People often ask me if they can sue for the inconvenience and distress that they suffer when a contract is breached. The Court of Appeal in Victoria considered this issue in the recent case of Archibald v Powlett  VSCA 259.
Most claims for breach of contract are limited to the actual economic losses caused by the breach, but there are some exceptions to this rule. For example, in the High Court case of Baltic Shipping Co v Dillon passengers sued the operator of a cruise ship which sank on day 9 of a 14 day cruise. The Court upheld an award of $5,000 for disappointment and distress, even though this was more than the tickets had cost.
The case of Archibald v Powlett dealt with a claim for distress, anxiety and depression caused by a different type of breach of contract. The claim was made by Ms Powlett who owned a property in Daylesford. Ms Powlett had arranged for two relocatable houses to be transported, restumped and placed on her property, where she planned to rent them out as holiday accommodation. Unfortunately, one of the houses was never delivered, and the other one was delivered several years late. Ms Powlett gave evidence that she had borrowed money to buy the two relocatable houses and that she could not pay the interest on the loan because of the delay in delivery. This meant that she had had to sell one of her blocks of land in Daylesford, and her own home in St Kilda.
When the case first went to Court, Ms Powlett was awarded damages of $30,000 for “distress, anxiety and depression”, in addition to compensation for her financial losses. However, the Court of Appeal ruled that she was not entitled to compensation for “distress, anxiety and depression.” The result may have been different if there had been evidence of a “significant injury” (which would generally require a medical report from a doctor, a psychologist or a psychiatrist) but the Court did not address this in detail because Ms Powlett was not claiming to have suffered a “significant injury”.
The Court also said that Ms Powlett may have succeeded if she had made a claim for “physical inconvenience”. The Court referred to past cases where building owners had been able to recover an amount for “physical inconvenience, anxiety and distress” caused by a breach of contract.
This means that a building owner who suffers loss as a result of a breach of contract cannot claim for “distress anxiety and depression” without proving they have a significant injury, but they can claim for “physical inconvenience, anxiety and distress”.
Does that distinction make sense to you, or is this something that only a lawyer would come up with? Does this law need to change? Let me know what you think in the comments section below.