Loss of Enjoyment and Damages
Can builders be liable for damages to homeowner’s loss of enjoyment of their home? How do we quantify that amount?
The principles governing breaches of building contracts are well established in Australia. There are clear provisions outlining how damages are to be awarded in circumstances where a breach of such a contract creates a liability in damages for defective building work. Loss of enjoyment or amenity is a legal concept explored more in realm of torts. However, is this principle able to be applied to one’s loss of enjoyment of their home as a result of a builder’s inability to perform its contractual liability?
Loss of Enjoyment/Amenity
In Baltic Shipping Co v Dillon[1] Mason CJ noted that damages are available for loss of enjoyment as a result of a loss in the benefit of a contract as ‘[the loss enjoyment] proceed[s] from [the] physical inconvenience caused by the breach, or the contract is one where the object of which is to provide enjoyment, relaxation or freedom from molestation’. [2] In other words, damages can result from the breach of a contractual promise if that effected the loss of the benefit to be obtained.
In Stone v Chappel, [3] Kourakis CJ accepted that:
‘[i]n Australia an award of general damages may be made to compensate for a defendant’s breach of promise to prevent vexation or annoyance, or to provide enjoyment or pleasure. General damages for breach of a building contract may include awards for physical inconvenience and consequential anxiety and distress’. [4]
However, what is often difficult is to be able to quantify that damage.[5]
Quantification of Damages
Citing Stone & Anor v Chappel & Anor[6], Kourakis CJ expressed concern in his judgement that there was an inherent difficulty in quantifying a figure for damages based on loss of enjoyment as ‘[t]he basis for an award to compensate for such as intangible loss is necessarily problematic and, to a degree, subjective’.[7]
Instead, his Honor determined in that case, that the Court approach was subjective and the facts of that case lead to an award based on any analysis of the ‘…evaluation of the loss of amenity in the sense of the loss of enjoyment of and diminished aesthetic appearance of the apartment. The translation of that loss into a monetary figure is incapable of precision or even substantial explanation’.[8]
This suggests that there will be an element of discretion incapable of precision, and the claimant’s task is to highlight how the breach or behavior for example, impacted on the ability of claimant to enjoy what he or she bargained for. This is more easily seen when a claimant had paid for a luxury apartment, which consisted of ‘premium elements of which included its location, views, architectural design, floor space and celling height’[9] with the damage being the extent it detracted from the enjoyment of those premium elements. This sort of approach has been upheld recently in Tincknell v Duthy Homes Pty Ltd. [10] However, given that subjectivity is involved more often than not ‘damages awarded under this head will rarely be large’.[11]
Conclusion
A head of damage for a person’s enjoyment is an easy enough concept. It is, however, the quantification of the damage that is challenging.
References
[1] (1993) 176 CLR 344.
[2] Ibid 44.
[3] [2017] SASCFC 72.
[4] Ibid 85.
[5] It is perhaps for this reason that the principles of Stone v Chappel [2017] SASCFC 72 have not been applied generally in other states.
[6] [2016] SASC 32, [168]-[169].
[7] Stone v Chappel [2017] SASCFC 72, [92].
[8] Ibid 26.
[9] Ibid 94.
[10] [2020] SASCFC 24.
[11] Ibid 398 [26].
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