Mercantile Mutual Insurance (Aust) P/L v Fischetto No. Scgrg-99-51 Judgment No. S81

[1999] SASC 81

MERCANTILE MUTUAL INSURANCE (AUST) LTD v FISCHETTO
SASC [1999] 81

Magistrates Appeal

Debelle J (ex tempore)

1. This is an appeal by an insurer against a judgment in favour of the insured on her claim to be indemnified in respect of damage to her motor car when it overturned and was extensively damaged. 

2. The respondent had permitted her husband to drive the motor car late one evening.  Earlier in the evening, they had both attended a function for Italians held at the Croatian Club in one of the suburbs of metropolitan Adelaide.  The function was in the nature of a dinner-dance.  Both the respondent and her husband drank liquor in the course of the evening.  The magistrate found that the respondent had little to drink.  The respondent and her husband left the party hurriedly at about 11.30 that evening.  I will return to the reasons for that.  When they arrived home at about midnight, the respondent watched television.  Her husband went for a drive in her motor car.  At about 2.00 am next morning, the car overturned and the respondent's husband was seriously injured and taken to hospital.  A blood sample taken at six o'clock on the morning of the accident showed an alcohol level of 0.059 milligrams per 100 millilitres of blood. 

3. The appellant insurer refused to indemnify the respondent relying on one of the exclusions in  Section 5 of the contract of insurance.  The exclusion states that the insurer will not provide indemnity if a person is driving with the consent of the insured and the insured knows, or should reasonably have known, that the driver is affected by liquor.  It is important to have regard to the precise terms of the exclusion.  It is headed:

   “If any other person is under the influence of alcohol/drugs or exceeding the level permitted by law”. 

The exclusion reads:

“If a person other than You:
- is driving the vehicle with Your express or implied consent and is under the influence of intoxicating liquor or of a drug and You knew or should reasonably have known, at the time when the consent was given or impliedly given, that person was or was to be at the relevant time under that influence;
- is driving Your Vehicle with Your express or implied consent and has a percentage of alcohol in their breath or blood in excess of the percentage permitted by any law in the place where the loss, damage or liability occurred (but subject to any applicable law to the contrary) and You knew or should reasonably have known, at the time when the consent was given or impliedly given, that person had or would have a percentage of alcohol as aforesaid in excess of that permitted by law.”

It is common ground that the respondent’s husband was driving her vehicle with her consent.  The ground upon which the insurer had denied liability, and the issue at the trial, was whether the respondent should reasonably have known at the time when she consented to her husband driving the car that he had a percentage of blood in excess of that permitted by law.

1. An important issue at the trial concerned the question as to who had the burden of proof of the respondent's stated knowledge.  The magistrate held that the respondent had the burden of proving that fact and that she had discharged that burden.  He therefore held that the respondent was entitled to be indemnified under the policy.  It is a nice question whether the magistrate was correct in concluding that the respondent carried the onus of proof as to her state of knowledge.  The parties referred to decisions such as Stateliner Pty Ltd v Legal & General Assurance Society Ltd (1981) 29 SASR 16 at 41 to 42 per King CJ and to Munro Brice & Co v War Risks Association Ltd [1918] 2 KB 78 at 88. Given the conclusion which follows, there is no occasion to examine that issue further in this appeal.

2. The magistrate expressed his reasons for holding that the respondent had discharged the burden of proof in these terms:

   “The final issue I need to decide is whether the cumulative inference from the information I have set out above should have led her to that conclusion.  This is a difficult task.  I mention the onus of proof.  It is asserted by the defence that although they clearly bear the burden of establishing the circumstances from which the exclusion clause arises, the state of her knowledge or imputed knowledge is an exception upon an exception.  It is also information peculiarly within her hands, and so for both those reasons and each of them, the plaintiff bears the onus of proving that she did not have the requisite knowledge or should not reasonably have known the requisite matters.  Mr Possingham points out that that is not the way the policy is drafted.  It is drafted with her knowledge being something for the insurer to establish.

   The burden of proof issue could be decided either way.  I am attracted to the notion that parties generally should be called upon to prove what is in their own knowledge rather than making other parties prove that.  The plaintiff is the one with the knowledge of the circumstances surrounding this incident and I find she bears the onus of proof.  In the event, I do not send this off on a burden of proof basis.  For my purpose the onus of proof is unhelpful.  I have made the factual findings.  I accept her evidence that she did not actually know that her husband was affected in terms that would bring the exclusion clause into operation.  The only remaining decision is whether she reasonably should have known.  That is a matter of inference from the found facts; not a matter upon which the burden of proof is decisive.

   In deciding whether the plaintiff “should reasonably have known at the time when the consent was given or impliedly given that the person had or would have a percentage of alcohol... in excess of that permitted by law” (i.e. .05) I consider the following:

   There is no evidence that Marco obviously consumed alcohol to excess in the presence of the plaintiff at the function.  I have already found that he did not consume each of his alcoholic drinks at the table.  As to whether his conduct was affected in a way that should reasonably have led her to realise that his blood alcohol content exceeded the .05 limit, there is no evidence to suggest that his conduct was altered.  The evidence of the plaintiff and her sister was that it was not.  He was inattentive and ignored her request to leave earlier.  He acted surprisingly when he asked her to leave hurriedly, but a reasonable explanation for that was given, namely that he was embarrassed by an incident over broken glass.  On the evidence, she did not witness that incident and there was nothing in that incident from which she could infer that it was caused by him being affected by alcohol.  I have noted that Mr Gilli described him as “happy” but did not infer that he was affected by alcohol.  Finally, there is the evidence of Dr Ross James that I have commented on above.  My comments that it is not safe for me to infer from that evidence that he would have been exhibiting signs of being affected by alcohol apply to this imputed test.

   After careful consideration there is just no evidence that a reasonable person should have realised that Marco was over .05 at the time when his wife gave her express or implied consent for him to use her vehicle.  It follows that the plaintiff should succeed.”

3. The insurer attacks these conclusions on several grounds.  Those grounds relate to several key issues of fact.  There was evidence, which was accepted by the magistrate, that the blood alcohol reading of the respondent's husband at the time he commenced his journey was 0.12 per cent and that level was consistent with drinking about ten standard drinks.  The magistrate found that the respondent's husband had consumed ten standard drinks at the Croatian Club over a period from about 7.00 pm  until about midnight. 

4. There was evidence also that the respondent's husband had been involved in an incident at the club when a substantial pane of glass was broken.  It is common ground that the respondent did not see that incident and only learned of it when she and her husband were driving home. The respondent's evidence was that she was not altogether satisfied with the account given by her husband.  This incident caused the respondent's husband to decide to leave the club hurriedly and his wife accompanied him without an opportunity to farewell relatives and friends at the gathering. 

5. Each of those facts was considered individually by the magistrate.  He also considered their cumulative effect. He deals with the effect of those incidents individually in his reasons and the cumulative effect is dealt with in the passage already quoted. 

6. Mr Kennelly, who appeared for the insurer, attacked the magistrate's conclusion by asserting that it would be apparent that the consumption of ten standard drinks would have caused the respondent's husband to appear to be affected by liquor.  He relied on evidence from Dr Ross James, a distinguished pathologist, who was asked this question:

   “Q....... At that level of consumption of alcohol, is it likely that a person would display any signs of being affected by alcohol?”

   A...... “They may or they may not.  An inexperienced drinker would almost certainly show some effects of the drinking.  Experienced drinkers are often well able to achieve the essential features of sobriety at levels substantially higher than this.” 

The evidence was that the respondent's husband was an experienced, but a light, drinker.  It was suggested he frequently drank a glass of wine with his meal at the end of the day.   Other evidence given by Dr James shows that his use of the word “inexperienced” drinker does not refer to a “light” drinker.  His evidence does not go so far as to suggest that all persons who consume at least ten standard drinks would necessarily display the effects of the alcohol they had been drinking.  That evidence is consistent with the notorious fact that different individuals are differently affected even when the same amount of alcohol has been ingested.  In State Government Insurance Commission v Laube (1984) 37 SASR 31 at 33, King CJ made an observation to like effect, albeit in a different context. Thus, the consumption of ten standard drinks does not, standing alone, call the magistrate's conclusion into question.

1. Mr Kennelly sought to overcome this difficulty by linking the fact of the consumption of ten standard drinks with the breaking of the glass window and the account of that incident given to the respondent by her husband.  The fact that the respondent's husband broke the glass pane is not necessarily consistent only with being affected by liquor.   But there is another and more important reason why that fact does not lead to the conclusion to which Mr Kennelly contends.   The actual issue in this case was whether the respondent knew, or should reasonably have known, that the window was broken by reason of the fact that her husband was affected by liquor.  There is nothing which points to that conclusion at all.  Viewed objectively with the knowledge that he had ten standard drinks and the event occurred late in the evening might result in it being reasonable to conclude that he was affected by liquor.  But that is not the question.  The question is what the respondent should reasonably have known and that question must be determined by first determining those facts which were known to the respondent and then determining what was reasonable for her to have deduced from those facts.  As she did not know the circumstances in which the window was broken, it is reasonable to infer that she would not reasonably have known that it occurred because her husband was affected by liquor.  The fact that the respondent believed the account to be less than satisfactory takes the matter no further.

2. Mr Kennelly also attacked the finding on the ground the magistrate failed to find how many drinks had been consumed at the table at which he was sitting with his wife at this function.  Her evidence was that she had seen her husband consume up to five glasses of red wine.  She was not aware that he had consumed any more.  She was pressed in cross-examination on that issue.  There was also evidence that this, like many functions of this kind, was one where those attending the function moved about during the course of the evening.  Both the respondent and her husband moved about, mingling with others.  There was evidence also that there was a bar which was selling liquor.  In addition, the respondent's husband went outside on occasions to smoke a cigarette.  Thus, there may well have been occasions when the respondent's husband consumed liquor which was not seen by his wife.  In addition to that, it would be obviously extremely difficult for his wife to keep a precise count of every glass of wine consumed by her husband. 

3. It is implicit in the findings of fact made by the magistrate that he has accepted the respondent's evidence that she believed her husband had drunk no more than five glasses of wine.  The magistrate found:

   “It is the fact that he consumed ten standard drinks.   However, this was over a period from about 7 pm  to midnight.  It is clear that he left the table on occasions to go outside and have a cigarette.  It is perfectly conceivable, indeed likely, that he drank alcohol away from the table.  Whether he drank it at the bar at the Croation Club is a point I need not decide.  I do find that he did not drink each of the ten drinks at the table.  With his absence on occasions, with the animated conversation with other people at the table (there were eight to ten people at that table) and with conversations between the plaintiff and her parents and other relatives, it is not reasonable to expect that she was aware that he had had ten standard drinks, nor for her to realise that he had drunk sufficient standard drinks to place him over the limit or under the influence of the alcohol by the end of the evening.” 

For the reasons I have expressed, that conclusion was clearly open to the learned magistrate.  No reason has been advanced why I should interfere with it. 

1. It is apparent from the magistrate's reasons that he has accepted the respondent's evidence that she did not have cause to conclude that her husband had drunk liquor in excess of the legal limit.  The magistrate had the advantage of seeing the respondent and other witnesses.  The respondent was in the witness box for a good part of the first day of this trial.   It is apparent from his reasons that he has been careful in his treatment of the evidence and of his assessment of the witnesses.  He rejected the evidence of the respondent's husband.  He has recognised the self-interest of the respondent in the outcome.  There are one or two occasions when he is critical of the respondent's evidence, but nevertheless has found in her favour.  Nothing has been put to me which demonstrates that the magistrate has misused the advantage he had of seeing the witnesses or has acted on evidence which was inconsistent with facts which were incontrovertibly established or which was glaringly improbable.  The magistrate has given full and careful reasons for his conclusion.  Findings of credibility do not necessarily bar an appellate court from setting aside the finding of the trial court: State Rail Authority of NSW v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3. But in this case, I do not think that any ground has been demonstrated which justifies this court disturbing the finding made by the magistrate.

2. The appellant has essentially attacked the findings of fact made by the magistrate and endeavoured to advance a thesis for the purpose of that challenge.  For reasons I have given, the appellant has failed to demonstrate any respect in which the magistrate has erred. 

3. In my view, the reasons of the magistrate show a careful analysis of the evidence.  He has not only considered the individual facts concerning the quantity of alcohol consumed by the respondent's husband on this evening, but has also considered them cumulatively.  There is no basis which justifies this court disturbing his findings.  It is a case where I think it could have been said that this appeal should be dismissed because of the correctness of the findings by the magistrate. 

4. The appeal is therefore dismissed. 

5. The orders will be:

6. Appeal dismissed.

7. The appellant shall pay the respondent's costs as taxed or agreed.