In an earlier post (‘Thomas v Powercor – First Black Saturday case to settle‘, 5 December 2011) I mentioned the judgement in Thomas v Powercor Australia Ltd [2011] VSC 586 where Forrest J had to decide whether or not the plaintiff, Thomas, was entitled to recover money damages for the cost of repairs when the repairs were done by himself and his neighbours (volunteers).   In that case the Court held that he was entitled to recover the value of the replaced fencing at a commercial rate.

The matter went on appeal to the Victorian Court of Appeal.  The judgement of Warren CJ, Bongiorno and Osborn JJA in Powercor Australia Limited v Thomas [2012] VSCA 87 was handed down on 9 May 2012.  Osborn JA delivered the judgement that the other two judges agreed with.   The result was that the Court of Appeal held that Forrest J was correct in finding that Thomas was entitled to compensation for the loss of his farm assets calcuated at the ‘reasonable commercial cost of repairing and/or reinstating the damaged fixtures’ and it did not matter that the fences were in fact repaired by Thomas or by volunteers.

At paragraph 36 His Honour said ‘This is that Thomas is entitled to compensation for the damage suffered directly to the fixtures at the time of the fire. ‘ At the time of the fire the way to calculate the loss was the cost of the repairs.

With respect to tort damages, when they are paid there is no obligation to ‘account’ for how they are spent, so it would have been open to Thomas to take the money and go on a holiday rather than repair the fences.  If that is correct then it can’t make any difference that he did in fact repair the fences using his own, or volunteer labour.  The damage was the value of the damage to the fences not the actual cost incurred in repairing them.

The court rejected the idea that the defendant did not need to compensate the plaintiff for damage that the plaintiff could fix himself; ‘The test hypothesised on behalf of Powercor would require the Court to undertake a detailed collateral enquiry into the capacity of individual claimants to carry out particular repairs. There is no authority that such an enquiry is necessary. It would be a peculiar rule that required a claimant to rectify, by his own labour, direct damage which the tortfeasor had caused.’    The ruling seems very reasonable.  A rule that a person could not get compensated for work they could themselves would be offensive to professional trades people.  Imagine if a builder got less compensation for the loss of a house on the basis that they could do much of the rebuilding work themselves.  If they are required to do that work due to the default of the defendant they should be paid for their professional time and if they are forced to do their work, they lose the chance to earn their income by doing that work by others (see also paragraph 60).

With respect to the use of volunteer labour Forrest J had held ‘that where an injured party has benefitted from the kindness of others not intended to relieve the wrongdoer of his or her obligation, then such benefits should be ignored in the assessment of damages.’ The volunteers had not donated their labour with the intention of relieving Powercor of its liability (they were not Powercor’s volunteers) so the benefit should be ignored.  Osborn JA agreed with this analysis.

In my first post, in December 2011, I said ‘This is not a significant precedent but it may suprise volunteers who step forward in a time of crisis to assist a stranger, for example during the clean up to the Queensland floods, and then find the people they helped are entitled to recover the commercial cost of the repairs. A cost that they didn’t pay and with no obligation to pay the amount to the volunteers or the community.”  Now that the matter has been heard in the Court of Appeal, with a detailed analysis of earlier cases, we can say this is, now, a significant precedent.   It again may suprise volunteers, and others, that the people they come to help are entitled to money compensation to cover the costs of the work of the volunteers.  That, I hope, will not discourage volunteers as the critical issues, whether its rebuilding fences or cleaning mud out of a flooded home, needs to be done as soon as possible and long before any claim is settled.  People need that help at the moment of their need and the fact that such help does not reduce the defendant’s liability is a good thing, if it did defendants may well feel that causing disasters is in fact ‘cheaper’ than it really is and they may be less inclined to take preventative measures if they think the goodwill of the community will reduce their damages.

Michael Eburn
10 May 2012