Rodriguez & Sons Pty Limited v Queensland Bulk Water Supply Authority t/as Seqwater

Supreme Court of NSW|2021-03-30|Before: Beech-Jones J, Adamson J

Solicitors: Maurice Blackburn Pty Ltd (Plaintiff) King & Wood Mallesons (First Defendant) Norton Rose Fulbright (Second Defendant) Crown Solicitor for the State of Queensland (Third Defendant) File Number(s): 2014/200854

Judgment

Lurking under every rock and tree of this litigation is another issue about damages.
On 26 February 2021, I published reasons in Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 27) [2021] NSWSC 145 ("Rodriguez (No 27)"). Rodriguez (No 27) was intended to address the last remaining damages issues that were known to be common to group members, or at least some group members, as well as all remaining issues concerning the quantification of the individual claims of the sample group members. I directed the parties to confer and bring in short minutes that reflected the calculation of the judgment sums to be awarded to four sample group members, namely Ms Visser, Ms Lynch and Mr and Mrs Keller.
On the day that judgment was published the plaintiff, Rodriguez & Sons Pty Ltd ("Rodriguez"), the second defendant, SunWater Ltd ("SunWater") and the third defendant, the State of Queensland (the "State"), publicly announced that they had settled their dispute subject to approval by the Court. On 3 May 2021, Adamson J approved that settlement (Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 28) [2021] NSWSC 467).
As a result, the process of conferring contemplated by Rodriguez (No 27) was confined to the plaintiff and the first defendant, Queensland Bulk Water Supply Authority & Ors t/as Seqwater ("Seqwater"). Two further issues emerged from that conferral and the matter was re-listed on 30 March 2021. The parties did not wish to be heard further on one of those issues which concerned the effect of what was said in Rodriguez (No 27) about damages for physical inconvenience. On 30 March 2021, the parties were advised of the Court's ruling on that issue, [1] the reasons for which are set out below. The other issue concerned whether there should be a reduction in the interest awarded to group members who received grants for Round 3 of "PDRF" funding. This issue was raised by Seqwater for the first time, notwithstanding ample opportunity to do so previously. To address it, the parties sought to file written submissions and have the Court determine the matter on the papers. The last written submissions on the topic were filed on 26 April 2021.

Mr and Mrs Keller: Joint or Separate Award for Physical Inconvenience?

The first issue concerns the amount awarded to two sample group members, Mr and Mrs Keller, for physical inconvenience occasioned by the flooding. In Rodriguez (No 27) at [70] to [73], I stated: 70 I addressed this head of damages in Rodriguez (No 26) at [99] to [105] and [117] to [120]. The claim is confined to physical inconvenience arising from disrupted living as a result of the flooding. It does not include either anxiety and distress or physical inconvenience occasioned by participating in the clean‑up of the Keller properties (Rodriguez (No 26) at [99]). 71 Throughout 11 January 2011, Mr and Mrs Keller and their family worked hard to protect their property and equipment from the rising floodwaters…. They were evacuated by helicopter at 6.00am on 12 January 2011 to an evacuation centre at Lowood. ..They returned to inspect their home by boat the next day. For the next week, they could only access their property by boat and thereafter by tractor and four-wheel drive. The family lived with Mr Keller's mother at Lowood until 26 January 2011. They then then returned to their home but could only live in the top story as the bottom story was inundated. Amongst the damage to the bottom floor was damage to the "pressure pump" which supplied water to the top story. The doors downstairs would not close and the floor coverings were not replaced before they returned. By late February 2011, electricity had been restored to their home and their house had been cleaned with the help of volunteers. 72 This evidence reveals a period of five to six weeks during which Mr and Mrs Keller experienced extreme dislocation and inconvenience after which they were able to resume living in their home. Given that this aspect of their claim does not include anxiety and exertion in cleaning up their home or the remainder of their farm, then an award similar to that awarded to Ms Lynch is appropriate (see Rodriguez (No 22) at [105]). 73 I allow $13,000.00 for this head of damage."
The issue that arose was whether I awarded, or at least meant to award, Mr and Mrs Keller $13,000 the joint sum of $13,000 or $13,000 each. The answer is $13,000 each. This passage refers to the claim by Mr and Mrs Lynch because they were the joint owners of the flooded property. The relevant group is defined by reference to property ownership. The findings in Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22) [2019] NSWSC 1657 ("Rodriguez (No 22)") about duty of care reflect that. [2] As noted in the above passage, the claim for physical inconvenience being addressed is the physical inconvenience, and not emotional distress, occasioned to property owners from the inundation of their property (see Rodriguez & Sons Pty Limited v Queensland Bulk Water Supply Authority t/as Seqwater (No 26) [2020] NSWSC 1728; "Rodriguez (No 26)" at [99]). Even though the award is tied to property ownership, it nevertheless reflects the physical hardship suffered by each owner. The result may be that, if there are many owners of property, then greater damages will be awarded under this head per property. However, if so, that is simply a result of a defendant taking a plaintiff as they find them.

Interest on Round 3 of PDRF Funding?

In Rodriguez (No 26), I addressed and rejected a contention that those group members who received funding from the Premiers Disaster Relief Fund (the "PDRF") should have their damages reduced by the amount of funding they received (Rodriguez (No 26) at [54]). I answered a separate question accordingly (Question 39).
Notwithstanding this finding, Seqwater now contends that the receipt by group members of so‑called Round 3 funding from the PDRF should be considered in calculating the interest payable on the amount they recover for damage to their homes and other property, specifically, that there should be a reduction of the interest calculated on the head of loss referable to that damage.
The relevance of the grants payable to group members under the PDRF to the assessment of their damages was addressed in Rodriguez (No 26) at [7] to [54] which should be read together with this judgment. In summary, the PDRF was a charitable trust that solicited and received donations from the public as well as government to provide payments to relieve people in "[d]istress" after the widespread flooding that occurred in Queensland in late 2010 and early 2011, including but not restricted to the flooding the subject of these proceedings (Rodriguez (No 26) at [10]). A Distribution Committee was established which promulgated guidelines for the distribution of grants.
There were three funding rounds under the PDRF. The third round was made available to persons who had suffered structural damage to their home (Rodriguez (No 26) at [24]). In Rodriguez (No 26) at [25], I described the Round 3 funding as being made available in three layers as follows: "… the funding was said to be made available to "both insured and insured applicants, with varying payment levels depending on the applicant's circumstances". The Distribution Committee's report stated that "[t]hose who were eligible for Damaged Home assistance received an initial payment of $5000 towards their rehousing or recovery needs, regardless of their insurance status…" (ie, a first layer). Thereafter, a damaged home payment was available, (ie, a second layer). It "was originally calculated at 50 cents in the dollar based on repair quotes provided", but that "was increased to meet the full cost of the quoted repairs up to the maximum payment of $80,000" including the first layer payment of $5,000. Initially, applicants were required to include two quotes seeking funding, however from May 2011 applicants could avoid this requirement by providing one quote from a designated panel of licensed builders. In June 2011, it was announced that there would be an additional payment to eligible householders to assist them in replacing damaged household contents" of up to $20,000 (ie, a third layer). According the Distribution Committee's report, this meant that there was "a maximum payment of up to $100,000 … available under the [Round 3 funding] ... depending on a household's circumstances." (emphasis added)
Ms Visser received $100,000 in Round 3 funding, being all three layers (Rodriguez (No 26) at [27] to [30]). To obtain that grant, she did not provide any quotes for home contents although she provided quotes for the damage to her home in connection with the second layer payments (at [27]). The correspondence accompanying the payments did not stipulate or require that the funds had to be applied in any particular way but instead stated that they "may be used for whatever purpose bests assists with your disaster recovery". [3]
Ms Lynch also received $100,000 in Round 3 funding. One of the letters accompanying a $10,000 cheque paid to her as part of the third layer stated it was paid "in recognition of the hardship you have sustained in the ensuing months following the summer disasters". [4]
Mr and Mrs Keller received $15,000 in Round 3 funding with $5000 referable to the first layer and $10,000 referable to the third layer. [5]
In Rodriguez (No 26), when rejecting the contention that Round 3 funding should be deducted from the damages awarded, I found that the first layer payment of $5000 for Round 3 funding was paid irrespective of whether or not the applicant had insurance cover. With both the first and third-layer payment, I found that neither payment was "dependent on proof of any particular form of loss" (at [45]). I found that the circumstances of those payments indicated they were made to alleviate hardship and they were intended to be received by flood victims "in addition to whatever rights [they] may have to recover" elsewhere (at [45] citing National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569; [1961] HCA 15).
With the second layer of Round 3 payments (and Round 2), I found (Rodriguez (No 26) at [46]): "… The amount of the payment was calculated by reference to the applicant's means and, to an extent, by the amount of damage suffered, but only up to a cap. Like the other two layers, the payment was not a refund of expense incurred in rebuilding a destroyed or damaged home and the applicant was not obliged to utilise the funds for that purpose. Instead, the destruction or damage to the home was simply a criteria for the funding and the applicant was only required to use the funding to "meet my/our rehousing and recovery needs'. This is consistent with the statement in the letter [to Ms Lynch] noted above …. Again, the circumstance of the payments for the second layer of rounds 2 and 3 suggest they were intended to be received by flood victims "in addition to whatever rights [they] may have to recover" elsewhere (Espagne supra)"
As noted, Seqwater submitted that, despite finding the payments received under Round 3 funding of the PDRF should not be deducted from the damages awarded, it should nevertheless operate to reduce the interest awarded to Messrs Keller, Visser and Lynch (and other group members). It sought to rely on my reasoning in Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 23) [2020] NSWSC 650 ("Rodriguez (No 23)"). In Rodriguez (No 23), I held that there would be no allowance for interest on so much of the plaintiffs' and group members' awards for damage to their fixtures and fittings that was calculated by reference to the commercial cost of volunteer labour that repaired them (Rodriguez (No 23) at [34]) and, this was so, even though the value or cost of that labour was not to be deducted from the amount awarded for the damage to those fixtures and fittings (Rodriguez (No 22), Chapter 14 at [77]). This finding reflected the observation by Handley JA in Screenco Pty Ltd v R L Drew Pty Ltd (2003) 58 NSWLR 720; [2003] NSWCA 319 at [46] ("Screenco") that "matters which are irrelevant in the assessment of damages may be relevant to the award of interest". The question raised by the present issue is, what matters?
In concluding in Rodriguez (No 23) that the provision of voluntary labour should be considered in reduction of the interest payable in respect of the cost of clean-up, I referred to Batchelor v Burke (1981) 148 CLR 448; [1981] HCA 30 and Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15, both of which concern the interest allowed on common law damages in circumstances where the injured plaintiff received workers compensation benefits prior to judgment which had to be repaid from the damages award but not with interest (at [22]). In Batchelor v Burke it was held that, where a plaintiff received workers compensation for lost earnings prior to trial, then the receipt of that payment reduced the interest awarded on common law damages for past loss of income. In Haines v Bendall, where an injured worker received workers compensation that had a same or similar purpose to an award of damages for non‑economic loss, the receipt of workers compensation from their employer was required to be considered in determining the interest payable on damages from a third party for non-economic loss.
The plaintiff submitted that the outcome of the present debate was not dictated by Rodriguez (No 23) because there I found that, after the event that gave rise to liability, the plaintiff received something that "corresponded" to its loss, being an in-specie service (at [28]) that addressed the damage to the plaintiff's fixtures. It was submitted that the findings about Round 3 PDRF funding in Rodriguez (No 26) did not relate in any necessary or direct way to any component of the sample group member's loss and were not compensation for loss at all. [6] The plaintiff further submitted that the Round 3 payments were not sufficient to completely redress any particular head of damage suffered by a sample group member. [7]
Seqwater submitted by reference to Screenco, Batchelor v Burke and Haines v Bendall, that it was not relevant that the PDRF payments "do not precisely or directly correspond with" group member's losses and do not redress any particular head of damage. [8] Seqwater submitted that it was sufficient that the Round 3 payments were intended to be used for the recipient's "rehousing and recovery needs" and the payments were not distinguishable from the services considered in Rodriguez (No 23).
To resolve the present issue, it is necessary to consider Haines v Bendall further. The judgment of Mason CJ, Dawson, Toohey and Gaudron JJ in Haines v Bendall commenced with a statement of that the "settled principle governing the assessment of compensatory damages" namely "the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed" (at 63) and that an award of interest must conform with that principle (at 66 to 67). The workers compensation payment considered in that case was required by statute to be repaid and thus ignored in the calculation of damages (at 64 to 65). However, between the time of the injury and the time of the award, the injured employee had the benefit of the payment and thus it was contended it should reduce the amount of interest paid on common law damages. In addressing that contention, the crucial factor was the nature and purpose of the statutory payment (at 68 to 72). Their Honours noted that, like an award of general damages, the factors considered in determining the amount of the statutory award included not just the fact of the injury but the consequences of an injury (at 70 to 71). Further, their Honours drew support from the statutory requirement to repay the award for its conclusion about the nature and character of the statutory award (at 69): "The injury for which compensation is payable under s 16 is an injury or loss for which common law damages are recoverable against a tortfeasor when the injury is occasioned by the wrongful conduct of the tortfeasor. It has not been, and could not be, suggested that compensation payable under the Act extends to loss or damage of a kind not compensable at common law. The fact that the Act directs that no payment made under the Act is to be retained upon the award of common law damages provides a statutory indication that such damages are considered to replace any workers' compensation payments. This, in turn, suggests that the same purpose is served by both payments under the Act and an award of damages at common law. Payments under s 16 of the Act are "by way of compensation". So, too, compensation underscores the award of common law damages." (emphasis added)
Although it was noted that the "basis on which statutory compensation is awarded is markedly different from the basis on which common law damages are assessed" (at 70), their Honours returned to the fact that both payments served the "same purpose" in concluding that the payments should be taken into account in assessing interest (at 72).
The position is no different with Batchelor v Burke. Gibbs CJ concluded that "it would therefore not be right to award interest in respect of that portion of the award which represents damages for earnings lost before trial but replaced by payment of workers' compensation" (at 455).
The payment of funding under Round 3 of the PDRF differs from the statutory award considered in Haines v Bendall because the starting point for the analysis is that the payments under the PDRF are not to be repaid from the damages award whereas the workers compensation payments in Haines v Bendall were. In other words, while both the Round 3 funding and the statutory award in Haines v Bendall are ignored in the calculation of damages, that is for fundamentally different reasons. With the Round 3 funding, the payments were ignored because it was found that they were intended to be received by flood victims in addition to whatever rights they may have to recover elsewhere. In Haines v Bendall, the payments were ignored because of a statutory command that they were to be refunded from the common law damages. The former provides a strong indication that the payments do not serve the "same purpose" whereas the latter suggests the contrary. As noted by the plaintiff, the conclusion in Rodriguez (No 23) rested on the correspondence between the services provided and the loss suffered.
The relevant head of damages being awarded to each of Messrs Keller, Lynch and Visser is damage to their real and personal property (Rodriguez (No 27) at [29]). The charitable payments made from the PDRF were paid "in recognition of hardship" (Rodriguez (No 26) at [45]) and to address their "rehousing and recovery needs" (Rodriguez (No 26) at [46]). They serve a different purpose to the award of damages. They are fundamentally different in nature to the damages awarded. The funds received are not to be taken into account in the calculation of interest.

Orders

In anticipation of this judgment being handed down, I sought the parties' advice on the form of the orders appropriate to record the judgments in favour of the sample group members. Orders 3, 4 and 5 are orders that the plaintiff and Seqwater agree represent the effect of the above findings and findings in earlier judgments. Order 6 reflects my assessment of the appropriate costs order to reflect Seqwater's failure on the point it raised.
Accordingly, the Court orders that: (1) The following question is to be determined separately and in advance of all remaining issues in the proceedings: "Q 42: Should money received by Sample Group Members and Group Members from Round 3 of the Premier's Disaster Relief Fund be taken into account in the calculation of interest awarded to Sample Group Members and Group Members and, if so, in what way? (2) The question posed by Order 1 be answered as follows: "A: No." (3) Judgment for Ms Sharon Leanne Visser against the First Defendant in the sum of $151,279.17. (4) Judgment for Ms Lynette Joy Lynch against the First Defendant in the sum of $486,492.22. (5) Judgment for Mr John Bernard Keller and Mrs Betty Lynette Keller against the First Defendant in the sum of $643,414.81. (6) The First Defendant pay the Plaintiff's costs of the appearance on 30 March 2021 and the preparation of the Plaintiff's written submissions dated 16 April 2021.

Endnotes

T 30/3/2021 p 9.9.
Chapter 11 at [32] and [123].
Rodriguez (No 26) at [29].
Rodriguez (No 26) at [32].
Rodriguez (No 26) at [33].
Plaintiff's written submissions dated 16 April 2021 at [36].
Plaintiff' written submissions dated 16 April 2021 at [27].
Seqwater's written submissions at [6] to [9]. 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: 07 May 2021

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