The recent case of Hartley & Hartley v Balemi and Others concerned one of the first appeals from an adjudicator’s determination in the WHRS.
Mr and Mrs Hartley had purchased a “leaky home” in April 2003. They soon thereafter noticed that the house was leaking and duly filed a claim with the WHRS. Their claim proceeded by way of adjudication in the WHRS and a determination was made.
The adjudicator determined in summary that:
• the house leaked substantially and, as a result, had suffered extensive damage necessitating considerable remedial work,
• the reasonable cost of the required remedial work was $284,685,
• most significantly for the point of the appeal, the Hartleys ought to have the damages they were entitled to reduced by 66% for contributory negligence.
The effect of such a large contributory negligence award against the Hartleys was to reduce their net recovery to $83,631 of the repair costs.
It left them severely short of the monies needed to carry out the repairs. It was not surprising in light of this that they decided to bring this appeal.
The first grounds of contributory negligence found against the Hartleys by the adjudicator was that they failed to take steps that a reasonable prudent prospective purchaser would take.
The adjudicator reasoned that the Hartleys were aware of the risks associated with monolithic-clad houses and, knowing that, they chose not to engage a professional building surveyor.
The second ground of contributory negligence was for failing to mitigate their loss. It was found by the adjudicator that they failed to take any steps to prevent further loss occurring. It is a principle of common law that they must take steps to mitigate loss.
There were other elements to the appeal brought by the Hartleys, but it was only on the grounds of the contributory negligence finding that they were successful.
The appeal came before Justice Stevens. He looked closely at the law on contributory negligence and ruled that the forseeability of risk of harm is a prerequisite to a finding of contributory negligence.
Further, he warned that subjective elements ought not to be imported into the standard of care for a claimant. He then went on to analyse the adjudicator’s findings on contributory negligence.
He concluded that the factual findings of the adjudicator would suggest that the Hartleys were not at fault when measured by the reasonable forseeability test.
He stated that the adjudicator wrongly applied a subjective test, by relying on aspects personal to Mr and Mrs Hartley (Mr Hartley was a builder), which had the effect of placing a higher standard or care upon them, rather than applying the reasonableness standard required by law.
In short, Justice Stevens ruled that they were not contributorily negligent in failing to retain the expert report of a building inspector prior to purchase.
Further, he ruled that the adjudicator made no factual findings as to how the fault of the part of the Hartleys was causative of the losses which they suffered.
A determination had been made as to the fact that remedial work was required to repair this leaky building. However, no factual link had been established between the damage and the alleged contributory negligence of Hartleys.
Accordingly, the contributory negligence apportionment was decreased by 33% on the basis that this aspect of the appeal was successful. Justice Stevens accepted that the finding of contributory negligence on the basis of failure to mitigate the damage was a correct finding.
The evidence established that, apart from lodging a claim with WHRS, the Hartleys took no steps to mitigate the damage that was occurring to the house.
The net result for the Hartleys was that they doubled their recovery against the parties.