Grace Agbalog

STATEMENT OF CLAIM COURT DETAILS Jurisdiction:the Australian Financial Complaints Authority (AFCA) Division:General Insurance Case Number:TBC PARTIES Insured:CARR, Phillip Broker:Safe Hands Insurance Group Pty Ltd Underwriting Agent:Blue Zebra Insurance Pty Ltd (‘BZI’) Underwriter:Zurich Australian Insurance Limited (‘ZAIL’) TABLE OF CONTENTS STATEMENT OF CLAIM1 TABLE OF CONTENTS2 LEGISLATION CITED2 THRESHOLD ELIGIBILITY QUESTIONS3 SUMMARY FACTS3 PLEADINGS, PARTICULARS & HEADS OF CLAIM6 ADDITIONAL BENEFITS7 ISSUES REGARDING REPAIRS45 ANCILLARY FEES & EXPENSES65 SETTLEMENT71 RELIEF CLAIMED75 LEGISLATION CITED 1. Insurance Contracts Act 1984 (Cth) (‘the IC Act’) 2. Corporations Act 2001 (Cth) (‘the Corp. Act’) 3. Insurance Contracts Regulations 2017 (‘the IC Regulations’) 4. Insurance Act 1973 (‘the Insurance Act’) 5. 2014 (& 2021) General Insurance Code of Practice (‘together, the Code’) 6. Freedom of Information Act 1982 (Vic) (‘the FOI Act’). 7. Residential Tenancies Act 1997 (Vic.) (‘the RT Act’) 8. Australian Consumer Law (‘the ACL’) 9. Competition And Consumer Act 2010 (Cth) (‘the CCA’) 10. the Sale of Land Act 1962 (Vic.) (‘the SOL Act’) 11. Acts Interpretation Act 1901 (Cth) (‘the AIA’) THRESHOLD ELIGIBILITY QUESTIONS 1. Phillip Carr (‘the Insured’) is a natural person. Accordingly, the Insured is considered as an “Eligible Person” pursuant to A4.1 of AFCA’s Complaint Resolution Scheme Rules (13 January 2021) (‘the Rules’). 2. The claim, forming the basis of this submission to AFCA, occurred within the prescribed statute of limitations and the Rules. 3. BZI (ABN:-) was at all material times a member of AFCA (membership number 40319). 4. ZAIL (ABN:-) was at all material times a member of AFCA (membership number 13270). 5. The quantum claimed by the Insured is below the cap particularised in the Rules. 6. The claim relates to a Retail General Insurance Policy pursuant to ss. 761G 5(a)(i) & 761G 5(b)(ii) of the Corp. Act. It is submitted that by virtue of the above, the Claim forming this dispute and, a request for review thereof by AFCA, falls within the ambit of AFCA’s Rules. SUMMARY FACTS 1. The Insured acquired 11 Pecan Court, Frankston North, Victoria, 3133 (interchangeably ‘the Situation’ or ‘the Property’) circa 2009. 2. Early February 2018, Blue Zebra Insurance Pty Ltd (‘BZI’) entered into an underwriting agency agreement with Zurich Australian Insurance Limited (‘ZAIL’), whereby the former would provide via brokers, personal lines (retail) insurance policies, with the latter as underwriter. 3. ZAIL are regulated by the Australian Prudential Regulation Authority, in accordance with section 122 of the Insurance Act 1973. 4. ZAIL at all material times were (and are) subscribers to the Code 5. The policy with BZI initially commenced on (or about) 1 January 2019 and expired on (or about) 11 June 2019. 6. On (or about) 11 June 2019, cover was renewed with BZI. That Period of Insurance was due to expire 11 June 2020. The applicable policy wording that applied to this Claim was BZ00001 – V2 06/18 - PCUS- (‘the Wording’). Annexed and marked ‘PC-01’ is a true and correct copy of the Wording. 7. The Wording is one of a ‘Plain English’ nature. 8. There is one insured – a natural person. 9. The cover provided by the Wording is of a prescribed kind contemplated by s. 34 of the IC Act and Part 3 of the IC Regulations. 10. On 24 February 2020 (‘the Date of Loss’) a fire impacted the Situation (‘the Fire’), which was unattended at the time. 11. The Fire was reported to BZI via their electronic portal on the Date of Loss (‘this Claim’). The notification to BZI informed them that the Insured intended to engage an Agent on the Insured’s behalf – Derek Jorgensen, Claim Partners (‘Mr Jorgensen’). Annexed and marked ‘PC-02’ is a true and correct copy of this submission. 12. On the morning of the Date of Loss, those in attendance were, the Country Fire Authority (‘the CFA’), Victoria Police (‘VICPOL’) and a Building Surveyor from Frankston City Council (‘the Council’). The CFA undertook a contemporaneous investigation of the Fire’s cause. 13. On (or about) 1 March 2021 cover was renewed pursuant to s. 58 of the IC Act. This is confirmed by my correspondence to BZI on (or about) 1 March 2021. Annexed and marked ‘PC-03’ is a true and correct copy of that correspondence. 14. On (or about) 2 March 2020, at the Insured’s request, a registered building consultant, Mr Molnar of IOA Building Consultants (‘Mr Molnar’) attended at the Property for a preliminary, cursory inspection. 15. On (or about) 2 March 2020, Mr Jorgensen attended at the Property, as did a BZI appointed assessor – Tom Holtslag (‘Mr Holtslag’). Annexed and marked ‘PC-03’ is a true and correct copy of that report. 16. On (or about) 4 March 2020, Mr Holtslag’s assessment report is believed to have been provided to BZI. 17. On (or about) 9 April 2020, the CFA Report, obtained by the Insured, was emailed to BZI by Mr Jorgensen. Annexed and marked ‘PC-04’ is a true and correct copy of that report. 18. On (or about) 22 April 2020, the Insured partook in the first interview with the factual investigator. Annexed and marked ‘PC-05’ is a true and correct copy of the transcript, produced by the Insured. 19. On (or about) 26 April 2020, the Insured partook in the second interview with the factual investigator. Annexed and marked ‘PC-05’ is a true and correct copy of the transcript, produced by the Insured. 20. On (or about) 22 May 2020, Roland Black of RBA Consultants (‘Mr Black’) attended at the Situation for an engineering assessment. 21. On (or about) 4 June 2020, BZI confirmed that they were extending cover from 11 June 2020 until 9 July 2020. 22. On (or about) 9 June 2020, following an investigation (forensic & factual), BZI confirmed indemnity was being provided. Annexed and marked ‘PC-06’ is a true and correct copy of this email. 23. On (or about) 1 July 2020, it was advised by BZI (via email) that cover was extended from 9 July 2020 until 6 August 2020. Annexed and marked ‘PC-03’ is a true and correct copy of that email. 24. On (or about) 15 July 2020, Ben Boshier of AIM Insurance Services (‘Mr Boshier’), being a replacement assessor, retained by BZI, attended at the Property. Ian Fleming of FLEMCON (‘Mr Fleming’) and Ivan Cupic of Focus Environmental (‘Mr Cupic’) also attended, as did the Insured. 25. On (or about) 6 August 2020, written confirmation (email) from BZI was received, advising that cover was extended until 31 December 2020. Annexed and marked ‘PC-03’ is a true and correct copy of that email. 26. On (or about) 17 September 2020, BZI was advised, in writing (email), about concerns the Insured and Mr Jorgensen had regarding the scope provided by Mr Fleming & Mr Cupic. This included a report from Mr Molnar with feedback on Mr Fleming’s report. Annexed and marked ‘PC-07’ is a true and correct copy of this email. Annexed and marked ‘PC-08’ is a true and correct copy of Mr Molnar’s report. 27. On (or about) 14 October 2020, BZI emailed an unsolicited (and surprise) scope of works. It was created by Gold Coast based, Andrew Morse of Morse Building Consultancy (‘Mr Morse’). Mr Morse’s scope of works was marked as draft and was in response to the Insured’s email (including Mr Molnar’s commentary). Annexed and marked ‘PC-09’ is a true and correct copy of Mr Morse’s draft scope. 28. On (or about) 6 November 2020, BZI was advised that the Insured continued to hold concerns regarding the draft scope. Annexed and marked ‘PC-10’ is a true and correct copy of this correspondence. 29. On (or about) 22 December 2020, confirmation was provided by BZI (via email) that the period of insurance was extended from 31 December 2020 until 31 January 2021. Annexed and marked ‘PC-03’ is a true and correct copy of that correspondence. 30. On (or about) 2 February 2021 an email was received from BZI, being an unsolicited cash settlement offer, based on two quotes obtained from builders BZI had engaged. Also provided was a Deed of Release. Collectively, this was BZI’s First Final Settlement Offer (altogether ‘the First FSO’). A true and correct copy of the First FSO, including the Deed of Release and quotes are annexed and marked ‘PC-11’. 31. On (or about) 2 February 2021, BZI advised (via email) that the cover was extended from 31 January 2021 until 1 March 2021. Annexed and marked ‘PC-03’ is a true and correct copy of that correspondence. 32. On (or about) 12 February 2021, Mr Morse attended for the first (and only time) at the Property. 33. On (or about) 1 March 2021 cover was renewed pursuant to s. 58 of the IC Act. This is supported by the Insured’s correspondence to BZI: a. on (or about) 16 February 2021. Annexed and marked ‘PC-12’ is a true and correct copy of that correspondence; b. on (or about) 15 March 2021. Annexed and marked ‘PC-12’ is a true and correct copy of that correspondence; and c. on (or about) 17 March 2021. Annexed and marked ‘PC-13’ is a true and correct copy of that correspondence. 28. On (or about) 16 March 2021, BZI provided their Second Final Settlement Offer (‘the Second FSO’) including updated quotes & Deed of Release. Annexed and marked ‘PC-14’ is a true and correct copy of the Second FSO, including the Deed of Release. 29. On (or about) 8 December 2021, the Insured submitted to BZI, a request for formal review by BZI’s Internal Dispute Resolution process (‘the Insured’s IDR Submission’). Annexed and marked ‘PC-15’ is a true and correct copy of the Insured’s IDR Submission. 30. On (or about) 6 January 2022, in response to the Insured’s IDR Submission, BZI’s reply (‘BZI’s IDR Response’) was received by the Insured. Annexed and marked ‘PC-16’ is a true and correct copy of BZI’s IDR Response. 31. It is uncontroversial that no exclusion has been held out by BZI as applying to this Claim. Annexed and marked ‘PC-17’ is a more comprehensive chronology. PLEADINGS, PARTICULARS & HEADS OF CLAIM ADDITIONAL BENEFITS 1.0 Additional Benefit: Trees and Shrubs 0.0 The Wording stipulates (page 34) that: Plants, trees & shrubs If [the Insured has] cover for [the Insured’s] buildings and they have been accidentally destroyed or accidentally damaged then [BZI] will pay the cost of replacing any plants, trees or shrubs that were damaged at the same time. [BZI] will not pay any costs related to: lawns or grass; pot plants; or any plants that were being grown for commercial use. 1.1. In BZI’s First FSO, they offered a quantum of $2,500.00 for the additional benefit (Trees and Shrubs). This was not marked as ex-gratia, or, noted as having any subjectivity attached thereto, nor was there the advice that ‘evidence’ was required. 1.2. It is not controversial to assert that the landscaping at the Property is not of largess. 1.3. However, at the Situation prior to the Fire, there was a small garden bed at the front. This comprised of plants primarily inground (i.e. not potted). They were used exclusively by the Insured for their private, personal enjoyment. 1.4. Further, of specific note, prior to the Fire, at the front of the Property, there was a large (approximately 12 foot), mature pine tree. 1.5. As a result of the prolific nature of the Fire, the tree and inground plants have now been died or otherwise been affected. 1.6. It is submitted that BZI resolve this aspect of the claim by: 1.6.1. remitting a payment for the sum of $3,300.00 with interest applying from 2 February 2021, being the date of BZI’s First FSO, pursuant to s. 57 of the IC Act Or, in the alternative, should our claim pursuant to 1.5.1. be unsuccessful; 1.6.2. remitting a payment of $3,300.00 with interest applying from 6 January 2022, being the date that BZI ought to have been in a position to remit, being in possession of all material information, pursuant to s. 57 of the IC Act. Or, in the alternative, should our claim pursuant to 1.5.1. above be unsuccessful; 1.6.3. remitting payment in the sum of $2,500.00, being BZI’s offered quantum. Interest to apply from 2 February 2021, being the date of their First FSO and there being no reason proffered as to why the money could not then be remitted. 2.0 Additional Benefit: Removal of Debris (Contents) 2.1 The Wording stipulates (page 32) that (original emphasis removed): If [the Insured has] cover for [the Insured’s] contents and they are accidentally destroyed, accidentally lost or accidentally damaged, [BZI] will pay the reasonable costs to remove and dispose of any damaged contents items 2.2 It is uncontroversial that because of the Fire, contents (as defined on page 26 & 27 of the Wording and covered subsequent thereto) were “accidentally destroyed” as contemplated by the Wording. 2.3 On (or about) 3 August 2020, BZI was in possession of Mr Boshier’s first assessment report. Relevantly extracted, it reads (emphasis added): We assessed the rooms of the dwelling and it is evident that there will be no salvageability [sic] in any of the Contents. The significance of fire, smoke and soot contamination, in conjunction with the Contents being in situ since the event (some 4.5 months from the date of writing), allows the Writer to make a recommendation that the Contents are likely non salvageable in their entirety. As such, we recommend a reserve estimate of $160,000 be held on file in this regard. We have instructed the Insured at this stage, to provide a list of items that he wishes to retain. These are items that may have sensitive information or data, sentimental value, etc. We will be able to have these items restored as best as possible (likely not to pre-loss condition however). We suggest that we seek quotes from two reputable restoration firms (Elements Restoration and First Response Restoration) to conduct an inventory of damaged Contents items and disposal of same. In addition to this, we recommend each restoration firm quoting to restore (as best they can) the items the Insured wishes to retain. 2.4 BZI asserted on numerous occasions that they would “remove and dispose” of the items that the Insured did not wish to retain. Such statement includes that by Mr Boshier to the Insured on (or about) 11 November 2021, when he advised in an email: We can confirm that we intend to deal with the contents ROD within the building claim as it is easier to not separate and there is no limit on the costs under either policy section. It should be no impediment to any final contents or building settlement. A true and correct copy of this email is annexed and marked ‘PC-18’. 2.5 On (or about) 18 February 2021, following BZI’s First FSO, Restorx (Vic) Major Loss Pty Ltd T/As Restorx Services (‘Restorx’) attended at the Property at the Insured’s request and undertook an assessment of the contents. A series of images were taken by Restorx. 2.6 A report, including a quote of $13,376.00 and series of images was received by the Insured on (or about) 20 February 2021 from Restorx. The report stated: A Fire onsite approximately 1 year ago has resulted in the main bedroom being burnt out and the remaining areas of the home badly smoke and heat affected, all contents in the property have been deemed non-salvageable [sic] due to the time spent in this environment. There appeared to be less damage to the laundry however, the contents in this area are still non-salvageable. 2.7 In the section titled ‘after your claim is accepted’ the Wording (page 13) states (emphasis removed / emphasis added): After we have paid a claim under your policy, either in total or in part, we have paid a claim under your policy, either in total or in part, we have the right to take over any legal right of recovery which you have. If we do this, it will be for our benefit and at our expense (if you have been fully reimbursed). You must provide full co-operation. You must not limit or restrict your right of recovery against any third party without our prior written consent. We have the right to keep any damaged property we have paid for under your policy, including any proceeds if the items are sold. If we recover more than the amount we paid you, we pay you the balance after deducting any expenses incurred by us in undertaking the recovery. If any person compensates you for any property which we have paid a claim you must reimburse us for that payment. You must do this as soon as the compensation is made. 2.8 Conscious of not wanting to prejudice any right to salvage or recovery that BZI may have been entitled to, nor to preclude BZI from obtaining quotes for contents removal, the Insured did not remove the contents. They are still in situ. 2.9 The contents removal and disposal quote from Restorx ($13,376.00 including GST) is asserted as “reasonable” as contemplated by the Wording. 2.10 It is submitted that BZI resolve this aspect of the claim by: 2.10.1 remitting payment of $13,376.00, as per Restorx’s quote. Interest ought to be payable from 15 September 2020, being approximately two (2) months after BZI was in receipt of Mr Boshier’s assessment report and had an opportunity to review same1. Further, for reasons of practicality and finality for the matter, that BZI abdicate their right to any salvage. Or, in the alternative, should our claim pursuant to 3.9.1. above be unsuccessful; then, 2.10.2 remitting payment of $13,376.00, as per Restorx’s quote. Interest ought to be payable from 11 November 2020, when BZI formally confirmed that the contents removal was pending and the sum would be provided in their settlement offer, despite there being no reference as to when that would occur. Further, for reasons of practicality and finality for the matter, that BZI abdicate their right to any salvage or recovery. Or, in the alternative, should our claim pursuant to 3.9.2. above be unsuccessful; then, 2.10.3 Payment of $13,376.00, as per Restorx’s quote. Interest payable from 2 February 2021 when BZI provided their First FSO yet did not reference the contents disposal. No explanation was provided as to why this sum was not paid prior. Further, for reasons of practicality and finality for the matter, that BZI abdicate their right to any salvage or recovery. 3.0 Additional Benefit: Removal of Debris (Building) 3.1 The Wording stipulates, as far as buildings (page 32) that (original emphasis removed / emphasis added): Removal of Debris If you have cover for your buildings and they are accidentally destroyed or accidentally damaged, then we will pay the reasonable costs to: make the insured address safe (such as temporary fencing to restrict access); and/or demolish, remove and dispose of any building debris that was caused by it being accidentally destroyed or accidentally damaged. 3.2 The removal of debris clause is designated by BZI in the Wording as an additional benefit. It states that following a covered loss, BZI will “demolish, remove and dispose of any building debris” – not “demolish, remove and dispose of selected debris [emphasis added]”. 3.3 It is well ventilated that when seeking to resolve a dispute pertaining to the interpretation of an insurance contract, the starting point is the words actually used.2 3.4 In the absence of words being assigned a specific definition that deviates from its everyday usage, the Courts will give express terms their plain and ordinary meaning, unless, doing so would result in manifest absurdity. 3.5 In general, Australian dictionaries rather than English dictionaries should be used in determining the plain and ordinary meaning of words.3 3.6 In this instance, the term debris is not defined in the Wording. 3.7 In the Macquarie dictionary, the term “Debris” is defined as “the remains of anything broken down or destroyed; ruins; fragments; rubbish”4 (‘the Debris definition’). 3.8 Noting the Debris definition, it naturally encompasses remnants of any part of the building at the Situation that has been damaged as a result of the Fire. 3.9 In this regard, a delineation ought to be drawn between the type of damage occasioned by or happening because of the Fire (regardless of through a causal and/or temporal nexus to the Fire) and whether it is actually debris. It is the Insured’s argument that ash and soot must properly be captured within the Debris definition, as they arose consequent to the Fire that caused damage to the building. This is equally the argument for mould remediation (removal) that occurred consequent to the Fire – as damage occasioned by or happening via the Fire. 3.10 An often-repeated statement as to the ‘correct approach’ to the construction of insurance contracts is that of Chief Justice Gleeson in McCann v Switzerland Australia Ltd5 at [22]: A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure. 3.11 That statement plainly confirms that the principal doctrine is the objective theory of contract which dictates that the rights and liabilities of the parties under a contract are to be determined objectively. Accordingly, “it is necessary to ask what a reasonable businessperson [in the position of the parties] would have understood [the terms of the commercial contract] to mean”: Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd - CLR 640; [2014] HCA 7 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd - CLR 104; [2015] HCA 37 at [46]-[47]. 3.12 In circumstances where each party contends that the “businesslike” interpretation coincides with its own interest. Words with a technical meaning (if appropriate in the circumstances) are to be given that meaning. If a technical meaning of a word is to be used, evidence must be admitted explaining that trade usage.6 3.13 It is not suggested that a reasonable person in the position of a typical or representative insured for a homeowner’s policy would consider a specialised meaning of debris. 3.14 However, should there be momentary indulgence that a typical insured of this policy type would consider a specialised meaning of debris, then following interrogation of construction material (and we don’t suggest that there should be), debris could be described as “any material that has fallen from the specimen.”7 Specimen is not defined. It is hence suggested that this definition of debris be given negligible weight (if any) to the resolution of this Claim. 3.15 Contemplation must rightfully be given to whether the ‘repair or replace’ (operative) clause is, in the circumstances, construed as subordinate to the additional benefit. On any ordinary interpretation, the additional benefit is, as described – one providing a benefit to the Insured that is additional to the initial insuring clause. 3.16 Applying the businesslike interpretation approach to the additional benefit clause, it is the Insured’s view that there is a legitimate entitlement to rely upon the benefit for the removal of debris (including ash / soot and smoke where found in conjunction) – over and above the ‘repair or replace’ clause, with the outcome that removal of debris is undertaken prior to any repairs or other reinstatement works – not in lieu of. Otherwise put, the additional benefit clause should be read with paramountcy. 3.17 Further, supporting the paramountcy of the removal of debris benefit to the cover is s. 34 of the IC Act which appositely defines “prescribed contract” and “prescribed event” by referring to the IC Regulations. 3.18 It is not controversial that insurance contracts covering a person’s private residence – their personal person’s home building or home contents are “prescribed contracts”, and that damage due to fire is a “prescribed event” as per s. 19(a)(i) of the IC Regulations. 3.19 Section 35(2) of the IC Act confirms that, when a claim is made under a “prescribed contract” for a “prescribed event”, an insurer cannot refuse to pay the claim unless that insurer can demonstrate that they informed the Insured in writing that it would not cover the event in the way particularised in the IC Regulations. 3.20 Section 20(2)(b) of the IC Regulations require “demolition and removal of debris” following a “prescribed event” regarding a “prescribed contract” – i.e., unless “BZI clearly informed the insured in writing (whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise)” – i.e., as per s. 35(2) of the IC Act. 3.21 According to s. 15AA of the AIA: In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the [AIA]) is to be preferred to each other interpretation. 3.22 Whilst the IC Act doesn’t expressly state an object or purpose, it has been variously used as a legal instrument designed to provide consumer protections. 3.23 The long title of the IC Act is: An Act to reform and modernise the law relating to certain contracts of insurance so that a fair balance is struck between the interests of insurers, insureds and other members of the public and so that the provisions included in such contracts, and the practices of insurers in relation to such contracts, operate fairly, and for related purposes 3.24 As far as the term “fire” in the IC Regulations, it is axiomatic that heat and smoke are inextricably linked to fire, which obviously results in smoke, ash and soot. 3.25 As stated above, the Wording provides cover for accidental damage or accidental loss, which, by extension, noting that there is no writeback or exclusion, includes cover for damage caused by heat & smoke. 3.26 It is not disputed that the Wording was provided when the cover was incepted. 3.27 It is acknowledged that in BZI’s IDR response, BZI “note[s] the opinions contained within the Annexures served alongside [the Insured’s] IDR Submission.” 3.28 All the builders from whom the Insured obtained a reinstatement quote, did attend the site, as did Restorx and DRA. Regarding the latter two, this is evidenced by the photos and confirmation on their respective quote that they did attend site. 3.29 As far as it relates to BZIs comments regarding the experts that were contacted to obtain their opinion, it is irrelevant whether they did or did not attend at the Situation, since the question posed to them was of an academic nature – i.e., to ascertain ‘the industry standard’ and to compare same against BZI’s approach. 3.30 It is particularly noteworthy that the builders that BZI sought to engage (namely Blue RMS (‘BZI’s proposed builder’) & Skyline Building Group (‘Skyline’)) were seemingly not provided any photos of the damaged premises, nor did they attend at the situation. In other words, BZI’s comments are concurrently incorrect and also self-defeating. 3.31 It is noted that BZI’s proposed builder and Skyline were both instructed by Mr Boshier to “essentially review the history of the property online” and that these builders had “explained [to them the Property’s footprint and construction.” Annexed and marked ‘PC-19’ is a true and correct copy of that email. Further, annexed and marked ‘PC-20’ is a true and correct copy of the current photographs online, which predate the purchase by the Insured in circa 2009 and hence ignore (among other things): 3.31.1 the kitchen that was renovated circa 2012; and 3.31.2 the significant bathroom renovation, in connection with a separate claim through BZI in 2019. This was a cash settlement, so BZI were unaware how the bathroom presented upon completion. 3.32 Reference to encapsulation and Australian Standards applying (or not) has arisen due to: 3.32.1 the First FSO from BZI, received by the Insured on (or about) 2 February 2020 and reaffirmed on (or about) 16 March when the Insured received the Second FSO, relevantly, BZI stated that (emphasis added): [the Insured has] queried the method of encapsulation and whether it will adequately reinstate the dwelling to pre-loss condition. To be clear, encapsulation is a repair method and is not removal of debris. We can confirm that encapsulation is an industry accepted repair method and complies with Policy terms and conditions as well as relevant Australian Standards and laws. Further to this, encapsulation can be used to prevent the release of any asbestos-containing materials. A bridging encapsulant creates a membrane over the surface. A penetrating encapsulant penetrates the material and binds its components together. Both are effective and accepted methods to treat both asbestos-containing and smoke-affected materials. We would like to draw your attention to page 12 of your Home Buildings and Contents Insurance Accidental Damage Product Disclosure Statement (PDS). How we settle your claim – buildings When your buildings are destroyed or damaged during the period of insurance we will pay for the cost of repair or replacement with new material without deducting an amount for wear and tear and depreciation. In noting the above wording, BZI is entitled to repair the subject dwelling so long as it is to a pre-loss condition. Considering this, we conclude that our proposed scope of works fully repairs the subject dwelling and returns it to a pre-loss condition. 3.32.2 Mr Cupic (Focus Environmental Pty Ltd) is the same hygienist that BZI engaged. Consequently, it is unknown how BZI purport that the encapsulation (dismissed by their own hygienist) is acceptable, but also compliant with Australian Standards, which is incongruent with Mr Cupic's advice to the Insured that no standards apply. Annexed and marked PC-XX is a true and correct copy of Mr Cupic’s email. 3.33 Should BZI seek to assert that the IC Regulations do not apply, they must articulate on what basis they seek to deviate from the coverage described outlined in the IC Act – specifically that they seek to curtail coverage, juxtaposed to the Wording. 3.34 There is nothing in the Wording that infers that BZI, following a peril of this type would opt to keep the debris (including mould) in situ, rather than removing same. 3.35 However, should an alternative view be found (i.e., that the removal of debris clause is subordinated to the ‘repair or replace’ operative clause), attention should duly turn to the Wording’s contemplated approach for dealing with debris following a loss. It is striking that the Wording does not contain any information about encapsulation, either expressly or implied, nor any other means of keeping contaminants or debris in situ following a loss. 3.36 If BZI is unable to remove the debris without removing the entirety of the relevantly damaged area, this rightfully is an issue for BZI, not for the Insured. BZI ought to be required to undertake this course of action, pursuant to a covered claim under the Wording. 3.37 BZI have referred to encapsulation as a suitable means of repair in various emails. In their stated opinion, it provides a satisfactory solution that complies with the Wording. This approach was formalised by BZI in their First FSO (2 February 2021) whereby they affirmed in writing that “encapsulation is a repair method and is not removal of debris” – i.e., encapsulation is completed in lieu of removing the debris. This was effectively reaffirmed in their email on 16 March 2021, whereby BZI stated that information provided on 2 February 2021 was unchanged. Annexed and marked ‘PC-21’ is a true and correct copy of this email. 3.38 On a literal interpretation, BZI’s statement is not in dispute – i.e. encapsulation and removal of debris are mutually exclusive. Their statement supports our proposition – it is an active choice between removal and encapsulation. 3.39 In continuing to promote their intended resolution (encapsulation), BZI has asserted: BZI is entitled to repair the subject dwelling so long as it is to a preloss [sic] condition [emphasis added]. Considering this, we conclude that our proposed scope of works fully repairs the subject dwelling and returns it to a pre-loss condition.8 3.40 Engaging the term ‘repair’ as per the Macquarie Dictionary, it must justly be read as “[to] restore after damage, to make good, or to renew”9 3.41 The term ‘make’ is further defined as “to cause to be or become”10 and ‘good’ as “...without blemish or flaw.”11 3.42 By extension, the corollary is that the phrase ‘repair’ must, if it is to give effect to ordinary language, “cause to be [after completion] without blemish or flaw” - any repair not meeting that standard is, necessarily, inadequate. 3.43 If an encapsulation process is undertaken, the Insured understands the relevant damage will simply be sealed within the confines of the existing structure. 3.44 Considering potential contamination issues, there is the inevitable prospect that encapsulation would fail to restore the Property its pre-loss state. Otherwise phrased, the outcome of BZI’s proposed repair (encapsulation) is to return to the Insured a tainted structure, which falls short of a ‘repair’ in any true sense. 3.45 BZI has repeatedly declared that their preference is to encapsulate (smoke seal) or, as Mr Morse refers to it, “Bleed Seal[ing]” the debris. 3.46 The Insured’s contention is the alternative being that any debris or, remnants, indeed, any trace of the Fire should be eternally and entirely removed from the Situation. This is based on a few different factors, as further outlined below. 3.47 There was no debris at the Property prior to the Fire. Therefore, even if encapsulation be accepted as a permitted repair technique, BZI’s own desired outcome (to restore the Situation to a pre-loss condition), would be inherently deficient. 3.48 According to s. 14(3) of the IC Act “in deciding whether reliance by an insurer on a provision of the contract of insurance would be to fail to act with the utmost good faith, the court shall have regard to any notification of the provision that was given to the insured, whether a notification of a kind mentioned in s. 37 or otherwise.” 3.49 Our disagreement with BZI applying any interpretation that doesn’t necessitate removal of this debris was communicated with BZI on repeated occasions, including: 3.50 An email from Mr Jorgensen to BZI on (or about) 14 October 2020, stating: That the most recent consultant appears again not to have been instructed as to the terms and conditions of the cover provided by the Policy – as such, works have been suggested (e.g. encapsulation of debris) that do not comply with the terms and condition of the Policy issued to the Insured; 3.51 In an email to BZI on (or about) 6 December 2020 by Mr Jorgensen, a number of things were stated by Mr Jorgensen, including providing a copy of a previous AFCA determinations on the matter and informing BZI that we don’t agree that encapsulation is a repair. Annexed and marked ‘PC-22’ is a true and correct copy of this submission. 3.52 Further, an email to BZI, from Mr Jorgensen requesting that if BZI’s proposed builder intended to encapsulate, then the Insured shall be requiring the builder’s Certificate of Capacity insurance documents. The Insured also requested supplementary information from the builder. Annexed and marked ‘PC-23’ is a true and correct copy of this submission. 3.53 On (or about) 11 November 2021, Mr Boshier, asserted that should the debris be removed as requested by the Insured, demolition of the Property would be required.12 In response (in addition to communication from the Insured and Mr Jorgensen to BZI and Mr Boshier asserting their reservations regarding that approach): 3.53.1 on (or about) 18 February 2021, a representative from Restorx attended at the Property. They were principally focused on preparing a quote for contents removal. Later, on (or about) 30 March 2021, at the Insured’s request, they provided a separate quote for removal of debris. Their quote for the removal of debris is annexed and marked ‘PC-24’ . 3.53.2 on (or about) 22 March 2021, a representative from Disaster Restorations Australia (‘DRA’) attended at the Property. They were principally focused on mould remediation (removal); 3.53.3 according to remediators whom are experts in their field, removal is not just desirable, but prudent, attainable and (in relative terms) cost effective in the circumstances. Annexed and marked ‘PC-25’; ‘PC-26’ & ‘PC-27’ are the true and correct emails from three (3) experts. 3.54 It is noted that the additional benefit for removal of debris imports a requirement for BZI to “demolish, remove and dispose of any building debris that was caused by” (page 32 of the Wording). 3.55 The word ‘any’ is relevantly defined as including: 3.55.1 “in whatever quantity or number, great or small” 3.55.2 “every”; 3.55.3 “a great or unlimited”13 3.56 As far as remediation works for the roof and subfloor (hardwood subfloor framing, brick stumps & concrete stumps) are concerned, the Final Scope of Works stipulates, that: [S]wabs are to be taken in several areas throughout the dwelling both prior to and after [bleed sealing] decontamination has been undertaken [with regard to mould]. Results of those swab tests are to be immediately provided to the assessors. 3.57 Should settlement occur as proposed by BZI (i.e. the unsolicited cash settlement), ipso facto, there is no assessor. If the decontamination process is unsuccessful, the Insured will need to spend money not provisioned for in the unsolicited cash settlement. 3.58 The Wording provides for a Lifetime Guarantee (‘the Guarantee’) and states (page 14) that (original emphasis removed / emphasis added) Lifetime guarantee on building repairs If you have a buildings claim then we guarantee that if a defect arises in your buildings as a result of poor quality workmanship or poor quality materials when we replace, repair or rebuild your buildings, provided that we: have directly authorised the replacement, repairs or rebuilding; have arranged the replacement, repairs or rebuilding; and have paid, or have a legal liability to pay, the supplier, repairer or builder directly for this work; then we will rectify the problem by arranging, directly authorising and paying for further replacement, repairs or rebuilding. We will, at our discretion, decide what needs to be done to rectify the problem. This guarantee does not apply to: replacement, repairs or rebuilding that you arrange, authorise or make yourself (this applies even if we give you or a supplier, repairer, builder a cheque for all or part of the repair cost); loss, damage or failure of any electrical or mechanical appliances or machines that form part of your buildings; or wear and tear consistent with normal gradual deterioration of your buildings (e.g. paint peeling off as part of its normal life cycle, wood rotting from moisture in the air or ground, roofs weathering or a hot water system leaking as a result of normal gradual deterioration. 3.59 The language is clear - should BZI themselves engage BZI's proposed builder and, in so doing, pay that builder, the Guarantee (in general terms) will be enlivened. 3.60 Parenthetically however, as per the writeback to the Guarantee clause, since the encapsulation involves encasing the contaminant, any degradation of the encapsulant over time would not be covered. 3.61 It is undisputed that a claim being resolved by cash settlement, provides finality. This is even more so when there is a deed of release, as is proposed in this Claim. Should cash settlement occur and the Insured proceed themselves with encapsulation as proposed by BZI, the Guarantee does not apply. Conversely, should BZI retain BZI’s proposed builder, in theory, the Guarantee would apply. The former, being the proposed resolution method, means that should encapsulation be accepted as a reasonable means of resolution, that a contingency sum for latent conditions is required – as a minimum. 3.62 In BZI’s IDR Response they aptly state that “[the] lifetime guarantee” (page 14 of the Wording) does not apply to “replacement, repairs or rebuilding that [the insured] arrange[s], authorise[s], or make[s] and applies even if [BZI] give’s the insured] a supplier, repairer, builder a cheque for all or part of the repair cost)” which is noteworthy, as that emphasises that any cash settlement enhances financial risk for an assured. 3.63 The fact that this encapsulation is impermanent is supported by expert evidence from: 3.63.1 Yanel LARA, who advised that “[e]ncapsulation should only be used as a last resort. Better to remove the hazard all together. The OHS Regulations 2017 state that asbestos must be removed if impacted by any refurbishment work”. Also, in terms of warranty, that “[n]o idea on warranty as I am not sure what you would use to encapsulate the hazards. I would say there would be no warranties for specific hazards for general products (sealants/paints)” (see ‘PC-25’). 3.63.2 Brian MURPHY (Managing Director & Certified Occupational Hygienist (COH)®) who, when asked about encapsulation, stated that “[e]ncapsulation is an option howber [sic] not a higher order control like removal. Removal is of preference where it is reasonably practicable to do so. Every situation is unique and whether encapsulation is the right one in this instance would need to be discussed. There are no ‘lifetime guarantees’ with encapsulation, it would need a management plan for ever. If it is a lifetime guarantee you need removal is the only option” (see ‘PC-26’). 3.63.3 Peter DEVEY, who stated that “mould is best treated rather than encapsulating” and “the integrity of encapsulation would depend on the encapsulation that is used”, further advising that “some [encapsulation processes] may well fail on the day they are applied”. Mr Devey’s hesitancy to encapsulate extends to other contaminants like ash, soot and smoke. (see ‘PC-27’). 3.63.4 Mr Cupic who deemed that encapsulation is inferior to removal. 3.63.5 In the Insured’s IDR Submission, the Insured provided to BZI advice from various other insurers of similar risks, with a view to detailing what is considered as Good Industry Practice (‘Industry Practice’). These were: 3.63.5.1 Jean-Pierre DE PRADINES – QBE Insurance (‘PC-28’). 3.63.5.2 Luke SMITH – Allianz Insurance (‘PC-29’). 3.63.5.3 Alexandra DELLA – ZIAL (‘PC-30’). 3.63.5.4 Charlie ZERAFA – Custom Home Insurance (‘PC-31’). 3.63.5.5 Ivan CUPIC – Focus Environmental (‘PC-32’). 3.63.5.6 Des REABY – LMI Group (‘PC-33’). 3.64 There is concurrence that Industry Practice is in favour of proceeding with the literal, businesslike interpretation of the Wording, being the removal of debris – not leaving debris in situ. 3.65 The weight of evidence from the experts, with regard to the appropriateness of removing debris compared to leaving it in situ, is that the former ought to be the desired conclusion. 3.66 Noting the short-term nature of BZI’s proposed ‘bleed sealing’ and, the outcome therefore being that it would indisputably not return the Property to its condition prior to the Fire, BZI’s proposed approach is said by the Insured, to contravene the inherent purpose of the cover and text in the Wording. The question is one of reasonableness and, in turn, determining which scenario is more rational & tenable – i.e.: 3.66.1 BZI removing the debris, as clearly outlined in the Wording; or 3.66.2 the Insured, who subscribes to an insurance policy and has an asset affected by an insured event, has debris left on site after that event, consequently not being placed into a pre-loss position and, moreover, one that demands ongoing monitoring, being the encapsulation over the asset’s life to supervise the efficacy of that treatment. 3.67 On any contemplation, BZI’s proposed settlement offer to leave what is a by-product of the Fire (e.g. ash & soot) at the Situation, including the smell and the resulting mould and contaminated soil, does not restore the Property to a pre-loss condition. Furthermore, it is a temporary solution. 3.68 Ultimately, it is respectfully submitted that the only outcome that yields to the inherent requirements of the Wording is to have the debris removed in its entirety. It is only this option that achieves the businesslike interpretation. 3.69 Whichever policy interpretation is used, BZI fails in every instance to assert that removal of debris should not occur. 3.70 Given the clear, explicit intent of the words in the Wording that do not yield any absurd outcome (only one of commercial inconvenience and infelicity to BZI), there is no scope at law to permit a discriminatory application of the text. Accordingly, BZI’s proposed position is an affront to common sense. Additionally, if BZI wishes to rely on a (seemingly silent) provision that supposedly permits encapsulation and not removal of debris, it is not yet determined how that would apply in practice. 3.71 Noting the circumstances, such as the ordinary consumer for this type of insurance, it is contended that such consumer would have the expectation of being placed into the position they enjoyed before the Fire, by having all debris removed. 3.72 In the most generous application available to BZI, should there be multiple possible available meanings of the clause, it was said by Justice Meager in Horsell International Pty Ltd v Divetwo Pty Ltd14 stated (at 275) that: [w]here there is more than one available meaning or, as in this case, means of reading a provision down, the one to be preferred is that which gives the policy a sensible interpretation taking into account the purposes it was intended to secure 3.73 There is no argument that following a loss, Industry Practice is to return a property to its pre-loss condition. This is not controversial. There was no ash or soot at the property before the Fire, so the only way to revert the Property to its pre-loss condition is to remove that debris in the entirety. 3.74 It is an affront to common sense to suggest that any rational intention would be to remain living with contaminants/pollutants, such as soot, ash, mould, etc. when they were not present at the Situation before the Fire. 3.75 Clearly, this pointedly reaffirms the sentiments expressed in McCann v Switzerland Insurance Australia Ltd15 & CGU Insurance Ltd v Porthouse16. Ultimately, BZI’s argument that encapsulation is permitted, is specious at best. 3.76 Applying the removal of debris clause as written, is the only approach that is consistent with the obiter in McCann v Switzerland Insurance Australia Limited17 that insurance policies should be interpreted in a businesslike manner; to provide indemnification only18; regarding the market value of the loss19; and the Insured.20 3.77 Contrary to assertions posited by BZI, it is not a binary proposition to either leave the debris in situ (and encapsulate) or demolish the structure. According to DRA they estimate that the cost of removing the debris to be $140,800 including GST. Annexed and marked ‘PC-34’ is the quote from DRA. 3.78 According to the quote from Restorx annexed and marked ‘PC-35’, to remove the debris (excluding mould) by dry-ice blasting, it is estimated to cost $33,205.70 including GST. It is submitted that this option will yield the optimum result to remove the debris, particularly noting the reputation that Restorx has in the insurance industry. 3.79 As far as the Wording is concerned, on any reasonable interpretation, there is no ambiguity. 3.80 To borrow from the words of Counsel on behalf of the insured in HDI Global Specialty SE v Wonkana No. 3 Pty Ltd21, as for this Claim, “to give the chosen words their clear and unambiguous effect involves no absurdity”22. The given words hence ought to be used, with the result that the Property be restored to its pre-loss condition that being without the smoke, ash, soot & mould. 3.81 Further, as submitted by Counsel for the insured in HDI Global Specialty SE v Wonkana No. 3 Pty Ltd:23 [T]he clear wording of the policies should not readily be departed from to permit insurers to deny [or limit] cover. 3.82 In that same matter, it was opined by Hammerschlag that:24 In a commercial context, absurdity is more than just lacking in genuine commercial good sense. It entails commercial nonsense, to the point where it is obvious that the parties did not mean what they said and obvious what they meant to say… 3.83 The Wording noticeably does not limit or curtail what is contemplated as debris, nor does it permit BZI to leave that debris at the Situation as part of a ‘repair’ process. 3.84 Regardless of whether it is viewed through the lens of a ‘reasonable’ consumer or an experienced, qualified insurance broker, no scenario exists that permits encapsulation in favour of debris removal. It is simply a matter of fairness. 3.85 To appreciate the commercial purpose of a contract, one needs to understand the genesis of the transaction, the background, and the market25 - i.e. Industry Practice. 3.86 Continuing with the notion of contract interpretation, in a unanimous decision, Justices Beazley P, Meagher JA & Simpson, in Vero Insurance Ltd v Australian Prestressing Services Pty Ltd declared that:26 The language of a particular provision in a contract of insurance must be construed having regard to its other terms, the commercial circumstances which it addresses and the objects which the parties can be presumed to have intended to secure by making their contract: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579 at [22]; Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 at [15]. Words used in a contract which have an ordinary or literal meaning will usually be given that meaning unless consideration of the text and context provide a principled basis for adopting some other meaning. For example, words will not be given their ordinary or literal meaning if they have another specialised meaning and, by reference to the text and admissible evidence of surrounding circumstances, reasonable persons in the position of the parties would be presumed to have intended that the words have that specialised meaning: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337 at 350-352; Holt & Co v Collyer (1881) 16 Ch D 718 at 720. 3.87 Only this application meets the commercial efficacy and the ‘reasonable person’ test. Any alternative definition (such as the one posited by BZI) offends rudimentary logic and common sense. 3.88 If the above approach fails to resolve the impasse, the contra proferentem rule of construction may provide some assistance. In this regard, in MGICA, Justice Kirby P (as he then was, at 74,350) described the contra proferentem rule of construction as a rule of last resort and a principle for construction to remove ambiguities only when other more rational approaches fail. 3.89 The contra proferentem maxim helped resolve issues raised by the contract terms in that case. At para 9.64 of his text Insurance Law in Australia (perhaps the locus classicus of the industry), Professor Sutton observes that: [t]he principle [of contra proferentum] has been described as a rule of last resort but it has been applied over and over again to the situation where an ambiguity has been found to exist in a provision formulated by an insurer for his own protection. 3.90 The principle recognises that as BZI is the party who prepared the contract, they should make its meaning clear by using unambiguous language – the Insured should not be misled into believing they are covered for a risk (or additional benefit) if they are not. Ambiguities should be resolved by adopting the construction most favourable to the insured, being the party that did not draft the contract. 3.91 The contra proferentem rule of construction in an insurance context was clearly explained by Isaacs ACJ in Maye v Colonial Mutual Life Assurance Society27 at 22 as follows: If by reason of its own language in relation to the matter, or by reason of the context or of conflicting or differing provisions elsewhere, a term when fairly read is doubtful or ambiguous and reasonably susceptible of two constructions, that construction should be adopted which is the more favourable to the assured, because that is of the two the more reasonable in the circumstances. 3.92 It is acknowledged that excluded from the cover is the cost of remediating mould pre-dating the Fire. However, there can be no argument proffered as to why BZI should not cover the cost of remediating any mould that has a causal and/or temporal nexus to the Fire (or the extinguishment of) or, the subsequent delays in resolution of this Claim. 3.93 Essentially, the coverage terms are clear. However, if BZI suggests that there is a degree of ambiguity in the Wording, as per the preponderance of case law, it is incumbent upon them to demonstrate that such ambiguity yields an outcome which is not just commercially inconvenient, but absurd. 3.94 In C E Heath Underwriting and Insurers (Aust) Pry Ltd v Edwards Dunlop & Co Ltd (1993),28 Justice Deane at 541-542 (albeit in a dissenting judgment) referred to the “settled rule of construction” that if there be difficulty or obscurity of meaning, the words of an instrument are to be interpreted more strongly against him or her whose instrument it is and said that such rule was “particularly applicable to contracts of insurance”. His Honour went on: … the courts should avoid a construction of a policy of insurance which has the effect that the insured, having paid a premium to be indemnified against loss caused by a particular kind of occurrence, is subjected to a new risk of not being insured against a loss of that kind by reason of the ambiguity or obscurity of the language which BZI has seen fit to use in its policy. 3.95 Further, the IC Act (Division 1) designates standard cover. The IC Regulations elucidates what is prescribed as ‘standard’ cover for residential premises. 3.96 They also state that any deviation from the standard cover must be clearly communicated to the insured in writing before the cover commences or, as soon as possible thereafter. One aspect is the removal of debris. Nothing is said about encapsulation. 3.97 If BZI continues to hold that encapsulation is permitted, they must demonstrate that this is not a deviation from the cover provided in the IC Regulations. If it is a deviation, they must demonstrate that they communicated this to the Insured before the cover took effect or was renewed. Moreover, if BZI asserts that the policy does not cover removal of all debris, then BZI, must demonstrate adherence to 12(a) of the IC Regulations. 3.98 Nevertheless, as BZI failed to advise of a proposed deviation from the standard terms (i.e. that debris will be removed), as required by Section 35 and 37 of the IC Act – removal of debris is required. 3.99 Recently, AFCA has dealt specifically with a matter concerning encapsulation, determining that encapsulation is not removal and by extension, encapsulation was not consistent with the intent of that respective wording (annexed and marked ‘PC-36’). While this case is not a precedent and therefore, not determinative insofar as how AFCA will decide future matters, it is persuasive and should not be readily discarded. 3.100 Importantly, the Wording does not refer to ‘at our decision’ which removes BZI’s discretion. Accordingly, it is markedly distinguishable from Raso & Glenn Starr. It effectively states that the decision will be the Insured’s, or at least a result of considered, respectful negotiation between the parties. Further, as far as this Claim, BZI is proposing to resolve by an unsolicited cash settlement, thus differentiating it from Fogarty v CGU Insurance Ltd.29 3.101 In BZI’s IDR Response, they asserted: 3.101.1 that the Insured did not inform the respective insurer that: 3.101.1.1 these enquiries related to an active claim for the Insured; and/or 3.101.1.2 the enquiry was intended to be of a general nature. 3.101.2 “the general response from the underwriters are that Policy response should always be determined on a case-by-case basis and that, while Removal of Debris clauses may operate in the way that you posit, that is not always the case.” 3.102 It is not in dispute that the various insurers contacted by the Insured were not informed that the enquiry was about the Insured’s own claim, nor for that matter, an active claim for any client. In this respect, whether the opinions obtained were for the Insured, a client, or some other party, is immaterial – nothing is to be gained by that disclosure or, conversely, no prejudice incurred to BZI through silence. Neither course of action should affect BZI’s approach. 3.103 It is not controversial and uncontested that one insurer’s approach to a certain set of facts is not binding or determinative on a different insurer. However, when there is similarity in the clause’s phrasing, in a homogenous, retail risk (such as for residential properties), it is unarguably reflective of Industry Practice and ought to be considered persuasive. It also reinforces the businesslike interpretation of the clause. Particularly noting that one of the responses was from ZAIL - the Underwriter behind this Claim. 3.104 As far as the ‘repair’ operative clause, this is presented as a ‘motherhood’ statement simply stipulating that in general terms, should a peril, covered by the Wording occur, that “[BZI] will pay for the cost of repair or replacement with new material” however in this section, there is no further elucidation. 3.105 The removal of debris is not an optional extension, but an automatically included, additional benefit, providing more specific guidance insofar as how any such remediation shall occur. 3.106 From the Insured’s perspective, there is no conflict between this broad operative clause and the distinct additional benefit, however, BZI submit that they are in conflict (i.e. removal is not necessarily required). 3.107 As far contract interpretation, in IBM Australia Ltd v State of Queensland30 Justice Martin said (at 30): The general principle of the law of interpretation that the meaning of a word can be gathered from its associated words — noscitur a sociis — has a number of specific sub-principles with respect to the immediate textual context. The most frequently cited such sub-principle is the ejusdem generis rule. The relevant sub-principle for the present case is the maxim propounded by Lord Bacon: copulatio verborum indicat acceptationem in eodem sensu — the linking of words indicates that they should be understood in the same sense. As Lord Kenyon CJ once put it, where a word ‘stands with’ other words it ‘must mean something analogous to them’. (Evans v Stevens (1791) 4 TR 224; 100 ER 986 at 987. See also W J Byrne (ed) Broomes Legal Maxim (9th ed) Sweet and Maxwell, London (1924) pp- Additionally, the operative clause that “[BZI] will pay for the cost of repair or replacement with new material [emphasis added]” ought to be assessed considering Lord Bacon’s maxim, as articulated above. 3.109 Reading the “repair or replacement with new material” clause, it clearly surmises that there will be a ‘renewal’ or ‘regeneration’ of the Property – a fact confirmed by BZI, in their repeated advice that the intention of the cover is to restore the Situation to its pre-loss condition. Using this maxim, links the words, such that repair could conceivably be construed as being “repair with new material” 3.110 Further, the doctrine generalia specialibus non derogant (which states that where there is a conflict between general and specific provisions, the specific provision prevails) is of assistance in clarifying the cover – i.e. strengthening the proposition that the specific removal of debris clause should properly be given paramountcy over the more general operative clause. 3.111 In this instance, the removal of debris clause takes primacy. 3.112 Should encapsulation of debris be permitted, to leave the soot, ash & mould in situ, in favour of restoring the Situation to its pre-loss position, it would eviscerate the intent of the Wording. 3.113 Ultimately, whichever method of policy construction is used, encapsulation is an impermissible ‘repair’ since debris should not be left in situ after any peril for which the Wording responds (let alone one as prolific as this) or any mould, particularly mould that can be causally or temporally linked to the Fire and delays in resolving this Claim. 3.114 It is submitted that BZI resolve this aspect of this Claim by remitting a payment to the Insured of: 3.114.1 $140,800 including GST according to DRA’s quote estimate for the cost of removing the debris (including mould) (see ‘PC-37’). Interest ought to be payable from 1 October 2020, being approximately two (2) months after BZI had acknowledged the extent of damage; 3.114.2 Or, in the alternative, should 3.114.3 and according to the quote from Restorx (see ‘PC-38’), it is estimated to cost $33,205.70 including GST, to remove the debris by dry-ice blasting. This quote does not contemplate mould removal. 3.114.4 Or, in the alternative, XXXX 4.0 Additional Benefit: Excess Waiver for total loss 4.1 The Wording (page 37) relevantly extracted, states that (original emphasis removed / emphasis added): If you have cover for your buildings and/or contents and you have a claim where we pay the full amount of the buildings sum insured and/or the general contents sum insured shown on your policy schedule then you are not required to pay an excess on that claim. 4.2 On (or about) 20 May 2020, BZI remitted a payment in favour of temporary accommodation. According to BZI’s claim portal notes, relevantly extracted, it is stated: (emphasis added) I will prepare a payment for the following: Temporary Accommodation: $16,761.99 Less Excess: $500.00 TOTAL PAYMENT: $16,261.99 This payment will be prepared and authorised as a top priority today. 4.3 It is uncontroversial that deducting an excess from a payment, when the ultimate extent of loss is unknown, is standard practice in the general insurance industry. 4.4 In Mr Boshier’s first assessment report (dated 16 July 2020), it is noted (on page 2) that: The significance of fire, smoke and soot contamination, in conjunction with the Contents being in situ since the event (some 4.5 months from the date of writing), allows the Writer to make a recommendation that the Contents are likely non salvageable in their entirety. As such, we recommend a reserve estimate of $160,000 be held on file in this regard. 4.5 Despite various emails from BZI affirming that they would reimburse the $500 excess, it remains outstanding. 4.6 It is submitted that BZI resolve this aspect of the claim by remitting a payment of $500.00 being the excess the Insured has paid XXXX. Interest ought to be payable from 16 August 2021, being approximately one month after Mr Boshier's assessment report was received by BZI, with reasonable time provided to BZI to remit payment. 5.0 Additional Benefit: Counselling 5.1 The Wording (page 37) relevantly extracted, states that (original emphasis removed / emphasis added): If you or a member of your family normally living at the insured address requires counselling as a direct result of a fire or theft at the insured address then we will pay reasonable costs up to $2,000 for the costs associated with the counselling. However, we will not provide any cover that would contravene any legislation, including but not limited to, the Health Insurance Act 1973 (Cth) or the Private Health Insurance Act 2007 (Cth). 5.2 The Wording relevantly does not define either “normally” or “normally living at.” Accordingly, it must be reviewed in the context of ordinary language and legal precedent. In terms of the former, the phrase “normally” is defined as “as a rule; regularly; according to rule, general custom, etc.”31 regarding the latter, the phrase, “normally lives with” was the subject of consideration in Dunning v Dunning32. Relevantly, Justice Harrison at 28 stated that: The natural and ordinary meaning of the term “normally” is as a rule, regularly or according to rule or general custom. I was not referred to any authority that specifically dealt with the expression “normally live”. However, the notion that someone might be “ordinarily resident” at more than one place has long been recognised, particularly in the context of bankruptcy and revenue cases. For example, in Re Taylor; Ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194, Lockhart J considered that expression, noting that the words had no technical or special meaning, being ordinary English words and that the question was one of fact and degree. Pertinently, at 31, as it pertains to this Claim with BZI: In the present case, for as long as the plaintiff's parents followed an arrangement that saw their children spend what amounted to equal, or roughly equal, periods of time living in each of their respective households, there can in my view be no doubt that the children were in such circumstances entitled to say that they were, or were liable to be found to be, normally living in both households. In the circumstances of this case it was normal for the children to live at times with their mother but also normal at other times to live with their father. Put another way, it could not be said that it was not normal, or was abnormal, for the children to be living either with their father or with their mother at any particular time throughout a given period during which the shared custody arrangement between the parents applied. 5.3 The phrase “as a result of” was considered by the High Court of Australia in Comcare v Martin33. The High Court construed that the phrase be naturally read – i.e. a causal connection is required, however the outcome need not be solely attributable to the trigger event – the Fire. 5.4 More recently and more specifically in a general insurance context, the phrase “[as a] direct result [of]” has been said to “involve the concept of proximate cause”34. In contemplation of proximate cause, as Lord Shaw stated in the seminal causation case in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd: One must be careful not to lay in accent upon the word “proximate” in such a sense as to lose sight of or destroy altogether the idea of cause itself ... to treat proxima causa as the cause which is nearest in time is out of the question. Lord Shaw went on to say: The cause which is truly proximate is that which is proximate in efficiency. The view expressed by Lord Shaw in 1918 prevails to this day. In Hams v CGU Insurance Limited, Justice Einstein of the New South Wales Supreme Court said: The word caused is used in terms of the cause which was proximate in efficiency. The real, effective or dominant cause. In practice, the last causal event, the causa causans, is usually, but not always, the dominant, effective cause. Justice Einstein said: I accept that the question of causation is to be determined by the common sense evaluation of the facts. I further accept that the last causal event to occur will usually be an effective contributing cause, especially when it has a cumulative and independent origin. 5.5 As it pertains specifically to this Claim, the proxima cause – the causa causans – the dominant, effective cause of – the catalyst for counselling for my daughter, was the Fire. Otherwise phrased, but for the Fire, these counselling sessions would not have been required. 5.6 It is arguably self-evident that when someone’s residential property is subjected to a fire of such significance, counselling is required. It is true that my daughter “was not at the premises at the time of the fire” as pointed out in BZI’s IDR response, however, this is a matter that was raised with both the forensic investigator and the factual investigator – that at the time, my daughter “normally” (i.e. “as a rule; regularly; according to rule, general custom, etc.”35) resided with me at the Situation. Also noted is that the term “normally” is self-evidently a lower threshold than “permanently”. 5.7 Notably, the coverage for “Counselling” in accordance with the Wording is not curtailed in instances whereby the affected insured (or their family) was not already in counselling at the time of the loss, but only for sums not recoverable under Medicare or Private Health Insurance. Accordingly, BZI’s IDR Response has no basis in law. 5.8 On (or about) 2 March 2020, the Insured entered a note on BZI’s claim portal requesting that BZI “confirm that [they are] ok for [the Insured to proceed with counselling for [the Insured’s] daughter, which will be directly in regard to this Fire” with the Insured then requesting that BZI “please advise asap if there’s a problem” with that request. 5.9 Payments under this additional benefit have been remitted previously. There was no reference to those being provided on a “without prejudice” basis or otherwise ex-gratia. For this reason, in good faith, the Insured’s daughter continued with the counselling sessions. However, due to the private nature of these sessions (i.e. they are between the Insured’s daughter and her mental health treater), the Insured is not privy to precisely what is discussed, however the counselling is to the best of the Insured’s knowledge as “a direct result of the fire” – the threshold of the Wording – not that the counselling is “solely in respect of the claimed fire event [emphasis added]” 5.10 After the Insured has demonstrated that an appropriate claim exists under the additional benefit (the effective operative clause), the onus rests upon BZI to apply any exclusion they assert is relevant. In this instance, the Insured argues that no exclusion is of any relevance. 5.11 The preliminary payment for counselling was after BZI’s investigation (including two (2) recorded interviews). Accordingly, BZI had every opportunity to avail themselves of all information relevant to a decision. 5.12 BZI, by previously remitting payment against this additional benefit expressly confirmed cover, they actively held out confirmation it was covered. BZI made an election to accept liability under this aspect of cover. The doctrine of election hence applies, thus waiving BZI’s right to avoid further legitimate sums under this additional benefit. 5.13 A decision by BZI to resile from their previous representations would be wholly ‘unjust, unreasonable & unfair’ in the circumstances, by reference to standards of decent commercial behaviour, plus also a breach of the duty of utmost good faith. 5.14 Turning to the quantum payable under this Additional Benefit, the clause states that it is $2,000.00 and, pertinently, that (as per page 17), insofar as ‘Goods and Services Tax’ (i.e. $2,200.00 in total). 5.15 On (or about) 17 September 2020, Mr Jorgensen emailed Mr Boshier, requesting reimbursement of expenses incurred thus far in accordance with the ‘counselling’ additional benefit. The sum requested was $- On (or about) 11 November 2020, Mr Boshier confirmed via email that BZI would pay $698.95 as requested. 5.17 According to BZI’s claim notes, payment was remitted on (or about) 29 December- BZI’s Provider asserts in their First FSO that they have remitted $698.95 against this coverage extension. This is agreed. 5.19 It is submitted that BZI resolve this aspect of the claim by: 5.19.1 remitting settlement for the balance outstanding ($1,501.05), with interest payable from 2 February 2021 in accordance with s. 57 of the IC Act, being the date that it was “unreasonable for [BZI] to have withheld payment” Or, in the alternative, should our claim pursuant to 6.15.1. above be unsuccessful, then 5.19.2 by paying the balance outstanding ($1,501.05), with interest payable from 6 January 2022, in accordance with s. 57 of the IC Act, being the date that BZI had received the formal claim for this Additional Benefit and had an opportunity to consider their position on same. 6.0 Additional Benefit: Temporary Accommodation 6.1 The wording provides (page 33) for an Additional Benefit as follows (original emphasis removed / emphasis added): If you have cover for your buildings and: they are accidentally destroyed or accidentally damaged; and you are unable to live in the buildings as a result of the destruction or damage, then we will pay reasonable costs for: temporary accommodation for you, your family and any domestic pets that normally resided at the insured address; any additional living expenses that we agree are necessary and appropriate (such as mail redirection costs, utility connection costs); and any necessary costs to remove and store your contents and then return them to your buildings, for the period it takes to repair or rebuild your buildings so they can be lived in again. The most we will pay under this additional benefit for any one claim is 20% of your buildings sum insured as shown on your policy schedule. We will not pay temporary accommodation costs if: you were not permanently living in the buildings at the time they were accidentally destroyed of accidentally damaged; you do not intend to repair or rebuild your buildings; or there are unreasonable delays in repairing or rebuilding your buildings that you contributed to. 6.2 Insofar as Additional Benefits, it is noted (page 32) that (emphasis added): These additional benefits will be paid in addition to the buildings or general contents sum insured shown on your policy schedule, up to the limits shown below for each of the additional benefits. 6.3 The wording advises (see ‘about your sum insured’ on page 10) that: The sum insured values that you choose should exclude GST 6.4 Further, (on page 17) the wording prescribes, insofar as ‘Goods and Services Tax’ that (emphasis added): The sum insured values that you choose should exclude GST and all dollar amounts in this PDS are exclusive of GST unless stated otherwise. 6.5 The ordinary, businesslike interpretation of the above clauses,36 when read in their composite sense is: 6.5.1 Alternative Accommodation is calculated based on 20% of the buildings sum insured on the schedule, at the Date of Loss ($390,000) – i.e. $78,000.00; and 6.5.2 as per the Goods and Services Tax (GST) clause (page 17), GST ought be added. The result being $85,- On page 10, the Wording states (emphasis removed / emphasis added): During each period of insurance the sum insured for buildings and/or general contents will be automatically increased by 0.5% per month (6% per annum) until the end of the period of insurance. The sum insureds after this adjustment represent the most you can claim for any one incident unless stated otherwise in the PDS. This is prior to the application of any ‘additional benefits’ or ‘additional covers’ which may be applicable to your claim. 6.7 This cover was current until 1 March 2021 – an aggregate of twenty (20) months – i.e. the equivalency of 10.00% indexation applying the above clause – $8,- Adding on the sum attributable from indexation ($8,580.00) to the sum insured plus GST sum ($85,800.00), yields a composite sum of $94,380.00 payable under this benefit. 6.9 In HDI Global Specialty SE v Wonkana No. 3 Pty Ltd37 (now settled by virtue of the High Court refusing leave to appeal) [at 18 to 19] it was said: Constructing a written contract involves determining the intention of the parties as expressed in the words of their agreement is recorded. As Lord Wright said in Inland revenue Commissioners v Raphael [1935] AC 96 at 142: ‘It must be remembered at the outset that the court, while it seeks to give effect to 42 the intention of the parties, must give effect to that intention as expressed, that is, it must ascertain the meaning of the words actually used [my emphasis]” That task is to be approached objectively. The meaning of the words used must be ascertained by reference to what a reasonable person would have understood the language of the contract to convey: Toll (FGVT) Pty Ltd v Alphapharm Pty Ltd - CLR 165; [2004] HCA 52 at [40]; Electricity Generation Corporation v Woodside Energy Ltd - CLR 640; [2014] HCA 7 at [35]. That is because the objective theory of contract requires that the legal rights and obligations of the parties turn “upon what their words and conduct would reasonably be understood to convey”: Equuscorp Pty Ltd v Glengallen Investments Pty Ltd - CLR 471; [2004] HCA 55 at [34], citing Lord Diplock in Gissing v Gissing [1971] C 886 at 906 and Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502. They continued at [22]: This language is construed according to its natural and ordinary meaning: Darlington Futures Ltd v Delco Australia Pty Ltd - CLR 500 at 510-511. As Lord Mustill said in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 384 “the inquiry will start, and usually finish, by asking what is the ordinary meaning of the words used”. Where the words are ambiguous, they cannot be simply ignored simply to reach a result that is apparently more commercially convenient [my emphasis]: Australian Broadcasting Commission v Australian Performing Right Association - CLR 99 at 109; [1973] HCA 36. 6.10 Furthermore, to borrow from the words of HDI Global Specialty Se v Wonkana No. 3 Pty Ltd38 at 33, citing Australian Casualty Co,39 in this instance, with regard to this Claim, “[the] insurance was offered on the terms of a standard form Wording introduced by a product disclosure statement, which adopted a conversational and plain English style, referring to the parties as “we” and “you”. That the policy wording sets out the details of what is and is not covered is emphasised, and the insured or prospective insured is invited to read it carefully. Each disclosure statement makes clear that words in the policy with “special” meanings have been defined. All of this is consistent with BZI’s proposal and accepting that the language adopted in the standard form wording be understood by reference to what it conveys “as a matter of contemporary language read in the context of the whole policy” 6.11 The Wording (page 14) also states that: If [the Insured] has a claim for [the Insured’s] buildings that results in [BZI] paying [the Insured] the sum insured, the cover for your buildings will end” 6.12 The clear import from that phrasing is that no loss after the incident giving rise to the claim will be covered. 6.13 As far as the indexation, this is addressed by the clear terms in the Wording (page XX) set out under the heading ‘How we settle your claim – buildings’. 38. The relevant section provides, amongst other things, that: Any rebuilding or repairing of [the Insured’s] buildings must commence within 6 months of the date that the destruction or damage occurred. If it does not commence within 6 months (or any other period which [BZI] agree with [the Insured] in writing) [BZI] may have to pay any increase in cost caused by delay. 6.14 This clause is specific regarding how a claim is resolved under the Wording. 6.15 On its face, the settlement term quoted above sets a limit for the responsibility for increased building costs as those occurring within six (6) months after the occurrence giving rise to the claim. This obviously needs to be read with the sum insured safety net, the effect of which would be to provide both a time and monetary limit on increased building costs. 6.16 It is conceded by the Insured that absent BZI’s agreement to an extension of building time, it can be considered as placing a time limit on indexation, so that the building sum insured will continue to be subject to indexation until the first of the period of insurance or the repair period expiring. 6.17 Assuming that repairs or rebuilding had not commenced prior (which they hadn’t), this would perhaps result in the sum insured being subject to indexation until about 24 August 2020 – i.e. six (6) months after the Date of Loss. 6.18 This position is perhaps reinforced by the recent decision of the NSW Court of Appeal in Worth v HDI Global Specialty SE40 (‘Worth’), in which a similar proviso was held to operate despite the reason for reinstatement within a reasonable time being the insurer’s failure to grant indemnity. That the term in Worth operated harshly did not render it invalid or inapplicable. 6.19 In this instance, on (or about) 6 October 2021, BZI confirmed in writing that as far as its application to this Claim, this ‘reasonable dispatch’ clause was deemed inoperative. Annexed and marked ‘PC-49’ is a true and correct copy of BZI’s email confirming same. 6.20 The outcome, is that the indexation ought to be read in the literal sense – as applying in this Claim until 1 March- Specifically, in this instance: 6.21.1 the cover was renewed on 11 June 2019; 6.21.2 various endorsements were processed subsequent thereto, including on 13 November 2019 whereby the buildings sum insured was increased to $390,000 (excluding GST); 6.21.3 cover was originally set to expire on 11 June 2020; and 6.21.4 cover was extended (not renewed) periodically since, effectively resulting in one protracted period of insurance. 6.22 On (or about) 6 October 2021, the Insured emailed BZI. The Insured requested clarification insofar as how they would seek to apply the ‘reasonable dispatch’ provision in the Wording (page 12) – i.e. “[a]ny rebuilding or repairing of your buildings must commence within 6 months of the date that the destruction or damage occurred. If it does not commence within 6 months (or any other period which we agree with you in writing) you may have to pay any increase in cost caused by delay” 6.23 BZI responded acquiescing to that request. They affirmed: The parties can agree that this section is not relevant, and we are happy to proceed on that basis. However, I would like to point out that BZI made a valid and comprehensive offer of settlement to you on 16/03/2021 and we were ready to settle as of this date, therefore no price or rate increases will be considered after that date. Annexed and marked as ‘PC-39’ is a true and correct copy of this email. 6.24 The Insured asserts that the language used in the Wording is inconsistent, such that the base sum upon which the ultimate Temporary Accommodation benefit is calculated, is subject to argument. Specifically, the phraseology adopted by BZI that this indexation is applied “prior to the application of any ‘additional benefits’ or ‘additional covers’ which may be applicable to the claim” with the result that it increases the additional benefit by such indexed amount. 6.25 The indexation sum argued as rightfully applying in this instance is 10.00% (being from 11 June 2019 to 1 March 2021 – when, following the various extensions, the period of insurance ultimately came to an end – an aggregate of twenty (20) months and eighteen (18) days-% of the pre GST buildings sum insured ($390,000) is $39,000. 6.27 Adding $39,000 to the buildings sum insured, yields $429,000. 6.28 Adding GST to this sum (in according with the Goods and Services Tax clause) results in a composite sum of $471,-% of this sum is $94,380.00 6.30 On this basis, after deducting the $51,302.00 paid by BZI, $43,078.00 remains as available. 6.31 Owing to widely reported issues about inherent delays in the construction sector, there is hesitation as to whether, once the settlement sum is received, construction can be completed in the next twelve (12) months. 6.32 According to BZI’s claim notes, various payments for accommodation were remitted. These were: 6.32.1 On (or about) 20 May 2020 – $5,000.00;41 6.32.2 On (or about) 3 June 2020 – $3,554.18; 6.32.3 On (or about) 10 July 2020 - $4,820.00; 6.32.4 On (or about) 23 July 2020 – $18,080.00; 6.32.5 On (or about) 7 October 2020 - $11,261.99;42 and 6.32.6 On (or about) 29 December 2020 – $8,- The aggregate payments received, as per the above, relying on BZI’s own claim records are $51,302.00 in the aggregate – $11,242.00 less than purported by BZI. 6.34 The Insured asserts that the phraseology used in the Wording affirms that the indexation is applied “prior to the application of any ‘additional benefits’ or ‘additional covers’ which may be applicable to the claim” – i.e. the additional benefit sum insured benefit available is determined only after, the indexation is duly calculated and applied. 6.35 The relevant Period of Insurance started 11 June 2019 and expired 1 March 2021 – i.e. twenty (20) months and eighteen (18) days. 6.36 As a result, based on 0.50% per calendar month, the indexation sum rightfully applying is 10.00%-% of the pre GST contents sum insured ($390,000) is $39,- Adding $39,000.00 to the contents sum insured, yields $429,- Adding GST to this sum (in according with the Goods and Services Tax clause on page 17 of the Wording) results in a composite sum of $471,-% of this sum is $94,- On this basis, after deducting the 51,302.00 paid by BZI, $43,078.00 is outstanding. 6.42 It is uncontroversial that the Wording limits payment for temporary accommodation in instances where “there are unreasonable delays in repairing or rebuilding [that the Insured] contributed to.” However, despite repeated assertions by BZI that the Insured was responsible for or, at least, complicit in the delay, no evidence has been adduced regarding any delay that the Insured did contribute to. Notwithstanding, the Insured concedes that any delay the Insured may have contributed to was inconsequential and incidental. Rather, any delays were caused by BZI and COVID-19 which made assessments problematic. These are further particularised in the Insured’s IDR Submission and, set out in more fulsome details in the Insured’s chronology (summary) which are attached and marked PC-XX as a true and correct copy of that chronology. 6.43 Consistent with other matters heard by AFCA, AFCA has the authority to issue a determination requiring that BZI pay sums over and above the prescribed policy cap for alternative accommodation (see: File Number 487541; File Number 663875; File Number 756988; File Number 425405; & File Number 287133 (involving an ex-gratia payment by BZI)). 6.44 It is submitted that BZI resolve this aspect of the claim by: 6.44.1 BZI remitting settlement for the aggregate outstanding sum, being ($29,262.00), with interest payable in accordance with s. 57 of the IC Act from 2 February 2021, being the date that BZI was rightly in a position to settle this sum (when their provided their First FSO); plus an allowance for a further four (4) months’ rent (at $2,151.00 per calendar month). 6.44.2 Or, in the alternative, should our claim pursuant to 7.30.1. above be unsuccessful, by BZI remitting settlement for the aggregate outstanding sum (without considering the effect of the indexation clause) ($23,256.00), with interest payable in accordance with s. 57 of the IC Act, from 2 February 2021, being the date that BZI was rightly in a position to settle this sum (when their provided their First FSO); plus an allowance for a further four (4) months’ rent (at $2,151.00 per calendar month). 6.44.3 Or, in the alternative, should our claim pursuant to 7.30.2. above be unsuccessful by BZI remitting settlement for the aggregate outstanding sum ($23,256.00), with interest payable in accordance with s. 57 of the IC Act, from 2 February 2021, being the date that BZI was rightly able to settle this sum (when their provided their First FSO). 6.44.4 Or, in the alternative, should our claim pursuant to 7.30.3 above be unsuccessful, BZI remitting settlement for their stated sum ($20,340.00), with interest payable in accordance with s. 57 of the IC Act, from 2 February 2021 (when their provided their First FSO), as there was nothing precluding BZI from remitting that sum on even date. 7.0 Additional Benefit: Claim Preparation Fees 7.1 The policy wording states (at page 36) that: We will pay professional fees which you incur, with our consent, in the preparation of your claim. The most we will pay in a period of insurance is $5,000. 7.2 In BZI’s IDR response, BZI postulated (page 7) that Mr Jorgensen was retained in contravention of the Wording, as “[the Insured] did not seek BZI’s approval before appointing a claims preparer as was an established condition within the Policy.” 7.3 It is acknowledged that consent from BZI is required, however, in accordance with the strict interpretation of the Wording, that consent need not be in writing. 7.4 Mr Jorgensen’s engagement was not a furtive one. BZI was advised of the engagement of Mr Jorgensen on various occasions, including: 7.4.1 on (or about) 24 February 2020, by the Insured entering a note in BZI’s claim portal stating that “[the Insured] is seeking to appoint a claims preparer on this file” and further, that “the claims preparer is Derek JORGENSEN. His phone number is-.” Annexed and marked ‘PC-40’ is a true and correct copy of BZI’s claim portal notes. 7.4.2 on (or about) 28 February 2020, an email was sent to BZI, advising that “we are in the process of formally retaining the services of Derek JORGENSEN (Claim Partners) as claim preparer [Mr Jorgensen]” and it was on this basis that an assessment was scheduled. 7.4.3 on (or about) 2 March 2020, when the assessment at the Property occurred, Mr Jorgensen was present, as was the Insured. This was attested to in the assessor’s report, which stated (inter alia): [t]he Insured has engaged a Claims Preparer to assist with the preparation of his claim. The Preparer has attended site in conjunction with the attending assessor. We note there is a relevant provision under the additional benefits section of the policy, with an applicable limit of $5,000/” – i.e. it was well known to BZI that Mr Jorgensen had been retained and various discussions (both telephone calls & emails) had occurred between Mr Jorgensen and BZI. 7.4.4 via an internal note on BZI’s claim portal, with a note on (or about) 3 March 2020 raising the fact that “claim preparation fees [are] to be claimed by the Insured” 7.5 The Insured has openly acknowledged that despite their firsthand experience in managing claims of this type, Mr Jorgensen’s services were needed to ensure an expedient resolution. 7.6 Based on personal experience and expertise managing claims of this type, it was recognised at the outset by the Insured that Mr Jorgensen’s skillset is outside the specific area of expertise the Insured possesses as it relates to this Claim. 7.7 Mr Jorgensen’s involvement was in direct consequence of needing to liaise with BZI, to ascertain their position on various matters and to progress the claim. 7.8 The overarching desire in engaging Mr Jorgensen was to circumvent what can otherwise become an adversarial, contested process. To ensure this Claim proceeded with mutual trust and genuineness. It was foreshadowed that retaining Mr Jorgensen would aide in facilitating transparency and communication. To ensure that there were no measures – deliberate or inadvertent that interfered with this Claim. The aim was to avoid any speculative, erroneous or emotionally motivated arguments and, instead, focus on one posited by experts in their field. 7.9 Mr Jorgensen’s engagement streamlined the process and reduced what could otherwise have been an even more protracted and combative process. 7.10 There were multiple substantive changes to the reports provided by Mr Black, Mr Fleming & Mr Morse. It is argued that but for the involvement of Mr Jorgensen & Mr Molnar, these amendments would not have occurred. This includes: 7.10.1 Mr Black’s report estimating the quantum to be approximately $300,000 and further stating that no building upgrades to comply with the BCA were required.43 This report, as a consequence of Mr Jorgensen’s input was ultimately rejected. 7.10.2 the report from Mr Fleming that resulted in a relatively substantial variation to Mr Black’s (albeit still asserting that no building upgrades were required to comply with the BCA).44 7.10.3 Mr Morse’s first draft scope of works used as the basis for a “final [emphasis added] settlement offer” of $440,104.75 (based on 20% builder’s margin). It was asserted that no building upgrade was required. 7.10.4 Following attendance at the site by Mr Morse on 12 February 2021, Mr Morse’s scope of works was amended, such that it resulted in a revised quote by BZI’s proposed builder – $443,348.78 (based on 20% builder’s margin).45 7.11 Items 8.7.1 to 8.7.3 (inclusive) determined that no upgrades were needed to comply with the Building Code. There were also apparent derogations from the coverage provided in the Wording. This, juxtaposed with Mr Molnar’s advice as early as March 2020 that the Property was damaged to such an extent that would require it to “meet current building regulations and laws that are required when they are being rebuilt or repaired” – advice evidently ignored. Annexed and marked PC-XX is a copy of Mr Molnar’s advice. 7.12 Mr Jorgensen was required to submit to BZI various requests for payment / reimbursement in connection with this Claim (eg. accommodation; contents; accountant’s expenses; etc.) due to BZI’s delays. Mr Jorgensen necessarily had to follow up BZI to ensure that the payment requested was remitted. 7.13 It is counterfactual to intimate that Mr Jorgensen’s involvement was unnecessary or, in any way surplus to needs, noting the tangible changes to BZI’s documents on every occasion. 7.14 It was not until Mr Morse’s final report, that BZI acknowledged that an upgrade to comply with the Building Code was required. 7.15 It is arguable that, but for Mr Jorgensen’s input, BZI would not have acquiesced with the requirement to upgrade the Property. It is also probable that a Building Surveyor would not sign off, thus leaving the Insured out of pocket in the context of BZI’s unsolicited cash settlement offer. 7.16 As a matter of fact, it was not until on (or about) 4 March 2021 that BZI conceded, by way of the Final Scope of Works that the damage to the Situation was extensive enough to agree with the scope advised previously by Messrs Jorgensen & Molnar– i.e. the ultimate reinstatement would need to include “reasonable costs to meet current building regulations and laws that are required when they are rebuilt or repaired”.46 7.17 In other words, the works undertaken by Mr Jorgensen & Mr Molnar jointly & severally until that point, were principally focused on ensuring that the finalised repairs complied with Building Codes. But for their input, it is questionable that BZI would have acquiesced with the requirement to upgrade the Property. 7.18 In Mr Holtslag’s first report, he recommended the engagement of a building consultant. 7.19 On (or about) 2 March 2020, the Insured uploaded a message on to BZI’s claim portal advising (inter alia) that “should [the Insured] not hear back to the contrary before next Monday, [they] shall be seeking to retain a building consultant to provide a report, in order the matter to the benefit of all parties”. Annexed and marked ‘PC-41’ is a true and correct extract of BZI’s notes confirming same. 7.20 As the Insured did not hear to the contrary, Mr Molnar was duly retained, in order to progress the claim. 7.21 Mr Molnar was required on multiple occasions to respond to various reports from experts appointed by BZI, with Mr Molnar routinely providing clear, coherent & cogent advice. 7.22 It is argued that therefore, the Insured’s expenses in connection with appointing Mr Molnar as a building consultant (noting too his capacity as a qualified building surveyor) such as the preparation of his reports ought to be reimbursed in full, particularly under the ‘meeting building regulations’ additional benefit. 7.23 It was BZI, who, because of their delay in handling the matter increased the works required of Mr Jorgensen and, consequently, inflated the aggregate sum payable to him regarding his work undertaken on this Claim. 7.24 On (or about) 11 June 2020, Mr Jorgensen responsibly informed BZI, that at that date, his costs were already over $5,000. 7.25 Mr Jorgensen’s fees were not rejected, nor was the Insured or Jorgensen informed that BZI would not contribute to a sum over that available in the Wording. 7.26 Mr Jorgensen was advised that we would hear back in terms of how BZI wished to proceed. 7.27 BZI remained silent on this matter. 7.28 Subsequently, a request was issued by BZI to Mr Jorgensen for a work in progress bill, summarising his billable hours to that point. In response, on 2 October 2020, Mr Jorgensen then emailed a summary of his hours. His fee at that time was $41,613.00 (including GST). Annexed and marked ‘PC-XX' is a true and correct copy of the ‘work in progress’ bill as emailed to BZI. Again, his fees were not declined. Instead, BZI & Mr Boshier continued liaising with him. 7.29 Due to BZI’s continued contact with Mr Jorgensen, by their ultimate conduct (i.e., continuing contact and failure to question or decline charges incurred to date), BZI provided the overt impression that they were covering his costs, which included (but is not limited to) BZI continuing to liaise with Mr Jorgensen. The Insured understood BZI were holding out their agreement and in so doing, effectively acquiescing to Mr Jorgensen’s fees, continuing to knowingly accrue, inferring that Mr Jorgensen’s costs would be honoured. 7.30 BZI’s silence was tantamount to acquiescence, which was relied upon by the Insured, thereby creating a cause of action in estoppel. 7.31 Whilst it is acknowledged that by virtue of s. 15 of the IC Act, the provisions of Sch. 2 of the CC Act, that contains the ACL does not apply, it is nonetheless important to pay heed to them, as it enlightens us as to instances when certain acts or omissions may fall foul of the utmost good faith obligation of the IC Act and also on aspects of community standards. 7.32 Turning to the ACL, the courts have held that silence or omission might be considered misleading if it can be shown that there is a reasonable expectation of disclosure (s 2(2) ACL; see Demagogue Pty Ltd v Ramensky47). 7.33 As it relates to this Claim, not hearing a formal rejection from BZI that they were refusing to honour Mr Jorgensen’s fees, over and above the amount prescribed in the Wording, the Insured proceeded on the basis that these reasonably incurred fees would be honoured. 7.34 The Insured was optimistic that BZI were proceeding based on genuine decency & good faith and, accordingly, the Insured interpreted BZI’s silence, on a prima facie level, to be them acceding to the costs incurred to date, in addition to those yet to be incurred, until such time that they formally advised otherwise. 7.35 As to the issue of BZI’s consent, the fact that BZI continued to openly liaise with him at least infers their consent (noting that the policy does not require this consent to be in writing). Further, should it be concluded that this consent should have been requested in some more formal way, then it is incumbent upon BZI to assert that BZI’s position was prejudiced, and their loss adversely affected, their loss was affected by virtue of me not doing so as opposed to the delays in the claim, increasing the work for Mr Jorgensen. 7.36 BZI’s silence was interpreted by the Insured as acceptance of Mr Jorgensen’s fees incurred to that point. As a matter of fact, it was not until 11 November 2020 that BZI communicated that they declined to cover any sum over the $5,000.00 specifically provided for in the Wording. By that stage the costs for the Claims Preparer were $50,- If these fees are rejected, BZI’s silence is arguably tantamount to a gross misrepresentation, which itself is contrary to good faith obligations in the IC Act. For the avoidance of doubt, the Insured’s argument extends beyond some vague notion of fairness or even optimal disclosure. 7.38 Rather, it is premised on the fact that it was BZI & BZI alone who were in possession of whether they would honour the costs incurred and, indeed, thereafter, BZI continued to liaise with Mr Jorgensen, increasing these costs. 7.39 Accordingly, Mr Jorgensen’s costs are arguably larger than what they would ordinarily have otherwise been - i.e. $51,- To date, BZI has thus far remitted nil payment against this item. 7.41 It is submitted that BZI resolve this aspect of the claim by: 7.41.1 remitting payment of Mr Jorgensen’s aggregate fee schedule being $51,595.00 plus $xxxx for Mr Molnar and a further $xxxx for Mr Wilkins. Interest, as per s. 57 of the IC Act ought be payable, from 6 January 2022, being approximately a month after BZI received the IDR submission, considered and subsequently rejected same; 7.41.2 Or, in the alternative, should our claim pursuant to 8.36.1 above be unsuccessful, remitting payment $41,613.00, as per the Work in Progress statement that was emailed to BZI on (or about) 2 October 2020. Interest, as per s. 57 of the IC Act ought to be payable, from 2 December 2020 being the date that the ‘work in progress’ quote was sent to BZI, then allowing two (2) months for them to interrogate same and action. 7.41.3 Or, in the alternative, should our claim pursuant to 8.36.2 above be unsuccessful, payment, based on the ‘without prejudice’ settlement offer ($10,000.00) sent to BZI on (or about) 8 December 2021, with interest as per s.57 of the IC Act payable from 6 January 2022, being the date that BZI rejected same. 7.41.4 Or, in the alternative, should our claim pursuant to 8.36.3 above be unsuccessful, payment, based on the policy prescribed limit of $5,500.00 (including GST), with interest (s. 57 IC Act) payable from 11 June 2020 being the date that BZI was informed that the Mr Jorgensen’s fees to that date had already exceeded $5,000.00, then six (6) weeks for BZI to investigate the legitimacy of same and make payment. SCOPE OF WORKS 8.0 Inadequacies (Alleged) in Mr Morse’s Scope of Works 8.1 It was not just the Insured that had concerns regarding the various scopes of work, but also Mr Molnar, who emphasised the shortcomings of the previous scopes, being from Mr Black & Mr Fleming. It is the Insured’s understanding that the former is ‘only’ an engineer and the latter has the qualifications of CE (Civil), Dip CE, DB-U DB-U- We acknowledge the comments of Mr Boshier in their email to the Insured and Mr Jorgensen on (or about) 14 October 2020 that owing to “a clear lack of consistency as to what works [were] required to reinstate the Property to its pre-loss condition” they “held conversation [sic] with a third expert, [Mr Morse]”. In this email, the Insured & Mr Jorgensen were provided with a “provisional scope of works” that was prepared “from the information that [BZI had] provided [Mr Morse] at [that] stage” with the caveat from Mr Boshier that “for [Mr Morse] to be able to provide a final scope of works, he, or one of his specialists under his direction will be required to attend [the Property] to confirm a number of items.” 8.3 Mr Boshier further articulated that “[the draft scope of works] is allowing more works than that what was allowed for by the engineer (namely the removal and replacement of roof tiles, brick work and the bath), as well as some items that are not necessary that your consultant has allowed (namely the removal and replacement of the frame and subfloor).” 8.4 We acknowledge that BZI was motivated to engage Mr Morse, as a result of concerns the Insured had expressed regarding the second (not first (Mr Black’s)) scope of works (from Mr Fleming) that BZI had obtained. 8.5 On (or about) 6 November 2020, Mr Jorgensen emailed BZI, detailing several alleged deficiencies in Mr Morse’s draft Scope of Works. This was in part based on Mr Molnar’s review of the draft Scope of Works. Annexed and marked ‘PC-42’ is a true and correct copy of this email, including Mr Molnar’s report. 8.6 Subsequently, on (or about) 6 December 2020, Mr Jorgensen emailed BZI reiterating (among other things) that “we continue to be in disagreement regarding the extent of damage to the property, how the Policy reinstates that damage [and the scope of works] and therefore the manner in which [BZI] is able to progress the claim.”. Annexed and marked ‘PC-43’ is a true and correct copy of this email 8.7 The engagement of Mr Morse reflects that, on balance, BZI considered that the reports from Mr Fleming and Mr Black were unsatisfactory in their respective right, perhaps as a result of feedback from the Insured, Mr Jorgensen and Mr Molnar regarding each report. This portrayed to the Insured that BZI was wavering in their confidence as to the thoroughness of Mr Fleming’s & Mr Black’s reports. 8.8 BZI assert that “[Mr Morse’s] scope of works should be favoured in circumstances where it has taken into account competing scopes of works from other experts, strikes a middle ground between them and has the benefit of being informed by a recent inspection of the Insured Property.” 48 8.9 BZI knew, following the email exchange between Mr Morse’s and BZI, that the scope of works was a draft and not to be relied upon.49 Notwithstanding this, it was used as the basis for BZI’s unsolicited cash settlement offer, being the First FSO. 8.10 The Insured asserts that BZI has erred in suggesting that Mr Morse’s scope of works ought to be accepted because it “strikes a middle ground between [reports]”50 as there is no basis in law for that proposition. Ultimately, just because a party to an insurance policy may obtain differing values that may not adequately deal with the damage is wholly irrelevant. Succinctly phrased, “the damage is the damage” and any damage covered by the Wording is compensable. A ”middle ground” report is impermissible. ISSUES REGARDING REPAIRS 9.0 Ramifications for Selling the Property 9.1 Insurance policies do not operate in a vacuum. Insurance claims, (particularly those such as the Fire) can have a hefty impact on property’s value. 9.2 A significant factor, albeit not the only one to consider when determining the appropriateness of encapsulation in the circumstances (weighing the prolific nature of the Fire) is the significant ramifications of incomplete, unsuitable or temporary repairs. 9.3 Specifically, the Sale of Land Act 1962 (Vic.) (‘SOL Act’) places various legal obligations on a homeowner should they wish to sell their property in the future. 9.4 It is undisputed that the remediation works as detailed in the Scope of Works will (notwithstanding the omissions) require a building permit. 9.5 Section 32E of the SOL Act requires a homeowner to disclose all building permits obtained within the seven (7) years prior. In accordance with the SOL Act, the reason for the permit needs to be communicated with any purchaser (i.e. a significant fire resulting in rectification works to the entire structure). This is perhaps unavoidable. 9.6 At all times, the Insured has stated that the Fire was significant & substantial. 9.7 Under section 12D of the SOL Act, it is an offence to knowingly conceal a material fact or, make a statement that is misleading or deceptive. This includes not posting misleading advertisements about the property’s condition or past incidents. If the Insured breaches this provision, the Insured is potentially liable for (up to) 120 penalty units or jail. In other words, if the Insured wishes to sell the house, the Insured will be legally obliged to disclose the Fire, including the fact that debris has been left in situ, which requires ongoing work by the new owner. 9.8 Further, any such disclosure will plainly diminish the value of the Property. 9.9 The Wording (page 61) provides two (2) general exclusions that are of potential importance in the circumstances: 9.9.1 any additional, indirect or consequential costs that are incurred unless covered under the ‘Additional benefits’ or ‘Additional covers’ sections of this policy; and 9.9.2 compensation for non-financial loss, distress, inconvenience, except if covered under the section what you are covered for – legal liability. 9.10 Parenthetically, to pre-empt BZI’s assertion that any diminution of asset value is “a consequential loss” so excluded by the Wording: 9.10.1 the reduction, if realised, would be directly attributable to inferior repairs – not consequent to the Fire. 9.10.2 The phrase incurred is not defined in the Wording. Reference to the ordinary meaning ought to be engaged, which is “to become liable or subject to through one’s own action; bring upon oneself [emphasis added]”. 9.10.3 The term “incurred” was also the subject of judicial determination by Justices Hill, Sackville and Hely in Commissioner of Taxation v Mercantile Mutual Insurance (Workers' Compensation) Ltd51 where (at 43) it was stated (emphasis added): It was pointed out in James Flood at 506 that it was not a necessary precondition to a deduction that the taxpayer have an immediate obligation enforceable at law whether payable presently or at a future time. That comment must, as the High Court in Coles Myer observed, be read against the question which fell for decision in that case; see at 661-2. It is, however, necessary that a liability must be “presently existing” before, in the relevant sense, it is incurred. (Subject to Coles Myer, discussed later, the discussion of the meaning of “incurred” in Ogilvy & Mather Pty Ltd v Commissioner of Taxation (1990) 95 ALR 663 in my view correctly summarises the principles which have been adopted in determining when a loss or outgoing is incurred.) 9.10.4 Otherwise phrased, the ‘loss’ must be ‘experienced’ prior to it being incurred. 9.10.5 As far as any future sale of the Property, any such diminution of value would not be incurred until such time that the asset was disposed. Moreover, it would not be through the Insured’s own action, but, instead, BZI undertaking incomplete repairs. 9.10.6 It is imperceptible to contemplate a scenario, whereby BZI unilaterally imposing a resolution upon us, which we have actually rejected for a variety of reasons, is categorised as being “through [the Insured’s] own action”. 9.10.7 Therefore, appropriately, this is plainly not a consequential loss within the terminology of the exclusion in the Wording. Accordingly, on that basis, the exclusion cannot be said to apply. 9.11 Ultimately, disclosure of matters forming the subject of this Claim submission would need to be disclosed to a prospective purchaser, as a compendium to the contract of sale of land, prior to said purchaser signing a contract. Failing to do would likely breach the SOL Act. 9.12 Notably, before the Fire, as averred by the Council, there was no adverse matter that the Insured needed to disclose. 9.13 All rooms of the Property have been affected by the Fire. Understandably, any prospective purchaser would likely pay particular attention to any asbestos, mould or debris left in situ after the Fire. 10.0 Costs to Ramifications for Selling the Property (should encapsulation occur) 10.1 As far as accurately quantifying the removal of debris, the Insured concedes that both BZI & the Insured are operating with imperfect information because no one knows precisely how much damage (ash, soot, mould) is present. However, given the prolific nature of damage occasioned by the Fire, as is always the way in matters such as this, there is the very real prospect of latent conditions. 10.2 We have procured quotes from various builders, who suggest that given the vagaries of the remediation required and, as a result, the quotes provided by BZI’s builder, it is ‘essential’ to include a provision for contingencies should BZI opt to proceed with finalising this Claim by issuing a cash settlement. 11.0 Sanding of the floorboards 11.1 The Property comprises of three (3) bedrooms. Two (2) were covered in carpet (being both bedrooms at the South end of the house). The office, hallway & kitchen had exposed hardwood floorboards. 11.2 The seat of the Fire was declared as being in the master bedroom, however, according to the factual investigator, there were multiple seats of the Fire, so it is highly probable that, as a result, extensive damage occurred elsewhere in the house, such as at the North end of the house.52 11.3 As a consequence of the Fire, as evidenced in the various photos, the carpet in the master bedroom was scorched with some carpet effectively melting into the floorboards. Annexed and marked ‘PC-44’ is a true and correct copy of this some of the photos, as uploaded into BZI’s claim portal. 11.4 The carpet in the Insured’s daughter’s room (bedroom 2) was ‘unaffected’ (in relative terms). 11.5 According to the Scope of Works from Mr Morse, the dimensions of the Property’s rooms (subject to carpet and floorboard damage) are: 3.42.1 Bedroom 1 (Master Bedroom): approx., 3.620m x 4.120m – 14.91m2 3.42.2 Bedroom 2 (Daughter’s Room): approx. 4.000m x 2.730m – 10.92m2 3.42.3 Bedroom 3 (Study): approx. 3.620m x 3.200m – 11.58m2 3.42.4 Hallway - approx. 2.620m x 1.355m – 3.55m2 & 0.960m x 1.880m – 1.80m2 3.42.5 Lounge Room - 3.450m x 4.740m – 16.35m2 3.42.6 Kitchen & Dining Room - 5.430m x 2.940m – 15.96m2 11.6 The composite area for those rooms with floorboards is (approximately) 75.07m2. 11.7 According to the unbiased experts engaged at the Insured’s request (all of whom attended at the Situation) to inspect the carpet, they relevantly advised: 11.7.1 Mr Molnar: 11.7.1.1 Protection is not required to be installed to all flooring areas as tongue and groove flooring will be required to be removed to accommodate for board replacement where boards are cupped due to effects of water deluge from fire-fighting efforts and where cleaning of boards from the effects of soot and ash water flushed into tongue and groove joints is required. 11.7.1.2 Decontamination and cleaning of all hardwood timber work to ensure all mould affected materials are removed. “Bleed sealing” is not an accepted form of rectification if the materials are identified as “damaged” by the event. 11.7.1.3 #2 Subfloor support is constructed from concrete stumps not brick piers as nominated in the report. 11.7.1.4 It should be noted that there is insufficient room between the finished ground level and the underside of the suspended timber flooring system and hardwood tongue and groove floorboards to accommodate access for cleaning. Removal of the timber tongue and groove flooring will be required. 11.7.1.5 #1 As there is insufficient room between the finished ground level and the underside of the suspended timber flooring system to accommodate access for cleaning (see Subfloor #1 & 3) removal of the tongue and groove floorboards will be required therefore protection works are not required. 11.7.1.6 • #2 Sanding of damaged or cupped floorboards due to the event, is not in accordance with the policy with replacement of affected materials required. 11.7.1.7 Peninsula Flooring: “if the concern is to remove all smoke, ash & soot from the surface of the floorboards and, within the gaps of the boards, then the ‘only’ option is to remove & replace these boards in their entirety (particularly in the kitchen / loungeroom & the master bedroom)” 11.7.1.8 Disaster Restorations Australia: “[t]he timber floor will need to be replaced due to being unrestorable” 11.7.1.9 Superior Commercial Constructions: “We don't believe the floor is savalgable and have allowed to replace it.” 11.7.1.10 Constructavision: “Hard wood flooring has soot deeply embedded into the grain of the timber. It would be impossible to remove this debris or sand the surface efficiently to safe thickness. Mould remediation into the tight confines of the sub floor without floor removal will be unsafe and nearly impossible for any tradesperson. Floor will need to be removed and replaced safely and bracing of timber frame designed by certified engineer.” 11.8 Of note, the Wording states (how we settle your claim – buildings: page 12) that (original emphasis removed / emphasis added): We will try to match any material used to repair if your buildings with the original materials, however if we are unable to do so we will use the nearest equivalent available to the original materials. However, in situations where: it is impossible to acquire new material to replace the damaged material that reasonably matches the undamaged portion to a similar extent as immediately prior to the loss or damage occurring; and the amount of damaged material that cannot be matched to the undamaged material is more than 40% of the total material that would have been replaced if all the matching damaged and undamaged material was replaced. then we will replace both the damaged and undamaged material. 11.9 It is apparent then that even if the entirety of the floor may not necessitate replacement, should more than 40% of the floorboards (in the aggregate) require replacement, then this clause ought to be invoked, to replace the floor in its entirety. 11.10 In order to invoke this clause, it need only be demonstrated that 30.03m2 (i.e. 40.01% of 75.07m2) of the floorboards are damaged, requiring replacement. It is suggested that, based on the extent of damage, this threshold is attained through (any combination of): 11.10.1 Bedroom 1 (Master Bedroom): 14.91m2; 11.10.2 Hallway: 5.35m2; 11.10.3 Lounge Room: 16.35m2; and 11.10.4 Kitchen & Dining Room: 15.96m2. 11.11 The composite area of floorboards at the Situation is 52.57m2. 11.12 BZI was advised by Mr Jorgensen that “it is highly likely that the floor has been sanded at least twice.”53 11.13 There is legitimate unease that the repair method proposed by BZI (sanding) will fail to return the floorboards to their pre-loss condition. 11.14 In this instance, the Wording relevantly states (page 12) that following an insured event, BZI will: pay for the cost of repair or replace with new materials without deducting an amount of wear and tear and depreciation. 11.15 Strikingly, the Wording does not contain the commonly used phrase in policy wordings of this type that asserts that “[BZI] will choose” the mode of settlement, thus differentiating the cover afforded by the Wording to that decided in Raso v NRMA Insurance Ltd T/As NRMA Home Insurance54 & Glenn William Starr v Insurance Australia Limited.55 11.16 As a result, by virtue of basic policy interpretation principles as detailed above, BZI do not have the exclusive right to dictate a settlement offer. Otherwise phrased, at one end of the spectrum, when the phrasing “[BZI] will choose” the settlement method, BZI is permitted to dictate the means of settlement – a point made clear in judicial determinations such as Raso v NRMA Insurance Ltd T/As NRMA Home Insurance56 & Glenn William Starr v Insurance Australia Limited.57 11.17 At the other end of the spectrum, it is the Insured’s sole choice. The Insured maintains that in applying the Wording in its literal sense and, by extension, the standard business-like interpretation as it pertains to this Claim, the settlement decision is the Insured’s. 11.18 For the sake of completeness, the Insured acknowledges and recognises that should the repair be commissioned by them, the Guarantee would be enlivened, and as a result, BZI are under no compulsion to provide any assurance or undertaking that the repair, as proposed, will succeed. 11.19 Noting however the finality of the unsolicited cash settlement and the inability for recourse against BZI, extra care should be taken to verify the veracity of the information upon which BZI relies to proffer such a binding settlement, accompanied with a deed of release, abdicating themselves of their obligations by virtue of the Guarantee. 11.20 Alternatively, as a minimum, it should rightly be the subject of genuine, bona fide agreement between the parties, following sincere dialogue and genuine negotiation. If the sanding is attempted and, as we suspect, it does not suitably remediate the damage to its pre-loss position, it will need to be repeated to complete the repairs. As BZI is proposing a cash settlement, together with a deed of release, they necessarily abdicate themselves of obligations under the Guarantee. 11.21 Should further sanding be attempted, and it fails, the Insured will be personally responsible for the cost of replacing the boards, thus exacerbating the problem. As a juxtaposition, if BZI engaged the builder themselves, the Guarantee would apply. That would provide assurance that the job would be redone if the integrity was affected. 11.22 The Insured acknowledges that BZI is not in a position at this point to provide an unwavering promise that the sanding effort will be entirely successful. 11.23 It is observed by the Insured that no evidence has been adduced by BZI setting out the information upon which they seek to rely, in order to assert that on the balance of probabilities, the floorboards can indeed be sanded and doing so will restore them to their pre-loss condition. 11.24 In the interest of completeness, annexed and marked ‘PC-45, PC-46 and PC-47) clearly advises, that in the expert opinion of multiple builders, the floorboards are unlikely to be remediated in the way BZI posit. These experts’ reports are arguably superior in legitimacy and probative value, as they are from consultants who attended upon the site prior to commenting on same. 11.25 Further annexed and marked ‘PC-48’ is the report from Mr Molnar who also states (following an attendance at the Property) that the floorboards are irreparable. 11.26 The arguments raised by the builders and Mr Molnar are multifactorial, including that: 11.26.1 the thickness at the tongue & groove will not ‘survive’ another sand; and 11.26.2 the soot & ash that is wedged into the floorboard’s grooves will not come out (in part due to the passage of time). 11.27 It should be noted that the builders who, at at the Insured’s request attended the Situation and subsequently quoted, were only prepared to issue their respective quote on the basis that the floorboards are replaced – not sanded, such was their conviction on the matter. 11.28 The Insured postulates that as a minimum, BZI’s unsolicited cash settlement offer should include a contingency for any latent conditions unforeseen. 11.29 Insofar as resolution: 11.29.1 In the event that the Insured’s quote be accepted in full, in favour of the BZI’s proposed builder, no further action against this item is required. 11.29.2 In the alternative, should that quote not be compensated in its entirety, then this item should be resolved by payment of the replacement of the floorboards, as per the experts reports as provided by us; or 11.29.3 in the alternative still, should it be determined that sanding of the floorboards is permitted, then a contingency sum ought to be paid, to protect against any latent conditions, including that the sanding of the floorboards, as proposed by BZI may not ultimately succeed as per the outcome consistent with previous AFCA determinations and the report from Mr Wilkins. 12.0 Cost of ‘Actual’ Reinstatement 12.1 On (or about) 9 October 2020, without prior advice, Mr Boshier retained Mr Morse as a third building consultant. 12.2 In the email exchange between Mr Boshier & Mr Morse, BZI stated “provide [him] instructions to attend site for the purpose of constructing your full scope accordingly” and conceded that any such report provided at that point would represent “something limited”. 12.3 On (or about) 12 October 2020, Mr Morse provided his preliminary report to BZI (‘Mr Morse’s preliminary report’). Mr Morse remarked that the document “[would] need to be reviewed on site and measurement checked etc.” with “the SOW adjusted [thereafter]” – to correct same. 12.4 Mr Morse’s preliminary report clearly indicated that it was a draft. Further, there were more than 400 references to “site measurement required”. 12.5 Despite there being known disagreement between the Insured and BZI insofar as Mr Morse’s preliminary report, including the inherent deficiencies and omissions therein, acknowledged by BZI themselves, it was nonetheless sent to two (2) builders for their quote and the Insured was not advised. 12.6 On (or about) 2 February 2021, the Insured received from BZI their First FSO, entirely unsolicited. 12.7 The Insured was not informed of this course of action. As there was disagreement regarding the scope and, neither BZI’s proposed builder or Skyline, nor Mr Morse had attended at the Property, we reached out to BZI. 12.8 It is posited that the quote from BZI’s proposed builder, upon which BZI based their unsolicited cash settlement offer (albeit without a site visit), that quote is both unreliable and not actionable. 12.9 Compounding the lack of credibility and problematic nature of the quote from BZI’s proposed builder and, by direct extension, BZI’s unsolicited cash settlement offer is the fact that BZI have refused to consider engaging any builder other than BZI’s proposed builder. Accordingly, there is zero opportunity for the Insured to avail themselves of the Guarantee, as detailed in the Wording. 12.10 Further, BZI and the builders (both BZI’s proposed builder and Skyline) avoided affirming that their quotes are ‘fixed price’ with no variations, despite BZI concurrently agitating to resolve by unsolicited cash settlement. 12.11 Further adding to the difficulties is the fact that Mr Boshier himself stated in his first report (dated 16 July 2020) that the Insured “wish[ing] to source one or two quotes” was “a reasonable request”. However, despite this, the First FSO was provided, with no opportunity for the Insured to procure alternative quotes. 12.12 It is apparent that in emails exchanged between Mr Boshier and BZI on (or about) 2 February 2021, the assessor queried the completeness & thoroughness of the quote from BZI’s proposed builder. 12.13 Therefore, in determining the actual sum that represents full indemnity, this Claim is sufficiently discernible from that of Glenn William Starr v Insurance Australia Limited (“Glenn Starr”).58 In Glenn Starr, there was an in-principle agreement between the parties about the extent of remediation required, with the dimensions consented to by the plaintiff (insured). The builder appointed by the respondent (insurer) attended the property, took detailed measurements (with a laser measurer) and provided a fixed price quote. Additionally, in Glenn Starr, there was confirmation that the relevant insurer would engage the builder, supervise repairs and be responsible for the lifetime guarantee, thereby ensuring that if a variation was required, such as from an oversight in quoting, a cost blowout or, indeed, simply as a result in an error in cost per square metre quoted (being one particular area of contention in that matter), the respondent would be responsible for remedying same at the insurer’s cost. 12.14 As above, it was acknowledged on multiple occasions by BZI and, their respective consultants, that a site visit was necessary to finalise the scope. Of material concern is also the fact that a deed of release accompanied this final offer, thereby possibly ruling out recourse against BZI. 12.15 Subsequently, following a strong urging from the Insured, Mr Morse attended at the Situation on 12 February 2021 (i.e. after the First FSO), in obvious recognition that they had erred in their handling of this Claim to that point. 12.16 Although there are still several noticeable omissions (such as the heated sub-floor system in the bathroom and the carport, as was noted in Mr Black’s report), it is acknowledged that a few positive changes were made to the Scope of Works following his visit hence it was a precipitous step. 12.17 Despite the Insured’s reservations and clear protestations, BZI still persisted with arranging for builders to quote, sight unseen, then provide an unsolicited cash settlement on that basis. Resultantly, the Second FSO was received on (or about) 16 March 2021 – again, subject to a deed of release which, if executed in its current form, would preclude recourse to BZI. Annexed and marked ‘PC-49’ is a true and correct copy of this Final FSO. 12.18 As BZI is seeking to remedy the claim by an unsolicited cash settlement, despite there being a known disagreement concerning the Final Scope of Works renders this Claim discernible to Glenn Starr. 12.19 As far as this Claim is concerned, BZI has not obtained any quotes to determine how much it would cost to proceed with removal of debris rather than encapsulation. Therefore, they are unable to substantiate their proposition that it is a binary position of either encapsulate or, if the debris is to be removed, to demolish the building in its entirety & rebuild. 12.20 In this respect, the Insured has never asserted that the basis of settlement is an ‘agreed value’ basis. However, the question of ‘true’ indemnity does need to be ascertained. 12.21 There continues to be overt discord as to the thoroughness of the Final Scope of Works, together with discomfort around BZI’s proposed builder’s quote as they haven’t attended at the Situation, plus, due to the obvious haste with which they completed their revised quote, based on the materially updated Scope of Works. 12.22 At (approximately) 10:48 a.m. on (or about) 2 March 2021, Mr Morse’s final Scope of Works was emailed to Mr Boshier. 12.23 Annexed and marked ‘PC-50’ is the email from Mr Boshier to BZI’s proposed builder at (approximately) 10:51 a.m. on (or about) 2 March 2021. There was no text in the body of that email. Appended to this email were five (5) documents. These were: 12.23.1 1st Amended -Scope of Works- Fire- Phillip Carr- 11 Pecan Court Frankston North 12.23.2 Victoria 3200.pdf; 12.23.3 NEW SUMMARY.pdf;- Pecan Court Frankston North.pdf; and-EHE2NIA-preview.pdf 12.24 The quote request to Skyline was sent by Mr Boshier at (approximately) 9:09 a.m. on (or about) 3 March 2021. There was minimal text in the body of the email. Appended to this email were seven (7) documents. There were: 12.24.1 1st Amended -Scope of Works- Fire- Phillip Carr- 11 Pecan Court Frankston North; 12.24.2 Victoria 3200.pdf; 12.24.3 NEW SUMMARY.pdf;- Pecan Court Frankston North.pdf;-EHE2NIA-preview.pdf; 12.24.6 AIMIS_28392_Rev_A_Quote_Carr_Frankston.pdf; (the cover letter relating to the quote from BZI’s proposed builder); and 12.24.7 quotation_Estimate_.pdf (this was the quote from BZI’s proposed builder). 12.25 According to the metadata, it appears that the quote from Skyline was completed at (approximately) 2:15 p.m. on (or about) 3 March- It is the Insured’s firm contention that it is implausible in the extreme for either Skyline or BZI’s proposed builder to have scrutinised the revised Scope and thoroughly amended their quote in the fleeting period that they did. 12.27 Noting that the quote from BZI’s proposed builder was provided to Skyline, it was not a blind tender process. 12.28 The omissions are abundantly clear when looking at the report from Mr Wilkins who, at the Insured’s request, undertook a proactive desktop analysis – a comparison of the Final Scope of Works against BZI’s proposed builder’s quote – to document what is particularised in the former, but not included in the latter provided by Mr Morse. 12.29 There are evidently several omissions in BZI’s proposed builder’s quote, as per Mr Wilkin’s report, which is annexed and marked ‘PC-51’. For the avoidance of doubt, the Insured has never asserted that BZI’s third Building Consultant is not qualified or experienced. 12.30 The Insured has not suggested or implied that any report from Mr Morse’s office should be discarded. What the Insured has argued is that Mr Morse should have attended at the Property prior to submitting his report. More importantly, BZI certainly should not have relied upon what was clearly, unmistakably, a draft document, containing over four hundred (400) references to “site measurement required” with volumes of red text, to then provide a final cash settlement. 12.31 On (or about) 2 March 2021, the Final Scope of Works was received by BZI. 12.32 Mr Molnar’s report avows to his requirement for impartiality and references source material, upon which he formed his conclusions. 12.33 Mr Morse’s report is silent insofar as his qualifications, his adherence to the expert code of conduct (nor does he even acknowledge that a requirement for impartiality exists) plus there is no reference to how Mr Morse formed the conclusions that he did (such as what documents he relied upon), when taken in a composite sense, reliant on the judgement of Justices Priestley, Powell & Heydon in Makita (Australia) Pty Ltd v Sprowles59 the report from Mr Morse ought to be provided lesser weight and probative value than Mr Molnar’s. 12.34 Following Mr Morse’s attendance at the Property on (or about) 12 February 2021, several changes were made to Mr Morse’s draft Scope of Works (upon which BZI relieved to provide their First FSO). These changes are reflected in Mr Morse’s final Scope of Works (‘the Final Scope of Works’). 12.35 At the time of issuing those quotes, no representative from either BZI’s proposed builder or Skyline had attended upon the Situation to familiarise themselves with the extent of damage and the presence of any latent conditions that could affect their quote. 12.36 BZI’s proposed builder increased by $2,700 (plus GST) their quote, despite several changes between the draft scope upon which the First FSO was based to the Final Scope of Works. 12.37 In order to ensure the accuracy and impartiality of the review, noting the finality of the matter should the claim be resolved by the proposed unsolicited cash settlement, the Insured engaged Mr Wilkins. Mr Wilkins was requested to undertake a desktop assessment, to report on the finalised quote from BZI’s proposed builder against the Final Scope of Works to particularise items in the latter as needed remediation (or replacement), but not included in the former. 12.38 On (or about) 12 April 2021, Mr Wilkins provided his report. A number of omissions were identified. Annexed and marked ‘PC-56’ is a true and correct copy of that report. 12.39 To provide confidence regarding the Second FSO, mindful of the consequences should the claim be determined by a cash settlement offer (particularly one with a deed of release), a few builders attended at the Property at the Insured’s request. They were asked to quote principally based on the Final Scope of Works and (to the extent possible) to make an allowance for some known omissions, such as the underfloor heating system in the bathroom; the solar panels (and inverter) and the carport (which was noted in Mr Black’s report). Their quotes are annexed and marked ‘PC-45’, ‘PC-46’ and ‘PC-47’. 12.40 Additionally, the Insured asserts that BZI was too eager, without any justification, to discard the feedback of Mr Molnar, who is incontrovertibly eminently qualified and experienced and, as clearly stated in his report, impartial. 12.41 It is the Insured’s humble proposition that the question reverts to the policy construction, as that determines which scope of works version yields the more dependable result. – BZI’s third Building Consultant’s second scope in isolation or, that document, supplemented by the scope provided by Mr Molnar. The Insured believes the latter, particularly as Mr Molnar’s report was steadfast and resolute in the works needed to remediate the Property to its pre-loss condition. 12.42 This applies to all versions for the Scope that he was required to review, in response to BZI’s wavering iterations, expressly noting that the Insured’s Building Consultant, Mr Molnar did attend at the Situation, with his Scope of Works compiled accordingly. 12.43 Any settlement offer must ultimately be fair and reasonable and not based on the cheapest quote (particularly considering the trade discounts available to insurers, giving them reduced rates) – a situation even more enlivened when a cash settlement is on offer. Ultimately, any settlement needs to be premised on the real cost of repairs to the Insured. 12.44 To confirm BZI’s proposed builder’s initial quote, based on the draft scope, the Insured sought to engage BZI’s proposed builder, to confirm the minutiae of their quote. BZI’s proposed builder refused to answer the Insured’s questions. Instead, they advised that any information needed to come from Mr Boshier. In this respect, an email annexed and marked ‘PC-48’ was sent to Mr Boshier, requesting that BZI’s proposed builder respond on their own letterhead to a few queries. A response was received, however, according to the incontrovertible metadata, this document was compiled by BZI’s Claim Manager – not BZI’s proposed builder. It is asserted therefore that BZI had the opportunity to adduce the evidence from BZI’s proposed builder, however, they did not and, have failed to provide an explanation for failing to do so. Accordingly, as advised would occur in my email to Mr Boshier, an adverse inference ought to be drawn, consistent with the rule established in Jones v Dunkel.60 12.45 Upon receipt of the First FSO, on (or about) 2 February 2020, the Insured called BZI’s proposed builder). One of the things that the Insured sought clarification about whether encapsulation was included in the quote and, if so, to what extent. 12.46 After that conversation, Mr Boshier emailed BZI advising that “[encapsulation] actually isn’t in his scope when I look at it again” however, in an email that ensued, Mr Boshier assured BZI that the costs for such encapsulation were negligible. 12.47 BZI has iterated that the quotes provided by the three (3) builders (who attended site) on the Insured’s behalf should be given equal weight to their own, since according to BZI “[the Insured’s submission] fail[s] to take into account discounts and other margins that would otherwise be readily available if rectification works were performed via the retainer of a builder who is regularly engaged by insurers”.61 12.48 It is submitted that whether BZI can or cannot retain a builder at a discounted rate is, in the circumstances of this Claim, irrelevant. In the context of an unsolicited cash settlement offer, whether BZI can get it cheaper is not a factor in the contract. What is of relevance is the market value of the loss – the quantum BZI ultimately needs to pay to have the necessary works done. 12.49 Both the Insured and Mr Jorgensen have been trying to come to an agreement about the extent of cover under the Wording, which has been made problematic because of the requests having been ignored on more than one occasion. Further, obtaining quotes for reinstatement before an agreed scope of works was significantly premature and counterproductive. Ultimately, the quote from BZI’s proposed builder is indigent and not actionable due to (inter alia): 12.49.1 the discount that may be available to BZI by virtue of a commercial agreement between themselves and BZI’s proposed builder is not something that the Insured is privy to. It is irrelevant, since the contract requires that the Insured be placed into their pre-loss position and (particularly in the instance of an unsolicited cash settlement offer) doesn’t permit discounting due to ‘trade discounts’ or the like. 12.49.2 The Final Scope of Works, upon which the quotes from BZI’s proposed builder is based and, in turn, the unsolicited cash settlement offer: 12.49.2.1 States in the preamble (page 3) that (emphasis added): The following is a schedule of works required for the repair(s) at the property noted above as the insured address. This document is a general overview of the reinstatement requirements, constituting a scope of works and is not to be considered an all-inclusive schedule; and In the event of unspecified damage being identified or a need arising for the method of construction to be altered, at any time during the duration of the works, the principal contractor will advise and seek the instruction of [BZI] / [the] loss adjuster prior to work commencing or continuing. 12.49.2.2 Under ‘site set out, measurements and Services & Materials’ (on page 5), it is stated (emphasis added): Where building materials and/or products are to be replaced, they are to be equivalent in every respect to the original, unless otherwise specified. All measurements are to be confirmed prior to any demolition commencing and all services are to be identified prior to any works commencing. Measurements are to remain as near as practical to that of the existing. 12.49.2.3 There are three hundred & eighty-seven (387) references to “site measure required.” 12.49.3 at all material times, the Insured proceeded with reasonable dispatch, noting too that BZI has waived the clause that necessitates reinstatement within six (6) months of the Date of Loss, reinstatement is the market value – the loss to me, as the assured. Annexed and marked ‘PC-49’ is a true and correct copy of BZI’s email confirming same. 12.49.4 the Insured on (or about) 8 February 2021 emailed BZI, requesting for BZI’s proposed builder to clarify details insofar as their quote, upon which the unsolicited cash settlement was based. Annexed and marked ‘PC-50’ is a true and correct copy of this email. This was followed up again by the Insured on (or about) 1 March 2021. Annexed and marked ‘PC-51’ is a true and correct copy of this email. No response was received from BZI’s proposed builder. 12.49.5 on (or about) 10 February 2021, the Insured requested from BZI, confirmation that BZI’s proposed builder had been provided a copy of the report & Scope of Works from BZI’s appointed hygienist. Annexed and marked ‘PC-52’ is a true and correct copy of this email. This was followed up again by the Insured on (or about) 12 February 2021 and again 1 March 2021. Annexed and marked ‘PC-53’ & ‘PC-54’ respectively, is a true and correct copy of this email. No response was provided on this matter. 12.49.6 on (or about) 12 February 2021, the Insured emailed BZI, particularising a number of questions that the Insured sought to be resolved, following Mr Morse’s attendance at the Property on the same date. 12.49.7 with respect to retail insurance policies (particularly of this kind), there is no allowance for betterment; 12.49.8 BZI’s proposed builder has refused to clarify various details insofar as their quote. Annexed and marked ‘PC-55’ is a true and correct copy of this email, containing the request. Absent a response from the builder, the cash settlement, upon which it is based is rendered altogether uncertain and the quote, not actionable. 12.49.9 BZI’s proposed builder has not provided, despite the Insured’s specific request, a copy of the fixed price contract. Annexed and marked ‘PC-56’ is a true and correct copy of this email. 12.49.10 there is nil ($0) contingency sum included in BZI’s proposed builder’s quote for latent conditions. 12.49.11 BZI’s proposed builder (for understandable reasons) state that any item not particularised in their quote will not be included in the reinstatement. However, they are silent as to whether it specifically includes or excludes the Final Scope of Works upon which it is supposedly based. Noting the finality of settlement via cash settlement, with the deed of release, one must err on the side of hesitancy, caution & prudence. 12.49.12 there being several omissions in the quote, when compared against the scope of works which was purported relied upon;62 and 12.50 justice McDougall stated, in Mushroom Composters v Robertson (No. 2)63 at 21: As Justice Sackar observed in Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd 64 at [390]: the process of estimating damages, where future or hypothetical events are concerned, has been described by many epithets: imprecise, indeterminate, speculative, based on slender materials, or on thin evidence, involving guess work, and prophesy or judicial guesses. 12.51 Noting this ‘imperfect science’, it was declared by his Honour Garde in Webb v Spectre Group Pty Ltd (in liquidation)65 that (at 24): The New South Wales Court of Appeal decision of Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd,[16] was a case where the repair work had been carried out by the time of the trial. Despite this, the trial judge assessed the cost of the repair by reference to a quotation rather than the actual cost of repair. And (at 25): Meagher JA held that the trial judge had erred in law stating: It seems almost too simplistic to point out that the actual cost was an impeccable method of calculating cost. Continued (at 26): Giles JA, with whom Sheller JA agreed, also held that the trial judge was in error. His Honour said that the cases did not support the award of damages based on the theoretical cost when the actual cost was known, as the actual cost was powerful evidence of rectification costs. Where the rectification work had been carried out and the actual cost is known, the actual cost provides sound evidence of the reasonable cost and should ordinarily provide the basis for damages. And (at 27): Hyder Consulting has subsequently been applied or followed in cases in the Federal Court of Australia, the Supreme Courts of New South Wales and Tasmania, and by the Tribunal itself. 12.52 To the question of actual quantum, it is agreed that BZI’s IDR Response (page 2) states that if "[BZI] determine[s] that the cost of repairing or replacing [[the Insured’s] the Insured’s] buildings exceeds the buildings sum insured shown on [the Insured’s] policy schedule [thus invoking the sum insured safety net]” then BZI will “pay [the Insured] the amount it would have cost [BZI] to repair or replace [the Insured’s] buildings”. However: 12.52.1 according to BZI’s First FSO offer (when correctly calculated), the sum insured safety net is not required: 12.52.1.1 the sum insured on the schedule is $390,000.00; 12.52.1.2 as per the Wording (see: ‘about your sum insured’ on page 10), GST ought to be added, giving a result of $429,000.00 before the sum insured safety net clause needs to be invoked. 12.52.1.3 subtracting two additional benefits (as they are additional benefits (see page 32 & 33 respectively) – i.e. the removal of debris & permit fees (noting that there are likely others) and reduces the ‘net’ reinstatement cost to $416,698.78 – $376,394.35 after deducting GST - i.e. less than the available sum insured before invoking the ‘sum insured safety net’ clause. This is calculated as follows (all sums are exclusive of GST, except where indicated):- Quote (including GST):$ 443,- Less Removal of Debris (Demolition)$ 17,- Less permit fees$ 9,- Less GST$ 40,- It is nonsensical to permit this clause to be put into effect, owing to a ‘mistake of fact’ (i.e. wrongful calculations). Indeed, as far as the proposition that BZI is seeking to take advantage of their wrongful calculation, there is a general presumption that, in the absence of clearly expressed provisions in a contract, a party in default under a contract cannot take advantage of their own wrong: New Zealand Shipping Co v Societe des Ateliers et Chantiers de France [1918-19] All ER Rep 552; Alghussein Establishment v Eton College [1991] 1 All ER- Further, as stated previously. there is not the unilateral option for BZI to choose, thus distinguishing it from Glenn William Starr v Insurance Australia Limited66 & Raso v NRMA Insurance- the clear, unambiguous threshold for BZI to reduce the settlement offer to the “amount it would have cost BZI to repair or replace [the Property]” is that “[BZI must firstly] determine that cost of repairing or replacing [the Situation] exceeds the buildings sum insured shown on [the Insured’s] policy schedule (original emphasis removed / emphasis added)” 12.52.5 The circumstances are such that it is counterfactual for BZI to discount their settlement offer, when, due to their own quote, save for a miscalculation of those figures, the unsolicited cash settlement offer doesn’t invoke the sum insured safety net guarantee. 12.52.6 It is not controversial that section 57 of the IC Act permits interest to be paid to an insured, effective from a date if was “unreasonable” for BZI to have withheld payment. 12.52.7 There is no text in the buildings section of the Wording that precludes BZI from choosing the method of resolution, however, in any event, BZI ought “indemnify the [Insured] against the loss actually sustained by them in consequence of the fire”68 - i.e. as per the builders’ quotes who attended at the situation, and whom have an actionable quote. 12.53 With respect to the application of interest awarded, the question of when it is deemed unreasonable to have withheld payment is determined by reference to the true position in the proceeding as determined by the Court. That exercise is to be determined objectively, and as a question of fact hinging on the specific circumstances. BZI’s actions internally by way of investigating this claim, and what views BZI held as this Claim’s merits (in good faith or otherwise) are irrelevant to that consideration.69 12.54 In Mutual Community General Insurance Pty Ltd v Sargis Khatchmanian,70 the Victorian Court of Appeal observed that an insurer’s bona fides in withholding payment are not relevant. In that instance, the insurer suspected arson but failed to adequately investigate. The Court of Appeal allowed three months from the date of the fire for time to investigate, rather than the six months that the trial judge had allowed. The trial judge had acknowledged that “factual decisions as to what was reasonable in other cases were of limited assistance”. See also Mattress Innovations Pty Ltd v MIB Insurance Brokers Pty Ltd71 (obiter) 12.55 In Camellia Properties Pty Ltd v Wesfarmers General Insurance Limited,72 the court rejected the insurer’s argument that it was reasonable for it to rely on its expert when disputing reinstatement costs (after the insured property was damaged by fire). The court awarded interest from the date of the insurer’s initial offer of reinstatement costs, declaring that the insurer must have had by then fully investigated the claim, despite it having obtained incorrect expert advice. 12.56 Reliant on the above, to resolve the matter, the Insured respectfully submits that: 12.56.1 BZI should remit as per the actual sum that it will cost – i.e. as per the quote from XXXX considering this represents the market value. Consistent with Camellia Properties, interest ought to be payable from 9 June 2020, being the date that they objectively were able to have all relevant material to quantify the loss; 12.56.2 Or, in the alternative, should 13.52.1 be unsuccessful, then XXXX. ANCILLARY FEES & EXPENSES 13.0 Ancillary Fees & Expenses: Solar Report 13.1 At the Situation, the solar panels on the roof are located immediately above the seat of the Fire. 13.2 The inverter is located on the (East) wall where the Fire is said to have ignited. 13.3 When dealing with similar claims in the past, it was brought to the Insured’s attention that when the CFA attends at a property to extinguish a fire, they isolate the power at the mains. However, on occasion, power generated from solar panels, is not necessarily isolated, thus leaving a live current. Hence, there was immediate concern that there might be an issue with the safety, integrity, and general efficacy of these items. 13.4 The Insured arranged for a technician from the Solar Doctors (‘the Solar Technician’) to attend at the Property shortly after the Date of Loss to assess the solar system to ameliorate risk. 13.5 On (or about) 28 February 2020, the Solar Technician attended at the Situation. 13.6 The Solar Technician’s attendance was a ‘make-safe’ – i.e. as described in the General Terms & Conditions within the Wording (page 58), under Precautions (emphasis added): [the Insured] must take all reasonable care to prevent or minimise loss, damage, injury, illness or liability, including [the Insured’s] compliance with any law, by-law, ordinance or regulation that concerns the safety of persons or property 13.7 Further, the Wording unambiguously states (page 11) that: [as soon as the Insured is] aware of any circumstances that are likely to result in a claim that would be covered under this policy, [the Insured] must… take any reasonable steps to reduce the damage and avoid any further loss [emphasis added]. 13.8 As held in Burns v MAN Automotive (Aust) Pty Ltd73: It is trite to say that damages cannot be recovered for any aspect for a loss that could have been prevented by reasonable mitigating action on the part of the injured party. On a proper analysis the loss in such a scenario is not caused by the breach, but by the failure to mitigate. [BZI] bears the onus of establishing the failure to mitigate. The extent of the obligation to mitigate however is limited. It requires the injured party to take reasonable measures that will prevent or diminish the loss. There is no need for the injured party to resort to measures that are costly, complex or extravagant. 13.9 There can be no dispute that insofar as this Claim, attendance by the Solar Technician and the provision of their subsequent report was not costly, complex, nor extravagant. It is mischievous and asinine to insinuate otherwise, as BZI have done. Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd74 per Justice Hayne: if in the course of a reasonable attempt on the party of the Plaintiff to mitigate loss, the total loss or damage is in fact increased, the Plaintiff still remains entitled to damages, including the increased amount. 13.10 It is true that in this instance, no further loss occurred in connection with the failure to isolate the solar panels. There is however no way to know what would have occurred, had the make-safe works not been done in the percipient manner it was. Such assessment is speculation at best. The Insured operated at all times to mitigate any loss, which was the Insured’s modus operandi. 13.11 The requirement for an insured to mitigate their loss is well established and with good reason. It is uncontroversial to state that BZI must behave in a manner comparable to them not having insurance in the first instance – i.e. as a prudent uninsured. 13.12 Should an insurer refuse to reimburse an insured for attending to sensible & reasonable make-safe works that are (in relative terms) inexpensive, this will be counterproductive and a disincentive for the insured to act with such risk aversion in the future, not to mention grossly unfair. This means the Insured would be in breach of the Wording and, perversely, could prejudice this Claim by not attending to “reasonable steps to reduce the damage and avoid any further loss”. It will be a slippery slope, as insurer’s will then seek to decline cover for tarpaulins, emergency / security fencing, plumbers disconnecting the water supply, or even an electrician to confirm an electrical system is not compromised. This includes organising any make-safe works that are needed, particularly until indemnity has been granted, although, of course, the onus to be sagacious does not terminate at that time. 13.13 Furthermore, the attendance from the Solar Technician served dual purposes. Firstly, to isolate the power and mitigate risk. Secondly, importantly, to report on the suitability to ‘repair & refit’ the PV system or, to replace the unit. Therefore, it follows that BZI need not (unless they choose to, at additional expense), obtain a second report from their own expert to contradict the Solar Technician’s report (noting their expertise is solar panels), not as a general electrician. 13.14 The appropriateness and reasonableness of the Insured engaging in make-safe works ought to be assessed against the knowledge of the Insured and their desire to obviate what they legitimately perceive as foreseeable future loss. 13.15 In this instance, as it pertains to this Claim, the Wording relevantly states (see page 11) that the Insured must: Take any reasonable steps to reduce the damage and avoid any further loss 13.16 It is further stated (page 11) that the insured must not (emphasis removed / emphasis added): Carry out any repairs without [BZI’s] authority, except in the case of an emergency where [the Insured is] required to prevent further loss or damage to [the Insured’s] buildings and/or contents as a result of that emergency, in which case [BZI] give [the Insured] the authority to arrange reasonable emergency repairs on [BZI’s] behalf. 13.17 These matters determine whether an obligation to truncate loss arises merely under contract (i.e. the Wording) or, also under the duty of good faith which applies to the Insured, as well as BZI. 13.18 On (or about) 17 September 2020, the invoice and report was emailed by Mr Jorgensen to BZI. Annexed and marked PC-XX is a true and correct copy of this email. 13.19 It is submitted by the Insured that in the absence of these provisions requiring the Insured to “take any reasonable steps to reduce the damage and avoid any further loss” BZI may, within reason, reduce their liability pursuant to the fee charged by the Solar Technician. 13.20 It is impermissible for an insurer to opt out of paying fees that the insured reasonably incurs to comply with their obligations under the insurance policy, particularly when that is to ameliorate risk to the underwriter. 13.21 Allowing BZI’s position to refuse payment for the Solar Technician’s report would lead to significant inequity. 13.22 It is submitted that BZI resolve this aspect of the claim by: 13.22.1 BZI remitting the full $222.00, with interest payable (s.57 of the IC Act) from 17 September 2020 being the date it was “unreasonable for [BZI] to have withheld payment”. 13.22.2 Or, in the alternative, should our claim pursuant to 14.12.1. above be unsuccessful, by remitting a payment of $- with interest applying, pursuant to s. 57 of the IC Act, from 6 January 2022, being the date that BZI ought to have been in a position to remit, being in possession of all material information (the date of BZI’s IDR Response). 14.0 Ancillary Fees & Expenses: Freedom of Information Report 14.1 On (or about) 6 March 2020, we received an initial contact from the engineer appointed by the insurer, Roland Black of Roland Black & Associates (‘Mr Black’). We arranged to meet the following Monday (9 March 2020) despite that being a public holiday. During the conversation, Mr Black asserted that he will be looking to “restore” the property, with an aim to “minimise costs for the insurer”. Mr Jorgensen was emailed by me that afternoon – to act as a contemporaneous note. 14.2 Later on (or about) 6 March 2020, I received an SMS from Mr Black both withdrawing his offer to attend on Monday, 9 March 2020 and requesting that I “dry things out as much as possible”. Later that evening, Mr Jorgensen communicated with Mr Black stating (inter alia): [the insured is unable to] employ drying equipment to prevent possible mould growth” as there is no power – i.e. “the main power supply has been isolated – we don’t have any ability to dry the structure”. On the issue of mould, during the inspection with the Claim Central Adjuster, the entire floor was saturated and no action has been taken to clear up [emphasis added] as we understand a Forensic Investigator has been appointed to inspect. I look forward to discussing this with you when you are available. 14.3 On (or about) 13 March 2020, correspondence was received from Frankston City Council (‘the Council’), being a building defect notice (‘the Notice’). 14.4 On (or about) 13 March 2020, correspondence was received from Frankston City Council (‘the Council’), being a building defect notice (‘the Notice’). 14.5 On (or about) 18 March 2020, the Notice was emailed to the insurer, asking that they attend to same as a priority. 14.6 Conscious of the significance of the Notice, and the possible significant consequences for non-compliance (up to and including a criminal conviction), on (or about) 20 March 2020, I emailed the Council confirming that the Notice had been received and noted that my communication was “pending a more formal response from the Insurer (which might overrule [my comments])”. 14.7 On (or about) 23 March 2020, via SMS, an appointment was arranged with Mr Black for him to attend at the property on Friday, 27 March- On (or about) 26 March 2020, after firstly confirming the appointment, Mr Black subsequently advised that “[he had] to change plans” as a result of his wife “[having] to go to hospital all of a sudden”. 14.9 On (or about) 27 March 2020, an email was sent by me to Mr Black, requesting that he “advise [his] availability to attend the Situation over this weekend to avoid any further delays?” This correspondence was followed up by an SMS, sent to Mr Black later that afternoon at (approximately) 4:48 p.m. enquiring about his “availability over the weekend to meet on site” citing my concerns that “[I felt] like a lockdown [due to COVID-19 was] imminent”. 14.10 On (or about) 27 March 2020, when reviewing the insurer’s portal, an email from Mr Black to the insurer was observed. That email, as extracted, relevantly reads: Hi Guy. I have been delayed in inspecting this property until next Friday 27 March. The Insured has apparently been unable to attend due to his involvement in Coronavirus matters. You may be aware, Derek Jorgensen of Claim Partners Pty Ltd has made contact and presented himself as the Insured’s representative and expects to be fully involved. Since he lives in NSW it is unlikely that he will visit the property, so I will see it with the Insured. Please be assured that I will not be providing either the Insured or Mr Jorgensen with any of my Reports and will not engage in any discussions other than the need to be courteous [emphasis added]. I will listen to what they have to say and may include [emphasis added] their observations in my Report. Happy to discuss with you at any time Regards Roland 14.11 A further email was observed on the portal, on (or about) 27 March 2020. That email, was sent internally at the insurer and relevantly extracted, reads as follows: Hi Josh, This [sic] defect notice [from the Council] appears to be a separate issue from the fire, so I don’t see a reason why the insured can't respond to the council clarifying the circumstances around the construction of the dwelling, but also advising that the dwelling is the subject of an insurance claim and requesting any works required to dwelling be postponed until our investigation is completed. 14.12 On (or about) 28 March 2020, Mr Black sent an email to me (with the insurer & Mr Jorgensen ‘cc’d). That email stated that “…various things, including the pandemic seem to have got in the way [of the inspection]” and “I now have to deal with the almost certain probability that my wife will be having brain surgery next week” 14.13 On (or about) 29 March 2020, Mr Black sent an email to me (Mr Jorgensen and the insurer were ‘cc’d). Mr Black stated: … I have now had to review my situation with respect to my family’s situation, my wife’s health and upcoming operations, my age and this infernal virus. I have decided that I will have to withdraw my “offer” to attend Phil’s property on Tuesday.  I am aware that I would probably not be seeing anyone else but I cannot be certain of that. I have no idea when I could possibly do this inspection but it looks like months away.  That’s unrealistic, so my current “offer” is that I will have to withdraw from involvement in this claim.  This means that the Insurer will need to decide whether to get someone else to take this over or whether we should wait.   14.14 On (or about) 22 May 2020, Mr Black attended at the Situation. 14.15 Following his attendance at the Property, Mr Black wrote to the local Council (‘the Council’), in response to a Building Notice that the Council had issued. 14.16 On multiple occasions, the Insured and Mr Jorgensen sought to procure a copy of Mr Back’s correspondence. These attempts include: 14.16.1 an SMS to Mr Black on (or about) 1 June 2020. Annexed and marked ‘PC-57’ is a true and correct copy of this email. 14.16.2 during the Insured’s conversation with Mr Frankenfeld on (or about) 3 June 2020. Annexed and marked PC-XX’ is a true and correct copy of the contemporaneous email sent by the Insured to BZI. 14.16.3 an email from Mr Jorgensen to BZI on (or about) 4 June 2020. Annexed and marked ‘PC-58’ is a true and correct copy of this email. 14.16.4 an email from Mr Jorgensen to BZI on (or about) 10 June 2020. Annexed and marked ‘PC-59’ is a true and correct copy of this email. 14.16.5 during a telephone conversation between the Insured and the Council on (or about) 16 June- an email from Mr Jorgensen to BZI on (or about) 17 June 2020. Annexed and marked ‘PC-60’ is a true and correct copy of this email. 14.17 The Insured did not receive a response from Mr Black or, BZI. 14.18 Despite the significance of the correspondence, including that Mr Black’s authority was required prior to permitting any other party access to the site, or risk being in breach of the Building Notice. 14.19 The Insured was mindful that the Notice stipulated plainly that no party was permitted access to the Situation until a structural engineer confirmed, in writing, the safety and integrity of the Property. 14.20 It was known that this report would talk to the structural integrity of the Property and, hence, said safety concerns, providing assurance around same. 14.21 The Insured, as Property owner, has strict liability for injuries that might occur in connection with their Property. As the property extends to use as a home office, it would invariably be classified as a workplace. It was hence deemed by the Insured that in order to comply with the Notice issued by the Council, access to the report describing structural defects (or otherwise) was important. Particularly as this was an express requirement of the Notice. The Insured regarded that a failure to insist upon Mr Black’s report, to examine same and act accordingly would be nothing short of reckless in all the circumstances. 14.22 Further, defiance, wilfully or otherwise it could have exposed BZI to a supplementary claim under the public liability section of the Wording, albeit subject to an exclusion for failing to take reasonable care. 14.23 On (or about) 22 June 2020, a submission was sent to the Council pursuant to the FOI Act. 14.24 The sum incurred by the Insured for this request under the FOI Act was $- The Insured submits that: 14.25.1 this report, should be paid in full ($29.60) by BZI with such sum subject to interest, as per s. 57 of the IC Act, from 17 September 2020, being when the request for reimbursement was emailed to BZI, by Mr Jorgensen and BZI had a reasonable opportunity to review. 14.25.2 Or, in the alternative, should our claim pursuant to 15.11.1. above be unsuccessful, by remitting a payment of $29.60 with interest applying, pursuant to s. 57 of the IC Act, from 6 January 2022, being the date BZI ought to have been in a position to remit, being in possession of all material information (the date of BZI’s IDR Response). 15.0 Ancillary Fees & Expenses: CFA Report 15.1 Once the Fire had been discharged, the CFA investigated the Property in order to determine the cause and origin. A causation report of the Fire was prepared by the CFA (‘the CFA Report’). 15.2 Noting the impartiality of the CFA report, the findings were important to understanding causation – particularly in the context of an investigation (forensic & factual) occurring at the time. 15.3 On (or about) 4 April 2020, the CFA report was applied for, including payment for same ($80.00 including GST). The report was received on (or about) 5 April 2020 and is annexed and marked ‘PC-61’. 15.4 The report was promulgated to BZI on (or about) 9 April 2020, in order to aide with their investigation and to expedite an indemnity decision for this Claim. A copy of the tax invoice from the CFA was included. 15.5 It is proposed that BZI resolve this item by: 15.5.1 reimbursing this sum in full ($80.00 including GST). Interest ought to apply in accordance with s. 57 of the IC Act, from 15 June 2020, being approximately two (2) months after BZI received the document and approximately seven (7) days after indemnity was granted – i.e. the date BZI was in possession of all material information – the date at which it is deemed, in the circumstances “unreasonable for [BZI] to have withheld payment thereafter”; 15.5.2 Or, in the alternative, should our claim pursuant to 16.5.1. above be unsuccessful, by remitting a payment of $80.00 with interest applying, pursuant to s. 57 of the IC Act, from 6 January 2022, being the date that they ought to have been in a position to remit, being in possession of all material information (the date of BZI’s IDR Response). 16.0 Ancillary Fees & Expenses: Building Connection Fee 16.1 On (or about) 22 September 2020, Mr Jorgensen emailed BZI, a request for reimbursement pertaining to “an additional invoice for costs incurred in setting up the new house” being a “cost of $300.00 for the connection of the new home to Fixed line internet” this email is annexed and marked ‘PC-63’. 16.2 This sum was requested in accordance with the “[t]emporary accommodation for home owners” cover on page 33. 16.3 This sum is unarguably a “reasonable cost” and in the ambit of “any additional living expenses that [BZI] agree are necessary and appropriate (such as mail redirection costs, utility connection costs [emphasis added)” as so clearly contemplated by the Wording. 16.4 Multiple attempts were made to recover this sum from the former rental provider (as defined in the RT Act), to no avail. 16.5 Accordingly, noting that there is express provision for a charge of this type, and, this amount has not adversely affected BZI’s liability, Accordingly, the Insured hereby proposes that BZI resolve this item by: 16.5.1 reimbursing this $300.00 fee (plus GST), with interest payable, as per s. 57 of the IC Act, from 22 November 2020, being approximately two (2) months after the invoice and request for reimbursement was emailed to BZI. 16.5.2 Or, in the alternative, should our claim pursuant to 17.5.1. above be unsuccessful, by remitting a payment of $300.00 (plus GST) with interest payable, as per s. 57 of the IC Act, from 2 February 2021 being when BZI provided their First FSO. 16.5.3 Or, in the alternative, should our claim pursuant to 17.5.2. above be unsuccessful, by remitting a payment of $300.00 (plus GST) with interest payable, as per s. 57 of the IC Act, from 6 January 2022 when they responded to the Insured’s IDR Submission. SETTLEMENT 17.0 Underpayment for Contents Settlement 17.1 The wording (page 13) relevantly states: How we settle your claim – contents When your contents are destroyed, lost or damaged during the period of insurance we will decide which of the following we will do to settle your claim: repair the contents item(s) to the condition it was in immediately before it was destroyed, lost or damaged; replace the contents item(s) with the nearest equivalent new item; or pay you the cost of the replacement or repair. As noted in the additional benefit ‘Environmental improvements’ (on page 36), if we have agreed to replace any refrigerators, washing machines, clothes dryers, or dishwashers that have been lost or damaged, we will replace them with items that have at least a 3-star energy rating regardless of whether the original item had such a rating. We will pay for the cost of replacing any damaged: carpets; wall, floor and ceiling coverings; and internal blinds and curtains but only in the room, passage or hall where your contents were destroyed, lost or damaged. 17.2 On (or about) 9 June 2020, the Insured emailed the Insurer, stating that (in the context of renting a property), they would also look to rent furniture. 17.3 On (or about) 8 July 2020, in an email to the Insurer by the Insured, that furniture would be hired. 17.4 On (or about) 17 September 2020, Mr Jorgensen emailed Mr Boshier. In that email, Mr Boshier requested reimbursement of furniture hire invoices. 17.5 On (or about) 11 November 2020, Mr Boshier, on behalf of BZI affirmed that BZI would cover the furniture rental invoices to date – i.e. five (5) months at $606.00 per calendar month ($3,030.00 in the aggregate). 17.6 The Insured proceeded on the basis that these costs would continue to be covered. BZI did not reject cover for this. 17.7 BZI have remitted an aggregate sum of $176,395.20 against the contents. These were: 17.7.1 on (or about) 17 June 2020 – payment of $50,000.00; 17.7.2 on (or about) 30 September 2020 – payment of $100,000.00; 17.7.3 on (or about) 29 December 2020 – payment of $26,000.00; and 17.7.4 on (or about) 29 December 2020 – payment for $- There was no reason BZI could not remit the full sum insured (including indexation as per the Wording), by 17 June 2020 or, at the latest, 30 September- Contained within BZI’s IDR Response, BZI declared that the contents were settled on an “offer and acceptance” basis. As a sequence of events, on the surface, this is not necessarily factually incorrect, however, owing to the significant delay in BZI’s approach to the claim, the contents sum was settled under duress. 17.10 In any event, there was no release provided. The sum settled against the contents does not represent the true indemnity sum in accordance with the Wording. 17.11 On (or about) 24 September 2020, Mr Boshier stated that they were prepared to include indexation in the contents settlement offer. The settlement that followed failed to include such increase as per BZI’s own calculations. 17.12 In HDI Global Specialty SE v Wonkana No. 3 Pty Ltd76 (now settled by virtue of the High Court refusing leave to appeal) [at 18 to 19] it was said: Constructing a written contract involves determining the intention of the parties as expressed in the words of their agreement is recorded. As Lord Wright said in Inland revenue Commissioners v Raphael [1935] AC 96 at 142: ‘It must be remembered at the outset that the court, while it seeks to give effect to 42 the intention of the parties, must give effect to that intention as expressed, that is, it must ascertain the meaning of the words actually used [my emphasis]” That task is to be approached objectively. The meaning of the words used must be ascertained by reference to what a reasonable person would have understood the language of the contract to convey: Toll (FGVT) Pty Ltd v Alphapharm Pty Ltd - CLR 165; [2004] HCA 52 at [40]; Electricity Generation Corporation v Woodside Energy Ltd - CLR 640; [2014] HCA 7 at [35]. That is because the objective theory of contract requires that the legal rights and obligations of the parties turn “upon what their words and conduct would reasonably be understood to convey”: Equuscorp Pty Ltd v Glengallen Investments Pty Ltd - CLR 471; [2004] HCA 55 at [34], citing Lord Diplock in Gissing v Gissing [1971] C 886 at 906 and Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502. They continued at [22]: This language is construed according to its natural and ordinary meaning: Darlington Futures Ltd v Delco Australia Pty Ltd - CLR 500 at 510-511. As Lord Mustill said in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 384 “the inquiry will start, and usually finish, by asking what is the ordinary meaning of the words used”. Where the words are ambiguous, they cannot be simply ignored simply to reach a result that is apparently more commercially convenient [my emphasis]: Australian Broadcasting Commission v Australian Performing Right Association - CLR 99 at 109; [1973] HCA 36. 17.13 On page 10, the Wording states (emphasis added): During each period of insurance the sum insured for buildings and/or general contents will be automatically increased by 0.5% per month (6% per annum) until the end of the period of insurance. The sum insureds after this adjustment represent the most you can claim for any one incident unless stated otherwise in the PDS. This is prior to the application of any ‘additional benefits’ or ‘additional covers’ which may be applicable to your claim. 17.14 In this instance, as it pertains to this Claim, the Wording is clear and explicit. There is no ambiguity – the indexation of 0.5% per month applies from the date the policy commences (or renews) and “until the end of the period of insurance” – i.e. when the policy is then renewed or ultimately cancelled by BZI. 17.15 The Wording further states (see page 14) that: If [the Insured] has a claim that results in [BZI] paying [the Insured] the general contents sum insured the cover for [the Insured’s] contents will end. 17.15.1 the cover was renewed on 11 June 2019; 17.15.2 a number of endorsements were processed subsequent thereto, including on 24 January 2020 whereby the contents sum insured was increased to $160,000 (excluding GST); 17.15.3 cover was originally set to expire on 11 June 2020; and 17.15.4 cover until the Date of Loss was 17.16 Between the cover inception date and the Date of Loss, there was an aggregate of eight (8) months and thirteen (13) days. 17.17 As a result, based on 0.50% per calendar month, the indexation sum rightfully applying is 4.00%-% of the pre GST contents sum insured ($160,000) is $6,- Adding $6,400.00 to the contents sum insured, yields $166,- Adding GST to this sum (in according with the Goods and Services Tax clause on page 17 of the Wording) results in a composite sum of $183,- Setting aside any additional benefits, the amount paid by BZI for contents was $176,000 (including GST) – i.e. a difference of $7,- It is submitted that BZI resolve this aspect of the claim by: 17.22.1 remitting payment of the ‘without prejudice’ settlement offer ($7,040.00). As far as interest, as BZI was aware of all material facts, insurance ought to apply from 10 October 2020, being after BZI was aware of the contents being a total loss. Or, in the alternative, should our claim pursuant to 18.24.1 above be unsuccessful, payment, based on the ‘without prejudice’ settlement offer ($7,040.00) sent to BZI on (or about) 8 December 2021, with interest as per s.57 of the IC Act payable effective 6 January 2022, being the date that BZI rejected same. RELIEF CLAIMED 1. A Determination that the terms ‘Removal of Debris’ ought to be given their ordinary, commercial meaning and Debris (as per the Insured’s quote from Restorx (TBC) be reimbursed by BZI. Interest, pursuant to s. 57 of the IC be payable, effective at the date particularised below. 2. A Determination that the quantum claimed by the Insured for each of the following, is determined, on balance, to be fair and reasonable: a) Reimbursement of the Insured’s Building Consultant’s fees $ 4,375.90 b) Reimbursement of Furniture Hire Invoices $ 3,030.00 c) Short payment on Contents (indexation @ 7.00%)*$ 12,320.00 d) Environmental Improvements$ 5,500.00 3. A Determination that BZI, in unnecessarily investigating (or continuing to investigate) when all material information was known to BZI was a breach of section 13 of the IC Regulations, as per XXXX. 4. A Determination be made that Blue Zebra erred in their obligations under the General Insurance Code of Practice 5. A Determination for the purposes of Section 58 of the Insurance Contracts Act 1984 (Cth) that, effective 1 March 2022, a statutory liability policy was in effect, with cover effective until XXXX. 6. A Determination, that where interest pursuant to section 57 is said to be appropriate, it is applied on the basis of compound interest in accordance with Hannover Life Assurance Re of Australasia Ltd v Membrey [2004] FCA 1095, where, at 43, it was said (emphasis added): Whilst there is a view that s 57 ousts the operation of other legislation concerning matters such as an applicable interest rate (a question I do not have to decide): NRMA Insurance Ltd v Tatt and Anor (1989) 92 ALR 299 at 315 (per McHugh J), there is nothing in s 57 which would preclude the awarding of compound interest on appropriate facts, in an appropriate case, following the approach in Hungerfords and Ors v Walker and Ors - CLR 125. See Moss v Sun Alliance Australia Ltd (1990) 93 ALR 592 at 604. See also Walker v FAI Insurance Ltd (1991) 6 ANZ Insurance Cases 61 – O81. 1 Reimbursement of Furniture Hire Invoices 2 Additional Benefit: Environmental Improvements Good faith Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd77 involved a case where BZI rejected an individual truck driver for a garbage removalist business. BZI advised the intermediary. the insured was not informed. The driver in question drove trucks for the business and was involved in an accident. BZI alleged non-disclosure. Justice Palmer rejected this and, in that context, noting that the policy clearly had no distinction between undeclared and rejected drivers, had this to say about section 13 of the IC Act: Insurers and their legal advisers must remind themselves that a contract of insurance contains an implied term to act with the utmost good faith... [if they do not] bear these principles in mind, if they come to Court seeking to construe an exclusion out of ambiguous words or by recourse to implied terms, they may well face not only an adverse judgment almost out of hand, but also an indemnity costs order. The Court of Appeal upheld the trial judge’s decision. The duty of utmost good faith does not put BZI and insured in a fiduciary relationship but something that is ‘akin’ to a fiduciary relationship: Maksimovic v Royal & Sun Alliance Life Assurance Australia Ltd [2003] WASC 46. 18.0 Cost of Reinstatement 18.1 Following attendance by BZI’s Engineer on (or about) 22 May 2020, they were then in a position to have access to all requisite information concerning the damage to the Property. It was not until on (or about) 9 June 2020 that indemnity was provided by BZI, following their decision to abandon the investigation. Accordingly, it on this basis, there is a similarity between On the preponderance of the evidence