Robert Hartley (removed from proceeding on 12 September 2023)

Sumner v Nobes (Building and Property) [2025] VCAT 755

1. The first and second respondents must pay the applicant damages assessed in the amount $207,258.27.
2. Costs and interest are reserved. The parties have leave to make an application for costs and interest. Any such application must be made in writing within 42 days of these orders. The parties are referred to the provisions of section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). The principal registrar is directed to refer any application to Member R Bennett who may make further orders and determine the application on the papers or list the proceeding for further hearing.

1. The dispute arose between the applicant ('Owner') and first and second respondents ('Builder') with respect to the construction of a new home in rural Victoria.
2. In addition to her claims against the Builder, the Owner commenced the proceeding against the relevant building surveyor and his employer (collectively, the 'RBS').
3. The Owner settled her claim against the RBS for $64,000.00 per terms of settlement dated 26 July 2023.
4. The Tribunal heard the Owner's claims in the proceeding on 28 August 2023 and determined liability and assessed the Owner's loss and damage. By its determination dated 3 February 2025, the Tribunal assessed damages in the amount of $207,258.27.
5. In their defence, the Builder raised the issue of double recovery of loss and damage. The Builder contended that the Owner's loss and damage should be reduced by the amount recovered from the RBS, with whom the Owner settled her claim in July 2023.
6. At the conclusion of the hearing, I granted leave to the parties to make submissions in relation to the issue of double recovery of loss and damage.
7. The Builder claims the terms of settlement are relevant to their defence in relation to the rule against double recovery.
8. I heard the Builder's application on 22 May 2025.

(a) Are there concurrent claims against the Builder and RBS?

(b) If yes, is there double recovery of loss and damage?

Are there concurrent claims against the Builder and RBS?

1. In their Further Amended Points of Claim dated 18 March 2022 ('FAPOC'), the Owner brings her claim against the Builder under section 8 and 9 of the Domestic Building Contracts Act 1995 (Vic), for breach of statutory warranties in respect of the building works. The Owner brings her claim against the RBS in negligence, for failing to properly perform his functions under the Building Act 1993 (Vic), in relation to the building works.[1]
2. The Owner alleges the building works were defective, including faulty installation of storm water drainage, structural and general defects. As a result of the defective building works by the Builder, the Owner has suffered loss and damage.
3. The Owner alleges the RBS performed building surveying services in respect of the building works, including:

(a) preparing and issuing the builder permit;

(b) preparing and issuing the occupancy permit; and

(c) performing mandatory inspections of the building works, which are referred to in the occupancy permit.

1. The Owner contends the RBS owed the Owner a duty to act with the care and skill that could reasonably be expected of a competent person performing building surveying services in respect of domestic building works.
2. The Owner asserts that the duty of care arose at law or because:

(a) The RBS held itself out as possessing the skill to provide the building surveying services;

(b) The RBS assumed responsibility for conducting the building surveying services;

(c) It was reasonably foreseeable that, if the RBS failed to take reasonable care in conducting the building surveying services, the future owner of the land could suffer significant economic loss and damage due to the defective works;

(i) The future owner of the land would rely on the building surveying services having been performed with reasonable care and skill, in entering an agreement to purchase the land and in paying a significant price for the land and the building works; and

(ii) If the RBS failed to take reasonable care in conducting the building surveying services, the future owner of the land could suffer significant economic loss and damage due to defects in the building works.

1. The Owner alleges the RBS breached the duty of care in two respects. Firstly, by issuing the building permit when there was no Domestic Building Insurance ('DBI') for the building works. Secondly and alternatively, by issuing the occupancy permit without directing the Builder to rectify the defective building works before issuing the occupancy permit.
2. The Owner claims her loss and damage by reason of the RBS's breaches of its duty of care is $300,000, being the value of her foregone opportunity to receive the indemnity under a policy of domestic building warranty insurance, with coverage of $300,000. This amount would have provided in respect of all the defects at issue in the proceeding, considering the likelihood of the Builder's insolvency within the meaning of the Domestic Building Insurance Ministerial Order dated 23 May 2003.
3. Against the Builder, the Owner claims her loss and damage is $280,028, as set out in her expert reports, plus the cost of alternative accommodation while the rectification work is carried out.
4. Importantly, the relief sought by the Owner against the Builder and RBS is the same - damages for breach of their respective duties and obligations.

1. The Builder referred to the principle in Townsend v Stone Toms & Partners,[2] where Oliver LJ stated at 38:

...where there is a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant.

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

1. Similarly, in Boncristiano and Another v Lohmann and Others,[3] the Victorian Supreme Court held that where the plaintiff seeks to recover compensation from several defendants in respect of the same damage, it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained. The Court further held where the claims for damages are concurrent, in the sense that the claims 'overlap', recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other.[4]
2. The Builder submits that the Owner advanced claims against the RBS in negligence that sounded in damages which were, in substance, for the same damage alleged against the Builder. The loss and damage sought is the cost of rectifying alleged defects in the Builder's work.
3. In response to the Owner's contention that the claims against the RBS and Builder were based upon different causes of action, the Builder submits this does not mean that the claims cannot be concurrent or 'overlap'. The Builder contends that damages that have been partly recovered by one defendant will necessarily be considered in assessing the damages to be recovered from the other, notwithstanding that the claims may be based on different causes of action.[5]
4. The Builder submits the claims against him and the RBS were concurrent or 'overlapping'. This is because the Owner alleged that she suffered loss and damage by reason of defective building works performed by the Builder and the RBS's failure to direct the Builder to rectify the defective building works.
5. In the affidavit of the Builder's solicitor, Elizabeth Gatt, she refers to a letter dated 20 June 2022 from the Owner's lawyers to the RBS' lawyers. In the letter, the Owner's solicitors state:

14. The Builders' work was defective. Consequently, by reason of these defects, the Builders breached the warranties that form part of the domestic building contract... our client is entitled to enforce those warranties against the Builders pursuant to s 9 of the Domestic Building Contracts Act 1995 (Vic).

15. The costs to rectify the Builder's defective work is substantial and presently amounts to approximately $280,028 as quantified in the expert evidence our client has adduced in this proceeding.......

21. Our client further alleges breaches on your clients' part by:

(a) issuing an occupancy permit in respect of the Builder's work, despite the existence of the defects in issue in this proceeding;

(b) failing to direct the Builders to rectify their defective works.....

22. ... had your clients performed their functions properly by bringing these defects to the Builders and former owners' attention, then these defects would have been rectified promptly pursuant to the contractual defect rectification regime.

23. ... in these circumstances, our client's loss and damage is the cost to rectify these defects, which cost our client would not be required to incur had your clients properly performed their building surveying services.

29.5 The primary relief out client claims in this proceeding is the cost to rectify the Builders' defective works.[6]

1. The Builder contends that the above shows that the damage claimed against the RBS is clearly concurrent.
2. The Builder submits the Tribunal found the Builder liable to the Owner for defective or non-compliant building work and the Owner's claim for loss and damage against the RBS related to the same defective or non-compliant work. Furthermore, the Owner relied on the same expert reports which the Tribunal determined liability against the Builder and may have determined liability against the RBS, but for the settlement in respect to the defective works.

1. The Owner submits there is no concurrency of claims and the Boncristiano principle does not apply. In the FAPOC, the Owner alleges her claim against the RBS was solely in relation to the loss of opportunity by reason of there being no DBI in place. In her FAPOC, the Owner stated that she was claiming $300,000 for loss and damage by reason of the RBS's breaches of its duty of care. In addition, the Owner's loss and damage is claimed to be her foregone opportunity to receive an indemnity under DBI.
2. The Owner further submits that, with respect to the alleged concurrency of the claims against the Builder and RBS, the Builder would have, as part of their defence, ran an apportionment defence under IVAA of the Wrongs Act 1958 (Vic). Further, the Builder would not have consented to the third and fourth defendants being released from this proceeding.
3. Therefore, the Owner maintains that there was no concurrency or overlapping of the claim for loss opportunity against the RBS and the claim brought against the Builder.

1. In determining this application, the main issue is whether the claims against the Builder is 'concurrent' in the sense that the relief sought is the same.[7] This means that causes of action may be pleaded on different bases.[8]
2. In Boncristiano, the plaintiffs (owners) bought an action against their builder for failing to build a new home in a proper and workmanlike manner and in accordance with plans and specifications. They also brought an action against the local shire for negligently approving the plans and specifications.
3. In its defence, the builder alleged the owners were estopped from bringing a claim against the builder by reason of a settlement agreement between the owners and the builder. The owners responded to this by joining their solicitors to the proceeding, alleging they had negligently advised the owners regarding the settlement agreement.
4. The owners settled with their solicitors shortly before the trial of the owners' action against the builder and shire. The trial judge found for the owners in their claims against the builder and the local shire and apportioned liability 70% against the builder and 30% against the shire. The trial judge also deducted part of the settlement amount with the owners' solicitors from the damages awarded against the builder on the basis the owners' claims against the builder and owners' solicitor were concurrent or 'overlapped'.
5. The Court of Appeal held the trial judge was correct in applying the 'rule against double compensation' and held, 'The fundamental question is whether the claims against the various defendants are concurrent in the sense that the relief sought is the same.' It does not matter that the claims against the defendants proceed from different causes of action.[9]
6. In this case, the causes of action by the Owner against the Builder and the RBS may be different, but the relief sought is largely the same.
7. The Owner has brought her claim against the Builder for breach of statutory warranties under section 8 of the DBCA in relation to the building works. Against the RBS, the Owner brings her claim in negligence for failing to correctly perform building surveying services in relation to the building works. The Owner alleges her main loss and damage is the cost of rectification of defective and non-compliant building work. Against the RBS, she also claims her loss and damage is the loss of opportunity to be indemnified for the cost of rectification work (up to $300,000) under a builder's warranty insurance claim. In her FAPOC, the Owner also pleads the RBS is liable for the cost of rectification of the defective building works for failing to direct the Builder to rectify during the building works.
8. In my view, as the Owner claims damages from the Builder and RBS in respect of the same loss and damage, the relief sought is the same and that is sufficient to establish that there are concurrent or 'overlapping' claims in the proceeding.

1. The Builder contends that if a credit is not applied to the award of damages against the Builder, the Owner will receive payment of a total amount which exceeds the actual amount of her loss and damage.
2. The Builder submits that a plaintiff cannot recover more than their loss and damage and so courts strive to avoid the double indemnification for plaintiffs. The Builder cites Townsend v Stone Toms & Partners, stating that the plaintiff can never recover more than the total sum due.[10]
3. The Builder submits that it is open to the Tribunal to find that the whole of the settlement sum paid by the RBS to the Owner was payment of an amount representing damages, with no allowance for legal costs.
4. The Builder further submits that, although the settlement sum ($64,000) is expressed in the terms of settlement, the sum is stated as being 'inclusive of any claim to costs and interest'. Therefore, the Builder contends there is no reference to an actual allowance or payment in respect of the Owner's costs.
5. The Builder submits the RBS agreed to waive payment of a costs order against the Owner, thus supporting a conclusion that the payment to the Owner does not include an allowance for her legal costs. The Builder refers to paragraph 2 of the Operative Provisions in the terms of settlement, which state the 'Surveyor Parties agree to accept the sum of nil in respect of the Owner's liability for costs pursuant to the Tribunal's orders dated 28 July 2022'. The Builder also refers to paragraph 3 of the Operative provisions, which state the 'parties shall bear their own costs of the Proceeding'.
6. Therefore, the Builder contends the proper construction of the terms of settlement, assessed with reference to the actual language used, is that the settlement sum represents a payment of damages in relation to rectification of the defects in the work, with no allowance for payment of the Owner's legal costs.
7. The Builder refutes the Owner's submission that any credit must be proportional on the basis that the Tribunal could only make a credit allowance against its award of damages if it finds that the entire settlement sum was for payment of the RBS' 'portion' of the loss and damage. The Builder claims that it is not necessary for the Tribunal to assess 'proportionality' of loss and damage between RBS and the Builder to apply a credit in accordance with the rule against double recovery. The Builder further submits that it would be appropriate for the Tribunal to conclude that the settlement sum represents payment in respect to RBS's failure to direct the Builder to rectify the defects, which were the same defects alleged against the Builder.
8. The Builder also submits that it is neither appropriate nor possible to allocate a division between those damages which might be attributable to the loss of opportunity claim against the Builder. Further, the Builder refers to the Owner's submission that 'the settlement sum clearly included a significant portion for the loss of opportunity claim'. The Builder submits it is unclear on what basis this submission is made. The Owner has not produced any material apportioning the claims or any claims made between her and the RBS.
9. The Builder claims that the lack of any material showing how the settlement sum is apportioned does not affect the application of the rule against double recovery. The Builder contends that a payment from the RBS to the Owner is enough to raise a presumption against the Owner that the whole sum was offered and accepted in satisfaction of the concurrent or overlapping claims made by the Owner.
10. Furthermore, the Builder notes the Owner submits that a reduction in the amount of credit is appropriate (whether on account of allowance for legal costs or otherwise), and any credit to be applied would be 'nominal at best'. The Builder contends that it is within the Owner's ability to produce documents that explains or supports such findings.
11. The Builder contends that, if the Owner does not produce material which would facilitate an accurate determination of what, if any, reduction or credit should be applied, the matter should be resolved in favour of the Builder. In other words, it should be presumed that the Owner received full payment of the settlement sum with respect to rectifying the defects and without any allowance for legal costs.

1. The Owner submits, if the claim against the Builders is found to be concurrent, any credit for double recovery must be proportional or nominal at best. The Owner further submits the absence of any specific quantum being referred to as part of the settlement sum in the terms of settlement is not evidence of the sum not including a portion for costs.
2. The Owner also submits the term, 'all in', in the terms of settlement is evidence of the fact that the settlement amount included a portion of costs and interest, in addition to an allowance for damages.
3. The Owner contends the Tribunal cannot be satisfied that the entire settlement sum, or even a significant portion of the settlement sum, should be credited against any award of damages to the Builder. This contention is made on the basis that the Tribunal would need to find that the entire settlement sum was exclusively for the payment of the RBS's portion of the loss and damage incurred by the Owner, due to the defects in the Builder's works.
4. The Owner further contends that it is not open for the Tribunal to make such a finding where the settlement sum was not purely in payment for the Owner's loss and damage, but also for interest. The Owner says that a significant amount of the settlement sum was for costs and interest. Moreover, the settlement sum covered a significant portion of the Owner's loss of opportunity claim against the RBS, which is not a concurrent claim.
5. The Owner says that she has applied the entirety of the settlement amount to her costs of the proceeding against the Builder.[11] Therefore, the settlement amount should be construed as being in settlement of the Owner's costs of the proceeding only.

1. As established in Townsend v Stone Toms & Partners,[12] the onus lies on the defendant to show that a part of the claim against him has already been satisfied and to demonstrate the extent to which recovery has already been completed by the plaintiff. Therefore, in this case, the Builder has the onus to prove that without amendment, the damages awarded against the Builder would amount to double recovery of the owner's loss and damage.
2. In Australia Super Developments Pty Ltd v David Wellesley Marriner (No 2),[13] the Supreme Court held it is clear that, in any given case, the terms of settlement will need to be construed when determining the issue of double recovery of loss.
3. In this instance, the settlement sum in the terms of settlement was expressed to be $64,000 'all in'. In other words, the settlement amount was inclusive of costs and interest. In Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2),[14] Steyn J held 'it would be wrong to treat the 'all in' term as if it was not there'. Therefore, as the terms of settlement do not apportion damages, costs or interest, and in the absence of further evidence, I am unable to determine an amount for damages which could be credited to the Builder, in accordance with the rule against double recovery of loss.
4. In RACV Insurance Pty Ltd v Unisys Australia Ltd,[15] Hansen J referred to Banque Keyser and Boncristiano, stating [at 555]:

In short, when a plaintiff sues two defendants and settles with one but continues to judgment against the other, in the calculation of damages payable by the latter the plaintiff is entitled to treat the settlement sum as allocated first to any claim separate and additional to any claim that was common to the defendants, and the costs of that separate claim, and, secondly, any excess of the settlement sum necessarily referable to the common or overlapping claim is to be credited in favour of the second defendant. It will be recalled ... that the terms of settlement did not apportion the settlement sum to claim, interest or costs. Thus, there is nothing in the terms of settlement that could affect the application of these principles.

1. Furthermore, in Morris v Riverwild Management Pty Ltd,[16] the defendants contended that no proportion of the settlement sum contained in the terms of settlement was referrable, apportioned or apportionable to costs whether common or otherwise. Pagone J stated at [9]:[17]

...The common law principle against double recovery, in contract, has embedded in it a requirement for apportionment in order to do justice between the parties and to ensure that there is not double recovery.

1. His Honour found it difficult to apply the rule against double recovery while determining how to account or apportion any of the settlement amounts received by the defendants, when considering the common claims sought.[18] This task was made even more difficult because the parties' settlement agreements did not allocate portions of the settlement amounts, whether for costs or otherwise.
2. I find the settlement amount in the terms of settlement with the RBS includes a component for the Owner's costs of her claims against the RBS and interest. I also find there is no apportionment mechanism in the terms of settlement on which I can determine which part of the settlement amount is for damages, costs and interest.
3. I further find that the Builder has the burden of adducing evidence on which an apportionment of the settlement amount can be made. The Builder has not adduced any evidence, including evidence of negotiations between the Owner and RBS before entering the terms of settlement, on which I can approach the task of allocating or apportioning the settlement amount into damages, costs and interest.
4. Accordingly, and in the absence of such evidence, the Builder's application for a credit to the damages assessed in favour of the Owner, on the basis there would be double recovery of loss, is unsuccessful.
5. For the above reasons, while the Builder has established there are concurrent claims by the Owner against the Builder, the Builder has not established a basis on which the all-inclusive settlement amount with the RBS should be apportioned. Therefore, I am unable to credit $64,000 or any part of the settlement amount with the RBS towards the damages awarded to the Owner.
6. However, the Owner has given evidence through her lawyers that she has applied the entire settlement amount to her costs of the proceeding against the Builder. It may be that, if the Owner obtains an order for her costs of the proceeding against the Builder, the Builder will contend that any award of costs against the Builder should be reduced by reason of the settlement amount being allocated to the Owner's costs of the proceeding.

1. For the above reasons, I will dismiss the Builder's application.
2. Accordingly, the Builder must pay the Owner damages assessed in the amount of $207,258.27. I will make orders to this effect.

[1] Tribunal Book, pages 5 to 14 inclusive - noting the pleadings against the RBS in the Second Further Amended Points of Claim have been struck out because of the Owner's settlement with the RBS in July 2023.

[2] (1984) 27 BLR 26 at 38.

[3] Boncristiano and Another v Lohmann and Others [1998] VR 82 ('Boncristiano').

[5] Townsend v Stone Tomes & Partners (1984) 27 BLR 26 at 38.

[6] Affidavit of Elizabeth Gatt sworn 5 March 2025, paragraph 6.

[7] Boncristiano and Another v Lohmann and Others [1998] VR 82, 89-90.

[8] TCM Builders Pty Ltd v Olyvia Nikou & Anor [2013] VSC 322, [73].

[10] Townsend v Stone Toms & Partners [1998] 4 VR at 89-90.

[11] Affidavit of Imran Fatah sworn 8 May 2025, paragraph 4(b).

[12] (1984) 27 BLR 26 at 41.

[13] [2015] VSC 315, [78].

[14] [1988] 2 All ER 880, 882 ('Banque Keyser').

[15] [2001] VSC 300.

[16] [2009] VSC 439 at [9].