Hickey v Delaneys
[2000] QDC 466
•22/01/2000
DISTRICT COURT OF QUEENSLAND
CITATION: Ricciardi v Suncorp Metway [2000] QDC 466 PARTIES: NICHOLAS RICCIARDI
(Plaintiff)
v
SUNCORP METWAY INSURANCE LIMITED
(Defendant)FILE NO/S: D 4596 of 1996 DIVISION: District Court PROCEEDING: Civil Jurisdiction DELIVERED ON: 8 August 2000 DELIVERED AT: Brisbane HEARING DATE: 25, 26 & 27 July 2000 JUDGE: Judge Robin QC ORDER: ACTION DISMISSED WITH COSTS TO BE
ASSESSED.CATCHWORDS: INSURANCE CONTRACTS ACT (CTH) section 13, section 54, section 56 – defendant insurer rejected plaintiff insured’s claim for loss of a house which burnt down – defendant alleged arson by plaintiff – suspicious circumstances included plaintiff’s false alibi and lies calculated to prevent defendant’s locating witnesses who might confirm or disprove the alibi – unnecessary for finding of arson to be made – insurer held entitled to reject claim as fraudulently made – destroyed house on the evidence was markedly inferior to a comparison house nearby also owned by the plaintiff who represented the contrary to his valuer and generally – such misrepresentation not “minimal or insignificant”. Insurance Contracts Act 1984 (Cth)
Transport Industries Insurance Co Ltd v Longmuir (1997) 1
VR 125
NRMA Insurance Limited v Elchaar (1993) 7 ANZIC 61-169
Steinberg v Federal Commissioner of Taxation (1975) 134
CLR 640, 694
Luxton v Vines (1955) 85 CLR 352, 358
Rejfek v McElroy (1965) 112 CLR 517
Helton v Allen (1940) 63 CLR 691
Briginshaw v Briginshaw (1938) 60 CLR 336
Winstanley v Alliance Insurance Co Ltd (1984) 3 ANZIC 60-567
K.T. Lock (T/a Mega Movies and Ascom Electronics) v
Territory Insurance Office (1997) NTSC 22
Kervan Trading Pty Ltd v Mercantile Mutual Insurance
(Australia) Ltd (1999) NSWSC 185
Moustakos v The Federation Insurance Ltd (1984) 3 ANZIC
60-537
AMP Fire & General Insurance Co Ltd v Collie (1991) 6
ANZIC 61-082
Craig v Associated National Insurance Co Ltd (1984) 1 Qd R
209; 3 ANZIC 60-553
Jeffery v Associated National Insurance Co Ltd (1984) 1 Qd
R 238, at 248-49
Dixon v Commercial Union Assurance Company of Australia
Ltd (1999) TASSC 104
NRMA Insurance Ltd v Collier (1996) 9 ANZIC 60-387
Hamden v NRMA Insurance Ltd, CA 40181 (95, 27 August
1997, New South Wales Court of Appeal)
R v Karl Mazur (2000) VSCA 111; VC 2000 3451
Boulton v Houlder Brothers & Co (1904) 1 KB 784, 791
Moraitis v Harvey Trinder (Q’land) Pty Limited (1969) Qd R
226, 236
Engel v The South British Insurance Co Ltd (1983) 2 ANZIC
60-516
Entwells Pty Ltd v National and General Insurance Co Ltd
(1991) 6 ANZIC 60-059
Australian Associated Motor Insurers Limited v Tiep Thi To
(1999) VSC 287COUNSEL: Mr Alldridge for the plaintiff Mr D. Kelly for the defendant SOLICITORS: McInnes Wilson for the plaintiff Minter Ellison for the defendant
Mr Ricciardi sues the defendant insurer consequent upon its refusal to indemnify
him in respect of the destruction by fire of a house property of his at 3 Church
Street, Kogan in the Shire of Chinchilla on the afternoon of Sunday, 23 May 1999,
the claim being for the aggregate of $53,100 (the sum insured) and $4,160, being
one year’s loss of rental.
The defendant says that the claim is fraudulent, principally because the plaintiff,
according to it, set the fire, also because the claim itself was made in a fraudulent way and in breach of the plaintiff’s duty to act in the utmost good faith, with the
consequence that the claim ought to fail altogether. As to those matters, the
defendant bears the onus of proof.
The sum insured was taken to be the result of application of some formula which
more or less automatically increased an original sum of $50,000. The certificate of
insurance indicates that the defendant insured a second house located on the same
251 hectare property, but with a different street address of 23 Montrose Road. It
was insured for an identical sum.
The defendant was suspicious of the plaintiff’s claim from the start, apparently on
the basis that the fire was Mr Ricciardi’s third in five years, the fourth in 15 years.
It engaged Mr Bevan to investigate. The investigations may have been more
difficult because, although Mr Ricciardi often uses a telephone, he is never
contactable by telephone, only by letter. Mr Alldridge, his counsel, described him
as a professional full time landlord. His somewhat incommunicado status was
explained to Mr Bevan in terms of avoiding unwelcome calls from his tenants. Mr
Ricciardi attended at Mr Bevan’s office at Nundah on Thursday, 3 June 1999 about
9 a.m. A tape recorded interview took place, of which exhibit 7 is a transcript
signed (and initialled on each page) by Mr Ricciardi. He made and initialled a
number of changes, including one giving God a capital letter. I think it may be
taken that he accepted the accuracy of the transcript. His acceptance of exhibit 8,
supposedly a transcript of a second recorded interview on 9 June 1999, is recorded
in his written answers to appropriate questions at the foot of it. There is no similar
authentication by him of exhibit 9, a transcript of a third interview on 16 July 1999,
but, in the circumstances I think this one, too, may be taken as generally reliable. Mr Bevan was attempting to place Mr Ricciardi, who lives at Burpengary, in the
vicinity of Kogan (which is some 50 kilometres south east of Chinchilla) at the time
when the fire began.
I took it to be common ground at the trial that the fire came about by some human
agency. The house was uninhabited at the time and Mr Ricciardi said that a week
before, on 16 May, on ascertaining that Mr Yardley had vacated, he turned off the
power at the main. In his closing submissions, Mr Alldridge suggested the court
was not in a position to exclude some sort of electrical mishap as a cause; this was
unpersuasive in the circumstances. The evidence of Mr Nystrom, who has
considerable expertise based on long and extensive experience in identifying the
causes of fires, was persuasive in respect of the human agency theory. I accept his
opinion that the fire started not at the corner of the dwelling where the power box
was located, but somewhere at the centre of it. There, in the debris, which had by
then cooled to permit removal of fallen roof iron which was still hot when other
witnesses such as the police officer from Warra and the fire chief from Chinchilla
were on the site, Mr Nystrom located an open 20 litre metal drum containing a
watery mixture, with a paraffin odour. The liquid from the drum was found to
contain a heavy paraffin mixture. Mr Nystrom’s report goes on:
“The residue was highly weathered, burnt off and because of this, we would be unable to confirm the identity of the original organic substance, but it is more likely than not that the paraffin mixture originated from either a distillate or hydraulic oil. Such a liquid would be likely to be combustible but would be difficult to ignite without either prior heating or the addition to the mixture of a more flammable substance. Other organic solvents or flammable liquids would be more suitable to have used to promote fire growth.”
Six debris specimens taken from the scene for routine testing, including from the
front stairs area, were examined, but Mr Nystrom “did not detect the presence of any introduced flammable or liquid substances”; Mr Nystrom commented that
“given the extent of development of the fire, this result would not be unlikely even
had quantities of flammable or combustible liquid been used to promote fire
growth.”
In the first interview, Mr Ricciardi told Mr Bevan he had spent the weekend of the
fire at another rental property of his at 23 Leahy Drive, Kingsthorpe, just west of
Toowoomba. He told Mr Bevan on 3 June:
“I was sorting out tenancy problems, people who had moved in and
were getting some keys cut and things like that.”
He said he supposed the next door neighbour saw him there.
At the 9 June interview, Mr Ricciardi said he was confident he was at Kingsthorpe
on the day of the fire:
“There was more problems there. I had to fix up the pump and the
sewerage and the sludge and God knows whatever.”
He said he was sure he was not thinking of the following Sunday. He was adamant
there was no tenant there on Sunday, 23 May or Sunday, 30 May. As to the earlier
Sunday:
“They never arrived, I took some furniture there for them, some lounge suites and God knows whatever ... they paid up a week before, a couple weeks before and then they said they were gonna move in.”
Mr Bevan advised his information was that the plaintiff had not been at
Kingsthorpe on the Sunday of the fire, leading to the plaintiff’s volunteering that
the people next door were “a bunch of wankers .. just hopeless”. (I would
interpolate that I found Mr Culpan, Mrs Skillington and her daughter Nicky-Anne
decent, honest people and impressive witnesses.) It was established that Mr Ricciardi and Mr O’Shea, a Rosalie Shire Council officer had a conversation at
Kingsthorpe early on the morning of Monday, 31 May. Mr Ricciardi ended up
saying that “two (weekends) in a row actually, I was at Kingsthorpe all the time”
and that tenants were there on neither weekend.
On 4 June, Mr Bevan had obtained a statement from Mrs Skillington confirming
that, although Mr Ricciardi had been at Number 23 the previous weekend (even
sleeping there, which she considered both morally and legally wrong as regards the
tenant) and on weekends at the beginning of May, Mr Ricciardi had not been there
on the weekend of the fire, but a tenant, known to her as Wayne, had been “the
entire weekend and Nick did not attend”. There are a number of reasons why this
account may be considered reliable, although Mr Ricciardi disagreed with it. It had
to do with recent events; Mrs Skillington remembered the weekend particularly,
because her son’s birthday fell on the Saturday; more generally, dealing with the
proposition Mr Ricciardi may have been there but not noticed, Mrs Skillington’s
children disliked Mr Ricciardi (an explanation for this was given) and would tell
her whenever they noticed him next door – it is highly unlikely they would miss
him for an entire weekend. Subsequently, Mr Culpan was able to confirm that he
had a conversation with “Wayne” at Kingsthorpe that weekend by reference to
reports of his weekly activity as an insurance representative. Unfortunately, those
records were not available at the trial, but I am satisfied they were available when
Mr Culpan had reference to them for purposes of fixing the date.
On 9 June, Mr Bevan informed Mr Ricciardi his information was that the latter had
not been at Kingsthorpe on 22 and 23 May. Mr Ricciardi stuck to his story. Mrs
Skillington had already told Mr Bevan the Kingsthorpe tenant’s name was Wayne, but the further identification of him was not pursued with Mr Ricciardi until 16 July
1999. Mr Ricciardi told Mr Bevan he had no written notation of any particulars
other than the first name Wayne. The interview proceeded:
“Q 24
The whole point of the matter is Nick, what is holding up the claim, is that I need to contact the previous tenant Wayne and .....?
ANS 24
Well you can do what you like ...... the best you can. I can’t track him down mate, I wouldn’t have a clue where the bloody hell he is. I don’t want to know either, the way they carried on ....
Q 25 You take no particulars of tenants whatsoever? ANS 25
Yeah ..... I write it down, and he told me there’s this place at Gaythorne and he said it’s one house down from the station. I said yeah righto.....I went along there when I couldn’t get in touch with him and they hadn’t moved in and all that sought of thing.
Q 26
Wouldn’t you keep a notation of at least the name of the person who’s renting your property? The name?
ANS 26 Yeah, well he put it in his girlfriend’s name. Q 27 Right where’s that? ANS 27 I’ve forgot the blooming.....I got it in the book
somewhere.....got it in the book.”
The book, which Mr Ricciardi then fetched from his vehicle, proved to include the
carbon copy of a receipt of 14 May 1999 incorporating Christian and surnames (and
signatures) of Mr Slatter and his partner, Marilyn Myers, the address 95 Glenalva
Terrace, Enoggera and the name and telephone number of a referee, together with a
note regarding the tenants’: “healthy Christian outlook”. Mr Ricciadi volunteered:
“ANS 38
Nah....They’re supposed to not thieve and all this type of bullshit, but they’d do anything for money the mongrels. Who in their right mind would give them a job when they carry on like that. I certainly wouldn’t. They could go and bloody die in the middle of the street as far as I am concerned. Cause more bloody hassles than what they’re worth.
Q 39 Here we are, Glenalva Terrace... ANS 39
That’s it. That’s it. Ninety five. Now that’s the house I was telling you about. I went there about half a dozen bloody times, I couldn’t get in, I sang out to them, eventually I said bugger it. I advertised the place again and got some other people in there.
Q 40 Now did you say that you’ve retained possession of
some personal possessions that he left in the house?ANS 40 Well it’s stuff they leave in the house alone, that
mob, I come and store them and that’s it.Q 41 What sort of possessions did he leave? ANS 41
Oh, well gear they took there. Just clothes and nick- nacks, kitchen items and God knows what. Driving me bloody mad, they owe me so much bloody money it’s not funny, but I’m not the bloke that sold them out because I don’t need their bloody money anyhow and if they ever front up they’ll get their gear back.”
It seems inescapable that Mr Ricciardi was attempting to dissuade Mr Bevan from
trying to track down those tenants, but accepting that progress of his claim
depended on coming up with some particulars of the kind any landlord would be
expected to have. The truth was that the tenants had been trying to contact Mr
Ricciardi (the only witness in the case not contactable by telephone, it seems)
seeking to get their property back (they found it had been removed and new tenants
installed when they went to Kingsthorpe to retrieve it some time in the middle of
June) and that, if he wished to contact them, he was able to do so. On 14 May, Mr
Ricciardi had been introduced to Mr Kerr (Kiwi), an acquaintance of his tenants’, at
his place of work; he repaired there when he became anxious to contact Mr Slatter
and Ms Myers, who had paid only one week’s rent of $80 and a small bond of $50,
to ascertain their future plans, and was told, correctly, that they could be found at the address where Mr Slatter’s brother Robert was, in Bowen Street, Windsor. He
found them there, without difficulty, on the first weekend of June, when they were
as upset as Mrs Skillington had been to learn that their landlord had moved in to the
Kingsthorpe premises the weekend before (29-30 May).
Mr Ricciardi appeared to concede at p. 70 of the transcript that prior to 16 July,
when he denied he could track down his tenants, he had visited them a second time
“towards 19 or 20 June”. See also p. 73 line 26. Subsequently, he located them at
their new place of residence at Kismet Street, Northgate, apparently without
problems – this would appear to have been after 16 July 1999. On that day, Mr
Ricciardi lied to Mr Bevan regarding the prospects of Mr Slatter being tracked
down, and presumably so that Mr Slatter’s version would not be available for
comparison with his claim of alibi for the day of the fire.
A side issue arose regarding the meeting at Windsor. Mr Slatter and Ms Myers
said they paid Mr Ricciardi $320 in cash for four weeks’ additional rent to establish
a right to continued possession until about 18 June when Ms Myers’ jury service in
Brisbane (amply proved by court documents) would come to an end and they would
be able to remove their furniture and effects from Kingsthorpe. No receipt was
given, they claim, because Mr Ricciardi said he did not have his receipt book with
him. It was put to them they were lying about the payment. The credibility of
witnesses is of great importance in this case and for reasons that appear elsewhere,
that of the tenants might be thought questionable. There is a direct conflict of
evidence between them as to whether or not he attempted to recruit them as possible
alibi witnesses on 14 May 1999.
The $320 payment issue may help resolve credibility issues. Although Mr
Ricciardi on 16 July appears to have indicated (in the last passage quoted) that he
was owed money by them, there is no hint of that in the interview of 9 June 1999,
just days after the payment was supposedly made. The only dissatisfaction Mr
Ricciardi was expressing at that date concerned whether or not the tenants were
going to move in, to join their furniture and effects, which he concedes were there.
On 9 June he said:
“Tomorrow which is Thursday I’m gonna set off again, go to Gatton first. .... Then I’ll go to Kingsthorpe again if I can’t track these people again and sort out what they’re doing.”
Of the 22nd and 23rd May he said:
“I just fronted up myself because I had to check up on the place at Kingsthorpe, because the tenants were moving in ... and it looks like this weekend I’ll front up there again and hopefully they’re there. .... I might even give them the chop tell them look if you’re not gonna be there I’ll get new tenants because I don’t leave the place just bloody empty you know ......” (pages 6-7 of ex 8).
The recorded interviews contain a diatribe against anyone Mr Ricciardi considers
has let him down. I find it inconceivable that if the tenants had been behind in their
rent on 9 June (the receipt shows the rent was paid only to 21 May 1999) Mr
Ricciardi would have let pass the opportunity to unburden himself on the subject to
Mr Bevan. I think the $320 was paid.
Mr Bevan was able to locate Mr Slatter and Ms Myers not because of any
assistance from Mr Ricciardi, but because they had left their telephone number with
the replacement tenants at Kingsthorpe as part of their efforts, which have only
partly borne fruit, to retrieve their property left there which Mr Ricciardi removed.
They wished to leave messages for Mr Ricciardi and/or to receive any information about the property the new tenants might come by. Mr Bevan’s inquiries led him to
the new tenants and they supplied the telephone number.
Wayne Slatter said at page 126:
“As you approached Kingsthorpe, did Mr Ricciardi say anything to you?-- He said a few things. He talked a bit about the house that was for rent and there was something I remembered him saying about having trouble with one of his houses had caught on fire and he was having a bit of trouble at the moment.
Did you tell you where that property was?-- Yeah, at Chinchilla.
Did he say anything to you about what you should say about that property?-- Just to say that he was with us that day and as I said, ‘Well, there’s no argument about it. You are with us.’ A little more later I found out that a house of his had burnt down, but it wasn’t at that time when he had told me about it.
and Ms Myers at page 181:
“When we were pulling into the driveway of the house at Kingsthorpe, Mr Ricciardi mentioned something about having some problems with a house at Chinchilla, it had burnt down and so if anybody asked where he was, we was to say that he was with us.
What was (t)he address?-- 23 Leahy Drive.
And did you say anything in response to that?-- No, I think Wayne sort of said to him, ‘Well, you know, you’re here with us today.’, and that’s basically where the conversation ended.
What did you think of that?-- Well, I sort of raised my eyebrows a bit, I thought it was a bit suspicious, I mean, if somebody says to me, ‘If anybody asks, I was with you’, that automatically means that.”
Compare Mr Ricciardi’s cross-examination at page 48.
The latitude Ms Myers was allowed makes less surprising this exchange from the
cross-examination of Mr Bevan:
“Have you asked yourself why Ricciardi told two complete strangers on 14 May ’99 that his house had burnt down prior to that date? Did you ask yourself why he would have possibly said that?-- Yes, I have.
Have you been able to explain it, because I would like an explanation?-- My interpretation was that he would possibly have had no idea that I would have been able to have located Slatter and Myers, and certainly not in a short space of time, and that, given the passage of time, that they could well have become confused regarding the date, but because they were absolutely adamant on the date on which this statement was made, it then became of significance to me. But had they not been able to recall the date by association of event, then it could well have passed as being, ‘Well, neighbours at Kingsthorpe, regarding that particular weekend and, generally speaking, people, once two or three weeks pass, they can’t necessarily remember a specific event unless, by association of something of significance, they are able to recall it.
Yes?-- I just felt that that’s the reason why he may well have made that statement
Well, now, you agree, obviously, if he had said nothing about the fire to Slatter, that they would nevertheless have been able to quite honestly provide him with the alibi that he effectively asked them to provide because he was with them on the date; correct?-- Yes.
So, if you had, after the fire, ultimately tracked the Slatters down as you did and said, ‘What dates were you with Mr Ricciardi?’, if they had said, ‘Well, I was with him on 14 May’, that would have been a perfectly true statement, wouldn’t it?-- Yes.
So the statement by him about the fire was rally just murkying the waters unnecessarily, wasn’t it?-- No, but how was he to know that I would locate Myers and Slatter?
He wasn’t, but why would he tell them about a fire that hadn’t happened yet?-- He might have had a premonition.”
I have concluded there is much to be said for Mr Bevan’s principal theory. One
might well not anticipate Ms Myers would have been so methodical in preserving
the receipt, exhibit 5 and that she would have had court papers verifying her jury
service from 25 May 1999 (she was empanelled on two trials). She and Mr Slatter
were thus in a position to date events precisely.
So far as another conflict between Mr Ricciardi and Ms Myers and Mr Slatter is
concerned, namely, whether they were in residence at Kingsthorpe on 22 and 23
May, their evidence, in my opinion, is established to be correct. It is supported by Mrs Skillington and Mr Culpan, the next door residents, and by Robert Slatter, who
was also there for the weekend. It is clear that Mr Kerr was in the party as well,
although he was unable to be precise about the date, and may possibly be
considered some support for Mr Ricciardi in his claim to have been at Kingsthorpe,
quite alone, on the weekend of the fire. The evidence does not fit together
perfectly. Mrs Skillington appears not to have noticed two male visitors; it is a
possibility she mistook Robert Slatter for a female. The neighbours’ observations
do not accord very well with the claims of those at number 23 to have spent a good
deal of time in the back yard playing cricket, with a dog. Perhaps the neighbours
were looking next door at the times when the party were drinking in front of Mr
Slatter and Ms Myers’ TV set. The weight of evidence makes me comfortably
satisfied that Mr Ricciardi cannot be believed in his claim about his whereabouts on
the weekend of the fire and that his persistence in it from and after 9 June 1999 was
deliberately dishonest. The immediate point is that, so far as credibility is
concerned, Mr Ricciardi’s claims to credibility fall further behind the others’.
Mr Kelly, for the defendant, agreed with my proposition that he presented those
witnesses of his as “rough but honest”. Mr Wayne Slatter volunteered a criminal
history of assault and traffic matters, and a time in prison, inflated by default
imprisonment in lieu of fines on top of a period on remand, for certain matters yet
to come to court. Cross-examined, he volunteered other matters of false pretences
and attempted false pretences, to do with valueless cheques; he said an employer
had failed to pay him. He, Ms Myers and Robert Slatter presently face charges, all
arising on the same occasion, which appear to involve alleged unlawful entry to
premises and assault in company on Mr Kerr. Mr Ricciardi has no criminal history.
I suppose, in the circumstances, it is not right for the court to take refuge in the presumption of innocence and pronounce the three young accused blameless. The
court should be cautious about accepting their evidence, especially where there is
sworn evidence to the contrary. Adopting this kind of suspicious approach, the
court finds their evidence both honest and reliable.
A further matter of interest is that Mr Ricciardi thus emerges as a person who
entertains “incendiary” thoughts. On Sunday 2 May, Mrs Skillington, who said she
had some sympathy with Mr Ricciardi whose tenants at 23 Leahy Drive,
Kingsthorpe had left his premises in a disgusting condition, heard him say to a
young couple who appeared to be helping him clean up, “a man ought to burn this
fucking house down and all the other fucking houses down that I own ... a man
should not have to fucking deal with this.” It may conceded, and some of the
witnesses did concede, that Mr Ricciardi had provocation on that occasion. On 3
June 1999, apropos the fire he told Mr Bevan (exhibit 7, page 3): “I think that some
mongrel is behind it all, I don’t know who, I hope you investigators will find out
who it was”. On 16 July (exhibit 9) having expressed some dissatisfaction with the
way in which the magistrate was dealing with proceedings against Mr Yardley he
said, “I wish they’d burn his bloody courthouse down.” Once again, I suppose it
might be said Mr Bevan, in the context of an insurance claim that was getting
nowhere, had given some provocation. Nevertheless, it seems that Mr Ricciardi
gives expression to thoughts of arson more easily than most people.
Mrs Skillington’s daughter, who is 16, gave evidence of an approach to her by Mr
Ricciardi on Thursday 20 July, that is, just days before the trial began. The subject
of the conversation was the serving of subpoenas on Mrs Skillington to give evidence, in particular one issued in the interests of the plaintiff. Mrs Skillington
said (page 168):
“He said, ‘is she going to court? and I said, ‘yes.’ He said, ‘she is probably going to say that I was at the house on the weekend of the fire.’ I said, ‘I know nothing about it.’ He said, ‘well I was at the house on the weekend. As you see me here now is how you saw me on the weekend of the fire.’ He also said that if I ever need anything, just sing over the fence and he will do his best possible to help in any way.”
She suggested Mr Ricciardi was generally ingratiating and “actually really nice and
he is not usually really nice... I thought it was very strange.” Mr Kelly suggested
there was something sinister in this approach in a submission I found it difficult to
accept. It seems to me only natural that a litigant would tend to be affable towards
the daughter of a person he hoped would attend court to give evidence favourable
to his cause.
I record the evidence discussed in the paragraph above, notwithstanding its minimal
weight in the circumstantial case the defendant is seeking to make that Mr Ricciardi
was responsible for the fire, in deference to the approach of the Victorian Court of
Appeal in Transport Industries Insurance Co Ltd v Longmuir (1997) 1 VR 125, as
indicated in the headnote:
“Held, allowing the appeal and giving judgment for the appellant (insurer): (1) The trial judge erred in considering each item of circumstantial evidence in isolation from the others and seeking to determine whether the ultimate fact could be inferred from each such item of evidence. The proper approach was to consider the weight of the combination of proven facts and to determine whether the combined weight of those facts supported the inference, as a matter of probability.
Girlock (Sales) Pty. Ltd. v. Hurrell (1982) 149 C.L.R. 155; Chamberlain v. R. (No. 2) (1984) 153 C.L.R. 521; Shepherd v. R. (1990) 170 C.L.R. 573; R. v. Neilan [1992] 1 V.R. 57, applied.”
The Victorian Court of Appeal’s approach that trial judges ought not to shrink from
inferring arson against insured plaintiffs is confirmed by the New South Wales
Court of Appeal’s allowing a similar appeal in NRMA Insurance Limited v Elchaar
(1993) 7 ANZIC 61-169. The headnote explains the Court of Appeal’s reasoning:
“(1) There was a failure on the part of the trial Judge adequately
to disclose his reasons for decision.(2)
As E did not give evidence and there was no suggestion that other witnesses were implicated in arson, nothing turned upon the credibility of any witness at the trial. The Court was in as good a position as the trial Judge to determine the issue, and did so.
(3)
Although the standard of proof is the civil standard, the seriousness of the appellant’s allegation against E affects the clarity of the proof required.
(4)
The fire was deliberately lit; there was no evidence of forced entry into the premises; the premises had apparently been securely closed on the evening of 28 November; E was the last to leave the premises; he had a key; he had an opportunity to start the fire; there was no evidence that anyone else had such an opportunity; no one who gave evidence was able to give any detailed account of E’s whereabouts over the hours during which the fire started; the contents of the building, as E must have known, were covered by a recent policy of insurance; and E’s financial commitments in connection with a purchase of a rural property gave him a motive to be in a position to claim under the policy of insurance covering the building.
There was no material conflict of evidence. The question was as to the inferences to be drawn from the evidence summarised. It was significant that E declined to give evidence. there was no suggestion that anyone else might have reason to set fire to the premises. In relation to the hypothesis that the fire was the result of random vandalism, the evidence was that the premises were securely locked.
(4)
The proper inference was that E was personally involved in lighting the fire and accordingly the insurer’s defence to the claims under the polices was made out.”
I was relieved when Mr Bevan, who had not been opened as a witness, gave
evidence. I took it that his profession was one inclining him to be suspicious,
especially of an insured with a claims history like Mr Ricciardi’s (which features
prominently in the interview transcripts tendered during the plaintiff’s evidence),
and was concerned that he may by some means have suggested to the defendant’s
witnesses what evidence they could give to assist the defendant’s case. This would
bear particularly upon evidence damaging Mr Ricciardi’s alibi. For reasons
appearing above, there is no longer any need to harbour such concerns. I do not
think for a moment that Mr Bevan, even if he sought to, could prevail on so many
witnesses to tell the same story, if they were not convinced it was the right one.
Having heard all the witnesses, I do not think there is any basis for suspecting that
what I have characterized as the plaintiff’s “incendiary” remarks represent
fabrications.
It must be noted that, with the exception of Mr Nystrom, the defendant’s witnesses
dislike Mr Ricciardi. Perhaps that comment does not apply to Mr Kerr, or to Mr
Culpan, except so far as he might make common cause with other members of his
household. Mrs Skillington smarts under unjustified accusations she says Mr
Ricciardi made against her children and has been engaged in an unedifying activity
with him of tossing rubbish back and forth over the fence. She thinks his conduct
as a landlord is unprincipled. So do Wayne Slatter and Marilyn Myers, who have
been the victims of it, and regard Mr Ricciardi as having unjustifiably detained
some of their property, which they have had to replace. They say he is still to
return some items. There may be some poetic justice in Mr Ricciardi (whose
records of interview, exhibits 7, 8 and 9 tend to reveal him as a person who always
thinks the worst of others) being regarded in a similar way in return. Suffice it to say that in my assessment none of the evidence given against Mr Ricciardi was
affected by any witness’ unfavourable attitude towards or experience of him.
So far as the plaintiff’s own evidence is concerned, it was not impressive. Even
before he entered the witness box, in interviews with Mr Bevan, he was very
difficult to keep to the point, expatiating upon all manner of extraneous topics. I
thought he was evasive and unforthcoming and, generally speaking, except where
his evidence went against his own interest, I would be inclined to accept what he
said only if it was corroborated by some other evidence, or production of records
held by him, such as his receipt book, exhibit 11. This book covers the period from
5 September 1998 to 27 May 1999. (Interestingly, the penultimate receipt dated 22
May 1999, assuming it to have been written out on a visit to the relevant rental
premises, would place Mr Ricciardi at Clinton Street, Coopers Plains on the day
preceding the fire, rather than at Kingsthorpe. This matter was not pursued during
the trial, and I shall not speculate about it.)
On the first day of the trial, the defendant’s interest in access to other receipt books,
bank statements or tax returns which might show the rental actually received for the
burnt property was clear. Mr Ricciardi appeared to indicate there were such
records, but none were ever produced in court. Receipt 713523 of 24 October 1998
for $240 in favour of Mr D. Marshall was treated as being the only one referable to
the property. It may be that receipt 713503 of 14 September 1998 for $80 in favour
of Mr D. Marshall also relates to the property. There appears to be no other.
Exhibit 6 was presented as Mr and Mrs Marshall’s tenancy agreement. It is for six
months from 1 July 1998. Except as aforesaid, no payment of rent is established. It
is clear that before the six months were up, the Marshalls vacated and that Mr Yardley and his family were in possession. Mr Yardley, who apparently asserted
some claim to (maybe even ownership of) the premises, paid no rent. He did not
vacate until shortly before 16 May 1999, when Mr Ricciardi visited the premises,
on the eve of his ejectment or similar proceedings against Mr Yardley coming on in
the Magistrates Court at Chinchilla on 18 May. Although Mr Ricciardi apparently
claimed rent or mense profits in the proceedings, he always denied Mr Yardley was
a tenant, and, in the end, did not pursue that claim.
Mr Yardley gave evidence for the defendant. For present purposes, his main point
was the extremely dilapidated condition of the house, as amply corroborated by
Sergeant Crowther, who was called for the plaintiff. His cross-examination
includes the following:
“You had been to that premises on a number of occasions prior to 23
May 1999?-- Yes.And it is the case, isn’t it, that in your opinion, the house wasn’t worth much?-- It was – it’s typical, or it was typical of many of the houses in and around that area, where they are purchased very cheaply. They are transported there. Many of them are erected without council, prior council approval or any to any building standard and in my personal opinion, the house was in poor standard and very poor standard, and that’s structurally as well as the conditions inside the house.
Was it that bad that you would think it being nearly at the stage of being condemned?-- Well, if I – again, my personal opinion would be yes.
Now, when was the last time you had actually been inside the house, do you remember?-- It wasn’t long before – it was in the beginning of ’99. It was around the Christmas, the period ‘98/’99, when there was people by the name of Marshall living there and I had then – I think Gary Yardley then moved in and I don’t think I had any contact with Mr Yardley at lot 3. I may have, but wasn’t long before that house fire, within a couple of months anyway.
And the floor was rotten when you saw it?-- There was many areas of the floor, in particular some of the floor boards in the bathroom and toilet and a small hallway that were, I guess, beyond repair.
They would have had to have been replaced through rot, yes. couple of old water tanks obviously on small stands, I think, from memory on the eastern side and on the western side of the house, but the tanks were certainly not in good condition.
And the paint work inside the house was in poor condition?-- Yes.
And there was water damage from a leaking roof section in that veranda area?-- I would suspect that there would be. From memory, the front veranda roofed area was lower than the remainder of the – it didn’t follow the roof line, which would suggest that there may be some – would have been some damage there, whether it was caused from water damage or not, but, yes, there definitely was – the house definitely wasn’t in good condition.
And the floor coverings were in poor condition, if there were any?-- I don’t think that there was – it may have been some old carpet in one of the bedrooms but in the lounge, as you walked into the house, there was two lounges, two rooms to the left, and I can’t recall any floor coverings at all, whether they were in – I think there was vinyl in the kitchen, which was extremely old, and floor boards. I think the majority of the floor would have been exposed timber, would have been floor boards.
And the toilet wasn’t working on the premises?-- On one of the occasions I turned up there to execute a search warrant, the toilet was in extremely poor state.”
I pursued the matter at page 118:
“Can you say whether you’ve had the opportunity to visit the other house on the property, I think the people are called Alice and Bernard Hocken?-- Yes, your Honour they reside at lot 23 Montrose Road, I have visited that house on a number of occasions.
Can you offer any comparison of the condition of the two houses?-- The house at lot 23 Montrose Road is or would be significantly of a higher standard than the one at lot 3 Church Road. I have been inside the house at lot 23 Montrose Road on a number of occasions and my observations of that would be that it is of much higher standard than lot 3, Church Road.
I’m not sure I’ve got the addresses right; are you saying that the one that burnt down was the inferior one?-- Yes, your Honour.
Thank you. Do you want to ask anything else, Mr Kelly? and oranges here in comparison to the standard of the two houses?-- It’s – the house at lot 3 Church Road is, as I said before, is significantly of a poorer standard than the other house on the adjacent lot, so yes.
So where your personal opinion was that the house that burnt down was on the verge of being condemned, you wouldn’t hold that view with respect to the other property?-- No.”
I accept the evidence of Sergeant Crowther and Mr Yardley as to the condition of
the house, rather than Mr Ricciardi’s assertions it was “habitable”. There was no
evidence as to the feasiblity or cost of work to render it habitable. As at the date of
the fire, it had not returned a cent in rental for months.
The plaintiff obtained a “valuation” of the property from Mr Burley, who laboured
under the disadvantage of never having seen it. He did inspect the other house on
the site, his assumptions, no doubt on instructions, including “the destroyed
dwelling reportedly being in superior condition to the existing dwelling.” Mr
Burley thought that the diminution in value of the site attributable to loss of the
house was $30,000 and that the cost of reinstatement, based on acquisition of a
removal house for $20,000 to $23,000, would be $40,000 or thereabouts. Due to no
fault of his own, Mr Burley made assumptions regarding the subject property and
the standard and condition of it which bear no sensible relationship to the true facts.
Mr Ricciardi told Mr Bevan that he purchased the house, in the mid 1980’s, for less
than $1,000. Mr Burley gave an estimate of the cost of getting a house transported
to and set up on the site of $15,000, which, being inclusive of stumping, is probably
less than Mr Ricciardi’s claim to have paid “another 15,000 grand to get it there.
Then you’ve got to ... another blooming $10,000 grand to set it up once it gets
there”. Mr Ricciardi also claimed (exhibit 8) that he thought he had the house
insured for $98,000 and that it was “worth to me in the vicinity of $90,000 grand.” I would not accept any of his figures without some evidence of actual payments or
the like to corroborate them.
That Mr Ricciardi has been assessed as not a witness of truth does not prove the
opposite of what he asserted: per Gibbs J. in Steinberg v Federal Commissioner of
Taxation (1975) 134 CLR 640, 694, a case to do with the intentions of a taxpayer
whose assertions as to his intentions in certain transactions were disbelieved. The
situation is that Mr Ricciardi’s evidence is of no assistance to him. It is still for the
defendant to prove its claim of arson against him on the ordinary civil standard of
proof. In the absence of any helpful direct evidence, the case is a circumstantial
one. I was referred to well known authorities such as Luxton v Vines (1955) 85
CLR 352, 358, Rejfek v McElroy (1965) 112 CLR 517, Helton v Allen (1940) 63
CLR 691 and Briginshaw v Briginshaw (1938) 60 CLR 336. For the defendant to
succeed on its principal defence, it must get the court to the point of actual
persuasion that Mr Ricciardi was complicit in arson, without having to go as far as
satisfying the criminal standard of proof.
It has been instructive to be referred to and consult numerous recent authorities
illustrating the jurisprudence of insurer defences of arson by the insured. The cases
indicate the kinds of factors whose presence invites the drawing of an inference of
arson. In Longmuir (supra), which reminds me of the importance of considering all
factors in combination, and not separately, when assessing the strength of the
circumstantial case, the court placed considerable reliance on the plaintiff’s failure
to give evidence and on the breakdown of his marriage, he having declared an
intention to depreciate the value of the property to spite his wife (he was acquitted
at his trial for arson). According to Winneke P. “experience demonstrates that people engaged in bitter matrimonial disputes do destroy property which is the
subject of such disputes.” His Honour cited Winstanley v Alliance Insurance Co Ltd
(1984) 3 ANZIC 60-567, whose headnote includes the following:
“The scientific evidence was such that the fire could only have been deliberately lit, whilst the other evidence was such that it must have been lit by the first plaintiff. He had been the only occupant of the house, which had been securely locked, he had been in a parlous financial position, his wife had left him, apparently for good, and he had been somewhat intoxicated at the time. Furthermore, his conduct had been inconsistent with innocence and his own evidence could not be relied upon.”
Proven proximity of the insured to the premises at the time of the fire and financial
pressures, particularly of failing businesses, may be seen as highly significant. See
K.T. Lock (T/a Mega Movies and Ascom Electronics) v Territory Insurance Office
(1997) NTSC 22, Kervan Trading Pty Ltd v Mercantile Mutual Insurance
(Australia) Ltd (1999) NSWSC 185, particularly allied with strong indicators of
arson and ease of access to the premises by the insured as opposed to other persons:
Moustakos v The Federation Insurance Ltd (1984) 3 ANZIC 60-537 (kerosene was
found in the tea urn in premises protected by deadlocks, the insured being about the
place); opportunistic arrangements for insurance cover or an increase in insurance
cover have been considered important: Ayoub v Lombard Insurance Co (Aust) Pty
Ltd (1989) 5 ANZIC 60-933 (the fire happened during a one day grace period in
respect of a cover note the insurer had announced it wanted to cancel) cf AMP Fire
& General Insurance Co Ltd v Collie (1991) 6 ANZIC 61-082.
In the early 1980’s, there was a rash of insurance claims for lost vessels in
Queensland leading, as one might expect, to mixed success by plaintiff insureds.
The insurer succeeded in proving arson in Craig v Associated National Insurance
Co Ltd (1984) 1 Qd R 209; 3 ANZIC 60-553. However, in Jeffery v Associated National Insurance Co Ltd (1984) 1 Qd R 238, at 248-49, Thomas J said,
expounding a policy with which I respectfully agree:
“Now objectively speaking, against that background I do not mind saying that it is much more likely that one of the insureds caused the loss than a stranger. In other words, the insureds are the obvious suspects. But the question of credence involves more than an assessment of objective probability. It is obviously quite possible that some other person did take the vessel, whether for malicious motives against the insureds, or for a desire to benefit the insureds, or for sheer devilry. If all such cases as these were decided on objective probability, every impecunious insured, innocent and guilty alike, would lose his case. It is often said that the plaintiffs are the persons who are in a position to explain matters, and the insurer is not. But in another sense an innocent claimant can do not more than come to court and say that he cannot explain matters either, and that he did not scuttle his vessel or ask anyone else to do so.
In the end, I am prepared to accept the word of the plaintiffs that they were not party to the scuttling of the vessel. I do this despite the suspicious background.
...
I do not have any strong conviction in the matter. It was perfectly proper of the insurer to reject the claim and require it to be proved in a court. I consider, with the reservations already expressed, that the insureds have done so.”
(Sergeant Crowther’s evidence did not persuade me that Kogan was any more likely
than other places to be home to people inclined to such devilry or malicious
motives.)
It is the nature of many of these cases that, as Wright J. put it in Dixon v
Commercial Union Assurance Company of Australia Ltd (1999) TASSC 104, it is
“difficult to reach a firm conclusion one way or the other, as to the cause of the
fire.” Many “suspicious” cases are resolved because, in the end, the judge believes
the insured’s denials of responsibility for the loss, as in NRMA Insurance Ltd v Collier (1996) 9 ANZIC 60-387, memorable for Meagher JA’s trenchant criticism
of a “plain English” policy document.
Mr Kelly seemed to lay particular stress on the circumstantial case made out in
Hamden v NRMA Insurance Ltd, CA 40181 (95, 27 August 1997, New South Wales
Court of Appeal). The claim concerned physical damage to a Mercedes car which
was taken away when parked outside a wedding by the insured. Although the Court
of Appeal began by thinking the insured’s appeal against the finding that he had
fraudulently caused the loss was promising, given the onus which the insurance
company bore to establish that, the appeal ultimately failed, in part because the
insured was not permitted to present fresh evidence which could have been
presented during the somewhat protracted trial once the occasion for it appeared, or
afterwards while the trial judge had judgment reserved. The circumstances thought
sufficient to prove fraud included the insured’s being contracted to leave Australia
shortly, to work overseas, being badly in need of money and without assets of any
consequence other than the vehicle, which he had been trying to sell for a
considerable time. The vehicle had not been used for some months, and just
happened to be taken out for use at the wedding, when it was stolen, with the
evidence at the trial being that a key must have been used to gain entry to and start
the vehicle, rather than entry being forced and some “hot wiring” technique used;
the insured, whom the trial judge did not believe, had had two sets of keys to the
vehicle, but was able to produce only one to the insurance investigator.
Summarizing, it can be seen that the evidence respecting the defence of arson by
the plaintiff cuts both ways:
(a) the fire in a house which was not completely secured and which was located in an isolated place where access could be had to it
unobserved, was caused by human agency, and no person or class of
persons other than Mr Ricciardi has been identified who might have
been responsible. The court accepts Mr Yardley’s denial of
responsibility;
(b) there is no positive evidence placing Mr Ricciardi in the Kogan/Chinchilla area between 18 May 1999, when he was at the
court and the weekend after the fire, when according to exhibit 8
page 4, “I did go to the fire”; however, he has lied about where he
was on the day of the fire, and on the evidence he had the
opportunity to be at the house (which he visited regularly) on the day
of the fire;
(c) further, an opportunity to set the fire existed in the sense that Mr Yardley had finally vacated the house;
(d) on 14 May 1999, Mr Ricciardi appears to have been setting up an alibi for a fire, which had not yet occurred; his failure to attend the
house after the fire (although within a couple of hours’ drive, which
would be nothing to him) was not satisfactorily explained, and is
consistent with wanting to distance himself from it;
(e) he lied in a clear attempt to prevent the insurance investigator from contacting witnesses who could demonstrate his alibi was false;
(f) Mr Ricciardi has sought from the insurer (and continues to seek in the action) compensation well in excess of the value of the destroyed
house which was in very poor condition, and of the rental he was actually earning and might have earned from it; while he may be
better off with the money, there is no evidence he was under
financial pressure at all or anxious to sell the property;
(g) no motive along the lines of spiting someone else appears; (h) although the house was probably always over insured, there was no recent increase in the level of cover (or eminent expiry of it).
Further to (d) above, it is worth setting out Mr Ricciardi’s account to Mr Bevan on
3 June as to his lack of curiosity to inspect the fire damage:
“NR
...the first time I was aware of it, I was driving in my car and I just happened to turn onto a radio station and I heard the announcement there’s a house that burnt down in ..... and I thought holy moly I hope it’s not one of mine places because I’ve got a few places there as you can imagine from this property.
RCB Where were you at that time? NR I was driving back from Toowoomba to go to Gatton. RCB And was that on the Sunday of the fire? NR
Oh no, it was Monday morning when I heard it on the news see.... I was going from Toowoomba to Gatton Monday morning at approximately about quarter past eight and the local news came on the air and I heard that there was a house fire at Kogan. I said Jesus Christ I hope it’s not one of mine, so what I did, I pulled up I think it was at Helidon and I rang Ally up because I got Ally’s number see and I said Ally, what was the nature of the business....” whose house got burnt down? and she said it was your place at 3 Church Road and I was absolutely amazed you know and then as soon as I got back to Suncorp office because I had to do other things, there’s no Suncorp office at Gatton. I had to wait until I got back here at Toombul I went and I checked to see if I had the insurance paid up on the property .... but I was actually taken aghast that was my house that was burnt down and I rang the Coppers virtually straight away, the Police at Warra, to ask if he had attended a fire on the previous Sunday and whether it was actually my place and he said it was 3 Church Road, Chinchilla, it was your place and when we got there it was completely gone.
... NR Yes, well I was travelling from Toowoomba to Gatton and I
heard it on the wireless right?RCB Yes. NR And then after, I dropped off some stuff at Gatton, then I made my way straight to Brisbane and first point of call was the Toombul Shopping Centre here to find out and put the claim in for the thingo because I’d rung up the Policeman at Warra and he said it was definitely my place that he had attended you know because I didn’t accept Ally’s word because although she kept an eye on it and that I had to double check to see if it was ...to make sure it was my place, you know.”
Like the trial judge in Elchaar(supra) I consider that there is evidence capable of
supporting a finding of arson, particularly if the robust view of an insured’s lies
regarding his whereabouts at the time of the fire taken by the Victorian Court of
Appeal in R v Karl Mazur (2000) VSCA 111; BC 200003451 is adopted. The
inference of arson is a serious one to draw in a close case (which I think this one is)
and I find it unnecessary to pronounce a conclusion upon it as I think it is clear the
plaintiff’s claim should fail because, whatever the cause of the fire, it has been
made and pursued fraudulently, within s.56 of the Insurance Contracts Act 1984
(Cth):
“56.(1) Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim.
(2) In any proceedings in relation to such a claim, the court may, if only a minimal or insignificant part of the claim is made fraudulently and non-payment of the remainder of the claim would be harsh and unfair, order the insurer to pay, in relation to the claim, such amount (if any) as is just and equitable in the circumstances.
(3) In exercising the power conferred by sub-section (2), the court shall have regard to the need to deter fraudulent conduct in relation to insurance but may also have regard to any other relevant matter.
This section has to be read against the background of s.13, which now gives
statutory force to the common law’s approach to insurance contracts:
“The duty of the utmost good faith
13. A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.”
It does not hurt to recall the common law background to the Act as summarized, for
example, in MacGillvray and Parkington on Insurance Law (8th) 1925:
“Conditions relating to false or fraudulent claims. Insurers, in the nature of their profession, are particularly exposed to fraudulent claims which are difficult to refute since the evidence in support will almost always be in the sole hands of the assured or his witnesses.”
or the celebrated charge to the jury of Willes J in Britton v Royal
Insurance Co (1866) 4 F&F 905 set out by the other authors in the
following paragraph:
“Of course, if the assured set fire to his house, he could not recover. That is clear. But it is not less clear that, even supposing it were not wilful, yet as it is a contract of indemnity only, that is, a contract to recoup the insured the value of the property insured by fire, if the claim is fraudulent, it is defeated altogether. That is, suppose the insured made a claim for twice the amount insured and lost, thus seeking to put the office off its guard, and in the result to recover more than he is entitled to, that would be a wilful fraud, and the consequence is that he could not recover anything. This is a defence quite different from that of wilful arson. It gives the go-by to the origin of the fire, and it amounts to this – that the assured took advantage of the fire to make a fraudulent claim. The law upon such a case is in accordance with justice, and also with sound policy. The law is, that a person who has made such a fraudulent claim could not be permitted to recover at all. The contract of insurance is one of perfect good faith on both sides, and it is most important that such good faith should be maintained. It is common practice to insert in fire-policies conditions that they shall be void in the event of a fraudulent claim; and there was such a condition in the present case. Such a condition is only in accordance with legal principle and sound policy. It would be dangerous to permit parties to practice such frauds, and then, notwithstanding their falsehood and fraud, to recover the real value of the goods consumed. And if there is wilful falsehood and fraud in claim, the insured forfeits all claim whatever upon the policy.”
These matters are now, effectively, covered by the Act, which picks up a good deal
of the common law insofaras there is no definition of fraud. An insured’s
obligations have been held to extend to supplying the insurer when it is
investigating a claim all available information reasonably required: Boulton v
Houlder Brothers & Co (1904) 1 KB 784, 791, cited in Moraitis v Harvey Trinder
(Q’land) Pty Limited (1969) Qd R 226, 236. Cases may be found in which,
independently of holding that an insured committed arson, the courts have denied
them indemnity under policies because of the use of fraudulent or dishonest means
adopted in pursuit of the claim. See for example the New Zealand decision of
Engel v The South British Insurance Co Ltd (1983) 2 ANZIC 60-516 and Entwells
Pty Ltd v National and General Insurance Co Ltd (1991) 6 ANZIC 60-059.
It does not matter that the insured honestly believes in his claim. Moraitis (supra)
is such a case, as is Australian Associated Motor Insurers Limited v Tiep Thi To
(1999) VSC 287. There, the insured (mistakenly) thought the insurer could avoid
the policy because her son (a minor) was driving her vehicle when it was damaged.
She invented a story that the vehicle had been stolen by a group of youths who set
upon her son. Mandie J. allowed the insurer’s appeal, finding the claim had been
made “fraudulently” under s. 56. Mr Ricciardi’s claim and his pursuit of it can be
similarly characterized.
Apart from asserting that the plaintiff or his agent caused the fire, the defendant
justified its refusal to indemnify the plaintiff pursuant to his policy on the following
grounds:
“(2)The Plaintiff has fraudulently denied his involvement in
the fire;
(3) The Plaintiff has fraudulently concealed his whereabouts on the date of the fire;
(4) The Plaintiff has fraudulently claimed the property was able to be rented at the time of the fire;
(5) The Plaintiff has fraudulently denied knowledge of how to contact persons able to assist the Defendant in its enquiries into the circumstances of the fire;
(6) The Plaintiff’s explanation as to where he was on the dateof the fire was false and fraudulent.
(7) The Plaintiff has fraudulently claimed that the property was of the value of $53,100.00. In support thereof the Plaintiff:
(i) Made a claim to the Defendant for the full sum of $53,100.00;
(ii) Included in his Statement of Claim the value of the property at $53,100.00;
(iii) Informed his valuer appointed for the purposes of this litigation that the property was in good repair and of a superior standard to the other dwelling located on the property in a deliberate attempt to obtain a figure higher than that which he would otherwise be entitled to recover under the policy.”
Paragraph (7) was added by amendment made by leave close to the end of the
trial. It reflects the way in which the trial had been actually conducted and, in the
end, in my view constitutes a good and sufficient basis for the refusal to
indemnify, which this court should uphold. It is necessary to have regard to
s.56(2). The matters particularized in (7), which were persisted in in the court,
were part of the process of the plaintiff’s making the claim, as was the false
exaggeration of stock quantities (to the extent of at least $22,995) in Entwells
(supra) – see the reasons for judgment at 77,134, citing Moraitis (supra) at 230
and 235. The plaintiff’s total claim in Entwells ranged between $222,589 and
$528,000, the claim for loss of stock ranging from $94,000 to $117,000. Ipp J.
regarded the exaggeration of stock as “relatively small”; he resolved the matter by disallowing any claim for stock, but (disregarding the effects of the finding of
arson) would have allowed other parts of the claim. It is impossible to regard as
“minimal or insignificant” what has been shown against Mr Ricciardi. Mr Burley
said in cross-examination that the cost of a removal house in equivalent condition
to a dilapidated one might be very small.
Mr Kelly set some store by Mr Ricciardi’s having, until an amendment was made to
his statement of claim at the beginning of the trial, persisted in an allegation that his
house was let to tenants at the date of the fire in support of a claim for lost rent.
While such an assertion in the pleading was contrary to the facts, there are some
difficulties in finding it was fraudulent, to the extent that fraud involves deceiving
the insurer into acting in a way it would not otherwise act. From the outset the
defendant had pleaded that the premises were vacant. It knew this because the
circumstances relating to Mr Yardley had been sufficiently disclosed to Mr Bevan
by Mr Ricciardi, as the transcripts of the recorded interviews show. The amended
statement of claim pleaded that the house was vacant, but had previously been let
for $80 per week and that $80 per week was the “net rent” within the meaning of
the policy, which provides under the heading “loss of rent” in the section “other
benefit”:
“(j) ... If your insured building is let to a tenant, you are covered for the net rent that you lose as a result of the building being unfit to live in due to damage for which we cover you.
We will pay an amount equal to the net rent you would have received during the period reasonably necessary to restore or rebuild the building to a livable condition. A limit of 12 months applies.
“Net rent” does not include any tenancy costs you save.”
Mr Kelly submitted this lost rent benefit was unavailable because, at the time of the
fire, the house was not “let to a tenant”. Difficult questions of application might
arise in other cases, if a fire happened during a brief interregnum between tenancies
in a building with a good history of being let to tenants who actually paid rent. It is
inappropriate for the court to rule on this question. Mr Ricciardi’s difficulty would
appear to be that there had been no tenant since some time in 1998, and that the
condition of the property, unburnt, made it problematical whether he could get
another tenant without spending a good deal on repairs. In the circumstances, the
inflated rental claim may be said to be akin to that made in Ewer v National
Employees’ Mutual (1937) 2 All ER 193 which was regarded as a “bargaining
figure” and not as fraudulent; however, I would regard it as vitiated by Mr
Ricciardi’s persistent false assertion that the house was superior to that at 23
Montrose Road.
As to the defendant’s particulars (3), (5) and (6), I have noted elsewhere authorities
which acknowledge the duty of an insured to assist an insurer by provision of
information reasonably required to assess how much ought to be paid out on claims.
In Boulton (supra) the context was an application for discovery in proceedings by
the insurer to recover sums claimed to have been overpaid by reason of claims
fraudulently made: some colour was given to the plaintiff’s claim by the
defendants’ making partial admissions and a payment into court. Given that there is
a sufficient basis otherwise for rejection of Mr Ricciardi’s claim, there is little to be
gained by ruling on these matters. Mr Ricciardi may well have a right in respect of
these matters to some relief under s. 56(2). And it may be noted that in Entwells, at
77,135-35, Ipp J. was unable to identify any basis for relieving the insurer, whose
ordinary right, set out in s.54(1) would be to have its liability "reduced by the amount that fairly represents the extent to which the insurer’s interests were
prejudiced as a result of that act.” I am in a similar difficulty here.
One other matter briefly considered at the trial was the basis of indemnity. The
policy provides under the heading “settlement of a claim”:
“(g) ...
‘We choose the method of settlement of any claim for
damage to insured property. We may choose to do any of
the following:
- arrange repair, reinstatement or replacement of the
property ourselves and pay the cost;- pay the cost of repair, reinstatement or replacement
of the property arranged by you with our consent;- pay the value of the property where any special limit applies (as shown in the policy or certificate of insurance) we will pay up to that amount and in total we will pay up to the ‘sum insured’ for the property.’”
The certificate of insurance expressly excluded replacement, so that the insurer’s
obligation came to be to “pay the value of the property.” I agree with Mr
Alldridge’s submission, for the plaintiff, that that would be the obligation, rather
than one to pay the amount of diminution in value of the 251 hectare site, which Mr
Burley’s report appears to offer as an alternative.
The plaintiff’s action should be dismissed with costs to be assessed.
0
9
0