McCarthy v NRMA Insurance Limited

[2001] NSWSC 508

CITATION:	McCarthy v NRMA Insurance Limited [2001] NSWSC 508
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 12047/00
HEARING DATE(S):	07/06/01
JUDGMENT DATE:	7 June 2001
PARTIES :	Kylie McCarthy (P) NRMA Insurance Limited (D)
JUDGMENT OF:	Young CJ in Eq

LOWER COURT JURISDICTION :	Local Court
LOWER COURT FILE NUMBER(S) :	9572/98
LOWER COURT JUDICIAL OFFICER :	Magistrate Price

COUNSEL :	B Debuse (P) P Renehan (D)
SOLICITORS:	Craddock Murray Neumann (P) Abbott Tout (D)
CATCHWORDS:	INSURANCE [80] Motor vehicle insurance- Stolen- What covered. MAGISTRATES [128][194]- Reasons for decision- Must deal with critical issues- If not case will be remitted. WORDS & PHRASES- "Stolen".
LEGISLATION CITED:	Justices Act, 1902, s 109
CASES CITED:	Mifsud v Campbell (1991) 21 NSWLR 725 Pierpoint v Pittis [1999] NSW SC 857 Simon v NRMA Insurance Ltd (Samuels AP, 22.10.1991)
DECISION:	Appeal allowed.

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

YOUNG CJ in Eq

THURSDAY 7 JUNE 2001

12047/00 - McCARTHY v NRMA INSURANCE LIMITED

JUDGMENT

1    HIS HONOUR: This is an appeal from a Magistrate sitting in the Civil Claims Jurisdiction of the Local Court.

2    The plaintiff was the owner of a motor vehicle which she claims was insured with the defendant at an agreed value of $14,000 against it being stolen. She claims it was stolen and subsequently found damaged. She made a claim under the policy which was refused.

3    The defendant filed a denial that, inter alia, the vehicle was stolen, and also alleged that the plaintiff was not truthful and frank in a statement she made in her claim, and that the claim was made fraudulently, and the plaintiff did not act towards the defendant with the utmost good faith.

4    The trial before the learned Magistrate took place on 21 February 2000 and 26 June 2000 and he gave a reserved judgment on 7 July 2000. The learned Magistrate found a verdict for the defendant.

5    The plaintiff appeals on a number of grounds, but essentially the appeal is to the effect that the learned Magistrate did not adequately express reasons for the finding he made.

6    Essentially his reasons are on p 5 of his judgment as follows:

"In these matters there is an evidentiary onus upon the applicant plaintiff. Equally there is an onus upon the defendant to satisfy the Court where a specific allegation of fraud is made against a claimed plaintiff.
“The cumulative effect of all of the available evidence leaves this Court to conclude that not only is the plaintiff unable to discharge her evidentiary onus but rather that the overall circumstances constitute a fraud, a civil fraud, upon the defendant.
“There will be a verdict in favour of the defendant."

7    The facts and circumstances need not be fully gone into. The plaintiff's basic case was that she had left her car parked in a public car park at Bankstown when she went to a social function. When she came back a few hours later the car was gone. She reported it to the Bankstown Police, the police station being about ten minutes walk away from where she left the car.

8    The police found the vehicle about half an hour or so later in a road at Richmond with its lights still on, crashed into a cliff or wall, with evidence that someone had jumped up and down on its roof.

9    The defendant's case essentially was that the plaintiff had deliberately arranged herself an alibi whilst some accomplice removed her car from the car park, drove it to Richmond, then damaged it as much as possible so that it would be a complete write-off.

10    The defendant pointed to factors which made this conclusion, it said, more likely than not, including the fact that, in the police officer's view, it was unusual for car thieves to have treated the car in the way this car was treated, including removing what would appear to be a useless stereo system, emptying the glove box of trifles, stomping on the roof etc, and that there were other aspects of the plaintiff's evidence which gave rise to great suspicion.

11    At the trial the only evidence was the oral evidence of the plaintiff, who was cross-examined at considerable length; evidence of a work mate of the plaintiff; in the defendant's case the police officer who investigated the accident; and a solicitor who gave formal evidence. The plaintiff's former boyfriend had been subpoenaed by the defendant to attend the Court and obeyed that subpoena but he was too much of a "hot potato" for either side to call.

12    The plaintiff appeared to be a person who in general would agree with whatever the questioner said to her though, when the defendant's counsel got to the Browne v Dunn points she was quite clear in her answers. For instance (transcript p 98) the defendant's counsel put:

"Q. I suggest to you the vehicle was not stolen on that evening, but that you knew it was going to be taken from the car park and disposed of?
A. No, I didn't know.
Q. And you made arrangements for that to occur?
A. No.
Q. And you did that because you had been unable to sell the vehicle for some time and that you were in financial difficulties with the Bankstown Credit Union with your loan from them in relation to the car?
A. No, I wasn’t.
...
Q. I suggest to you that you decided the only way that you were going to pay off the Bankstown Credit Union was to arrange for the car to be stolen and then written off?
A. No… ."

13    It was, accordingly, a case where the credit of the plaintiff was a matter which went to the heart of the case, and which the Magistrate needed to decide. Was the plaintiff telling the truth when she said that she had just parked the car and it was stolen without her involvement, or was the defendant's case correct and she had arranged for the vehicle to be removed and disposed of so that she could get the agreed value from the defendant and so extricate herself from her financial difficulties.

14    There were, as the learned Magistrate recognised, really two matters to think about in the ultimate question to be asked:

(a) whether the motor vehicle had been stolen within the meaning of that word in the relevant policy; and

(b) whether this was a fraudulent claim.

15    As Samuels AP said in Simon v NRMA Insurance Limited (22 October 1991, unreported) p 8:

"'Stolen' in this context means, of course, taken away without the co-operation or connivance of the appellant."

16    It is perhaps a little unfortunate but in the judgment the learned Magistrate kept referring to "thieves" and "theft", but it is relatively clear what he meant.

17    The onus of proof, not just the evidentiary onus in the ultimate case, was on the plaintiff. If she failed in this then that was the end of the case and the learned Magistrate need go no further. That is in fact what happened in Simon's case. Further, alternatively or additionally, the Magistrate could find for the defendant on the basis that the plaintiff had committed fraud in making her claim, and on that matter the onus was on the defendant. Furthermore, as fraud is a very serious allegation, and as Mr Debuse for the plaintiff kept pointing out to me, is a matter which may mean that for the next fifty years of her life the plaintiff may not be able to get any insurance for her motor vehicle, it therefore is a matter that would need to be dealt with under the Briginshaw standard.

18    As can be seen from the learned Magistrate's finding, he purported to find for the defendant on both aspects of the matter.

19    However, it is difficult to know how he came to that conclusion. He said he came to that conclusion on the cumulative effect of all the available evidence. However, in the para penultimate paragraph of the reasoning he talks about the plaintiff as a person who candidly conceded that she had initially borrowed too much to buy the car, and then continued:

"The plaintiff impressed as a candid witness ."

20    It is very difficult both to say that the plaintiff is a candid witness, and also to completely disbelieve her, as the Magistrate presumably must have done, when she denied she was a party to the rather horrendous fraud that was being alleged by the defendant. There is nothing in the reasons to suggest that the Magistrate did not regard the plaintiff as a witness of truth.

21    There are, of course, some ways of saying that a person is completely dishonest in most things but they have not actually lied in court. But the Magistrate has not even said that.

22    There are other aspects of the judgment where the learned Magistrate does appear simply to leap over gaps in the evidence. When I say gaps in the evidence it is, of course, very much a circumstantial case in which no one but the defendant's side would have any details about what happened as far as the Court would know, and the plaintiff says that she did not either. However, the Magistrate seems to have taken a leap in faith in making his finding about what the judgment regards as a completely “useful” piece of equipment, but must mean a completely “useless” piece of equipment, being stolen, and the fact that the thieves stole it. I merely mention this as one of the problems in the judgment.

23 It would seem to me that if this case had gone to a jury, and if the jury had found for the defendant on the evidence, then the verdict would probably be undisturbed because it was a verdict that a jury reasonably instructed could have reached. However, when a case of this nature is being dealt with by a Judge or Magistrate there is a judicial duty to consider all the evidence in the case and to give full reasons for judgment which reasons must include findings on all critical issues in the case; see eg Mifsud v Campbell (1991) 21 NSWLR 725.

24 I have been much assisted by the judgment of Hidden J in Pierpoint v Pittis [1999] NSW SC 857 which in some respect is not dissimilar to the present case. In that case his Worship took certain views as to what the case was all about which were erroneous, and because of that did not deal with vital matters of fact in his judgment. Hidden J said (para 15):

"The fact is that he did not give the matter proper consideration, no doubt, as a result of his misapprehension about where the burden of proof lay. Accordingly, his Worship's reasons are deficient because of their failure appropriately to deal with an essential issue of fact… ."

25    I think, with respect to his Worship, the same comment could be made here. The finding may well have been open to him but he did need to deal at least with the credit of the plaintiff, and as to why he disbelieved her when she swore on her oath that she was not a party to any attempt to defraud the insurance company by arranging for the car to be "stolen". That may have been clumsily put, as, of course, it was for the plaintiff to show on the main case that a theft did take place and it was important for any judicial officer to make it clear how he was deciding the case; was he deciding it on the basis that he did not accept as a fact that the car was stolen, or was he deciding it on some other basis, or on both bases?

26 The Court is reluctant to set aside a judgment involving a small amount of money like this because the policy of the Local Courts (Civil Claims) Act 1970 is to make sure that cases of this nature are dealt with once and for all with as little formality as possible. However, as Mr Debuse says, even though there is a relatively small amount of money involved, the plaintiff is a person of simple circumstances and the flow on effect of a finding of fraud in an insurance matter may be very disabling in the future.

27    I am not one hundred per cent sure that the failure to give proper reasons is a question of law so I suppose I should formally give leave to appeal on a mixed question of fact and law, because the matter is sufficiently serious enough for this Court to deal with.

28    The next thing is what to do with the case. One way of dealing with it is to ask the learned Magistrate to give further reasons. I believe I have power to so order in appropriate cases. However, there are a couple of factors that lead one to the conclusion that this is not the best thing to do in this case. One is that given the lengthy period that has passed since his Worship heard the evidence, he may not be able to satisfactorily recall matters of demeanour etc which would have a bearing on the reasons he gave. The second is one that I do not completely accept, and that is that there would be a great temptation for the Magistrate to justify his decision, ex post facto. I think one must accept that magistrates will act judicially. It is not unknown for a judge or magistrate to leave a case with a particular view of the probable result in his or her mind and then, when he or she is directing attention to various critical amounts of evidence when writing reasons for judgment, realising that the initial impression was erroneous. However, it may be difficult to explain that to the lay client.

29 The order that Hidden J made in Pierpoint was merely to pick up what is in s 109(d) of the Justices Act 1902 and remit the matter to the Magistrate to be determined according to law. I think that is the proper order even though I very much fear that that may lead to further argument before the Magistrate as to whether he should just pick up the case from where he left it off, or start again, or whether another magistrate should hear the case from the beginning. I think, however, that is really a matter for the Local Court.

30    To avoid any criticism that I am not dealing with all the submissions, I should record that Mr Debuse submitted in this case that I could find a verdict myself on the material. Mr Renehan for the defendant has said that is not a course I should adopt and it seems to me that the credit of the plaintiff was vital and that no appellate court should involve itself in that exercise without having the advantage of seeing the witnesses. Accordingly, I decline that invitation.

31    The order then is that the Court gives leave to appeal. The appeal is allowed. The matter is remitted to the learned Magistrate to be determined according to law.

32    The next matter is the matter of costs. Mr Renehan has put that because the error here was an error of the judicial officer it would be inappropriate to make an order for costs against the respondent and the costs of the appeal should be costs in the cause. There is some appeal to that submission. However, it seems to me that the general trend of authority is against it and, if one does seek to defend the decision below and lose, even on this sort of point, the respondent should pay the costs. Mr Renehan fairly pointed out to me that that was the result in Simon. However, the costs of the first trial should be in the discretion of the Magistrate or whichever magistrate hears the second trial. Accordingly, in addition to what I have already said I formally set aside the judgment of the learned Magistrate and order the defendant to pay the costs of this appeal.

33    The costs in the Local Court both in what has already happened and may hereafter happen are a matter for the Local Court.

34 I reserve the question as to whether there is any entitlement to a certificate under the Suitors’ Fund Act.

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Last Modified: 06/20/2001