1. The Owner seeks unquantified damages for physical inconvenience, distress, loss of enjoyment and loss of amenity and asks me to fix an appropriate figure.
2. In general, damages for breach of contract are for financial loss (Sunley v. Cunard White Star [1939] 2 KB 791 at 799). However physical inconvenience and discomfort suffered by living in cramped and uncomfortable circumstances may be compensable where it is substantial (see for example Bailey v. Bullock [1950] 2 All ER 1167; Watts v. Morrow [1991] EWCA Civ 9; [1991] 1 WLR 1421).
3. Such damages have been awarded by the Tribunal in a number of cases. In Anderson v. Wilkie [2012] VCAT 432, the applicants were awarded $5,000.00 damages for loss of amenity for having to live in a wet house for two and a half years. In Harmonious Blend Building Corporation v. Ibrahim [2014] VCAT 1084, the applicants were awarded $6,000.00 compensation for physical inconvenience and mental distress.
4. In the present case, the Owner and her family had to live in a converted garage for almost 2 years instead of the three-month period in which the contract works ought to have been completed. Although the conditions were cramped and they were deprived of the enjoyment of their renovated home, the level of discomfort does not appear to be at the same level as the cases referred to. I think an appropriate award of damages would be $3,000.00.

1. The Owner seeks compensation for the interest that she had to pay to her bank on the amount of $254,757.72 that she had to borrow in order to rectify and complete the work.
2. There is no provision in the contract entitling the Owner to interest of this nature. However, damages in the nature of interest can be awarded under s.53 of the Act, the relevant parts of which are as follows:

(1) The Tribunal may make any order it considers fair to resolve a domestic building dispute.

(2) Without limiting this power, the Tribunal may do one or more of the following -

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(ii) by way of damages (including exemplary damages and damages in the nature of interest);

(3) In awarding damages in the nature of interest, the Tribunal may base the amount awarded on the interest rate fixed from time to time under section 2 of the Penalty Interest Rates Act 1983 (Vic) or on any lesser rate it thinks appropriate."

1. I considered how this provision should be applied in Quinlan v. Sinclair [2006] VCAT 1063, where I said (at para 9 et seq.):

"9. There is nothing in the Victorian Civil and Administrative Tribunal Act 1958 that empowers this Tribunal to award interest or damages in the nature of interest. In domestic building disputes there is the power in s.53(2)(b)(ii)]of the Domestic Building Contracts Act 1995 referred to and there is a similar power in s.108(2)(b)(ii) of the Fair Trading Act 1999 in regard to claims brought under that Act. In the presence case I can only have recourse to the former section and that allows the award of damages in the nature of interest.

10. In the Supreme Court there is a statutory entitlement to interest "unless good cause is shown to the contrary' (see Supreme Court Act 1986 s.58(1), s.59(2) and s.60(1)) and the sum awarded becomes part of the damages awarded. It is an additional head of damages (see Williams v Volta [1982] V.R.739 at p.746). In domestic building disputes the Tribunal "may" award damages in the nature of interest (s.53(1) & (2)). There is no requirement for the unsuccessful party to show "good cause" why they should not be awarded but the use of the permissive "may' would suggest that they will not necessarily be awarded in all cases. There is no guidance in the Act as to the circumstances in which such damages should be awarded, apart from s.53(1) which indicates that it must be "fair" to do so.

11. It cannot be "fair" to make any order that is not in accordance with the evidence and established legal principles. The Tribunal cannot make an award of damages in the nature of interest simply because the section confers the power. Before awarding damages in the nature of interest the Tribunal should satisfy itself that it is appropriate as a matter of law to do so in order to compensate the other party, wholly or partly, for loss and damage suffered as a result of the offending party's breach of the contract. Damages in the nature of interest are damages suffered because the successful party has been deprived of the use of the money but whether an award of such damages is "fair" must be determined in each case."

(See also Glenrich Builders Proprietary Limited v. Modonesi [2013] VCAT 543 to a similar effect).

1. What is sought by the Owner in this case is compensation for the loss that she has sustained by reason of having to borrow additional money to make good the Builder's breach of contract. If there had been no breach, she would not have needed to borrow this money and pay that interest. That is a loss she has suffered by reason of a breach of contract. As the innocent party, she is, so far as money can do it, to be placed in the same situation, she would have been in with respect to damages, as if the contract had been performed. In order to do that, she should be compensated for the interest that she would not otherwise have paid. It is therefore fair to make an order for payment of interest under s.53.
2. The claim will therefore be allowed from the date of termination, being 14 March 2018. The rate of interest paid by the Owner, up to and including 26 September 2018, was 3.85% per annum thereafter, it is 4.01% per annum. The calculation should be on the adjusted cost of rectification and completion paid to Lombardi Homes that I have found to be payable by the Builder, less the balance of the contract price, which is $207,417.14.
3. I calculate the interest to be $5,894.10, as follows:

15 March to 26 September 2018 (197 days) @ 3.85% = $4,310.00

27 September 2018 to 3 December 2019 (69 days) @ 4.01% = $1,584.10.

1. For the foregoing reasons, the damages to be awarded to the Owner are assessed at $246,367.19, as follows:

1. As the Builder's entitlements under the contract are taken up in the counterclaim, the claim will be dismissed. There will be an order on the counterclaim that the Builder pay to the Owner $246,367.19.
2. Costs will be reserved for further argument.
3. Direct that the proceeding between the Respondent and the Interested Party be listed for directions before Senior Member Walker at a date and time to be fixed by the Principal Registrar.