Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 27)

1. [1]

   Since the publication of the principal judgment [1] and a judgment dealing with apportionment [2] , further judgments have been published dealing with costs, certain causation and quantum issues affecting the sample group members and motions for the referral of various claims of group members to a referee in anticipation of a later application by the plaintiff for an order under s 177(1)(f) of the Civil Procedure Act 2005 (NSW) (“CPA (NSW)”). [3]

2. [2]

   For the reasons explained in Rodriguez (No 26), the determination of the quantum of the claim of a particular sample group member(s), Mr and Mrs Keller, had to be adjourned until December 2021. This also necessitated the deferral of the determination of one part of a notice of motion [4] filed 10 September 2020 by the Third Defendant, the State of Queensland (the “State”), specifically that part which sought a determination of the following separate question:

3. [3]

   The only sample group members who received such a loan was Mr and Mrs Keller. Hence it is appropriate that it be determined at the same time as their claim.

4. [4]

   Further, as also explained in Rodriguez No 26 (at [83] to [87]), it was necessary to defer determination of so much of the claims of Ms Visser, Ms Lynch as well as Mr and Mrs Keller that concerned the recovery of cleaning costs.

5. [5]

   This judgment deals with these issues. It assumes a familiarity with the previous judgments noted above.

Cleaning Costs

1. [6]

   As explained in Rodriguez (No 26) at [83], at the hearing in October 2020 an issue arose as to the basis for determining sample group members’ claims to recover the cost of the clean-up of their properties in the aftermath of the flooding. By that time the lead plaintiff, Rodriguez and Sons Pty Ltd, had claimed and recovered an amount that was calculated by reference to the commercial cost of cleaning its premises (ie, a “top-down approach”). This approach was then sought to be applied to the claims of all group members including the sample group members. However, the first defendant, Queensland Bulk Water Supply Authority trading as Seqwater (“Seqwater”), and the second defendant, SunWater Ltd (“SunWater”), contended that this head of damages should be assessed by costing the actual clean up work that was performed by those volunteers (and group members) (ie, a “bottom-up approach”). Seqwater also proposed a variant on that approach which involved costing the reasonable commercial equivalent of the volunteer labour that was provided. The differences between these approaches are best explained by summarising the evidence adduced in support of them.

2. [7]

   Prior to a hearing in late October 2020, the plaintiff and Seqwater obtained competing quotes for the commercial cost of cleaning the buildings, including homes, owned by Mr and Mrs Keller, Ms Visser and Ms Lynch that were damaged by flooding. The plaintiff adduced evidence from Ms Leanne Rudd who is the part owner and operations manager of High Powered Floor Restoration Pty Ltd (“High Powered”). [5] After the flooding in January 2011, High Powered was engaged by residential property owners and commercial firms to clean up approximately 200 flood affected properties. [6]

3. [8]

   Ms Rudd explained that a significant factor affecting the cost of cleaning and drying was the level of contamination of the flood water and the extent of water damage. [7] She classified the water damage to Ms Visser, Ms Lynch, Mr and Mrs Keller’s properties (and the plaintiff’s property) as “Category 3, Class 3” that is grossly contaminated water containing “pathogenic, toxigenic or other harmful agents” where the “ceilings, walls, insulation, carpet, cushion and subfloor in virtually the entire area are saturated”. [8] This categorisation had consequences in terms of the training of the staff required to be involved in the clean up and the equipment required. In her affidavits, Ms Rudd explained the basis for her quotations for the cleaning and drying of each of Ms Visser, Ms Lynch and Mr and Mrs Keller’s properties. [9]

4. [9]

   In response, Seqwater filed affidavits from Mr Oliver Threlfall. Mr Threlfall is the CEO of “Steamatic” which is the registered trading name of Fischers Cleaning Pty Ltd. [10] Mr Threlfall describes Steamatic as “Australia’s largest and a leading provider of specialist cleaning and disaster management services”. Mr Threlfall has been employed by Steamatic for over 30 years. In his first affidavit, Mr Threlfall stated that he reviewed Ms Rudd’s quotes and “sought to adjust [them] … where, based on [his] professional experience, [he] believe[d] it was reasonable to do so.” [11]

5. [10]

   Mr Threlfall agreed with Ms Rudd’s assessment that all the properties suffered Category 3 contamination, save for certain sheds on Mr and Mrs Keller’s properties which he described as suffering Category 4 damage which is applicable to buildings requiring “specialty drying”. [12] The variations suggested by Mr Threlfall’s adjustments partly relate to the adoption of a different pricing structure, [13] an overall reduction in the number of hours that Mr Threlfall considers the work would have required [14] (as well as the timing of the work), [15] a disagreement over the amount of “anti-microbial fluid” to apply to the jobs [16] (especially in relation to outdoor areas [17] ), as well as certain variations specific to each property. [18]

6. [11]

   In his first affidavit, Mr Threlfall also stated as follows: [19]

7. [12]

   Ms Rudd and Mr Threlfall traded affidavits in which they made various (relatively minor) adjustments to their own quotes in light of the comments of the other. [20] The final costing they produced and the differences between them were as follows: [21]

8. [13]

   In Rodriguez (No 26) at [84] to [87], I explained the course of events that led to the plaintiff seeking leave to reopen on the issue of cleaning costs to adduce evidence to support the quantum of the sample group member’s claims in the event that the Court accepted Seqwater and SunWater’s contention that the bottom-up method was appropriate. Consistent with the grant of leave, the plaintiff filed affidavits from Mr Keller, [22] his daughter, [23] Ms Lynch [24] and Ms Visser [25] setting out in detail their best recollection of when clean‑up work was performed, by whom and for how long. The plaintiff also filed a further affidavit from Ms Rudd [26] in which she set out the applicable hourly rate for labour hire in 2011 including personal protective equipment (“PPE”) ($141.56 per hour on weekdays). Ms Rudd opined that, given the nature of the clean‑up that was undertaken especially the level of water contamination, it was appropriate to use the labour hire rate for a “qualified and experienced technician” rather than a skilled labourer. [27]

9. [14]

   Prior to the resumed hearing on 11 December 2021, Seqwater served a further affidavit from Mr Threlfall containing his costings for the work undertaken by sample group members and volunteers to clean up their properties. He prepared costings on two bases. [28] The first basis involved taking the total hours that each of the sample group members contended that they and the volunteers worked, applying a 50% “efficiency discount” to those hours and then multiplying this discounted number of hours by the 2011 hourly charge rate for a Steamatic General Restoration Technician working on week days being $47.00 per hour (with some extra amount allowed for the first two weekends after the flood). [29] The “efficiency discount” reflects his estimate of the time it would take a trained cleaner to undertake the cleaning work that was undertaken by an untrained volunteer. Mr Threlfall stated that a technician is the “least trained and experienced personnel employed by Steamatic and, therefore, most akin to a labourer”. [30]

10. [15]

    Under the second scenario, Mr Threlfall did not discount the time spent by each of the sample group members and volunteers but instead only applied the standard labour hire rate of $28.75 per hour which he knew was used by labour hire companies in 2011 (along with allowances for time and half and double time). [31] With both scenarios, Mr Threlfall then made some (modest) allowance for additional costs such as PPE, attendance of an electrician, the use of a port‑a‑loo, the hire of a pressure washer and an asbestos audit. [32]

11. [16]

    Mr Threlfall explained that these additional costs were less than those provided with his “original quotes”, that is quotes on a commercial basis because: [33]

12. [17]

    In light of the findings made below, it is not necessary to set out the respective figures for the bottom-up approach derived by Ms Rudd and Mr Threlfall. It suffices to state that the differences between their figures were far greater than the differences between their estimates for the top-down approach. The plaintiff produced figures that included interest on the amounts to be awarded for cleaning costs. In the case of the Kellers and Ms Lynch, the amount claimed by the plaintiff on this approach exceeded Ms Rudd’s estimates using the top-down approach [34] and in the case of Ms Visser the figures were approximately the same. [35] Relying on Mr Threlfall’s evidence, Seqwater provided figures that were dramatically less than his “original quotes” for the commercial cost of cleaning. [36] Ultimately, the differences between Mr Threlfall’s estimates and Mr Rudd’s estimate of the bottom-up figures appears to reflect differences over a number of issues with the principal ones being (i) the application of the “efficiency discount”; (ii) the appropriate hourly rate to apply to the work that was performed; (iii) the manner of charging for PPE and (iv) the application of overtime rates. [37]

13. [18]

    At this point, it suffices to state that the difficulties in reliably estimating the amount of the clean‑up work undertaken and the preparation of costings that appear to reflect a significantly lower standard for a clean‑up than so called “commercial entities” only reinforced my misgivings about the use of bottom‑up estimates as the appropriate method of estimating the direct loss occasioned to fixtures damaged by flooding.

14. [19]

    The determination of the proper measure of cleaning costs was not addressed in Rodriguez (No 22) or Rodriguez (No 23). In those judgments I did not distinguish between the commercial cost of the labour that was provided in cleaning and repairing the relevant premises on the one hand and the reasonable commercial cost of repairing the stock or fixtures on the other (see for example Rodriguez (No 22), Chapter 14 at [77]; Rodriguez (No 23) at [9] to [10]). Thus, in Rodriguez (No 23) in answering questions concerning the application of interest I referred to group members “recover[ing] for damage to their real and personal property in amounts calculated by reference to the commercial cost of the volunteer labour of others”. [38] However, as noted, the amount awarded to the plaintiff was determined by reference to the commercial cost of the clean‑up of its premises. Given that and the evidence that was exchanged until October 2020, I assumed that would apply going forward. [39]

15. [20]

    As explained below, the determination of this issue turns upon a consideration of the decision in Powercor Australia Ltd v Thomas (2012) 43 VR 220 (“Powercor”). Powercor was addressed in Rodriguez (No 22) but only in the context of determining whether the provision of volunteer labour provided by the “mud army” operated to reduce the damages otherwise payable to the plaintiff on account of cleaning costs. [40] In doing so, I rejected any analogy between this head of damage and Griffiths v Kerkemeyer (1977) 139 CLR 161; [1977] HCA 45. Instead, I characterised it as a form of “direct loss”. [41]

16. [21]

    In his oral submissions on 28 October 2020, Senior Counsel for the plaintiff, Mr Sexton SC took the Court to a number of passages from Powercor which he contended supported the conclusion that, in this case, the top-down approach was correct. I accept his submission.

17. [22]

    In Powercor, Osborn JA (with whom Warren CJ and Bongiorno JA agreed) upheld a finding that the respondent was able to recover the commercial cost of repair work to fixtures, fencing and buildings destroyed by fire that had been undertaken by volunteers. [42] Powercor held that the measure of damages in tort for damaged fixtures “is the reasonable commercial cost of repairing and/or reinstating them” (at [25]) with an exception being “where a reasonable substitute [fixture] is available for a price significantly less than the cost of repair” (at [26]). This was found to reflect the “underlying principle as being that when goods are damaged by the negligence of a tortfeasor, the owner of the goods suffers immediate loss represented by the diminution in the value of the goods” (at [27]).

18. [23]

    In Powercor, Osborn JA noted two exceptions to this being that “the cost of replacement or repair of fixtures will not be the appropriate measure of damages if they are out of all proportion to the injury to the claimant” and the “costs of reinstatement of fixtures will not be allowed where it is clear that reinstatement is not contemplated” (at [29]). However, his Honour observed that neither of them was applicable to the “to the destruction of farm fences and stockyards, where it is plain the restoration of such fixtures is essential to the continuing highest and best use of the land and that the restoration has been or will be carried out” (at [30]). Mr Sexton SC submitted that this was applicable to this case in that, in the case of Mr and Mrs Keller, the proper cleaning and restoration of their homes and sheds was necessary to conduct their farming business and, in the case of Ms Lynch and Ms Visser, that was necessary for them to resume habitation of their home.

19. [24]

    Consistent with what I have noted above, Powercor confirmed that in the case of damages to chattels and fixtures, this head of damages concerns “direct damage” and no question of mitigating loss arises because the loss was complete on the day the fire (and in this case the flood) occurred (at [49] and [66]). Of particular significance to this matter is the following extract from Powercor (at [59] to [60]):

20. [25]

    This extract is directly inconsistent with Seqwater’s contention that the proper method of determining damages is to calculate the value of the labour that was actually expended by a claimant (or volunteers) in the actual clean-up that took place. In submitting to the contrary, Seqwater emphasised the last two sentences of this extract. [43] However the above passage makes it clear that the cost to the “claimant of the labour actually expended” including their own labour may be less than or greater than the “reasonable cost of labour” but the latter is the measure of damages and not the former. The reference to the “reasonable cost of labour” in the above passage is not to the reasonable cost of the labour provided by the claimant or their workers but the reasonable cost of labour of “effecting such repairs”.

21. [26]

    This is best illustrated by considering two of the items the subject of the claim for recovery in Powercor, namely the costs of reinstatement of fencing destroyed by fire and the cost of repairs to damaged stockyards.

22. [27]

    The claimant in Powercor repaired fencing on his own and with the assistance of others. [44] A local fencing contractor quoted the labour component to reinstate the fencing at $2,830.00 per kilometre. [45] The claimant was awarded $15,791.00 for the repairs to the fencing being 5.58km x $2830 per km. [46] With the stockyards, the claimant managed the repair and reinstatement of the yards himself with some assistance from contract labour. [47] He expended $3,312.00 to repair them. However, the estimate of the reasonable commercial cost of repair of the stockyards was $11,962.00 including his expenses [48] and that amount was awarded. [49] This was more than four times the amount the claimant expended and did not involve any attempt to time cost his labour. The amount allowed for the cost of the fences did not represent an amount for the claimant’s labour but simply represented the reasonable commercial cost of repairing a farm fence.

23. [28]

    In Powercor, one of the grounds of appeal contended that the trial judge should have disallowed the component for his labour and that of the volunteers. [50] It was submitted that it should not have been allowed at full commercial rates [51] but that amounts for the claimant’s labour should only be allowed if he could establish a consequential loss to his farming income. [52] This contention was rejected on the basis that it “avoid[ed] the primary conceptual basis on which the trial judge found damages were payable” namely for “damage suffered directly to the fixtures at the time of the fire” which was not consequential loss. [53]

24. [29]

    Similarly, in this case Seqwater contended that “where one is awarding damages to compensate a group member for cleaning up and drying out their property subsequent to a flood, one does so with reference to what actually occurred and one endeavours to place some value on what occurred”. [54] It follows from Powercor, that this contention “avoid[s or misstates] the primary conceptual basis on which … damages [are] payable”. The group member is not being compensated for their work in “cleaning up and drying out their property”. Instead, they are being compensated for the damage to their property and the measure of that damage is the reasonable commercial cost of remediating their property regardless of whether that is greater than or less than the value of the labour they expended in attempting to doing so themselves.

25. [30]

    Seqwater’s contention was accompanied by various adornments including a description of the approach of Ms Rudd and Mr Threlfall as the “gold standard” and the “perfect clean”. [55] These were rhetorical devices designed to demonstrate how supposedly unreasonable it is to award compensation to that standard compared with what is “reasonable in the circumstances and in the light of what was actually done”. [56] To that end, Seqwater cited Dang v Chea [2013] NSWCA 80 in support of a submission that a “test of reasonableness” applies to the amounts claimed. [57] Reasonableness is always a yardstick but it is a different concept depending on whether the claim is for direct loss or consequential pecuniary loss. This case concerns direct loss and the framework of reasonableness is applied in a manner consistent with Powercor to allow the recovery of the reasonable commercial cost of remediation. Dang v Chea concerned consequential loss namely the cost of nursing and medical care consequent upon personal injury and in such cases questions arise as to the need for the care and whether the care is provided to a reasonable standard and at a reasonable price. This also applies to consequential loss claims arising from damage to chattels (Lee v Strelnicks [2020] NSWCA 115).

26. [31]

    To similar effect Mr Threlfall’s repeated references to the fact that only commercial entities would ordinarily be able and prepared to pay for a commercial clean up only highlights the difference between direct loss and consequential loss. With direct loss occasioned to fixtures there is no reason why owners of residences or farms should receive a lesser measure of damage than “commercial entities”. However, where the claim is for consequential pecuniary loss in the form of a liability to pay for a service then the capacity and preparedness of the affected party to pay for a particular service at a particular level is highly relevant to whether it can be recovered (see CSR Ltd v Eddy (2006) 226 CLR 1 at [31]).

27. [32]

    In submissions in December 2020, Senior Counsel for SunWater, Mr Williams SC, put a variation on Seqwater’s submission. Mr Williams SC referred to the qualification stated in Powercor on using the reasonable commercial cost of repair where “a reasonable substitute is available for a price significantly less than the cost of repair” in which case the “replacement cost is the measure of damages” (at [26]). The reference to a “substitute” is to a substitute for the fixture. Arguing by analogy, Mr Williams SC contended that “if one achieves or can achieve the same result for a lesser sum” [58] then the lesser sum should be awarded. He submitted that the Court should award the lesser of: the commercial cost of remediation (ie, the “top down” figure) or the cost of the labour that was provided by a claimant and their volunteers at the labour hire rate with no deduction from the number of hours worked. [59]

28. [33]

    Properly analysed, this submission is only seeking to substitute a different method of calculating the commercial cost of the clean-up. It assumes that each of the claimants and their volunteers achieved the “same result” as a commercial clean-up. If that is what they did and they were able to use labour that was only worth the hire rate for labourers then that just means that represents the reasonable commercial cost of cleaning the various premises. However, I do not accept that the assumption behind this submission has been established for any of Mr and Mrs Keller, Ms Visser and Ms Lynch; ie it has not been demonstrated that the form of clean‑up they undertook was the “same result”, that is, the same result as a commercial clean‑up. It can be accepted that they cleaned their homes and rental properties to a standard that allowed them to be reinhabited and, in the case of Mr and Mrs Keller, used as a farm. However, there is a difference between a house being made inhabitable and it being restored to a position as though it was never flooded. I am not prepared to find that the latter state was achieved by the use of volunteer labour. This is borne out by Seqwater’s cross‑examination of Mr Keller which was to the effect that, not only was there uncertainty in the estimates of the hours worked by volunteers, but given they were not trained employees, it could not be expected that their work was as rigorous. [60] To similar effect, Ms Visser agreed she had to re‑clean some items that had already been cleaned by volunteers [61] and Ms Lynch stated that the mud had been cleaned off several times. [62] Mr Threlfall’s evidence reinforced this.

29. [34]

    Ultimately, Seqwater’s efforts to undermine the efficiency and quality of the clean up that was in fact performed only served to emphasise that to award damages to the sample group members on the basis of costing the labour that undertook it would leave them undercompensated.

30. [35]

    Accordingly, the proper measure of that head of damages is the reasonable commercial cost of their clean‑up.

31. [36]

    It follows that the relevant figures to consider are the competing quotes for a commercial clean-up provided by Ms Rudd and Mr Threlfall noted above (at [12]). I have already described the principal reasons for the differences in their figures. The differences over the use of antimicrobial fluid were taken up with Mr Threlfall who generally considered it unnecessary to use the fluid on exterior areas. [63] Otherwise, I noted that it was suggested to Ms Rudd that the “Jensen’s shed(s)” on Mr Keller’s properties had dirt floors and, on that assumption, she stated she would not pressure clean dirt floors. [64] In fact, Mr Keller explained that the floors to the sheds were not dirt but “gravel pressed down”. [65] It was also suggested to Ms Rudd that her estimate of the cleaning costs for the sheds on Mr and Mrs Keller’s properties were out of all proportion to their value. [66] Ms Rudd was not qualified to express an opinion on that topic and, otherwise, the contention was not established.

32. [37]

    In his submissions, Mr Sexton SC noted that there was no appreciable difference between the figures provided by Ms Rudd and Mr Threlfall for the clean-up cost of Ms Visser’s home and for both of Mr Keller’s rental properties. [67] With the other properties he submitted that all the Court had was competing expression of opinions and no prescribed standards or rates that would enable the Court to assess between them. He submitted that “there [is not] a proper basis for a finding that Ms Rudd’s approach is unreasonable” [68] and no basis to discount her estimates. [69] Mr Williams SC submitted that it was not established that Mr Threlfall’s estimates were unreasonable and this meant that his quotes should be adopted because the “reasonable person always chooses the lesser figure to remedy or to fix the damage”. [70] Mr Sexton SC replied that a defendant does not always get the benefit of the lower end of the range of estimates and in this case Mr Threlfall’s approach of not using antimicrobial fluid on exteriors was unreasonable. [71]

33. [38]

    Neither party has persuaded me to reject either set of costings nor that any aspect of either approach is unreasonable. In the end result, I am satisfied that both sets of figures were within the reasonable range for the commercial cost of remediating the relevant properties. While a plaintiff may not always be forced to accept the lower quotes, in this case I cannot discern any reason why Mr Threlfall’s estimates, being the lower of two reasonable estimates, should not be adopted. Accordingly, the figure for this head of damages for each sample group member will be that set out under the heading “Threlfall” in the table in [12].

34. [39]

    At the hearing on 11 December 2020, I admitted paragraph 20 of Mr Threlfall’s fourth affidavit provisionally. I stated that I would determine its admissibility in this judgment. [72] The paragraphs states: [73]

35. [40]

    The reference to “those reasons” is principally to paragraph 19 of the affidavit in which he sets out his reasons why the volunteers who cleaned up the sample group members’ properties were likely to less efficient than professional cleaners. As this part of the affidavit relates to a measure of damages that I reject, this paragraph is rejected.

Mr and Mrs Keller’s Claim

1. [41]

   The layout of Mr and Mrs Keller’s properties and the course of the flooding is set out in Rodriguez (No 22). [74] In his third affidavit, Mr Keller included a diagram of their properties with flooding under Simulation C (“SIM C”) superimposed. Mr Keller observed that their home, the rental properties, sheds and other buildings “do not experience flooding” under SIM C but that other parts of their properties appear to flood under SIM C. [75] As least so far as this evidence concerns the inundation of buildings it was not challenged. It appears to be borne out by those diagrams and I accept it.

2. [42]

   In the end result, with the exception of cleaning costs, there was a relatively confined debate over the quantum of the heads of damage claimed by Mr and Mrs Keller. Thus, there was no debate over their claim for the cost or repairs and restoration of the buildings on the various properties ($228,436.09), [76] a claim for lost and damaged possessions ($32,167.62), [77] a claim for lost hay and lucerne replanting costs ($54,653.00) and “interest on QRAA loan” ($53,620.00) [78] (see below).

3. [43]

   Mr and Mrs Keller identified four categories of loss that relate to the conduct of their farming business: (i) $188,453.36 for the cost of repairs and replacement farming equipment machinery and stock, (ii) $64,038.68 for repairs and replacement of non-portable farming fixtures, (iii) $115,515.85 for the cost or repairs to agricultural land and (iv) $168,939.00 for loss of income and replanting costs. (Item (iv) included $54,653.00 for the agreed cost of replanting lucerne and hay, with the balance being $114,286.00). [79]

4. [44]

   Item (i) consisted of repairs to farm equipment and machinery ($42,699.00 less reduction for GST [80] ) that were damaged when the various storage sheds on the Keller properties were inundated, the cost of which is set out in invoices and ledger entries attached to one of Mr Keller’s affidavits. [81] This item also included a claim for $4,554.69 (less GST) [82] for repairs to irrigation equipment which was damaged or washed away during the flooding [83] and a claim for $141,614.00 [84] (less some adjustments [85] ) for repairs and replacement of other equipment and stock that Mr Keller said was “used around the farm” some of which were stored in the sheds and some stored outside or near the sheds. [86] Mr Keller was only able to estimate the value of these items based on his knowledge of what was lost and his “familiarity with the materials and purchase prices”. [87] In its written submissions, the plaintiff contended that there is no “greater flooding” issue with these items, ie they contended that items in this category would not have been flooded under SIM C. [88] Presumably this submission was made because these items were either stored in or near the sheds and the superimposed mapping of SIM C flooding superimposed onto a map of the Keller properties does not show flooding under that scenario encroaching on those sheds. [89]

5. [45]

   With item (ii), in his Second Affidavit Mr Keller identifies a number of items that were destroyed by flooding of the farm paddocks and areas outside the buildings on the property namely a dam, a gravel pathway, barbed wire fencing and various pump sites. [90] The plaintiff’s written submissions accepted that this aspect of Mr Keller’s claims was potentially affected by a “‘greater flooding’ issue”. [91] However, they pointed to Mr Keller’s explanation that, having viewed the mapping of SIM C onto his property, he did not believe these items would have been flooded. [92]

6. [46]

   With item (iii), in his Third Affidavit Mr Keller addressed the land remediation work that was undertaken. [93] Mr Keller stated that, following the flooding, the farms lost a significant amount of topsoil, however the extent of degradation depended on whether crops had been sown by the time of the flooding. [94] Thus, there was much less lost topsoil where lucerne had been planted (the “Lucerne Fields”) compared to the rest of the farm where topsoil was lost (the “Topsoil Fields”). He said that if the farm had only been flooded as per SIM C, then: they would not have lost topsoil in the areas of the Topsoil Fields that are not affected by SIM C; not have incurred as many expenses to restore the land in preparation for planting; have been able to maintain the production of much of the lucerne crop; and have been able to plant more crops during 2011. [95]

7. [47]

   By reference to a superimposed map of flooding under SIM C and his knowledge of the Lucerne Fields, Mr Keller estimated that approximately 78 acres of lucerne was growing as at 11 January 2011 [96] of which 56 acres was lost. [97] He says that approximately 36 acres of lucerne would have been unaffected by SIM C. [98] He said that after the flooding, 34 acres of lucerne were replaced that would not have had to be replaced under SIM C. [99] He claimed the cost of replanting 34 acres of lucerne (as well as lost “profits” for that crop which are addressed below). [100] As noted, this claim was accepted by the defendants.

8. [48]

   In his Third Affidavit, Mr Keller also estimated that approximately 75 of 134 acres of the Topsoil Fields, or 56%, would not have been flooded under SIM C. [101] He allocated earthmoving costs between those costs incurred in respect of Topsoil Fields that were flooded in the events that happened and those costs which would have only been incurred in the event of flooding under SIM C. Where those costs could not be allocated, he claimed 56% of the total cost incurred with the flooding that happened. [102] On that basis he claims $44,374.00 (less some adjustments [103] ) as the estimated cost of Earthmoving Works referable to flooding that exceeded SIM C. [104]

9. [49]

   In his Third Affidavit, Mr Keller also sought to estimate the extra cost of cultivation and soil preparation that was required following the flooding compared to flooding under SIM C. In respect of farm land that was flooded but would not have been flooded under SIM C, he estimated [105] that $21,213.75 was spent on (re)cultivating that land for planting in 2011, $4,775.00 was spent cultivating parts of that land that could only be planted in subsequent years and $18,240.00 was incurred in extra cultivation costs in 2012 and 2013 (because, for example, it was necessary to “to perform additional deep tillage using our chisel plough, deep rippers and/or subsoiler to aerate the soil to increase microbial life and to distribute nutrients”). [106] The total amount claimed for additional cultivation was $44,229.00. [107] Further, he stated that, to restore soil quality, it was necessary to “use more compost and fertiliser”. [108] He estimated that 30% of the expenditure on compost and fertiliser in 2011 and 2012 was required to repair the soil after the floods and sought recovery of 56% of that amount being $29,346.13 [109] (which was reduced on account of GST [110] ).

10. [50]

    In relation to item (iv), in his Third Affidavit Mr Keller describes the crops that were sown in 2011 and set out a detailed estimate of the profit per crop per acre. [111] This included estimates of the (variable) expenses referable to growing each crop. [112] These expenses include an item for “labour in field”. This does not appear to include any component for the labour of Mr Keller and possibly his sons but instead appears to be a reference to contract labour. The list of expenses did not include such items as an allowance for extra machinery and repair costs. Mr Keller provided a table estimating the profit that was received on the crops that were planted after the flood [113] and another estimating the profit that would have been received had the farms only been flooded to the level of SIM C. [114] The difference between the two was $114,286.27 (which together with agreed figures for the lost hay and lucerne costs make up the total of $168,939.00). [115]

11. [51]

    Four matters should be noted about this evidence.

12. [52]

    First, not surprisingly, with the exception of the claim for the cost of repairs to farm equipment and stock which was supported by invoices and journal entries, the remainder of those claims were heavily dependent on the reliability of Mr Keller’s estimates. For example, in estimating the cost of restoring the soil quality for the affected land Mr Keller stated: [116]

13. [53]

    Second, as submitted by Seqwater, [117] in cross‑examination Mr Keller experienced difficulty in recalling the events of the flooding. He stated that his affidavit had been prepared with the assistance of other members of his family. [118] In that regard, I note that when Mr Keller attended to give evidence, he had recently undertaken a medical procedure. Whatever the cause of his lack of recollection, it made the task for the defendants of testing his estimates of loss more difficult.

14. [54]

    Third, both in the cross‑examination of Mr Keller on behalf of Seqwater [119] and in submissions, it was contended that Mr Keller’s estimates did not take into account the flooding under SIM C. In cross‑examination, Mr Keller was unsure of that. [120] In fact, as the above summary makes clear, his affidavit does seek to differentiate between flooding under SIM C and the flooding that actually occurred. Nevertheless, some doubt about that differentiation in relation to the dam noted in [45] above was raised as the superimposed picture of flooding under SIM C suggests that it was likely to have been flooded under that scenario as well, [121] although Mr Keller did not agree. [122]

15. [55]

    Fourth, Mr Keller was cross‑examined on the tax returns of the partnership for the financial years 2009 to 2014, the main details of which are as follows:

16. [56]

    In addition to revenue from produce, each year’s revenue included rent (and in some years diesel fuel rebate and a refund of insurance premiums). In cross‑examination, Mr Keller stated that production levels in 2009 were affected by the drought as the farm was “only on 25 per cent allocation out of the river”. [129] Mr Keller confirmed that the only permanent full-time employees of the farm were his two sons, Gary and David, who were paid wages and bonuses but did not receive a share of the profits. [130]

17. [57]

    The above figures show a drop in revenue from produce during the year of the flood and a strong rebound the following year with another substantial increase in the year after. An increase in revenue does not appear to correspond to increase in profits per se, however the figure for wages generally increases with revenue. Given that Mr Keller’s sons were full time employees throughout, this suggests that one means that the family took funds out of the farming business was through varying the wages paid to them. Put another way, the income value of the farm to the family appears to be more than just its overall profits but at least extends to the total amount of profits and wages paid in a given year. In addition, the amount paid for seed cost would appear to some form of proxy for future expectations of trading conditions for produce. The amount expended in 2010 suggests that expectations for production after the end of the drought were high.

18. [58]

    Ultimately Seqwater submitted that the Court should not place any weight on the affidavit of Mr Keller. [131] It was submitted that the Court should adopt a pragmatic approach and discount items (i), (ii) and (iii) noted above (at [43] to [46]) by 30% to reflect that “there wouldn’t have been the same degree of repairs, replacement and the like required”. [132] Further, it was submitted that no amount should be allowed for item (iv) because the farming enterprise “was not turning a profit, or only a modest one”. It was submitted that it was not demonstrated that the farm would have turned a profit in 2011 but for the flood, especially given that there would have been repairs and maintenance in any event. [133]

19. [59]

    Mr Sexton SC submitted that it was “hardly surprising” that in a family business Mr Keller would, in preparing an affidavit about financial matters concerning the business, discuss its contents with his family. [134] He contended (correctly) that Mr Keller’s affidavits explained in detail how the claimed loss were attributable to the difference in flooding between the events that happened and SIM C. [135] He submitted that any discount on account of the damage that would have been occasioned under SIM C should be limited to the $15,000 cost of repairing the dam noted above [136] or failing that 5% or 10%. [137] He pointed out that the tax returns showed a substantial increase in turnover in the years after the flooding and substantial costs and wages incurred in remediating the business to address the effect of the actual flooding. [138] He submitted that it was no answer to a claim for the lost profit that would have been earned under SIM C to point to their performance in dealing with the much greater flood that ensued. [139]

20. [60]

    As noted, it was correct to submit that Mr Keller’s affidavits seek to identify the damage attributable to the flooding occasioned by the difference between the flood that happened and that which happened under SIM C. However, while it is not surprising that Mr Keller might have discussed the contents of his affidavits with his family, the difficulty in terms of proof was his poor recollection of its contents and the absence of other evidence from his family who had knowledge of the farm’s finances. Given the above observations, the heavy reliance on estimates that support Mr and Mrs Keller’s claim (and exigencies) I consider that the cost of the dam which forms part of item (ii) should be disallowed, and that a discount of 15% on the balance of items (i), (ii) and (iii) is warranted save for the amount of $42,699.00 for repairs to farm equipment and machinery as that is well documented.

21. [61]

    In relation to the lost “profit” claim, three matters should be noted. First, Seqwater’s submissions appeared to proceed on the assumption that what Mr and Mrs Keller had to demonstrate was that, overall, the farm would have been profitable if their farm had only been flooded under SIM C and then prove the lost (overall) “profit” attributable to the difference between the flooding that happened and SIM C. However, the claim is for economic loss, not lost overall profitability. Hence, if under SIM C, the farm would have made a loss of say $10,000.00 but under the flood that happened it suffered a loss of say $70,000.00 then its loss is $60,000.00 even though it was not profitable under either scenario.

22. [62]

    Second, the value of any such loss is not to be assessed on the balance of probabilities. Provided I am satisfied on the balance of probabilities that Mr and Mrs Keller suffered some form of economic loss or damage then the assessment of the level of that loss is undertaken on a loss of chance basis (Malec v JC Hutton Pty Ltd (1990) 169 CLR 63; [1990] HCA 201 and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4) and that is so, even if the task is difficult and some guess work is involved (La Trobe Capital & Mortgage Corporation Limited v Hay Property Consultants Pty Ltd [2011] FCAFC 4 at [90] per Finkelstein J; Malec at 643 per Deane, Gaudron and McHugh JJ).

23. [63]

    Third, in making an assessment of the lost “profitability” of the farming enterprise as a result of the additional flooding, caution must be exercised not to double count for the amounts that are awarded under the other heads of damage. For example, the revenue of the farming enterprise includes rental from the various cottages and the expenses for financial year 2011 presumably included some items that are the subject of an award for items (i), (ii) and (iii) above. The approach outlined in Mr Keller’s affidavits seeks to avoid this by attempting to calculate the lost profit for a particular crop. However even that approach must be tempered so that, overall, the effect of the compensation awarded is broadly consistent with the business performance of the farm from 2013 when the effect of flooding on the performance of the farming business had substantially dissipated. Further, as noted, not all the costs associated with extra farming under SIM C are included in Mr Keller’s profit per acre calculation, eg extra maintenance costs.

24. [64]

    I am satisfied that Mr and Mrs Keller’s farming business suffered a loss in its trading performance referable to the difference between the flooding that actually happened and SIM C. Given the overall performance of the farm, I am satisfied that it would have performed better financially if it had been utilising around 56% of its acreage compared to none. Bearing in mind the uncertainties and the above factors, I assess the amount of the loss referable to this claim as $45,000.00.

25. [65]

    Accordingly, in respect of items (i), (ii) and (iii) I will allow for $42,699.00 for repairs to farm equipment and machinery, disallow the cost of the dam for item (ii) and allow 85% of the balance of those items. In respect of item (iv) (and leaving aside lucerne) I will allow $45,000.00.

26. [66]

    Mr and Mrs Keller claimed for loss of rental on their rental properties at XX4 and XX8 O’Reilly’s Weir Road. At the time of the flooding, XX4 was tenanted and the tenant was not able to occupy the premises for two months. The amount claimed is $1620.00. It was not disputed. [140]

27. [67]

    The rental property at XX8 was not tenanted at the time of the flooding. Mr Keller stated that it had been vacant since the last tenant vacated “in or around August or September 2010”. [141] He said that the damage to XX8 as a result of the flooding was extensive and it was not fit for occupation. After repairs were completed, a tenant leased the property from 22 July 2011 for $260.00 a week. A claim for loss rental of $7020.00 was made for the 27‑week period from the floods until July 2011. [142]

28. [68]

    Seqwater disputed the claim on the basis of the sustained period that it was vacant prior to the floods. It contended that only 50% of the claim should be allowed. [143] There is force in that submission. However, as noted in Rodriguez (No 26) (at [90]), it seems likely that in the aftermath of the flooding with so many homes affected there would have been a significant demand for housing and that is so even with the flooding under SIM C. I expect that would have been very much the case in the Lowood region where the Keller properties are located. Allowing for the dislocation that flooding on SIM C would have occasioned Mr and Mrs Keller and contingencies, I will allow 75% of this part of the claim, ie $5265.00.

29. [69]

    Accordingly, I allow $6,885.00 for lost rental.

30. [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]).

31. [71]

    Throughout 11 January 2011, Mr and Mrs Keller and their family worked hard to protect their property and equipment from the rising floodwaters. [144] They were evacuated by helicopter at 6.00am on 12 January 2011 to an evacuation centre at Lowood. [145] They returned to inspect their home by boat the next day. For the next week, they could only access their property by boat [146] and thereafter by tractor and four wheel drive. [147] 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. [148] The doors downstairs would not close and the floor coverings were not replaced before they returned. [149] By late February 2011, electricity had been restored to their home and their house had been cleaned with the help of volunteers. [150]

32. [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]).

33. [73]

    I allow $13,000.00 for this head of damage.

34. [74]

    Even though there was no dispute about Mr and Mrs Keller’s claim to recover interest paid on a loan from the QRAA, it is necessary to consider it in detail because of the separate question sought to be posed by the State.

35. [75]

    In or around November 2011, Mr and Mrs Keller received a loan of $373,341.00 from the QRAA [151] in what Mr Keller described as “exceptional disaster assistance loan”. [152] The loan did not accrue interest for its first two years and thereafter has accrued interest at rates between 4% and 5.58%. [153] As at the middle of 2019, the loan balance had been reduced to just over $70,000.00. [154]

36. [76]

    One of the assistance schemes administered by the QRAA in the aftermath of the floods was the “Exceptional Disaster Assistance Scheme”. In its submissions, the State identified the legal basis for the scheme as Part 8 of the Rural and Regional Adjustment Regulation 2000 (Qld). [155] In contrast to Part 29 that was considered in Rodriguez (No 22), [156] Part 8 was not specifically created to deal with flooding that occurred in the period late December 2010 and early 2011. Within Part 8, regulation 90 identified the Scheme’s objectives as inter alia to assist primary producers recover from “exceptional circumstances”. Clause 92 specified that the nature of the assistance that could be provided was an “an interest subsidy for new or existing loans for primary production enterprises” for the purpose of effecting “improvements in productivity”, providing “carry-on finance” and “debt restructuring” (clause 91). Clause 95 specified that to be eligible for an interest subsidy the applicant had to be a primary producer to whom an exceptional circumstance declaration applied, the enterprise had to be in financial difficulty because of the exceptional circumstances, and, for applicants eligible to receive $300,000.00 or more, the enterprise had to be viable.

37. [77]

    Clause 93 imposed limits on the level of assistance that was provided. In particular, subclause 93(2) provided that the interest subsidy given to a primary producer in the first “EC period” must be not more than 50% of the interest on and the associated costs of the loan and subclause 93(3) provided that the interest subsidy given to a primary producer in the second or a subsequent “EC period” must be not more than 80% of that interest and costs. The “EC period” was defined as the period being one year or less, for which an “EC declaration” applies and for which assistance may be given under a rural adjustment scheme where an “EC declaration” means a declaration under the Rural Adjustment Act 1992 (Cth) of an area as an area undergoing exceptional circumstances. I have assumed that such a declaration was made.

38. [78]

    Clause 98 addressed the terms and conditions of the interest subsidy. Subclause 98(2) provided that payment of an interest subsidy for a loan was to be made either direct to the lender of behalf of the primary producer (cl 98(2)(a) or “direct to the primary producer, after the authority has secured agreement from the producer as to the use of the assistance” (cl 98(2)(b)).

39. [79]

    Guidelines for the loans were published. They were annexed to a statement from a relevant officer of the Queensland Rural and Industry Development Authority which is the successor to the QRAA. [157] The Guidelines describe the scheme as being made pursuant to an agreement between the Commonwealth and State Governments dated 16 February 2011 and that the scheme is designed to assist primary producers and business (as well as non-profit organisations). The Guidelines expressly disclaim that it is intended to compensate for loss of income suffered as result of the “disaster event”. [158] Instead, the Guidelines identify the form of assistance provided as follows: [159]

40. [80]

    The Guidelines specify that loan is interest free for two years and thereafter interest accrues at 4 per cent per annum. [160] One condition of the loan was that applicants must provide on request tax invoices and receipts evidencing “expenditure … for amounts drawn against the loan”. [161]

41. [81]

    Three matters should be noted about the interaction between the Guidelines and Part 8 of the Rural and Regional Adjustment Regulation 2000 (Qld). First, the specification in the Guidelines of an interest free period of two years is difficult to reconcile with the limits on the interest subsidy set out in subclauses 93(2) and 93(3). This inconsistency was not identified or explored by any of the parties and I cannot take it further.

42. [82]

    Second, the specification of the “nature of the assistance” provided in clause 2 of the Guidelines appears broadly consistent with clauses 91 and 92 of the Regulations to the extent that they refer to the provision of an interest subsidy to effect “improvements in productivity”.

43. [83]

    Third, the State submitted that the Guidelines recorded an exercise of power under s 9(1)(d) of the Rural and Regional Adjustment Act 1994 to “fix conditions for the supply of … services”. [162] I accept that contention. I also consider that the Guidelines can be taken as a statement as to the “form of conditions” that the QRAA sought to secure agreement from the primary producer concerning the use of assistance for the purposes of regulation 98(2)(b).

44. [84]

    The State submitted that these aspects of the scheme revealed that, like the scheme for reimbursement of certain costs and damage analysed in Rodriguez (No 22), Chapter 14, [163] this was a closely calibrated benefit which did not exhibit the “distinguishing characteristic” [164] of conferring benefits that are intended to be “enjoyed independently of, and cumulatively upon” [165] any right to recover interest in respect of the loss occasioned to the subject matter of the interest subsidy; ie, those matters identified in clause 2 of the Guidelines.

45. [85]

    I accept that submission so far it goes, however, the effect of the conferral of an interest subsidy for repairs to property depends very much on how the claim for damages and interest is framed. It is open to a plaintiff to seek recovery of the actual interest paid on amounts expended to repair damage to property damaged by the defendant’s tortious behaviour. At one point the common law did not recognise interest as a separate head of damages and, absent statute, it was not recoverable (see for example Marine Board of Launceston v Minister of State for the Navy (1945) 70 CLR 518 at 525). However, provided obstacles such as remoteness are overcome, interest as a head of damages is now recoverable (Hungerfords v Walker (1988) 171 CLR 125; Sempra Metals v Inland Revenue Commissioners [2008] AC 561 at [100]; Palasty v Parlby [2007] NSWCA 345 at [33] per Mason P with whom Tobias and Handley JJA agreed). If a group member was to seek and obtain recovery of interest paid on a QRAA loan used to repair damage to property that was suffered as a result of the defendant’s negligence then the calculation of that amount would necessarily not include any interest subsidy and in that sense the interest would be “reduced” (being the phrasing of the question sought to be posed by the State).

46. [86]

    The other and potentially alternative course is for the affected group member to claim a statutory award of interest for an amount representing the cost of repair of the relevant property. I discussed the source and nature of the statutory power to award interest in Rodriguez (No 23) at [20] to [34]. In summary the victim of the tort receives an award of interest for being “kept out of [their] money” (MBP (SA) Pty Ltd v Gogic (1990) 171 CLR 657 at 663; [1991] HCA 3), the award is compensatory (Haines v Bendall (1991) 172 CLR 60 at 67; [1991] HCA 15), the exercise of the power to award interest can include a consideration of facts and circumstances that occur after the tort was committed (Rodriguez (No 23) at [22] and [28]) and some “matters which are irrelevant in the assessment of damages may be relevant to the award of interest” (Screenco Pty Ltd v R L Dew Pty Ltd (2003) 58 NSWLR 720; [2003] NSWCA 319 at [46]; Rodriguez (No 23) at [26]).

47. [87]

    A consideration of how a claim for statutory interest would interact with a subsided loan is highly fact specific. In circumstances where a loan with an interest subsidy conferred by Part 8 of the Rural and Regional Adjustment Regulation 2000 (Qld) was used to repair property then it would be inconsistent with the compensatory nature of an award of interest to allow interest on the cost of repair at statutory rates if there is a separate claim to recover the interest paid on the subsided loan to effect those repairs. If there was no such claim, then it would be inconsistent with the compensatory nature of an award of interest to award statutory interest in an amount that exceeded the interest paid on the subsided loan to effect those repairs. The position would be different with, say, an interest free loan provided by a friend or relative in that it would have the “distinguishing characteristic” noted above.

48. [88]

    This is best illustrated by the claims made by Mr and Mrs Keller. Their original schedule of damages includes a separate head of loss of $53,620.17 as “interest on the QRAA loan” [166] and then a claim for “Total interest … on all heads of damages” [167] which I understand to be a claim for statutory interest. The claim for interest on the QRAA loan was not disputed by the defendants. This appears to represent a recognition on their part that, whatever obstacles maybe faced by a claim for interest as a separate head of damages in tort (as opposed to statutory interest), they have been overcome for this claim. Moreover, the account statement for the QRAA loan suggest that Mr and Mrs Keller made the relevant interest payments from time to time so that a claim for statutory interest is allowed on the amount they paid from the time of payment. However, it is not clear whether Mr and Mrs Keller’s claim for “Total interest” includes a claim for statutory interest on the cost of repairs of property that were funded by a QRAA loan. If it was then, consistent with the above, it will be disallowed to the extent that the repairs were funded by the QRAA loan.

49. [89]

    There remains the question sought to be posed by the State. It follows from the above, that a question posed by reference to whether the award of damages payable “should be reduced on account of loans made to Group Members under the QRAA and NDRRA” does not properly embody the above analysis. Instead, that analysis requires an examination of what the loan was used for and how the claim for damages and interest on the part of a relevant group member is framed.

50. [90]

    In their written submissions, the defendants contended that an amount of $21,000.00 received by Mr and Mrs Keller from the Premier’s Disaster Relief Appeal [168] should be deducted from their award of damages. [169] It follow from the findings in Rodriguez (No 26) at [54] that there should not be a deduction for these payments. The same applies in relation to a submission by Seqwater [170] that an amount for insurance recoveries should be deducted from their damages (see Rodriguez (No 26) at [92] to [98]).

51. [91]

    Mr and Mrs Keller claimed interest on the various heads of damage. Subject to two qualifications, that claim should be allowed. The first concerns the interest on the QRAA loan which is address above. The second is a contention made in written submissions that “the Kellers meet the alternative criteria identified at [34] of” Rodriguez (No 23). [171] In Rodriguez (No 23) at [34] I stated as follows:

52. [92]

    In oral submissions, Mr Sexton SC confirmed that this claim was only maintained if the Court upheld the bottom-up approach to assessing cleaning costs contended for Seqwater and SunWater. [172] As I do not accept that is the correct approach this claim does not arise.

Relief

1. [93]

   It will be necessary for the parties to bring in short minutes containing separate awards of damages for each of Mr and Mrs Keller, Ms Visser and Ms Lynch against each defendant. Depending on the contents of the short minutes, I propose to make orders in their favour on 18 March 2021.

2. [94]

   In addition, orders will be made posing and answering the question suggested by the State in relation to interest subsidies. As is clear from the above discussion concerning Mr Keller, how that will impact a particular group member’s claim will in large part depend on the manner in which the group member’s claim is framed. As the only factual circumstance presented concerns the interest subsidy provided for by Part 8 of the Rural and Regional Adjustment Regulation 2000 (Qld), the answer will be so confined. Further, in light of the observation in [19], it will be necessary to modify the answers to questions 37 and 38 as set out in Schedule 1 to Rodriguez (No 24).

3. [95]

   Lastly, I note that to my understanding, this judgment disposes of all outstanding issues in relation to the State’s notice of motion filed 10 September 2020. Accordingly, it will be otherwise dismissed.

4. [96]

   Accordingly, the Court orders that: