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Damage vs age—a contentious issue resolvedC/2007/5365
Mr N had arranged an electricity supply upgrade for a commercial building. Extensive undergrounding was required. During the digging works, a pinhole leak developed in the large fire service water pipe supplying the building. The electricity distributor’s
contractor engaged a plumber to make repairs. A clamp was placed over the damaged section of pipe but, on his invoice, the plumber noted the repair couldn’t be guaranteed because the pipe was old and rusty.
Mr N was concerned that the repair was just a temporary fix. He said that, when he told the distributor he was concerned about future leaks, he was told any future leaks or claims for compensation would be considered at the time they occurred — a response he said he was satisfied with.
One Friday afternoon some six months later, Mr N was notified that water was gushing from the pavement outside the building. The water company shut the water supply off — and a plumber found that a section of pipe had failed, in the same area as the first leak. Because it was Friday, the plumber wasn’t able to replace the damaged pipe until the following Monday. This left the building without water over the weekend.
One tenant, a catering business, had a large function scheduled for the Friday evening. It lost $10,000 and claimed this from Mr N — he negotiated a reduction from $10,000 to $3,000 and paid this to the tenant. He then put in a claim to the electricity distributor for the $3,000, and an additional amount of $2,898.50 for replacement of the damaged section of pipe. The distributor rejected the claim and, after several failed attempts to have the company reconsider its position, Mr N contacted EWOV.
Mr N believed the pipe had failed because of the temporary repairs to the damage caused by the distributor’s contractor. The distributor said Mr N was told about the condition of the pipe at the time of the first leak, and again over the phone by a manager. It said that, as its contractor repaired the leak during the works and notified a representative of the building, it wasn’t responsible for the claim. Mr N said he wasn’t told the pipe was in very poor condition and needed replacing.
Having received documentation and arguments from both the distributor and Mr N, we started EWOV’s investigation by contacting Mr N’s plumber. The plumber confirmed it was a very old galvanised iron pipe which had rusted out — this effectively ruled out damage to the pipe by the contractor during the initial works, as it was clear the pipe needed replacing. Since the customer is responsible for maintaining a fire service pipe, it didn’t seem reasonable to ask the distributor pay the $2,898.50 replacement cost.
We then focused on the $3,000 which Mr N had paid his tenant as compensation for lost trade. According to the distributor, Mr N and a representative of his building had been told about the condition of the pipe — but there was no evidence of this in writing. Mr N said, had he been told, he’d have replaced the pipe immediately.
We contacted two other distributors for advice on good industry practice in cases such as this. One said a minimum amount of $3,000 should be paid to Mr N and, possibly, the entire $5,898.50 — but, the other said that, as it seemed Mr N had been notified verbally at the time of the first leak, the claim should be denied.
Looking to reach a fair and reasonable resolution, we facilitated a meeting of the parties to discuss all aspects of the case. It was agreed that, because there was no documentary evidence of whether Mr N had been notified of the condition of the pipe at the time of the initial leak, the distributor would be asked to reconsider paying the $3,000. It was also agreed that it wasn’t reasonable to ask the distributor to pay for the replacement cost of the pipe, as this was Mr N’s responsibility and the plumber had confirmed it needed replacing. Further negotiation resulted in a claim of $3,000 being paid to Mr N, who was satisfied with this outcome.
This case illustrates the nature of alternative dispute resolution and how EWOV works. Through thorough investigation, we were able to ascertain where responsibility lay. Our facilitation of the meeting enabled a solution to be agreed. The customer received compensation, though not the amount he’d initially requested. The case provides a clear demonstration of a fair and reasonable outcome.
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