification had made no allowance for the costs of "making good" following rectification. He also noted that, although both Baglin and Cichello had allowed substantial sums for "making good", these allowances had been made in respect of far more substantial rectification solutions than the one which he had accepted as appropriate and were, thus, not capable of being accepted in their entirety.

In fixing the sum of $700 as "a reasonable allowance", I do not think that it can be said that his Honour was in error. He was bound to resort, as indeed all judges do in the area of assessing damages for future economic loss, to making an "educated estimate" on the basis of the evidence available to him. The Lorich solution, which he had accepted as the preferable one, required limited "jacking" of the floor structure and thus limited risk of interference with brittle surfaces. All estimates for "making good" are made on the basis of an assessment of the amount of labour likely to be involved and it was incumbent upon his Honour to fix a figure which in his view was reasonable having regard to his assessment of the work involved in "making good" following the more restricted rectification proposed by Lorich. This is what he has done and I would not be prepared to say that his assessment is so plainly erroneous as to amount to error.

Assessment of the cost of replacing red cedar cladding

His Honour found that the whole of the red cedar cladding should be removed and replaced as a consequence of the builders' deficient workmanship and materials. On this appeal that finding had not been challenged. The only challenge made by the appellant owners is to the amount which his Honour found to be the cost of rectification. As to this the judge allowed the sum of $7,600 which was the figure given by the builders' expert, Mr. Hegarty, as the cost of removing and replacing all the weatherboards. This figure was some $4,000 less than the figure given as the cost of rectification by Baglin, the expert called on behalf of the owners. Baglin's figure of $11,780.64 was expressed as follows:

On this appeal it was contended on behalf of the owners, in similar fashion to the submissions made in respect of the sub-floor issue, that his Honour was in error in preferring the "minimal cost estimate" given by Hegarty to the more detailed cost estimates given by Baglin. Save in one respect this submission confronts the same difficulties which I have already dealt with in respect of the submission made as to sub-floor rectification; namely that his Honour saw and heard the competing evidence of Baglin and Hegarty and his preference for the costing estimates given by Hegarty in respect of removal and refixing of the weatherboards was open to him and is not a finding with which this Court can or should interfere.

It was contended, however, by Mr. Ritter that his Honour was in error in making no allowance for the supply and fixing of flashings in order to render the building water-proof and no allowance for the replacement of the anti-blaze insulation. The submission was that, on the evidence, there was no contest that it was necessary to seal the building against water penetration by the provision of appropriate door and window flashings; nor was there any contest that the anti-blaze insulation would have to be replaced. It seems to me that this submission is good as to the flashings, but not as to the anti-blaze insulation. As to the latter, it was Hegarty's evidence that there was no need to replace the insulation if the existing boards were removed with care and that the purpose of the insulation was not necessary in any event to render the building weatherproof. His Honour decided this dispute against the owners, noting that:

"Mr. Baglin suggested that the anti-blaze insulation would need to be replaced as most of it would be damaged with the removal of the weatherboards. I do not accept this proposition."

This seems to me to be a clear acceptance by his Honour of the evidence of Mr. Hegarty that it would not be necessary to replace the existing insulation and I can see no basis upon which this finding can be challenged.

It is otherwise, however, in respect of the flashings. The evidence was uncontested that it was the builders' responsibility to ensure that the building was water-tight. Hegarty agreed that it was necessary that the building "be sealed one way or another" but that the Timber Code did not necessarily provide that it had to be done by flashings. However in his cost estimates he had provided for sealing by way of flashings in the sum of $1,296.50, which as it appears to me was a sum additional to the cost of $7,600 which he had given as the cost of supplying and fixing the new weatherboards. Hegarty further conceded in cross-examination that "flashings are the tried and true method of keeping water out of the window and door frames".

It seems to me that his Honour has simply overlooked the need to make an allowance for making the building water-tight. This is not a case of failing to accept uncontradicted evidence given by one party (as to which see Taylor v. Ellis [1956] VicLawRp 72; [1956] V.L.R. 457; Swinburne v. David Syme & Co. Ltd. [1909] VicLawRp 92; [1909] V.L.R. 550 at 565 per Madden, C.J.); this is a case where the experts on both sides of the record accepted that it was necessary for the building to be sealed and where the defendants' expert had conceded that the "tried and true" method of doing so was by the installation of the appropriate flashings.

I am therefore satisfied that his Honour should have allowed an amount for the installation of appropriate flashings. The amount which should be allowed is $1,296.50 which Hegarty agreed was the appropriate cost.

General damages were awarded by his Honour to each of the owners for inconvenience, disappointment and stress flowing from the breach of contract by the builders in the erection of the super-structure of the house. His Honour awarded a total sum of $1,500 to Mr. Boncristiano and $250 to his wife on this account although no claim appears to have been specifically made by either of them in the amended pleadings. In the case of Mr. Boncristiano, the judge appears to have considered the claim under two separate heads which he respectively described as "injury to health", for which he awarded $1,000; and "physical inconvenience and distress" for which he awarded $500. As no evidence was led suggesting that Mrs. Boncristiano had suffered any psychological illness, his Honour awarded damages to her only under the head of "inconvenience and distress" for which he awarded $250.

The appeal of the owners is only against the sums awarded by the judge in respect of what can be briefly called "inconvenience". It is their contention that the damages awarded under this head are "manifestly inadequate and against the evidence and the weight of the evidence". In this respect, as it seems to me, the appeal of Mr. Boncristiano creates difficulty for this Court because it is an appeal against only portion of the sum awarded to him as general damages. It would seem that his Honour was influenced to assess the general damages claimed by Mr. Boncristiano under the two heads as a consequence of the same procedure being adopted by Gobbo, J. in the case of Clarke & Anor. v. The Shire of Gisborne [1984] VicRp 77; [1984] V.R. 971 where the learned judge had assessed the claim for general damages made by the second plaintiff separately as to injury to health and loss consequential upon inconvenience. But, in truth and in law, a claim for general damages consequent upon a breach of contract is but a single claim for damages for inconvenience and distress including damages for deleterious consequences to health flowing from the physical inconvenience (Watts v. Morrow [1991] EWCA Civ 9; [1991] 4 All.E.R. 937 per Ralph Gibson, L.J. at 956-7 and per Bingham, L.J. at 959-60). This, I think, was recognized by Gobbo, J. in Clarke's case at 997 where his Honour observed that the element of stress flowing from physical inconvenience "is already reflected in the award of damages made in [the second plaintiff's] favour". Similarly in Campbelltown City Council v. Mackay (1989) 15 N.S.W.L.R. 501 at 511, McHugh, J. observed that:

"... in an action to recover damages for damage to property, the plaintiff is entitled to recover for personal damage which is the reasonably foreseeable result of the defendant's negligent damage of that property. ... It is not a question of whether the damage claimed can be categorized as vexation, distress or inconvenience. The matter does not depend on labels. The question is whether the consequential damage is the reasonably foreseeable consequence of the defendant's negligence."

It seems to me therefore to be clear that, in considering the judge's award for general damages in favour of Mr. Boncristiano it would be neither profitable nor correct to consider the award of $500 for inconvenience as an item separate and distinct from the award of $1,000 for mental distress resulting therefrom. It now appears to be accepted, both in England and Australia, that awards of general damages of the type to which I have referred can be made to building owners who have suffered physical inconvenience, anxiety and distress as a result of the builders' breach of contract, but only for the physical inconveniences and mental distress directly related to those inconveniences which have been caused by the breach of contract (see Franklin; "More Heartache : A Review of the Award of General Damages in Building Cases"; (1992) 8 Construction L.J. 318; see also Baltic Shipping Co. v. Dillon [1993] HCA 4; (1993) 176 C.L.R. 344 at 364). Although it would seem to have been accepted in England that such awards should be "restrained" or "modest" (Perry v. Sidney Phillips & Son [1982] 3 All.E.R. 705 at 709 per Lord Denning, M.R.; Watts v. Morrow, supra, at 958 per Ralph Gibson, L.J. and 960 per Bingham, L.J.; Ruxley Electronics & Construction Ltd. v. Forsyth [1996] A.C. 344 at 374 per Lord Lloyd of Berwick), this injunction has not met with the approval of the Court of Appeal in New South Wales in the Campbelltown case, supra, where Kirby, P. (at 504) said that he "could find no logical basis for it" and Samuels, J.A. (505) found it "extremely difficult to attribute any meaning to the phrase".

Although Gobbo, J. in Clarke's case (at 998) accepted the restraint to which Lord Denning, M.R. had referred in Perry's case (supra), for my own part I find myself in agreement with the view expressed by the New South Wales Court of Appeal that it is difficult to give meaning to it. Whilst in my view damages awarded under this head will rarely be large, because of the very nature of the loss being compensated, it seems to me that a trial judge, once he has satisfied himself that damages are awardable under this head, should not be constrained from awarding damages which are fair and reasonable by a concept which, in my view, is foreign to the assessment of general damages. In this respect I refer to the comments which I made in obiter in Butler v. Rick Cuneen Logging [1997] 2 V.R. 99 at 105.

However, there is nothing in the reasons given by the learned judge in this case which suggests that he was awarding general damages otherwise than on a basis which he regarded as fair and reasonable or that he was intending to restrict those damages by the application of some unacceptable formula. Rather, as it seems to me, he was confining himself to the relevant matters, bearing upon such an award, which arose in the evidence. Thus, in the case of Mr. Boncristiano his Honour was conscious of the evidence that the mental and psychological distress from which he accepted that Mr. Boncristiano was suffering, arose from a number of factors other than the builders' breach of contract, including but not confined to the loss of his business, his financial difficulties, his wife's pregnancy and the litigation, in respect of the last of which Dr. King and Mr. Walton had expressed the opinion that the conclusion of litigation would greatly relieve the symptoms of the distress. Furthermore, with regard to the claim for physical inconvenience his Honour had noted that each of the owners had asserted their inability to conduct a "hobby farm" which, in the view taken by the judge, was at odds with Mr. Boncristiano's evidence, given in cross-examination, that the property was "presently over-stocked". Furthermore, his Honour took the view that, so far as Mrs. Boncristiano was concerned, she was able to "escape the pressures of constantly living in the house" because of her work as a flight attendant and that it fell, in the main, to her husband to cope with the problem of the defects in the house.

Whilst I agree that the awards of compensation made under this head are low, I am not able to say that they are so low as to bespeak error. As this Court has pointed out in a number of recent decisions (see, for example, C.S.R. Readymix (Australia) v. Payne, unreported, 23 May 1997; Mobilio v. Balliotis & Others, unreported, 10 November 1997) an award of general damages by a trial judge is in the nature of a discretionary judgment with which a court of appeal will not interfere unless it is satisfied that the judge has erred in principle or is otherwise satisfied that the estimate made by the judge is a wholly erroneous one.

There is no suggestion in this case that the learned judge's estimates are infected by error of principle. Nor am I able to say, having regard to the advantage which the judge enjoyed of seeing and hearing the witnesses and assessing their demeanour and credibility that the estimates of general damages which he made are "wholly erroneous".

Accordingly, in my view, this ground of appeal has not been made out.

In accordance with these reasons I would allow the appeal only to increase the damages awarded against the builders by adding to them the amount of $1,296.50 to the sum awarded in respect of the "red cedar cladding" and to adjust the orders made by the judge so that they may comply with the findings which he made. This will mean that the total sum awarded against the builders will be increased to $9,399.16 to which, no doubt, will need to be added some extra amount of interest (which, hopefully, can be estimated) to take account of the additional amount of $1,296.50 which, in my view, his Honour should have awarded. The appeal brought against the damages awarded against the Shire should be dismissed.

I certify that this and the preceding 19 pages are a true copy of the reasons for judgment of Winneke, P. of the Court of Appeal (Winneke, P., Charles and Batt, JJ.A.) of the Supreme Court of Victoria delivered on February 1998.

CHARLES, J.A.: I have had the benefit of reading in draft the reasons for judgment of the President. I agree with the orders proposed by his Honour, and for the reasons given by him.

I certify that this is a true copy of the reasons for judgment of Charles, J.A. of the Court of Appeal (Winneke, P., Charles and Batt, JJ.A.) of the Supreme Court of Victoria delivered on February 1998.

BATT, J.A.: I also concur in the judgment of the President.

I certify that this page is a true copy of the reasons for judgment of Batt, J.A. of the Court of Appeal (Winneke, P., Charles and Batt, JJ.A.) of the Supreme Court of Victoria delivered on 1998.