Flanagan v Bernasconi

192 CLR 603; [1998] HCA 38 Zurich Australian Insurance Limited v CSR Limited [2001] NSWCA 261 Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010 Category: Principal judgment Parties: Sue Flanagan (Plaintiff) Robert John Bernasconi (First Defendant) Nadic Insurance Brokers Pty Ltd t/as Nadic (Second Defendant) Representation: Counsel: D Priestley SC (Plaintiff) M Elliott SC (First & Second Defendants) Solicitors: Mayweathers (Plaintiff) Hall & Willcox (First & Second Defendants) File Number(s): 2019/66093

INDEX Conclusion - paragraph 9 The agreed facts - paragraph 10 Issues - paragraph 12 The disputed evidence led in Mr Bernasconi's case - paragraph 18 Credibility and reliability - paragraph 30 The relationship - paragraph 42 Problems with Dr Flanagan's recollection - paragraph 61 The disputed 2005 conversation - paragraph 72 The pool was not empty in 2010 - paragraph 84 Dr Flanagan's financial position - paragraph 92 The planned commercial use of the property - paragraph 116 Other evidence Mr Bernasconi volunteered - paragraph 126 The 28 February meeting did not occur - paragraph 137 The altered funding document and the March meetings - paragraph 163 How the Vero policy came to be taken out on 15 March - paragraph 172 How the pool came to be emptied - paragraph 189 How the Vero claim and other steps were pursued - paragraph 199 Other factual issues How the pool and enclosure were built - paragraph 209 How the pool came to be left empty - paragraph 217 Breach Breach of duty - paragraph 223 Breach of the Corporations Act - paragraph 245 Causation What must Dr Flanagan prove? - paragraph 255 The pleadings - paragraph 263 The onus - paragraph 267 The available insurance cover - paragraph 272 Was there a defect? - paragraph 293 Was there a failure to take reasonable precautions? - paragraph 316 Damages - paragraph 336 What was covered? - paragraph 344 Demolition costs - paragraph 355 The cost of the initial demolition - paragraph 361 The waste would not be kept onsite - paragraph 372 The cost of disposal of material which remain onsite - paragraph 378 The cost of further demolition and removal of the remaining material is too remote - paragraph 386 Conclusion - paragraph 390 The new pool - paragraph 392 The cost of repairing the pool enclosure - paragraph 406 Additional works - paragraph 412 The FOS challenge - paragraph 425 Calculation - paragraph 428 Orders - paragraph 430

Judgment

1. In 2013 the 25-metre swimming pool and surrounding pool enclosure at Dr Flanagan's home were damaged when the pool partially lifted out of the ground, damage which her insurance did not cover. She claims that this was the result of the negligence of Mr Bernasconi, who had long been her and her former husband, Dr Oldfield's insurance broker and who was then employed by Nadic Insurance Brokers Pty Ltd.
2. Dr Flanagan claims that in 2012 Mr Bernasconi advised her to take out homeowners' insurance with a new insurer, Vero Insurance Ltd, rather than with her former insurer, CGU Insurance Ltd, which had fully insured her home. But contrary to the duty which he owed her, Mr Bernasconi did not advise her that while under both policies the property was insured for some $3,500,000, the Vero policy had an exclusion in respect of the pool.
3. The result was that when the pool, surrounds and enclosure were later extensively damaged, the claim Mr Bernasconi prepared for accidental damage under the Vero policy was declined, Dr Flanagan having earlier made a claim to the Mine Subsidence Board, which had also failed. Her later application for review of the insurer's decision by the Financial Ombudsman Service, which she pursued on legal advice, was also rejected.
4. Dr Flanagan had the pool and structure demolished in 2014, given the requirements of her financier and not then having the means to rebuild. She considered that in their damaged condition they posed risks to health and safety, creating a potential for release of fibreglass debris into the surrounding soil and air, and also adversely affecting the value of the property.
5. On the pleadings what was in issue included the circumstances in which Dr Flanagan came to take out the Vero policy; her instructions to Mr Bernasconi; the nature of the advice and services he offered and provided her; breach; causation; contributory negligence; whether Dr Flanagan had failed to mitigate any loss which she suffered; and whether she had a basis for claiming that she had lost a business opportunity.
6. Before the hearing the parties agreed what remained in issue between them. At the hearing they identified various other matters which were also in issue.
7. Dr Flanagan did not finally pursue her lost opportunity claim and while there was no issue about the nature of the duty she was owed, it was only after Mr Bernasconi was cross-examined that it was conceded that it had been breached. Despite this, her claims were still defended, although the contributory negligence and mitigation claims were also not finally pursued, other than in the former case on the basis of Dr Flanagan's failure to read the Vero policy, which it was accepted was unlikely to amount to contributory negligence. On the evidence I will explain, I consider that it did not.

Conclusion

1. For reasons which follow I have concluded that despite the admitted breach, there must be judgment for the defendants.

The agreed facts

1. The parties agreed that: "1. In 2012, the Plaintiff was the registered owner of the property Lot 6 DP xxxxxx situated at xxxxxxxxx in NSW South Wales (Property), jointly with her former husband Geoffrey Oldfield (Oldfield), until 30 June 2013 and then solely. 2. In addition to a large two-story house, garage, tennis court and standalone shed, erected on the Property were: (a) A concrete and fibreglass inground swimming pool measuring 25 meters long and wide enough for 5 painted lanes (the Pool); and (b) A building surrounding and enclosing the Pool measuring 32 meters by 12.5 meters (the Pool Building). 3. The First Defendant commenced providing insurance broking services to the Plaintiff and Oldfield for the first time in or around 1984. 4. The First Defendant provided the Plaintiff and Oldfield with Insurance Broking Services in respect to a suite of insurance products for both personal and various medical services business for almost 30 years. 5. The Plaintiff has been at all material times a medical practitioner. 6. On 20 December 2000, the First Defendant commenced employment with the Second Defendant as an insurance broker and continued to provide the Insurance Broking Services to the Plaintiff under an agreement between the Plaintiff and the Second Defendant. 7. In 2003, the First Defendant recommended that the Plaintiff and Oldfield take out a Homeowner's Insurance policy with CGU Insurance Limited (CGU). The Plaintiff accepted this advice and incepted the Homeowner's Insurance policy with CGU to provide coverage of the buildings and contents on the Property. This was renewed each year until 2012 (the CGU Policy). 8. On 5 December 2011, the CGU Policy was amended to name the Plaintiff as the sole insured, following the marital separation of the Plaintiff and Oldfield. 9. The CGU Policy was not renewed in 2012. 10. The Plaintiff took out a Homeowner's Insurance Policy with Vero [titled "Secure Home Elite Insurance" bearing the policy number HAHA015730948] on or about 16 March 2012 (the Vero Policy). 11. On or about 28 March 2012, the Second Defendant issued the Plaintiff with a Tax Invoice bearing the same date for the sum of $8,562.16, which related to the inception of the Vero Policy and which was paid through premium finance funding taken out by the Plaintiff [as had been her usual funding course]. 12. As a result of action taken by the Plaintiff, the Pool was empty in 2013. 13. In each of the months of January and March 2013, there were days of heavy rain at and around the Property. 14. On or around 2 March 2013, the Pool partially lifted out of the ground, causing extensive damage to the Pool itself, to the surrounding concrete and tile surface, to equipment connected to the Pool and a collapse of the 30-meter eastern brick wall of the Pool Building (the Pool Damage). 15. On 9 July 2013, the Plaintiff made a claim on the Vero Policy with respect to the Pool Damage by submitting a claim form (the Claim). 16. The Claim was declined by Vero on 8 October 2013 (declinature). The Claim was expressly declined on the basis of exclusion 12 in the Vero Policy, which excluded events involving swimming pools, including pool lifting or any area around the pool lifting (the Pool Exclusion Clause). 17. The Plaintiff challenged the Vero's declinature of the Claim with the Financial Ombudsman Service on or about 18 May 2014 (the FOS Application). The FOS Application was rejected by the Financial Ombudsman Service on 6 January 2015. 18. In about December 2014, the Plaintiff demolished the damaged Pool Building and caused the damaged Pool to be filled in with the surrounding rubble."

Issues

1. Before the hearing the parties identified facts in dispute to be: "1. The usual practice of the First Defendant in providing Insurance Broking Services to the Plaintiff, in particular in providing documentation and explanation of policies at or before the time of renewal. 2. Whether the Plaintiff and the First Defendant met and discussed Homeowners insurance on 28 February 2012. 3. Whether the Plaintiff said any words to the First Defendant to the effect that she was not prepared to pay a high premium for Homeowners insurance for the 2012 - 2013 year. 4. The terms of the conversations between the Plaintiff and the First Defendant in relation to Homeowners insurance in 2012."
2. At the hearing other facts in issue were identified to include: 1. What instructions and advice were given at the 15 March 2012 meeting between Dr Flanagan and Mr Bernasconi; 2. Whether there was another meeting on 28 March 2012; 3. Whether Dr Flanagan and Mr Bernasconi had discussed insurance cover for the pool in 2005; 4. How Mr Bernasconi came to learn about the damage to the pool; and 5. Whether the pool was empty in 2010.
3. The matters in issue the parties identified before hearing were: "Duty & Breach 1. What meetings and conversations occurred between the Plaintiff and the First Defendant in about February and March 2012? 2. What advice and other broking services did the Defendants provide to the Plaintiff in relation to Homeowners insurance, and in particular the matters in dispute, in 2012? 3. What instructions did the Plaintiff give the First Defendant in relation to Homeowners insurance in 2012? 4. Should the Defendants have provided different advice or broking services as alleged by the Plaintiff such as to breach their duty to exercise due care and skill? 5. Was the Second Defendant in breach of the pleaded provisions of the Corporations Act in not providing the Plaintiff with a Statement of Advice in relation to Homeowners insurance in 2012? Causation 6. If the Defendants breached their duty, what insurance cover would the Plaintiff have had as at March 2013 if such advice and services had been provided? 7. If the Second Defendant was in breach of the pleaded provisions of the Corporations Act, what insurance cover would the Plaintiff have had as at March 2013 if such breaches had not occurred? 8. Having regard to the Plaintiff's conduct after the inception of the Vero policy in 2012, in particular in emptying the pool, and leaving it empty for a period of time, would a notional policy taken out have covered the claim for damage which was made? 9. Was there any existing defect in the pool or pool building and if any, would it have affected cover under a notional policy for the claim that was made, and if so, in what manner? Damages 10. Did the Plaintiff sustain the loss and damage claimed as a result of the alleged breaches, and if so, what is the quantum of damages? 11. Should the damages be reduced by reason of any conduct of the Plaintiff as pleaded in the Defence?"

The disputed evidence led in Mr Bernasconi's case

1. Mr Bernasconi led affidavit evidence from other of his clients, the admissibility of which was in issue. They were not required for cross-examination and the resolution of the objection was deferred until judgment.
2. The objection was that the evidence was inadmissible under s 97 of the Evidence Act 1995 (NSW), which does not permit evidence of conduct, with which the affidavits were concerned, to be admitted unless "the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value": s 97(1)(b).
3. That was in issue, the argument advanced for Dr Flanagan being that the evidence said nothing about the course which Mr Bernasconi had pursued in her case, he having elected to call evidence from only a handful of clients from the hundreds he had advised over the years and where differences between them, their needs, and the reasons why those practices had developed, could only be speculated upon.
4. "Probative value" is defined in the dictionary to the Evidence Act to mean "the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue". It need not have significant probative value with respect to all facts in issue: TL v R [2020] NSWCCA 265. It must be assessed on the assumption that the evidence is credible and reliable: IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 at [48]. But it must be of importance in establishing facts in issue: at [46].
5. Further, what the tendering party seeks to establish must be identified with some precision and the strength of the inference and the extent to which the tendency increases the likelihood that a fact in issue did or did not occur must all be considered: Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [153], [213], [216].
6. The affidavits each dealt with matters such as what Mr Bernasconi did when providing his services. Mr Emerton, for example, said that at each of their meetings held shortly before insurance renewal "Mr Bernasconi would sit down with me and go through the insurance documents (including schedules and policy wordings) for the policies that Swansea RSL was buying that year. He would explain what was and was not covered under each policy. He would also bring to my attention any changes to policies from one year to the next."

Credibility and reliability

1. Dr Flanagan and Mr Bernasconi's credibility and the reliability of their evidence turn on disputed conversations and actions and what various documents, the authenticity of some of which were in issue, do and do not establish. Dr Flanagan and Mr Bernasconi each gave affidavit evidence, aspects of which were not in dispute, and they were cross-examined about matters which were.
2. Dr Flanagan's case was that Mr Bernasconi's evidence had been proven to be incorrect about numerous matters and could not be preferred over hers. The defence case that there were aspects of Mr Bernasconi's evidence, including about what Dr Flanagan told him on 28 February 2012 about her insurance needs, that were more plausible than her evidence.
3. I am unable to accept that submission.
4. Given the real conflict in their evidence about many matters, it is necessary to "engage with, or grapple or wrestle with the cases presented by each party" on these issues: Murray v Sheldon Commercial Interiors Pty Ltd [2016] NSWCA 77 at [60]. Such conflicts must be resolved by "reasoning so far as possible on the basis of contemporaneous materials, objectively established facts and the apparent logic of events", as well as upon the assessment of a witness' reliability: Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135 at [60].
5. Having undertaken that exercise I have concluded that Dr Flanagan did not give deliberately false evidence, nor can it be concluded that she was not a credible or reliable witness. I have not been able to reach the same conclusion about Mr Bernasconi.
6. In her case Dr Flanagan called affidavit evidence from Mr Murray, a business adviser, who corroborated her evidence that it was in 2011 that he first began giving her advice about the possibility of the property being used for various commercial purposes. During the course of the hearing she also led affidavit evidence, without objection, from her daughter, who corroborated Dr Flanagan's evidence about the pool not being empty in 2010, as was Mr Bernasconi's evidence. Only Mr Murray was cross-examined. Their evidence and contemporaneous documents, including those which evidenced the ongoing regular pool maintenance, supported Dr Flanagan's evidence about various issues.

The relationship

1. Dr Flanagan is a medical practitioner and Mr Bernasconi a retired insurance broker who had almost 50 years' experience when he retired in 2013, although on his evidence he was never licensed. They had a professional relationship over some 29 years beforehand, during which they had regular contact about the complex business and personal insurance needs which Dr Flanagan and Dr Oldfield had, other than in relation to life insurance. Before their divorce Dr Flanagan, Dr Oldfield and various of their companies were involved in the operation of businesses which included a private hospital and cardiac testing business. Dr Oldfield also had a cardiology practice.
2. Dr Flanagan's role in the businesses included medical work, such as filling in for other doctors who provided their services, as well as an administrative and financial role, essentially that of a chief financial officer. She was assisted by both administrative and accounting staff and was responsible for overseeing insurance. Both she and other staff dealt with Mr Bernasconi about insurance matters over the course of each year, although not to the extent that he claimed.
3. In cross-examination Dr Flanagan acknowledged that before she left the business in 2011 she was very busy, as was Mr Bernasconi's experience, she also having the care of five children and the home, which is situated on a three-acre property. She also had various staff to assist her there.
4. Dr Flanagan denied, however, that her interactions with Mr Bernasconi were as he described them, visiting the office two or three times a week, but dealing mainly with her staff, because she was too busy to see him.
5. It was common ground that Dr Flanagan and Mr Bernasconi had a longstanding friendship, which he described in cross-examination. Her evidence was that it was she who usually dealt with Mr Bernasconi, which he disputed. In cross-examination she said that while she could not always see him when he called in, usually she could make time.
6. After Dr Flanagan's separation from Dr Oldfield, Mr Bernasconi continued to provide her with broking services for her professional and personal needs, about which she also took the advice of her accountant. He also continued to provide his services to Dr Oldfield.
7. Dr Flanagan, Dr Oldfield and Mr Bernasconi had considerable personal contact, although Dr Flanagan and Mr Bernasconi also disagreed about how frequently he visited the home. He had swum in the pool with Dr Oldfield on at least one occasion and on Dr Flanagan's evidence, even had an access code to enter the property. On his evidence, when he met with Dr Flanagan at her home, it was usually early in the morning.

Problems with Dr Flanagan's recollection

1. What the cross-examination did establish was that while Dr Flanagan had a good memory of events dealt with in her evidence, supported as much of it was by contemporaneous records, the reliability of which were not in issue, as well as by the evidence of other witnesses, including Mr Bernasconi, her memory about some matters was mistaken.
2. For example, she told the engineer engaged by Vero to investigate her claim that the pool had been emptied in December 2012, which was reflected in his 2013 report. On her evidence when she received it, she realised her error, having emptied the pool at the end of winter.
3. It was the defence case that this was a part of Dr Flanagan's deliberate attempt to mislead Vero, which she denied. This was also said to be evidenced by her failure to inform the investigating engineer about problems with the hydrostatic valves. On her evidence there were problems when the pool was first built, after which it was emptied three times and one of the valves replaced, before the dispute over the problems was resolved in 2001, when she made payment.
4. Dr Flanagan explained that she did not mention this to the engineer in 2012, who did not ask her about the valves. She did not then consider the initial problems with the pool to have been relevant to the investigation of what had caused the pool to lift, they having been repaired at the pool builder's cost before the final payment was made for the pool in 2001. There had not been further problems afterwards, apart from a leaking light which was repaired without the pool needing to be emptied, until it was identified in 2012 as the likely source of a leak which she had become aware of in late 2011 from an increased water bill.
5. This accorded with Dr Flanagan's daughter's evidence that she had lived in the home since 1999 and had regularly used the pool as a child and until her late teenage years, and also with the pool maintenance records. It was in February 2012 that she saw the pool had started turning green and her mother told her that it had been turned off to investigate a leak. The pool was not emptied until winter, after Dr Flanagan had been advised that it was designed to be emptied. That accorded with the expert evidence.
6. I am satisfied that neither this nor any other evidence established that Dr Flanagan had set out to mislead Vero or the Court, let alone that she gave false or generally unreliable evidence.

The disputed 2005 conversation

1. That Dr Flanagan's evidence was generally reliable was established by other evidence. It is convenient to begin with the conversation Dr Flanagan deposed having in February 2005, while Mr Bernasconi was at her home.
2. Between 1997 and 1999 Dr Flanagan and Dr Oldfield had built a new house, the 25-metre pool and pool building of commercial sized proportions on their property. There were problems and they obtained written advice about the adequacy of the pool and pool building and in mid-1997, on her evidence, she instructed Mr Bernasconi to take out insurance cover, including for the pool and pool building, because of the size of their investment.
3. There was an issue about this, but not that in 1998, problems with the pool leaking were investigated. Ongoing issues with the pool after it was filled were pursued and, Dr Flanagan believed, resolved by the pool builder by 2001. On her evidence they required the pool being emptied a number of times and the replacement of a faulty hydrostatic valve. From that time the pool was cleaned and maintained monthly or fortnightly depending on the season, until it was emptied in mid-2012.
4. On Dr Flanagan's affidavit evidence in 2005 she discussed with Mr Bernasconi at her home: "Me: Rob, is the pool fully insured, I mean for everything the equipment, the building and all? Bernasconi: No. Me: What about the tennis court and the shed? Bernasconi: No Sue. They are not included in the policy. Me: Why not? They need to be included. Please make sure they are all insured. Bernasconi: Okay, no problem Sue. I will need you to give me a figure for the cost of each item to re-build. Me: I can give you some round figures, the pool was approximately, $250,000 and the building enclosure was approximately $127,000. The tennis court and shed were approximately $75,000. I cannot remember the exact dollar amounts, but those figures would be close to the mark. Bernasconi: Ok, I will arrange it for you."
5. Mr Bernasconi had no recollection of this conversation and also denied that Dr Flanagan had ever discussed with him her requirement that the pool be fully insured. Dr Flanagan was adamant that both had occurred.
6. But Dr Flanagan did make some pertinent concessions. For example, her affidavit evidence was that she had a regular pattern of communication with Mr Bernasconi in around November of each year, from 1984 to 2013, in which her instructions were to "make sure I am fully insured and that I have the right insurance to cover me". In cross-examination she accepted that she had not expressly articulated this each year.

The pool was not empty in 2010

1. Dr Flanagan, in the extensive attack in cross-examination on many aspects of her evidence, insisted that she had a good memory of conversations dealt with in her affidavits, even those held long ago. She was also certain that some events Mr Bernasconi gave evidence about had not occurred, such as Mr Bernasconi speaking to her in 2010 when he saw the pool empty.
2. In his affidavit Mr Bernasconi described the occasion in February 2010 when he went to the home to retrieve his swim fins and saw that the pool was empty. On his account he then spoke to Dr Flanagan about the risk of the pool lifting out, which he explained in cross-examination he was aware of, because of his general knowledge. She then told him that they had been having problems with the pool since it was built; that it was leaking; and that she was pursuing the matter with the builder, Bel-Air Pools.
3. Dr Flanagan denied this in her affidavit. None of the contemporaneous documents support Mr Bernasconi's account, and it was contradicted by some of them, as well as by the evidence which Dr Flanagan's daughter gave.
4. Mr Bernasconi also said in his affidavit that he told Dr Oldfield in 2010 that the pool was empty and that he was very angry. But there was no suggestion that Dr Oldfield did anything as a result, unlike in 2012 when he sent Dr Flanagan an email, at a time when there is no issue that the pool had been emptied.
5. In cross-examination Mr Bernasconi denied that he could have been confused about the timing. He also volunteered that he knew that Dr Oldfield had spoken to Dr Flanagan about the pool being empty in 2010, because he was present when Dr Oldfield telephoned her "and told her in no uncertain terms to refill the pool".
6. This had not been put to Dr Flanagan, whose cross-examination had been: "Q. In February 2010 Mr Bernasconi came to the property and when he did, he was with you and noticed that the pool was empty. Correct? A. No. The pool was full. I don't believe he came over but I'm telling you in 2010 the pool was full. Q. You don't believe he came over in February 2010. Is that what you say? A. I did not see Mr Bernasconi in 2010 with an empty pool. I - I need to explain this differently perhaps. The pool was full in 2010. Q. Do you accept that Mr Bernasconi may have come to your property in February 2010? A. He may have come. Q. He may have come to ask for his pool fins back. Correct? A. He could have got them without asking. Q. You had a conversation with him about the pool being empty? A. No. Q. You told him you'd let the water out because the pool had been leaking? A. No. Q. The pool at that stage was in a untidy condition, wasn't it? A. No. Q. The whole pool area was littered, wasn't it? A. No. Q. You said to Mr Bernasconi that you never really wanted the pool, didn't you? A. Not - at different times I may have said it. Q. You said that it was Geoff's folly, didn't you? A. Yes. I have called it Geoff's folly before. Q. Is that's the first time you've admitted that in this proceeding? A. I've never denied it. Q. It's not addressed in your second affidavit, is it? A. It's a passing comment of no importance. Q. You told Mr Bernasconi during this conversation that you'd had problems with the pool since it had been built. A. That's not true. Q. He told you you'd better be careful because by leaving the pool empty, there was a risk that it could pop up. Correct? A. No, he did not. No conversation occurred. Q. It doesn't suit you now to admit there was a conversation of that kind, does it? A. No conversation occurred."

Dr Flanagan's financial position

1. Dr Oldfield and Dr Flanagan separated in 2010 and in November 2011 they reached a heads of agreement about how they were going to separate their personal and professional affairs, which on her account Dr Flanagan later showed Mr Bernasconi. On his evidence he was then aware of the separation and its impact on Dr Flanagan's financial position.
2. The 2011 agreement included the home being transferred into Dr Flanagan's sole name unencumbered, which depended on Dr Oldfield refinancing and thus what was agreed was noted as being subject to the NAB's and other approval. The NAB then had a mortgage over the property to secure business debts, in which Dr Flanagan was no longer to have any interest.
3. On her evidence in cross-examination Dr Flanagan was relieved when the agreement was reached and for a time not much concerned about her financial position, but this changed in 2012. She was not privy to the steps Dr Oldfield was pursuing to refinance, necessary to obtain the bank's approval, which proved not to be readily forthcoming, and she came to be concerned about the financial viability of Dr Oldfield's practices, given his failure to refinance.
4. In her first affidavit Dr Flanagan explained that despite what she had agreed with Dr Oldfield, she was thus under some stress. She was time poor due to a combination of factors, including the divorce; Dr Oldfield's inability to refinance; the NAB threatening foreclosure, which would have left her and her five children with no home; having to work and take care of her patients; and supporting her children. Details of her considerable problems as the result of what was no doubt a difficult divorce process emerged in cross-examination.
5. Dr Flanagan had the advice of her accountant, as well as legal advice, but eventually came to fear that what was to be her sole asset, the unencumbered home, would be repossessed by the bank and that both she and Dr Oldfield would end up being bankrupted. On 8 March 2012 she wrote that she could not live at the financial whim of the bank and Dr Oldfield for another 18 months and was then prepared to go into receivership, having repeatedly faced losing the house and bankruptcy. In April she discussed a possible fire sale of the house, being bankrupt and having no super. But this did not transpire.
6. Amongst the many things Dr Flanagan was cross-examined about was her decision to reduce insurance for the contents of the home in 2012 from over $1million to $500,000, it was common ground, in consultation with Mr Bernasconi. On her evidence this reflected property Dr Oldfield had taken with him in 2010 and other property it was agreed in 2011 he would then take.

The planned commercial use of the property

1. Dr Flanagan said she had first begun exploring plans in 2011 for alternate income producing uses for the property, including the pool and pool structure, which she had then also mentioned to Mr Bernasconi, but which she had not actively pursued until more recently.
2. Mr Bernasconi also denied this, but it is entirely possible that it was something which he had simply forgotten. Given the early stage of her investigation in 2011, it seems quite unlikely that Mr Bernasconi would then have investigated and advised Dr Flanagan about her insurance needs, as was his evidence, given the early stages of her consideration of this possibility.
3. It was put to Dr Flanagan in cross-examination that even though she no longer pursued a pleaded claim for lost opportunity, she had no plan in 2011 to pursue such opportunities and had never intended to put the pool, which she had never wanted and was content to get rid of, to such use, having always considered it to be Dr Oldfield's "folly", as she had described it in the past. She accepted that she had used this description, but denied having not considered using the pool, or having no interest in it.
4. It was also argued that Dr Flanagan, who borrowed $400,000 in late 2013 and refinanced in 2014, resulted in her having an extra $290,000 available to spend, but not then having constructed a new pool and enclosure, also showed that she had no real interest in the pool. A document written by Dr Flanagan's son in 2017 in response to a question asked by an insurance expert about the construction of the pool structure, which made no reference to the pool, was also relied on by the defence to establish this.
5. That Dr Flanagan had the pool and structure demolished and grassed over, rather than rebuilt, having unsuccessfully pursued a claim with the Mine Subsidence Board, Vero and the FOS and eventually later brought these proceedings, is all inconsistent with any lack of interest in the pool. Her evidence in cross-examination, that even though she had considered the pool to be a folly, she also considered it to be a valuable asset which she could make commercial use of, was supported by Mr Murray's evidence, which is not undermined by the 2017 document.
6. Mr Murray's affidavit evidence corroborated Dr Flanagan's evidence, although he agreed he could not now remember details of conversations which he had with her in 2011. He was cross-examined, but his evidence did not detract from this conclusion.

Other evidence Mr Bernasconi volunteered

1. While Mr Bernasconi was not able to answer some questions because he could no longer remember the events he was being asked about, not only was he adamant that his detailed memory of some things was accurate, he also volunteered other additional information which he had not included in his affidavit, and which had not been put to Dr Flanagan in cross-examination.
2. Some of his evidence also became contradictory.
3. No evidence was led by any of the Nadic staff who Mr Bernasconi said in cross-examination had prepared various documents he had provided Dr Flanagan, by use of its computerised system. Some documents were issued under his name, he said in accordance with Nadic's usual practices, but others were not. He could not explain why some documents he claimed he had given Dr Flanagan were issued in the name of Mr Dallas James, Nadic's CEO, or his son Mr Mitchell James, who also worked for Nadic, when their authenticity was raised with Mr Bernasconi in cross-examination. On his evidence they should have born his name, it being he, not they, who provided her with broking services.
4. It has been observed that "[e]xperience of the world shows that the files and other records of even the best run organisations, government and private, large and small, can usually not be treated as infallible": Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109; (1991) 23 ALD 183 at [122]. The evidence finally led in this case established that Nadic kept no reliable record of what documents Dr Flanagan was given. Also, that Mr Bernasconi's evidence that he gave exhibited documents to Dr Flanagan, relying as he did on documents created in the way Mr Dallas James explained, established that his evidence was not correct.
5. The result of the challenge to the authenticity of the documents was that without objection, evidence was called from Mr Dallas James which confirmed that documents bearing his name and that of his son had not been given to Dr Flanagan. That Mr Bernasconi gave her any such documents was not established by his evidence.
6. Mr James explained how the exhibited documents had been created by printing them from the Nadic system on current letterhead and forms not in use when Mr Bernasconi was providing broking services to Dr Flanagan. He also explained why what was so retrieved from the system did not refer to Mr Bernasconi. This evidence confirmed that the exhibited documents had not been given to Dr Flanagan.

The 28 February meeting did not occur

1. On Dr Flanagan's evidence, the Vero policy was taken out as the result of Mr Bernasconi's recommendation on 15 March 2012 and on his evidence, it was because she was not prepared to pay CGU's considerably increased policy, which he advised her of on 28 February.
2. In Dr Flanagan's affidavit evidence she said that on 15 March Mr Bernasconi did not provide her with any Vero documents, but that she signed the insurance premium funding loan form which she gave back to him. In April she received an amended version of that document. Mr Bernasconi did not then advise her about any of the terms of the Vero policy, other than saying that he would increase the sums insured by 5% as he had in previous years and decrease the contents cover, to reflect changes resulting from the dissolution of her marriage. He did not discuss any alternative options and she believed that she continued to have full coverage for the pool and all buildings on the property. Mr Bernasconi also did not tell her that the policy did not cover the pool or pool building or that she should read the terms and conditions of the policy or do anything else to satisfy herself that they satisfied her needs.
3. Mr Bernasconi's denied this in his affidavit where he said that he met with Dr Flanagan on 28 February 2012, the date the CGU policy fell due for renewal, at about 7.30 am and gave her a folder containing an invoice, product disclosure document and Statement of Advice, which Dr Flanagan denied receiving in her second affidavit. Mr Bernasconi exhibited a Nadic invoice dated that day, as well as a disclosure document, but no Statement of Advice. Instead, there was a General Advice Warning exhibited. That these documents were ever provided was not established.
4. On Mr Bernasconi's evidence on 28 February they discussed: "Me: Sue I am afraid he renewal premium has increased substantially this year. Dr Flanagan: Why Me: I think it's to do with the bush fire risk. We're having some trouble getting alternatives, but the girls in the office are working on it already and we're in the process of seeing what other quotes are available. Dr Flanagan: Good, because I can't afford it. I won't pay it Rob. You'll just have to find a better premium. Me: The other thing with the CGU renewal is that they want you to carry out some improvements that were recommended by the insurance surveyor who came round to inspect the property. Dr Flanagan: Well, I can't afford those either. Me: Ok, we'll do our best, but bear in mind there are bush fires raging in this area and insurers won't quote in high bush fire risk areas, particularly when there is fire activity. The CGU policy offers good cover and I'm just not sure we'll be able to find you a better alternative. I'm happy to go through the CGU policy with you if you think it would help. Dr Flanagan: Look, I could just about afford last year's premium, but that's it. I can't afford to pay what they're asking for."

The altered funding document and the March meetings

1. Dr Flanagan's case was that Mr Bernasconi recommended the Vero policy at their meeting on 15 March 2012 as a replacement for the CGU policy, but he gave her no advice about its terms or the differences in the cover and exclusions offered by the two policies. Nor did he enquire as to whether she wished to reconsider insuring for damage to the pool and pool building, given the reduced contents cover. He also gave her no advice about other available insurance apart from Vero, comparative scope of cover or premium cost, and did not provide policy wording documentation or a product disclosure statement or a statement of advice under s 946A of the Corporations Act 2001 (Cth) .
2. Pertinent to the resolution of this is Mr Bernasconi's explanation of the premium Vero charged for the insurance Dr Flanagan took out and the premium funding loan then provided by the Nadic subsidiary, which it is common ground was entered on 15 March. The loan was dealt with by a form which Mr Bernasconi had had prepared and he completed by hand, which Dr Flanagan signed in his presence that day.
3. On Mr Bernasconi's evidence in cross-examination, unbeknownst to Dr Flanagan, two later changes were made to the signed document afterwards.
4. Mr Bernasconi said initially that he had left blank the amount of the premium for the Vero policy on the loan form. Then, that he had written a figure in before it was signed and finally, that he had later increased the amount, without Dr Flanagan's knowledge or consent, after she had signed it. A certificate under s 128 of the Evidence Act was issued to Mr Bernasconi in relation to this evidence. He also said that someone else at Nadic had later altered the date from which the Vero insurance was provided on the signed form.
5. This evidence made implausible other evidence which Mr Bernasconi had given in his affidavit, which Dr Flanagan had also denied. Including that after the 15 March meeting when she had signed the funding agreement containing the Vero premium, which was considerably lower than the CGU premium, that he had met again with Dr Flanagan around the end of March, when she expressed her happiness with the higher Vero premium he then told her about.
6. Dr Flanagan denial of this was consistent with her expectation, which Mr Bernasconi shared, that the premium would be considerably reduced by the decrease in the contents cover.

How the Vero policy came to be taken out on 15 March

1. Dr Flanagan said in her affidavit that she had been concerned about the renewal of the insurance in early February when she contacted Mr Bernasconi, who assured her that her cover would continue and advised her that CGU required an inspection. He denied this, even though there is also no issue that in 2012 CGU had required an assessor to inspect the property and that the cover was extended. The CGU renewal schedule Mr Bernasconi exhibited was dated 2 March, noting the policy expired on 28 February.
2. The policy was then in Dr Flanagan's name. The inspection occurred in February, when Dr Flanagan was present. The assessor provided a 20 February report to CGU, but when it was provided to Nadic is not clear. CGU wrote to Nadic on 2 March about its resulting requirements, however, advising that identified fire protection equipment needed to be serviced and requiring advice of the result of discussions with Dr Flanagan by 4 May. Contrary to the defence submission this was not expressed to be "a condition precedent to the grant of cover" which, Mr Bernasconi claimed, he had already advised her to take out on 28 February.
3. The 2011 CGU premium had been $8,440.59 and Mr Bernasconi said he learned from a Nadic employee, Ms Daniels, only in late February 2012 that CGU was prepared to offer a renewal at $15,414.94. The Nadic invoice in evidence was dated 28 February in that amount, referred to Mr Dallas James and identified the insured to be Cardiac Assessment Centre Pty Ltd, not Dr Flanagan. As I have explained, that document plainly was not provided to Dr Flanagan.
4. Mr Bernasconi said he then expected that Dr Flanagan would be unhappy about the increase and so asked Ms Daniels to go to market to look for alternative quotes, which she was already doing.
5. Mr Bernasconi also said in his affidavit that he was then aware that insurers were changing their assessment of the risk of insuring homes in the vicinity because of increased bushfire risk and that this applied to the property, which was close to a State Conservation area and Dudley Bluff, where there was a bushfire at the time. He also said he was then concerned that there would not be an alternative insurance policy which met Dr Flanagan's requirements as to premium cost because of the bushfire risk and so he arranged for continuing bound cover on 90-day credit terms with CGU, while that search was made. Mr Bernasconi exhibited a message from Ms Cockburn, a Nadic staff member, of 14 March advising that: "Specialist U/W's Mansions - declined due to risk Chubb - declined due to risk Summit - declined due to risk General Insurers Lumley - $14,867 gross premium. Referral required due to sums insured & security Vero - $8204.18 gross premium. Referred to u/w for consideration QBE - $25,049!! Referral Generated Allianz - $12822 Referred to u/w for consideration. Basic excess $750 Rob, tried quoting with NRMA (to see if any direct insurers would do this). Maximum sum insured on building with NRMA is 1.1million."

How the pool came to be emptied

1. In her affidavit Dr Flanagan said that in December 2011 she had noticed a large increase in her water bill. Between January and May 2012 the possible causes, of which there were a number, were investigated by her plumber, Mr Houghton, whom she told: "I am still waiting for Geoff to refinance and so I can't get to it right now. I will monitor my water bills for the next couple of months and we can revaluate? That way we can fix any issue as soon as I have the funds come in, and we are sure it is being caused by the pool."
2. Mr Houghton advised in late May 2012 that he thought it was a leak coming from the pool, having excluded other causes. It was decided to turn off the equipment, which automatically refilled the pool and to then monitor the water bill further.
3. The next bill reduced, confirming that there appeared to be a leak in the pool to be repaired. Dr Flanagan asked Mr Houghton whether the pool could be emptied. He advised that it could be, being a "commercial" type pool designed to be emptied. She also knew that the pool had been emptied before and had also seen the council empty pools every year and so at the end of winter asked Mr Houghton to empty it. But she did not have the cause of the leak investigated or repaired, the pool was just left empty.
4. In January 2013 Dr Flanagan received an email from Dr Oldfield in which he said that there was a danger of the pool cracking and popping out as the clay underneath dried out and that he would hold her responsible for any damage if it was not at least half filled, because of the reduced potential sale value. There was at that stage still a possibility that the bank would decide to sell the property.
5. Dr Flanagan advised her barrister of the email, instructing that she had received a $2,000 water bill and a plumber had identified the leak to be in the pool, as the result of a process of elimination. She said that she did not have the financial scope to refill it, pay for the chemicals and run the cleaning system, which also required a new commercial quality cleaner which cost $5,000 and that she had been advised that the pool would not be popped out. While Dr Flanagan there instructed that the pool held 160,000 litres, in her evidence she corrected this to 300,000.
6. Dr Flanagan also told her counsel that she did not want the pool fixed because it could make the option of selling the house more attractive to the bank. She also asked for advice on various issues in the divorce proceedings and her arrangements with Dr Oldfield.

How the Vero claim and other steps were pursued

1. The pool was still empty in 2013 when there were two very heavy downpours, in January to March. On 2 March Dr Flanagan discovered that the pool had lifted out of the ground and the entire 30-metre eastern wall of the pool enclosure had collapsed. When she then spoke to Mr Bernasconi, he advised: "Me: Rob, the Pool has come out of the ground and the wall of the Swimming Pool has completely fallen down and is on the ground. I'm really concerned, the wall has also collapsed. Bernasconi: Don't worry Sue, you are covered by the Vero insurance policy. Me: What do I need to do? I am in the middle of preparing for Dominic's 21st birthday. Bernasconi: It's fine, you are going to need to get Mine Subsidence out there as soon as possible to make sure it is not related to the mine. Then we can take it from there. Me: Okay."
2. Mr Bernasconi denied so assuring Dr Flanagan about how Vero would respond to a claim. But she did make a Mine Subsidence claim, the rejection of which, he was aware of. Despite on his evidence Mr Bernasconi having seen the pool empty in 2010 and then telling her about the risk of lifting, he did not tell Dr Flanagan that this could have any impact on her insurance claim. Nor had he told her in 2012 about the Vero exclusion. Instead, he prepared the claim, which raised the likely problem with the hydrostatic valve, on his evidence in accordance with Dr Flanagan's instructions.
3. This was also in issue. But Dr Flanagan's evidence was that she later discussed the renewal of the Vero policy with Mr Bernasconi on 13 March 2013, when he advised: "I think that is a good idea Sue, given that you will be required to lodge an insurance claim, you should stay with Vero to facilitate the claim for the pool damage."
4. This was also denied, but the policy was then renewed.
5. Dr Flanagan had engaged a structural engineer, Mr Kidd, to assess the damage. His report was provided to Vero, which also engaged an engineer, with the eventual result that Vero denied the claim in October, when on her evidence Mr Bernasconi advised: "Bernasconi: Sue, I have some bad news. Vero has rejected the claim. There is an exclusion under the policy, but I think it will be okay. I think the pool damage will still be covered because there is a consequential damages clause. Me: Okay, what does that mean? Bernasconi: There are circumstances where there is accidental damage clauses that can cover accidental damage to your property. For example, assume you have a fire in your home on the first floor and the fireman damages the carpet on the ground floor with water when he is putting out the fire, the subsequent damage to the carpet may be covered under the accidental damage clause in a home insurance policy. I have had some success with other policies claiming under accidental damage when the claim was initially denied. One time with your boat claim and another with a different home insurance policy. I think the hydrostatic pressure release valves didn't work and therefore the pool lifted secondarily to this, it is a secondary event or accidental damage and is therefore covered under the accidental damage clause in you Vero Policy. Me: Okay, well what do we need to do? Bernasconi: I need to look at the Insurance Contracts Act and I will let you know what you should do. Me: Okay. Thanks Rob. I will speak to my solicitor tonight."

How the pool and enclosure were built

1. There were various photographs of the pool and the enclosure in evidence.
2. The experts, Mr Clemmett and Mr Dockrill, examined contemporaneous records evidencing how the pool had been constructed, including advice from the builder Bel-Air Pools in 1998 when concerns were raised about water entering the pool through a drain at the deep end, it would seem, before it was filled.
3. The pool shell was built of reinforced concrete and the pool house constructed of braced structural steel framing supporting a metal sheet roof and masonry walls, built on reinforced concrete footing beams, supported at points by bored piers. The documentation did not indicate that the pool had been designed to withstand hydrostatic groundwater pressure. That would usually be referred to in design drawings, which would have regard to relevant Australian standards.
4. But Bel-Air's 1998 advice was that there were three hydrostatic relief valves in the pool structure which were spring loaded and designed to relieve build-up of water pressure under the pool and that if they were not present, a build-up of pressure could result in the pool popping out of the ground.
5. Mr Clemmett's view was that this was a typical method of construction in use at the time, the valves allowing for pressure to be relieved by groundwater entering the pool shell until equilibrium is achieved. In his report Mr Dockrill observed that the pool "may or may not have been built with hydrostatic relief valves". The 2013 report provided by Mountford Prider Engineers and Technical Advisers Pty Ltd had noted that such valves had not been observed, but that they could exist in the pipework supply to the floor of the shell.
6. In 1998 a problem with water loss had also been investigated by Bel-Air Pools. It then advised it was likely to be from the hydrostatic relief valves in the pool and a water make-up chamber. In 1999, Craig's Building Advisory Services Pty Ltd referred to Bel-Air Pools replacing the valves in the floor of the pool, the shallow end valve having showed leaking through the mechanism. In 2000, Bel-Air Pools also advised that both an expansion joint problem and the water loss from the valve had been repaired.
7. In the result, as the experts agreed in their concurrent evidence, it must be accepted that the evidence establishes that the pool was designed and built to withstand hydrostatic groundwater pressure when empty and so long as the valves were functioning correctly, it could be left empty without the pool being at risk of lifting out of the ground.

How the pool came to be left empty

1. That Dr Flanagan did not consider in 2012 and 2013 that leaving the pool empty involved an insurance risk may be accepted. She was not aware of the Vero exclusion. Even though on Mr Bernasconi's evidence that he saw the pool empty in 2010, he did not tell her about the CGU policy requirement to take reasonable precautions, even though he considered that gave rise to a risk of the pool lifting.
2. Before Dr Oldfield advised her of his concern about the pool lifting in 2013, she had taken advice about emptying the pool, at a time when she did not want to make the property more attractive to the bank, which was threatening to sell it. She did not then believe that there was a risk which needed to be addressed by partially filling the pool.
3. That there was then such a risk was established by the expert evidence.
4. While the valves were designed to prevent the pool lifting because of hydrostatic pressure, them again not functioning could have caused the leak. When the pool was emptied Dr Flanagan was undoubtedly aware of the leak and the need to empty the pool to deal with it. On her evidence the advice she obtained from Mr Houghton in late May 2012 was: "Houghton: I have spoken to Kev's Pools and we can empty it. It is a 'commercial' type pool. They are designed to be emptied, serviced and refilled on regular basis. Me: Okay Robin, I know it was emptied before and I have seen the Council empty swimming pools every year. I just don't have time to deal with this at the moment, given everything I am dealing with. Can we empty the pool?"
5. Despite what Dr Oldfield raised with her in 2013 about the risk of the pool lifting, Dr Flanagan took no further advice, even though she had not emptied, serviced and refilled the pool, but had instead left it empty, by then for over 6 months, without investigating the cause of the leak.
6. On the expert evidence the pool, built as it was with three hydrostatic valves, was capable of being safely left empty for such a time, but only if the valves were functioning correctly. There then being an un-investigated risk that the cause of the leak was a defective hydrostatic valve, it could not safely be left empty. What was then required to ensure that it did not lift, was half filling the pool.

Breach of duty

1. There was no written agreement between the parties, but there was no issue about the nature of the duty which the defendants owed Dr Flanagan as her insurance brokers. It is of the kind explained in Horsell International.
2. An insurance broker has a duty both in contract and tort to exercise all reasonable care and skill, both in advising the client and in obtaining appropriate insurance cover: at [237]. That duty requires the broker to use reasonable skill and care not only to ascertain the customer's needs by instructions or otherwise, but to procure the cover that the customer has asked for, either expressly or by implication. If what is required cannot be obtained, the broker must report in what respects it has failed and must also seek the customer's alternative instructions: at [235].
3. Further, the client should not be exposed to an unnecessary risk of legal disputes with the insurer. The broker thus also owes the client a duty to draw to their attention any onerous or unusual terms or conditions and should also explain their nature and effect: at [236].
4. If ambiguous instructions are given by the client in circumstances where, if they had the meaning put upon them by the broker, they left the client substantially under insured, the broker's duty is to clarify the instructions and draw to the client's attention the consequences of giving effect to them, if they had that meaning. While the broker's duty does not include expounding the law, it does extend to pointing out legal pitfalls: at [238].
5. Mr Bernasconi knew that the Vero policy included an exclusion relevant to damage to the pool while the CGU policy did not. The expert evidence confirmed that as well as the CGU policy, in 2012 there were other policies available in the market which offered cover for loss arising from accidental damage to the pool and pool enclosure which the Vero policy excluded, as did information Nadic staff had gathered.
6. Mr Bernasconi also knew the pool was a valuable asset. Because of the location of the property near the bush and its size, it was also a source of water for firefighting. At that time he also knew that CGU and other insurers were concerned about heighted bushfire risks.
7. Despite this Mr Bernasconi did not draw the Vero exclusion to Dr Flanagan's attention, although she accepted in cross-examination that had she read the Vero policy, she would have understood it. But she did not read it, relying as she did on Mr Bernasconi.

Breach of the Corporations Act

1. The alleged breach of the Corporations Act obligations was also established, given its requirements in relation to the giving of financial product advice and the provision of financial services and personal advice: ss 766A and 776B. Although this can be dealt with shortly, not much finally turning on this, as the defence accepted in final submissions.
2. Instead of a Statement of Advice, of the kind which Mr Bernasconi had previously given Dr Flanagan and which he accepted he should on this occasion also have given her, the General Advice Warning he exhibited to his affidavit was given to her which advised that: "This advice has been prepared without taking into account your objectives, financial situation or needs. You must therefore assess whether it is appropriate, in the light of your own individual circumstances, to act upon this advice. If this advice contains information about a particular financial product, you should ensure you obtain a Product Disclosure Statement in respect of that product prior to making any decision to acquire that product."
3. On Mr Bernasconi's evidence that was inaccurate. She was a retail client: s 944A. He did consider Dr Flanagan's situation and was of the view that the CGU policy was preferable to the Vero policy, but did not tell her that or explain why, or mention the Vero exclusion, or that other insurers offered cover of the kind that CGU offered. In the circumstances he had to ensure the advice given was appropriate in Dr Flanagan's circumstances: s 945A. He also had to give her the statement of advice s 946A required, including in relation to premium costs and likely consequences of taking out the policy, given the exclusion.
4. His explanation in cross-examination was that he had no opportunity to tell Dr Flanagan about these things in any of the three meetings he claimed he had with her, the last in late March for 15 minutes, when he gave her yet another folder containing the Vero documents, which she also denied. He also said it did not occur to him then to say anything to her about the Vero policy because he was still hoping to arrange a meeting with her for an hour at her home and reserved telling her about the Vero policy for then. But there is no evidence that he ever attempted to arrange such a meeting, or raised the need to have one with Dr Flanagan, as he easily could have done.

What must Dr Flanagan prove?

1. It was the defence case that Dr Flanagan's pleaded claim was an all or nothing case which required proof not only that she would have taken out another policy, but that her claim would have been accepted by that insurer. That was because she did not pursue the loss of an opportunity which may or may not have come to pass, with its value having to be assessed having regard to possibilities of the kind dealt with in Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4
2. It followed that Dr Flanagan "must prove that, more likely than not, she would have taken out a different policy, the terms of that different policy, and the insurer under that policy (whoever it was) would have accepted the claim."
3. But Dr Flanagan had led no evidence that she would have stayed with CGU if made aware of the Vero exclusion, or that she would have taken out cover with any other insurer. Had she done so, consideration of all of the terms of the policy and other matters such as that insurer's attitude to claims, whether they had an interest in promoting or removing themselves from the market and whether they had a local presence, would all have been relevant. But only the terms of the then current CGU policy were in evidence and an Allianz policy taken out by Dr Flanagan in 2014. There were thus various evidentiary gaps in Dr Flanagan's case, preventing her case on causation being made out.
4. This was also disputed.
5. For Dr Flanagan it was argued that on her pleaded claim she bore the onus of proving that she would have successfully taken out homeowner's cover for the risk which the Vero policy did not cover, but not that she would have taken out a particular policy. Further, that whether or not a notional policy would have covered her notional claim for the risk and loss which materialised had to be determined on the balance of probabilities, or an assessment of the possibilities and probabilities, in a Sellars manner.
6. There was evidence that there were policies available which would have covered Dr Flanagan's claim and that she was uninsured because of the Vero exclusion. She did not have to prove all of the conditions and terms of such other policies. To establish causation, she had to call sufficient evidence of what would have occurred if the negligence had not happened, as well as the link between the breach and her loss, which had to be considered objectively, having regard to matters which included the nature of the pool and the enclosure, what the Vero policy excluded and the cost of policies which did not, as well as Dr Flanagan's circumstances.

The pleadings

1. What Dr Flanagan pleaded was that:

• she had taken out the Vero policy in reliance on Mr Bernasconi's recommendation: Statement of Claim: at [15];
• she suffered economic loss and consequential harm as the result of the breach of the duty of care which the defendants owed her: at [26]-[30];
• the defendants had also provided her with financial services and personal advice under the Corporations Act: at [31]-[34];
• they were obliged in the circumstances to provide her with a Statement of Advice in accordance with s 947C and other specified provisions of the Act: at [36]-[39]; and
• the defendants thus also breached their statutory obligations: at [40].

1. This has to be understood in the context of the exclusion clause in the Vero policy for risk which the CGU and other available policies did not exclude, namely: "12. Events involving swimming pools, including the pool lifting or any area around the pool lifting."
2. Causation was pleaded at [43] of the Statement of Claim by reference to the alleged breaches: "(a) but for the breaches the Plaintiff would have sought Homeowner's Insurance cover which covered damage to the Pool and the Pool Enclosure, including the Pool Damage; (b) had the Plaintiff sought insurance as described in (a) above she would have successfully taken out such insurance cover, and on terms sufficient to cover the total cost of repair or replacement of the Pool Damage; (c) the Pool Damage would have been covered by the Homeowner's Insurance which the Plaintiff would have taken out, subject only to the deduction of an excess; (d) the Plaintiff would have claimed on her Homeowner's Insurance policy and the claim in relation to the Pool Damage would have been accepted; (e) the Pool Damage would have been either repaired by the relevant Homeowner's Insurance or that insurer would have paid the Plaintiff a sum of money sufficient to enable her to fully repair the Pool Damage; (f) in either of the events as set out in (e) above, the Pool Damage would have been repaired at no cost to the Plaintiff, (other than an excess), by no later than twelve months after the Pool Damage occurred; (g) the denial of the Claim by Vero caused the Plaintiff to make the FOS application, and incur legal costs in doing so; (h) as a result of the unavailability of insurance cover to the Plaintiff with respect to the Pool Damage, the Pool Damage has not been repaired other than as described in paragraph 22 above; (i) removal of the rubble present from the Pool and the Pool Enclosure, which is contaminated with fibreglass, will require specialist waste removal services, which will cost up to $1,800,000 plus GST, (according to a quotation for this work obtained by the Plaintiff in January 2019); (j) to repair and rebuild the Pool and Pool Enclosure to a state comparable to that existing before the Pool Damage occurred will cost in the order of $820,610 inclusive of GST, (according to quotations for this work obtained by the Plaintiff in April 2016); (k) the Plaintiff has not had sufficient funds available to her to remove rubble, repair or rebuild the Pool or the Pool Enclosure, and the costs of doing so have increased since the time by which the Pool and Pool Enclosure would have been repaired had the Plaintiff been insured for this damage; (l) as a consequence of having not yet repaired or rebuilt the Pool or the Pool Enclosure, additional related works would now be required to obtain Local Government certification of any new Pool or Pool Enclosure, including: (i) upgrading driveways; (ii) removing trees and grinding out tree stumps; and (iii) upgrading the garage; (m) as a further consequence of having not yet repaired or rebuilt the Pool or the Pool Enclosure, the Plaintiff was required to construct an alternative fire- fighting water source in the form of the installation of a 110,000-litre water tank; (n) as a further consequence of having not yet repaired or rebuilt the Pool or the Pool Enclosure, the Plaintiff has been unable to pursue a prospective business opportunity, which involved her operating a business utilising the Property, and the Pool and the Pool Enclosure, as an environmental education centre or health retreat, (the business)."

The onus

1. In Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38 it was explained that whether "one event caused or resulted from another is determined in legal proceedings by applying common sense criteria and not philosophical or scientific theories of causation": at [22].
2. While Sellars was concerned with a claim for damages for breach of s 52 of the Trade Practices Act 1974 (Cth) for misleading and deceptive conduct claimed to have resulted in a lost opportunity, it was there explained that "the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage": at 355.
3. The Civil Liability Act now applies to Dr Flanagan's negligence claim. In order to succeed on causation she must establish that the admitted negligence was a necessary condition of the occurrence of the harm which she suffered and that it is appropriate for the scope of the defendants' liability to extend to the harm so caused: s 5D(1). Further, Dr Flanagan bears "the onus of proving on the balance of probabilities, any fact relevant to the issue of causation": s 5E.
4. The evidence established that Dr Flanagan suffered harm as a result of Mr Bernasconi's failures. No longer having the full insurance cover which she previously had, the claim which she made under the Vero policy was rejected because of the result of the operation of the exclusion, of which she was not aware and which the CGU and like policies did not contain.
5. On all of the evidence I have discussed I am satisfied, on the balance of probabilities, that but for Mr Bernasconi's negligence, she would not have taken out the Vero policy, but would have accepted his views about the cover CGU offered.

The available insurance cover

1. The experts Mr Le Plastrier and Mr Gribbin agreed that while most home policies include cover for pools, associated buildings, and equipment, they do not necessarily cover the risk of a pool lifting under accidental damage cover which applies to both direct and consequential damage. They also confirmed Mr Bernasconi's evidence that when the Vero policy was taken out, other insurers, Allianz, Lumley and QBE, as well as CGU, did not exclude the lifting claims which the Vero policy excluded.
2. In the concurrent evidence they agreed that no insurer would have offered cover for the risk of the pool lifting for the Vero premium, $8,600. A quote was obtained from Allianz for such cover at a cost of $12,822, less than the cost of the CGU renewal of $15,415. All the possible premiums available in the market for such cover could not, however, be calculated, that being the role of underwriters and the role of brokers being to source quotations. Further, the terms on which that cover was provided depended on the particular policy.
3. Dr Flanagan was not advised about the availability of insurance other than Vero, or that the Vero policy did not provide cover for the pool lifting. Initially Mr Le Plastrier and Mr Gribbin did not agree that Mr Bernasconi should have informed Dr Flanagan about this. That altered after Mr Bernasconi's evidence in cross-examination. The result was that parts of Mr Gribben's report and the joint report were not read.
4. Dr Flanagan never instructed Mr Bernasconi that she was prepared to take out insurance which did not provide either the full insurance the CGU policy provided, or one which did not insure damage to the pool and pool structure, understandably given as the mortgage required the property to be insured.
5. Mr Gribbin agreed that a competent broker would have obtained quotes from alternative insurers which provided cover equivalent to that provided by the expiring policy. Nadic staff did that, obtaining quotes from Allianz, Lumley and QBE, which offered such cover at premiums $4,000 to $16,000 more than CGU had previously charged, as well as obtaining a quote from CGU. Other insurers were not prepared to offer cover.
6. Still Mr Bernasconi did not inform Dr Flanagan about any of those quotes, so that she could make an informed decision about whether to insure with Vero, the only quote with which she was provided, but whose policy, unbeknownst to her, did not provide cover for the damage which the pool and building later sustained.

Was there a defect?

1. The experts agreed that other policies which provided the cover the CGU policy offered would also have contained similar provisions in relation to defects and reasonable precautions.
2. Dr Flanagan's case was that the defence had not met the onus falling upon it, given the advice which she had received before emptying the pool, which had left her with an understanding that there was no problem with leaving the pool empty as she did, given that it was designed to be left empty. Both the defect and reasonable precautions points would have, in the circumstances, been hopeless for an insurer to take in the case of the defect provision because there was not sufficient evidence to establish any defect, especially given that the valve could not be inspected.
3. Given what she understood, Dr Flanagan's actions in emptying the pool and leaving it empty, on the defence case, showed that she would not have acted differently if damage to the pool had been insured under the CGU policy. Further, that there was an evidentiary gap, because she had not led expert evidence to establish that in the circumstances, it was likely that her claim would have been accepted had she been insured under such a policy.
4. While I do not accept that the existence of a defect in the valve could not be established unless it was inspected, the question of whether another policy would have insured the damage for which Dr Flanagan made her claim under the Vero policy, does not depend on the opinions of experts such as Mr Gribben, who considered that liability for such a claim would be declined, in his experience the most common cause of a pool lifting being well known to be emptying a pool and leaving it empty, or even upon the view of an insurer.
5. As was contended for Dr Flanagan, whether a policy provides cover in particular circumstances does not depend on expert evidence that an insurer would have accepted the claim, or the Court guessing or forming its own view about how the insurer would behave. It depends on the proper construction of the policy and its operation in those circumstances.
6. What constitutes a "defect", the CGU policy and other policies which did not contain the Vero exclusion excluding damage or loss caused by a defect, thus arises to be considered. The word is not there defined and so must be construed in the context in which it appears, namely in an exclusion of damage or loss caused by "a defect in an item, faulty workmanship, structural defects or faulty design". On the expert evidence other policies of the kind CGU offered, also contained such a term.

Was there a failure to take reasonable precautions?

1. In the circumstances the evidence also establishes, on the balance of probabilities, that Dr Flanagan failed to take the reasonable precautions which the CGU policy and those which offered like cover, on the expert evidence, also required. That also leads to judgment for the defendants.
2. The policy provided under the heading "What you are required to do for us", that "You must take reasonable precautions to prevent anything which could result in a claim under this policy".
3. The experts did not agree, in the concurrent evidence, whether a broker in Mr Bernasconi's circumstances should also have drawn attention to this. Irrespective of this, or whether in 2012 Dr Flanagan remembered that there had in 2001 been a problem caused by a defective valve which was replaced, which on her evidence it seems she did, when she left the pool empty she would have been contractually bound to take reasonable precautions to prevent anything which could result in a claim in relation to the pool.
4. What they were, were established by the evidence.
5. The leak had been identified in late 2011 by Dr Flanagan and the pool its likely cause in 2012, by Mr Houghton. It was emptied mid-year and left empty until it was damaged in 2013, without the cause of the leak being investigated or repaired, Mr Houghton having advised only that it could be emptied, serviced and refilled. Dr Flanagan chose not to take the latter two steps.
6. In Mr Dockrill's opinion, in the circumstances it would have been prudent for Dr Flanagan to have taken advice from a pool contractor about leaving the pool empty for a long period. If he had been consulted in 2012, Mr Clemmett said that he would have advised that the pool should only be emptied for maintenance and left empty, after confirmation that all three hydrostatic valves had been maintained in working order.
7. As Bergin J, as she then was, explained in Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010, by reference to Fraser v BN Furman (Productions) Ltd [1967] 1 WLR 898, the purpose of such a requirement to take reasonable precautions is to "ensure that the insured will not refrain from taking precautions which he knows ought to be taken because he is covered against loss by the policy": at [14].
8. Further, an insurance policy "is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure": McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22], affirmed in CGU Insurance v Porthouse (2008) 235 CLR 103; [2008] HCA 30 at [43].

Damages

1. Whether Dr Flanagan had established the damages which she claimed should also be determined, in case I am wrong about the conclusions I have reached about the existence of a defect and her failure to take reasonable precautions.
2. Dr Flanagan pursues total damages of $2,083,061.75, much of it for demolition costs. Dr Flanagan's claim was that her entitlement arose primarily from being uninsured for the damage to the pool and pool building, for which she would have been covered under a notional policy such as that of CGU, which covered her for reinstatement of the damage and certain consequential losses. But the parties also disagreed about what would have been recoverable under such a policy.
3. While at one point it appeared that it was finally common ground that damages must be assessed on 2013, rather than 2020 figures in evidence, in respect of damages which are only payable when work is undertaken, such as council fees, for example, it was 2020 figures which were relevant.
4. On the defence case much of what Dr Flanagan pursued had no evidentiary basis and the maximum which could be awarded was: 1. Demolition - $35,000 plus interest; and 2. Pool - $231,070.
5. The measure of Dr Flanagan's damages is the difference between the position she was in and that she would have been in, had the complained conduct not occurred, even if that requires consideration of a range of possible hypothetical past events: Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20 at 643.
6. The burden of proving that Dr Flanagan suffered the claimed damage as the result of the defendants' breaches and the amount of the loss she sustained, "on the balance of probabilities and with as much precision as the subject matter reasonably permitted", fell on Dr Flanagan: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10 at [37].
7. Further, if precise evidence of what was lost could not be provided, estimation or guesswork may be necessary in assessing the damages to be allowed. In such a case mere difficulty in estimating damages "not relieving the court from the responsibility of estimating them as best it can": at [38].
8. The parties again relied on expert evidence. While there are similarities in some of their calculations, Mr Sturgess and Mr Vasey disagreed about many of the claimed costs, disagreements which remained largely unresolved in their joint report and by their concurrent evidence.

What was covered?

1. The relevant CGU provision was: "How we pay a claim for your buildings When damage or loss occurs to your buildings we will pay the cost of rebuilding your buildings or repairing the damaged portions to the same condition as when they were new. We will also pay any additional costs required for your buildings to comply with government or local authority bylaws. We will not pay these additional costs if you were required to comply with these bylaws, and had not done so, before the damage or loss occurred. Rebuilding or repairing your buildings must commence within six months of the damage or loss occurring. If it does not commence within six months, we will do one of the following: ▀ reinstate or repair the buildings to the condition they were in just before the damage or loss occurred, or ▀ pay you the cost of reinstating or repairing the buildings to the condition they were in just before the damage or loss occurred, or ▀ pay you the value of the land and buildings just before the damage or loss occurred. We will reduce this payment by the value of your land and buildings after the damage or loss occurred. We decide which one we will do. We will pay for the damaged portions of fixed coverings to walls, floors and ceiling only in the room, hall or passage where the damage occurred. We will try to match any material used to repair the buildings with the original materials. If we cannot, we will use the nearest equivalent available to the original materials. We will not pay any costs for replacing undamaged property. If the damage was caused by liquid that escaped from a bath, basin, sauna, spa, shower base, or shower wall we will pay the costs to repair the buildings. We will not pay the costs to repair or replace the bath, basin, sauna, spa, shower base or shower wall."
2. I am satisfied, on the balance of probabilities, given this clause and the evidence about the damage caused to the pool enclosure and how it had been built, that the entire cost of rebuilding it would not have been covered by this or a like policy.
3. On the contemporaneous engineering advice it cannot be concluded that the damage to the pool necessitated the demolition of the entire enclosure. To the contrary, the advice that both Dr Flanagan and Vero received was that it could have been repaired, Vero's engineer offering to provide a detailed scope of works for "necessary repairs". Contrary to Dr Flanagan's case this does not suggest that "maybe everything needed to be demolished and built as new".

Demolition costs

1. That if the pool lifted there would be damage to the pool and pool enclosure which would require demolition work was foreseeable, as was that Dr Flanagan would herself have to deal with the damage because the Vero policy did not cover the pool lifting. That necessitated demolition work. She considered in 2014 that the pool and pool enclosure could not be left, given the health and safety risks which they posed, the requirements of the bank and not considering herself to be in a financial position then to rebuild.
2. The experts agreed, having considered both documents and photographs, that the rubble from the demolition work which was undertaken in 2014 was used to fill the pool, instead of both the pool and enclosure being demolished and the rubble being removed, as Dr Flanagan had contracted in 2014.
3. That material was then covered with clean fill and grassed over, although some bricks were retained. If the pool and enclosure are to be rebuilt there, this material now has to be removed.
4. The experts also agreed that the clean fill could be removed, but that much of the pool, which was lined with fibreglass, remains in place underground and still has to be demolished in order to be removed, so that the pool can be reinstated. That should have been done as part of the 2014 contracted $32,000 cost, on the quotes in evidence.
5. It follows that if the 2014 demolition contract had been adhered to, there would only now be clean fill to be removed.
6. The experts disagreed about how the rubble from the demolition in 2014 could now be removed and disposed of, apart from the clean fill and what that would cost; whether fibreglass can be separated successfully from other waste; whether any of the materials can be disposed of as general solid waste, Mr Sturgess considering that it all had to be disposed of as special waste, at a very considerably higher cost; as well as about what account should be taken of costs Dr Flanagan has already met.

The cost of the initial demolition

1. Mr Sturgess' costing rests on his assessment of the work necessary in October 2013 when the damage occurred, without regard to the costs Dr Flanagan paid in 2014 to the demolition contractor Novalec. Mr Sturgess calculated additional sums for work appropriate, but not then done at $77,373. Mr Vasey arrived at a figure of $75,039, but he considered that the quoted 2014 sum should fix this aspect of claim, which was included in his figure. Mr Vasey also allowed an additional amount of $5,537 for the grassing over of the site, which could be seen on photographs in Mr Sturgess' report.
2. Also to be considered is a term of the CGU policy which limited what was payable to 10% of the sum insured.
3. No work was undertaken in 2013, Dr Flanagan pursuing the insurance claim Mr Bernasconi prepared and, only after it was rejected in 2014, incurring the cost of the demolition. The value of the property had undoubtedly been adversely affected and work on the pool and structure was then necessary. In the circumstances such work could plainly not await the bringing and resolution of these proceedings.
4. The defence case was that if insured by a policy like the CGU policy, Dr Flanagan would not have had the 2014 demolition work undertaken. Given the views I have reached, such an insurer is also likely to have resisted her claim and so the cost incurred needs to be taken into account.
5. Mr Sturgess explained in the concurrent evidence that he considered the 2014 quote to have been "only a quotation which was inconclusive". Mr Vasey however considered not only that "the scope appeared on that quotation to be reasonable", but its cost known and so he had taken it into account. The quote was to demolish and remove the structures, demolish the pool, backfill with clean fill, level the area for grassing and remove the demolished items from the site.
6. The experts also offered possible explanations for the quote: that the contractor had a place to dump the materials for a competitive price; illegal dumping; mistake; and utilising the materials, or some of them, on another project. But they disagreed about their likelihood, given the size of the site and what had to be disposed of. It is unnecessary to resolve this.
7. The experts agreed that the work performed in 2014 did not accord with what had been quoted. But the evidence established that Dr Flanagan had paid the quoted sum. Accordingly, I accept that this cost must be taken into account in determining damages.

The waste would not be kept onsite

1. The differences between the experts' costing for removal of the waste on site was $215,790 on Mr Sturgess' approach and $79,253 on that of Mr Vasey, although in the joint report they agreed on a 2020 cost of some $97,153, if the material was taken off site.
2. Mr Vasey considered that the waste could be retained onsite, at even less cost than if disposed of as general waste, either by the pool being built in a different location, or retaining the demolished material elsewhere onsite, for example in a pit or by extending an embankment, although he said in the concurrent evidence that would require engineering advice. He had not inspected the property, while Mr Sturgess, who disagreed, had. Mr Vasey also explained that he had used site diagrams in Mr Sturgess' report, which did not show trees, to arrive at his conclusions.
3. Mr Sturgess disagreed about the cost involved, given the nature of this site, the regulatory approvals required and the unreasonableness of what was proposed.
4. I am satisfied that these possibilities are not a reliable basis for any conclusions in relation to damages and in final oral submissions, understandably, damages calculated on this approach were not urged by the defence.
5. Not only did Dr Flanagan contract for the removal of the demolished materials, onsite retention would obviously require her approval. That it would be forthcoming, or ought reasonably to be given, was not established. Dr Flanagan is not only entitled to rebuild the pool and enclosure where they were, but to have the demolished materials removed. Nor does the evidence establish what onsite retention of these materials would require by way of approval, for example from the relevant Council or EPA, or what that would involve and cost, if available.
6. In the result, I am satisfied that this cannot be contemplated as a basis for assessment of damages.

The cost of disposal of material which remain onsite

1. Photographs taken before the pool was filled in were explained by the experts. They show that much of the fibreglass had delaminated and spread around in material which lay on the bottom of the pool, much of it close to the walls; but some adhered to small pieces of broken concrete lying on the floor of the pool, the pool walls having been partly demolished by a large hammer; and a great deal still adhered to the concrete walls, which still have to be demolished. There are also broken bricks and other materials there to be seen, which were all covered by the clean fill and grass.
2. Mr Sturgess approached costs on the basis that only 80% of that fill could be removed as clean fill and the rest treated as hazardous, given his view that fibreglass would have contaminated the rest, the demolition work having shattered some of that glass into very small pieces which had dispersed throughout the waste and some of the fill. Mr Vasey disagreed.
3. It is common ground that the cost of dumping recycled material is less than either general solid waste, or the most expensive, special waste. That, I accept, encourages demolishers to recycle as much waste as they can and otherwise, if possible, to wrap materials such as fibreglass, so that it may be dumped as general waste in accordance with the applicable EPA guidelines. That will also have an influence on how they might compete for the work and at what price.
4. Mr Sturgess' approach was that most of the material had to be disposed of as special waste and even bricks as general solid waste. In the concurrent evidence he explained that the fibreglass shards in the mix had led him to make an enquiry of the EPA and that his view of the documentation he had considered had led him to conclude that shards of loose fibreglass in the waste would result in it being classified and having to be disposed of as special waste.
5. Mr Vasey disagreed, having had experience of the guidelines in his work. On his approach, a large part of the remaining pool walls could be detached from the fibreglass and the concrete then recycled, for which he made allowance. What could not be, could be dealt with as general solid waste by being appropriately bagged. He also explained why he considered some of the material was still recyclable, including as it did structural steel and bricks which could be separated by methods he explained, using equipment, labour and protective equipment which he had included in his costing. Otherwise, the waste containing fibreglass could still be wrapped as required to prevent dust emissions, permitting disposal as general solid waste.

The cost of further demolition and removal of the remaining material is too remote

1. I am also satisfied, however, that the defence case that the cost of the removal of the material now left in the pool is too remote, must be accepted. That flows from Dr Flanagan's decision to remove the entire enclosure, rather than repairing it as engineers had advised was possible in 2013 and from the work she contracted to have undertaken in 2014, demolition of both the pool and enclosure and removal of all material offsite.
2. It could not have been reasonably contemplated, not only that Dr Flanagan would have had the entire enclosure demolished, rather than repairing it as the engineers advised, but that the contractor she engaged would not complete the contracted work for which it was paid, with the result that the pool was only partly demolished and instead of removing what had been demolished from the site, it was dumped in the pool and so must now be removed in order for the pool to be rebuilt.
3. In the concurrent evidence Mr Sturgess described what had been done as akin to having created a tip on the property, but still Dr Flanagan paid for the contracted work which had not been performed. That was also not foreseeable.
4. It follows that while part of what Dr Flanagan has paid is recoverable as damages, the cost of further demolition required and the removal of that and the materials which were left in the pool, contrary to the demolition contract, is not.

Conclusion

1. In the result, doing the best I can on all of the evidence, I have concluded that these damages must be assessed by reference to what Dr Flanagan agreed to pay for the contracted work, with the result that $20,000 of what was paid is recoverable for the demolition of the pool and part of the enclosure and the removal of those materials.
2. That reflects that the demolition and removal of the pool would have been more difficult and expensive than the cost of demolition and removal of part of the damaged enclosure.

The new pool

1. Mr Sturgess concluded that in 2013 rebuilding the pool and enclosure would have cost $600,566 and Mr Vasey $532,164, with the pool plant room being costed respectively at $13,286 and $8,629, on the basis that it had also been demolished and was to be rebuilt.
2. The experts' costings have had regard to design and council fees. I am satisfied that there were such consequential expenses contemplated in the event that the pool had to be rebuilt. In Mr Sturgess' case he had also taken account of a second set of consultants to design and have the pool building approved.
3. I am satisfied that only the cost of rebuilding the pool and repair of the enclosure could be recovered and even if this were not the case, only the cost of one set of consultants could be recovered.
4. Mr Sturgess assessed the cost of the pool to be $226,366 and Mr Vasey $188,495. Neither figure can be accepted.
5. Mr Sturgess and Mr Vasey each drew on their own experiences, which were plainly different, to arrive at their costings. For example, in Mr Sturgess' case builder's margins could be up to 30% in some cases, 15 to 20% on a custom-built home and 10% on a project home. Mr Sturgess accepted that a builder might be prepared to negotiate the margin, as was Mr Vasey's experience, in order to be competitive in pricing, although he considered 15% to be a fair market price.
6. Mr Vasey agreed that a 15% builders' profit might be reasonable, but Mr Sturgess maintained that 10% was not, given the risks involved in the project. Mr Vasey's experience was of builders who had tendered for less.
7. The experts both had regard to rates provided by the Rawlinson's guide, which had its own index for the regions, which Mr Vasey departed from because of his view that some of those rates were not applicable in the Newcastle area, which was slightly higher than the Sydney rate. They also disagreed about the cost of some preliminary work and the cost of builder's supervision.
8. Mr Sturgess also agreed that the preamble to the Rawlinson's guide referred to the inclusion of a preliminary 5% margin, but unlike Mr Vasey he was not aware of discounting a builder's margin by that amount as a result, which Mr Vasey said was his daily experience and Mr Sturgess said he had never experienced.
9. In the result I am satisfied that the Rawlinson's rates should be used, with a 10% builder's margin, 15% builder's profit and 10% for preliminaries.

The cost of repairing the pool enclosure

1. Mr Sturgess assessed the cost of rebuilding the enclosure to be $401,336.10 and Mr Vasey $312,132.86.
2. Dr Flanagan's case was that the defendants not having led evidence to establish the cost of repairing the enclosure, the Court had to do the best it could on the evidence, which did not leave open the conclusion that repairing the structure would have cost less than replacing it. That was in issue and I consider that was for Dr Flanagan to prove, but the evidence did not touch on this.
3. The wall which was damaged is shown in photographs, as is the state of the enclosure after its collapse. What the engineers advised in their reports included that the steel frame had suffered an upward movement centrally on the east side of the building, causing the masonry wall infill, which was fixed to the steel uprights, to rotate and collapse outwards, damaging the eastern wall beyond repair. But this still permitted the uprights adjacent to the wall to be replaced and/or straightened, with the result that a significant proportion of the pool remained salvageable.
4. The cost of those repairs was not separately considered by the experts.
5. Doing the best I can, I have concluded that they would be less than half of the cost of rebuilding the entire structure, a sum which would also be further reduced, because what collapsed had not been built to the standard required, while the experts' cost of rebuilding had had regard to that standard. In the result these damages should be calculated as 42% of the cost of rebuilding the entire enclosure.
6. The experts also included design and council fees in their costings, again for the cost of the replacement of the building. Given that an entire wall of this structure was severely damaged, that its replacement would also have resulted in some design and council fees, must also be accepted.

Additional works

1. The experts also disagreed about the necessity for substantial additional work which Mr Sturgess had assessed would cost some $293,300, on the basis of a scope of work with which he was provided and on Mr Vasey's costing $15,354, he not having considered that scope of work.
2. Mr Sturgess' costings rest on the assumption that such works are required as the result of the November 2019 NSW Rural Fire Service Planning for Bush Fire Protection document. It is a guide for Councils, planners, fire authorities and developers, but has no statutory basis. There is no suggestion that such a publication existed in 2013.
3. In the concurrent evidence Mr Vasey explained that he considered that it was necessary for a fire consultant to be engaged to advise on such a scope of work. His costing reflected his assessment that it was reasonable to accept that a few of the items Mr Sturgess had been instructed to assess would be required, without such expert advice.
4. Mr Sturgess confirmed that his costing was based on the assumption that the works were required to be undertaken, as he was instructed. They were identified in an annexure to his report.
5. Mr Vasey also explained problems which he saw with some of the assumptions, for example that 55 trees would have to be removed, without consideration of their size or location, which would be relevant to determine the cost of their removal. Mr Sturgess explained that his inspection had allowed him to make some assessment of the type of clearing which would be required.
6. The works also included building a long new driveway around the property and removal of the existing driveway. Given the work already undertaken, the existing driveway would clearly also provide necessary access for further work required to rebuild the pool and enclosure.
7. On Dr Flanagan's approach in final submissions, works to comply with bush fire requirements are likely to be extensive and while it was difficult to be confident of the costs which may be involved, Mr Sturgess had estimated a cost, that being the only realistic estimate before the court and so it should be found that they were recoverable.
8. The defence disagreed. It was argued to be relevant that Dr Flanagan was not obliged to rebuild the pool or pool structure, even though on her evidence she wishes to pursue her commercial plans for the property. However, she had not made a development application. Even if the application of the Bushfire Protection document could result in additional cost if such an application was made, she might never incur them.

The FOS challenge

1. Damages for the legal costs incurred in the challenge to the Vero refusal of Dr Flanagan's claim were also claimed. I am satisfied that this claim was also too remote.
2. The challenge was pursued by Dr Flanagan as the result of legal advice which she obtained about the terms of the Vero exclusion. Even though it is undoubtedly not a claim which she would have pursued, had she been covered by a policy which did not contain an exclusion of the kind which precluded this challenge succeeding, that the pursuit of this challenge to Vero's refusal of her claim was reasonably foreseeable, given the nature of the exclusion, is not apparent. Nor is it apparent why the challenge was pursued, even at the limited cost incurred before the Ombudsman.
3. Contrary to Dr Flanagan's case, given the terms of that exclusion, a failure to pursue such a challenge could not have resulted in a successful claim that Dr Flanagan had failed to mitigate her loss.

Calculation

1. Had I concluded that judgment should be entered in favour of Dr Flanagan, these conclusions would have required the parties to calculate her award of damages to reflect the conclusions I have reached, as well as interest, about which there was no argument.
2. Given that I have not arrived at such a conclusion, that exercise need not be undertaken.

Orders

1. For these reasons judgment must be entered for the defendants.
2. The usual costs order under the Civil Procedure Act 2005 is that costs follow the event. In this case that is an order that Dr Flanagan bear the defendant's costs, as agreed or assessed.
3. The parties are directed to confer and approach in the event that they wish to be heard on costs within 14 days. Otherwise they are to file final orders within that time, which will then be made.

Amendments 04 April 2022 - 0 placed before 4 in Date of Orders 04 April 2022 - Index added to Judgment DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 April 2022