11.2 Evidence

The Healds held a home and contents policy with AAI.[1] The policy was branded as a Suncorp product.[2] On 22 April 2015, they lodged a claim with AAI for damage to their property caused by a major storm in the Hunter Valley region.[3]

Ms Heald gave evidence about the severity of the storm and the damage caused to her home by the storm.[4] Immediately after the storm, damage to the balcony railings, laundry and garage was evident.[5] Over time, more damage became evident. Amongst other things, gyprock and brickwork began cracking and laundry tiles began popping off, exposing the property’s slab.[6] There was also a hairline crack in the slab that grew larger over time.[7] When it rained, dirty storm water would rise up through the slab and flow into the house.[8]

In about June or July 2015, the western wall of the property started coming away from its supports.[9] Ms Heald kept AAI updated on the additional damage to her property as it occurred.[10]

Ms Heald explained that the damage to the property had greatly affected her daughter, who suffers from anxiety.[11] At times her daughter would become so stressed by the popping and cracking noises made by the house that she would sometimes wake up during the night terrified that the house might collapse.[12]

The day after Ms Heald lodged her claim, AAI appointed a building inspector to inspect the damage caused by the storm.[13] It also appointed a builder to undertake a make safe.[14]

It took until mid-May 2015 before a builder attended at the property to fix the railing.[15] It took until mid-June for AAI to send a builder to complete a make safe on the railings.[16]

There were also delays in having the damage assessed. Ms Heald said that she and her husband were frustrated by AAI’s failure to properly assess the damage to their property.[17] Between May and October 2015, AAI sent a building inspector,[18] a building assessor,[19] and two engineers[20] to assess the damage. Each alluded to some possible structural damage, but no–one could properly explain what was wrong with the house.[21]

When the first engineer came to the property, he undertook a half hour visual inspection and did no testing.[22] When the engineer’s report was provided, the Healds disagreed with many aspects of it.[23] The report included a scope of works for the repair of superficial cracking, but recommended that the repairs not be undertaken for six to 12 months so as to allow the soils to dry.[24] The scope of works did not include any repairs to the foundation of the house.[25]

The Healds requested that AAI appoint a new engineering firm to assess the property.[26] AAI rejected that request, but agreed to appoint a second engineer from the same firm to prepare a report.[27] This second engineer’s report contained a revised scope of works, this time including the replacement of the slab in the laundry.[28] The Healds’ concerns were not allayed by the further report.[29]

Because of the difficulty the Healds encountered in dealing with AAI, they contacted Brenda Staggs, a lawyer from Legal Aid.[30] Ms Heald said that she did not think they would have been able to deal with the claim without the assistance of a solicitor.[31] Ms Staggs first wrote to AAI on the Healds’ behalf in May 2015, explaining the health problems faced by their children, and noting temporary accommodation may be needed.[32]

Mr Dransfield gave evidence that upon receiving the email from Ms Staggs in May 2015, AAI should have ensured that the make safe was completed to the satisfaction of the family.[33] He said that AAI should then have sent an engineer to the property as soon as possible to assess the safety of the home, and that AAI should have been discussing temporary accommodation with the Healds.[34]

Ms Heald advised AAI on several occasions that she had concerns that the property was not safe to live in,[35] and requested temporary accommodation on multiple occasions.[36] AAI agreed to move the Healds into temporary accommodation in March 2017.[37] The Healds commenced living in temporary accommodation on 28 April 2017.[38]

AAI tried to cash settle the Healds’ claim in October 2015 for around $30,000.[39] The Healds rejected that offer and lodged an internal complaint with AAI.[40] Ms Heald did not recall ever being told by AAI about IDR.[41] Mr Dransfield did not dispute that the Healds were not informed of AAI’s IDR process.[42]

Ms Staggs emailed AAI again in mid-October 2015, expressing concerns on the part of the Healds with the delay in attending to the repairs to the property.[43] The Healds were concerned that a wall might collapse and injure them, or their neighbour’s children.[44] Mr Dransfield acknowledged that this concern held by the Healds was a very serious matter, and that at this time, again, AAI should have seriously considered temporary accommodation for the Healds.[45]

On about 4 December 2015, Mr and Ms Heald lodged a complaint with FOS.[46]

On 31 December 2015, AAI wrote to the Healds, notifying them that AAI would reimburse them the cost of having a local engineer attend the property and provide a further report.[47] Mr and Ms Heald appointed Burke Engineering Services Pty Ltd.[48]

This letter also made an offer of $3,000 compensation for the frustration and inconvenience AAI had caused.[49]

Burke Engineering provided a preliminary report on 25 January 2016,[50] advising that further investigations would be required before a detailed assessment could be provided.[51] In the meantime, it suggested that temporary fencing be installed.[52] Burke Engineering subsequently provided two further reports, in which it said that the issues with the foundation (including the footings and slab), coupled with the water inundation, had caused the damage to the property.[53] It recommended the footings and slab be replaced.[54]

However, AAI maintained that it was entitled to settle the claim on the basis of its engineer’s scope of works, which provided that the cracking could be repaired without needing to replace the foundations and that a complete demolition of the property was not warranted.[55]

Mr Dransfield accepted that the engineers appointed by AAI to produce reports on the damage to the Heald property failed to produce thorough reports and that the conclusions they reached were ultimately incorrect.[56] The engineers AAI appointed were ‘panel’ experts. That is, they were experts drawn from a group of experts used by AAI to provide expert reports and advice. Mr Dransfield acknowledged the potential risk of subconscious bias, on behalf of panel firms, towards particular outcomes because of the panel arrangements.[57] Mr Dransfield accepted that there was a potential for this subconscious bias to have influenced the work of the panel engineers in the Healds’ case, given the significant divergence of views between the panel engineers and the independent engineer, Burke Engineering.[58] That a panel firm could possibly exhibit subconscious bias as a consequence of an ongoing commercial relationship is entirely plausible. However in this case study, the matter was not explored beyond the hypothetical possibility, and I need not make any express findings about that issue.

In January 2017, FOS informed AAI that it considered that AAI was liable for the damage to the property, including to the foundations.[59] FOS’s determination necessitated the preparation of a revised scope of works.[60]

By April 2017, AAI had not obtained the fresh scope of works.[61] Mr Dransfield accepted that this delay was not acceptable.[62]

AAI and the Healds subsequently made offers to settle the matter between 29 May 2017 and January 2018.[63]

In January 2018, FOS made a determination in favour of Mr and Ms Heald, awarding them more than $744,000.[64] This amount included interest from 5 August 2015, the date FOS held AAI was in a position to determine its liability under the policy (which, as FOS had found, included replacement of the foundations).[65]

Mr Dransfield acknowledged that, overall, AAI had failed the Healds in the handling of their claim, and apologised for AAI’s failures.[66] He specifically acknowledged that AAI failed the Healds by having too many people involved in the handling of their claim, and that AAI failed to show compassion to the Healds’ situation.[67]

Mr Dransfield accepted that AAI did not manage the Healds’ claim in a satisfactory manner.[68] In particular, he accepted that the following aspects of the handling of the claim were unsatisfactory: the delay in resolving whether a complete repair or rebuild was required;[69] AAI’s lack of effective and compassionate communication with the Healds regarding the extent of the damage to the property and the possibility of repairs;[70] the failure to appoint a dedicated claims handler to the Healds’ claim;[71] AAI’s processes for dealing with vulnerable customers like the Healds;[72]and AAI’s failure to advise the Healds of its IDR process on 18 June 2015.[73]

Mr Dransfield also acknowledged that in 2016, FOS identified systemic issues within AAI, including:[74] a failure to comply with its obligation to provide information to policyholders about its IDR process;[75] delays in assessing damage and conducting repair or rectification works;[76] and a failure to ensure timely implementation of FOS determinations and negotiated settlement agreements.[77] Mr Dransfield accepted that the first two of those issues had affected the way in which the Healds’ claim was handled.[78]

[1] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, Exhibit GCD-2 (Tab 1) [SUN.0708.0001.0499], (Tab 2) [SUN.0703.0002.0165], (Tab 3) [SUN.0792.0901.0033].

[2] Transcript, Bernadette Heald, 20 September 2018, 6330.

[3] Transcript, Bernadette Heald, 20 September 2018, 6330.

[4] Transcript, Bernadette Heald, 20 September 2018, 6330.

[5] Transcript, Bernadette Heald, 20 September 2018, 6330.

[6] Transcript, Bernadette Heald, 20 September 2018, 6332; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 4 [23].

[7] Transcript, Bernadette Heald, 20 September 2018, 6332; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 4 [23].

[8] Transcript, Bernadette Heald, 20 September 2018, 6332; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 4 [23].

[9] Transcript, Bernadette Heald, 20 September 2018, 6333.

[10] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 27 [74] [table “” not found /]
.

[11] Transcript, Bernadette Heald, 20 September 2018, 6333; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 1 [2].

[12] Transcript, Bernadette Heald, 20 September 2018, 6333. The Healds’ son is also a heart transplant recipient, a fact of which AAI was made aware on 19 May 2015: Transcript, Bernadette Heald, 20 September 2018, 6344–5.

[13] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 27 [74] [table “” not found /]
.

[14] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 27 [74] [table “” not found /]
.

[15] Transcript, Bernadette Heald, 20 September 2018, 6332.

[16] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 5 [25].

[17] Transcript, Bernadette Heald, 20 September 2018, 6333.

[18] Transcript, Bernadette Heald, 20 September 2018, 6331.

[19] Transcript, Bernadette Heald, 20 September 2018, 6332.

[20] Transcript, Bernadette Heald, 20 September 2018, 6332, 6334.

[21] Transcript, Bernadette Heald, 20 September 2018, 6331, 6332–4; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 4 [18]–[19].

[22] Transcript, Bernadette Heald, 20 September 2018, 6332.

[23] Transcript, Bernadette Heald, 20 September 2018, 6334.

[24] Transcript, Bernadette Heald, 20 September 2018, 6333; Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, Exhibit GCD-2 (Tab 76) [SUN.0702.0004.1289]

[25] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 5 [24].

[26] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 6 [29].

[27] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 6 [29].

[28] Transcript, Bernadette Heald, 20 September 2018, 6335.

[29] Transcript, Bernadette Heald, 20 September 2018, 6335.

[30] Transcript, Bernadette Heald, 20 September 2018, 6331.

[31] Transcript, Bernadette Heald, 20 September 2018, 6341–2.

[32] Transcript, Bernadette Heald, 20 September 2018, 6331; Transcript, Gary Dransfield, 20 September 2018, 6344–5.

[33] Transcript, Gary Dransfield, 20 September 2018, 6345.

[34] Transcript, Gary Dransfield, 20 September 2018, 6345.

[35] Transcript, Bernadette Heald, 20 September 2018, 6337–8.

[36] Transcript, Bernadette Heald, 20 September 2018, 6338.

[37] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 32–3 [83(i)].

[38] Transcript, Bernadette Heald, 20 September 2018, 6340; Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 33 [83(l)]; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 10 [52].

[39] Transcript, Bernadette Heald, 20 September 2018, 6335.

[40] Transcript, Bernadette Heald, 20 September 2018, 6336.

[41] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 36 [88] [table “” not found /]
.

[42] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 36 [88] [table “” not found /]
.

[43] Transcript, Gary Dransfield, 20 September 2018, 6345–6.

[44] Transcript, Gary Dransfield, 20 September 2018, 6346.

[45] Transcript, Gary Dransfield, 20 September 2018, 6346.

[46] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 8 [41].

[47] Exhibit 6.389, 31 December 2015, Letter Suncorp to Healds.

[48] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 36 [89] [table “” not found /]
.

[49] Exhibit 6.389, 31 December 2015, Letter Suncorp to Healds.

[50] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 37 [92(a)].

[51] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 37 [91] [table “” not found /]
.

[52] Exhibit 6.386, Witness statement of Gary Dransfield, 13 June 2018, 37 [91] [table “” not found /]
.

[53] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 37 [91] [table “” not found /]
.

[54] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 37 [91] [table “” not found /]
.

[55] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 37 [91] [table “” not found /]
, 37 [92(d)].

[56] Transcript, Gary Dransfield, 20 September 2018, 6372.

[57] Transcript, Gary Dransfield, 20 September 2018, 6372.

[58] Transcript, Gary Dransfield, 20 September 2018, 6372–3.

[59] Transcript, Gary Dransfield, 20 September 2018, 6364.

[60] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 32 [83(g)]; Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, Exhibit GCD-2 (Tab 92) [SUN.0702.0026.0022].

[61] Transcript, Gary Dransfield, 20 September 2018, 6365.

[62] Transcript, Gary Dransfield, 20 September 2018, 6365–6.

[63] Exhibit 6.328, Witness statement of Bernadette Heald, 30 August 2018, 10–11 [53]–[60]; Transcript, Bernadette Heald, 20 September 2018, 6340–1.

[64] Transcript, Bernadette Heald, 20 September 2018, 6341; Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, 11 [60].

[65] Exhibit 6.382, Witness statement of Bernadette Heald, 30 August 2018, Exhibit BJH-23 [FOS.0031.0001.3557 at .3560].

[66] Transcript, Gary Dransfield, 20 September 2018, 6343–4.

[67] Transcript, Gary Dransfield, 20 September 2018, 6343–4.

[68] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 40 [100].

[69] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 40 [101(a)].

[70] Transcript, Gary Dransfield, 20 September 2018, 6344; Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 40 [101(b)].

[71] Transcript, Gary Dransfield, 20 September 2018, 6344; Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 40–1 [101(c)].

[72] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 40–1 [101(c)].

[73] Exhibit 6.368, Witness statement of Gary Dransfield, 13 June 2018, 41 [101(d)].

[74] Transcript, Gary Dransfield, 20 September 2018, 6381; see FOS, Terms of Reference (as amended 1 January 2015), cl 11.2 (definition ‘systemic issues’).