An ACT family are battling an insurance giant over its alleged refusal to rebuild their fire-ravaged 1960s home to a standard that complies with modern building laws.
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The family's court struggle – which could have broader implications for Canberra homeowners – began after their Mawson home was all but burnt down in 2011.
The fire tore through the roof of the single storey, five bedroom brick home, which was built in 1967.
The roof was entirely destroyed and partially collapsed into the front of the house, causing damage to the lounge room, dining room, entry hall, kitchen, and family room.
Most of the fixtures and fittings were destroyed and some internal walls and floors were damaged. The house was left completely uninhabitable.
The ageing resident who lived in the house, Jayammal Vivekananda, was devastated by the loss, and made a claim under her house insurance. However, she soon encountered resistance from NRMA Insurance, despite its policy appearing to cover the cost of meeting current building regulations.
New laws, introduced in the wake of the 2003 Canberra bushfire disaster, required the entirety of a home to be brought up to the standard of modern building codes if it was undergoing a substantial alteration.
The Mawson home was so badly damaged, Mrs Vivekananda argued, that repairs to it represented a "substantial alteration", which meant all of her newly repaired home needed to comply with the modern building code.
The problem was that undamaged parts of the building, mainly the original 1960s footings, did not meet the new standards.
To make her home legal, Mrs Vivekananda said she needed to completely demolish and replace the home.
But NRMA Insurance refused to pay out for the rebuild, instead only offering to cover enough repairs to bring the home back to the state it was in before the fire.
It argued that the repairs for fire damage did not constitute a "substantial alteration", and so the repaired home did not need to meet modern building codes.
Mrs Vivekananda died in 2012, but her son, barrister Ravi Vivekananda, has taken up the fight in the Federal Court.
He said that the home was the centre of his mother's life, and she was devastated by her loss.
"Fires do happen and whilst no one died as a direct result of the fire, it did hasten the demise in health of my mother that led to her to give up any hope of seeing her home rebuilt," he said.
"After the fire she was devastated, but had NRMA met their legal obligations immediately we could have demolished and rebuilt her home."
The first decision in the Federal Court went against the family, with Justice Lindsay Foster finding that the floor area of the home needed to be enlarged by more than 50 per cent to constitute a "substantial alteration".
But that decision was found to be in error by the full court of the Federal Court in August.
The three judges sent the case back, saying that the original judge did not properly consider whether the work to repair and reinstate the home was an alteration to more than 50 per cent of the building.
The court proceedings are ongoing, and Mr Vivekananda said it will be a landmark case for other Canberrans who find themselves in the same predicament.
"After all, any Canberra building owner who loses their building and needs to have it replaced is obliged to meet the [building code], and their insurance cover should provide actual reinstatement not notional reinstatement," he said.
NRMA Insurance said it could not respond because the case was still before the court.
