Pacemont P/L as Trustee for Khoury Family Trust & Ors v FAI General Ins Co Ltd - [1998] QSC 212

IN THE SUPREME COURT
OF QUEENSLAND
Brisbane  No. 3625 of 1998
Before the Hon. Mr Justice Shepherdson
[Pacemont P/L as Trustee for Khoury Family Trust & Ors v FAI General Ins Co Ltd]
BETWEEN:
  PACEMONT PTY LTD ACN 055 854 905
  AS TRUSTEE FOR KHOURY FAMILY TRUST;
  STUDIO LOUNGES PTY LTD ACN 075 537 003;
   ACN 066 243 561 PTY LTD FORMERLY BOSS FURNITURE COMPANY PTY LTD;
  UNIVERSAL FABRICS PTY LTD ACN 064 455 250;
  LOUNGES & SOFAS R US PTY LTD ACN 077 660 701;
  LOUNGE & SOFA COMPANY PTY LTD ACN 064 037 896
  Plaintiffs
AND:
              FAI GENERAL INSURANCE COMPANY LIMITED ACN 000 327 855
  Defendant

JUDGMENT - SHEPHERDSON J.

Judgment delivered 7 October 1998
CATCHWORDS: INSURANCE - Application to strike out defence for failure to deliver further and better particulars as ordered - particulars delivered late - insurance loss - building destroyed by fire - allegations that a person or persons unknown caused the fire; allegations that a named person procured a person or persons to cause the fire - defence case is circumstantial - particulars supplied insufficient - liability denied.

McCormick v Colonial Mutual General Insurance Co Ltd (1995) 8 ANZ Ins. Cas. applied
Silk v Zurich Australia Insurance Ltd (1995) 8 ANZ Ins. Cas. 61-259 referred to.

Counsel:Mr R.R. Douglas Q.C. for the applicant
Mr S. Couper Q.C. for the respondent

Solicitors:Quinlan, Miller & Treston for the applicant
Gadens Lawyers for the respondent

Hearing date: 9 September 1998

JUDGMENT - SHEPHERDSON J.

Judgment delivered 7 October 1998

The applicant plaintiffs have applied by summons for orders that the defence of the defendant be struck out for failing to deliver further and better particulars of the defence ordered to be delivered pursuant to the order of Moynihan SJA made on 4 August 1998 and that the defendant pay the plaintiffs’ costs of and incidental to the action and the application.
The order of Moynihan SJA required that the plaintiffs deliver a further request for further and better particulars of the defence on or before 6 August 1998 and that the defendant provide further and better particulars of the defence, subject to the availability of expert evidence, within fourteen days of service of the request.
The affidavit of Brockwell John Miller supporting the application shows:-
(a)that on 5 August 1998 a further request for further and better particulars of the defence was served upon the solicitors for the defendant;
(b)as at 25 August 1998 the defendant had not served upon the plaintiffs’ solicitors the further and better particulars sought.
The summons was filed on 26 August.
An affidavit by Lionel Richard Lukin sworn on behalf of the defendant and filed by leave on 9 September 1998, the date of the hearing of the application, shows that:-
(a)instructions given to a junior secretary of the defendant’s firm of solicitors that counsel be briefed to respond to the request dated 5 August 1998 were not carried out;
(b)Mr Lukin was not aware of such omission until 26 August 1998 and receipt of the summons and affidavit of Mr Miller;
(c)the further and better particulars sought were delivered on 3 September 1998.
At the hearing, Mr Douglas QC, counsel for the applicant plaintiffs, submitted that the particulars supplied later were inadequate and did not comply with the order of Moynihan SJA and that sub-paragraphs 14(d), 14(e)(ii) and 14(e)(iii) of the defence should be struck out or alternatively that the defendant should be given leave to re-plead.
The action is one in which the plaintiffs have sued for loss under an Industrial Special Risks policy of insurance with the defendant. The policy is alleged to have been effective as amended from 10 September 1997 and to have insured the plaintiffs against loss or damage by fire and consequential losses arising therefrom.
In their statement of claim, the plaintiffs allege that whilst the policy was in force they suffered loss on 12 September 1997 when an insured building and other property were destroyed by fire.
The defence denies liability, pleads (inter alia) fraud and has elected to avoid the policy of insurance.
Among the allegations in the defence are:-
“3(d) . .On 8 September 1997 the plaintiffs, by their director and agent Monty Khoury, requested that the limit of indemnity in the said policy of insurance be increased such that the limit of indemnity for section 2 of the policy in respect of situation 2 be increased to $500,000.
(e)that on 10 September 1997 the plaintiffs, by their director and agent Monty Khoury, requested that the limits of indemnity of the said policy of insurance be increased such that the policy would provide for insurance as particularised in paragraph 3 of the statement of claim.”
In paragraph 14 of the defence the defendant admitted that a fire had occurred on 12 September 1997 in the building named in the statement of claim and admitted that as a result of the fire, plant, machinery, contents and stock in trade were destroyed. It then alleged:-
“14(d)... the said fire was caused by the wilful act of Monty Khoury or of a person or persons unknown procured by Monty Khoury to so act;
(e). . . that Monty Khoury so acted as alleged in sub-paragraph (d) hereof:
(i)on behalf of the plaintiffs and each of them;
(ii)with the connivance of the plaintiffs;
(iii)fraudulently to obtain a benefit under the said policy of insurance.”
Relevant to the present application the particulars sought and the particulars provided were:-
1.Under sub-paragraph 14(d)
Request -
“Give full particulars of:-
(a)The acts of a person or persons unknown which caused the fire;
(b)The facts, matters and circumstances relied upon by the defendant in alleging that Monty Khoury procured a person or persons to cause the fire.”
Response -
“As to paragraph 14(d) of the defence, the defendant is presently unable to give any further particulars of:
(a)The acts of a person or persons unknown which caused the fire;
(b)The facts matters and circumstances relied upon by the defendant in alleging that Monty Khoury procured a person or persons to cause the fire.”
2.Under paragraph 14(e)(ii)
Request -
“Give full particulars of the facts, matters and circumstances relied upon by the defendant in alleging that Monty Khoury caused the fire with the connivance of the plaintiffs.”
Response -
“As to paragraph 14(e)(ii) the facts matters and circumstances relied upon by the defendant in alleging that Monty Khoury caused the fire with the connivance of the plaintiffs are that Monty Khoury was a director of each of the plaintiff companies and was the controlling mind of each of the plaintiff companies. Any decision of the plaintiff companies was effectively made by Monty Khoury.”
3.Under paragraph 14(e)(iii)
Request -
“Give full particulars of the facts matters and circumstances that the defendant relies upon to allege that Monty Khoury acted fraudulently to obtain benefit under the said policy of insurance.”
Response -
“As to paragraph 14(e)(iii) of the defence, the facts matter and circumstances that the defendant relies upon to allege that Monty Khoury acted fraudulently to obtain a benefit under the said policy of insurance are that Monty Khoury wilfully caused the fire referred to in paragraph 14(a) of the defence.”
In respect of the particulars sought in each of the above sub-paragraphs, Mr Douglas submitted that the matters pleaded in effect amounted to a plea of fraud - a view from which Mr Couper QC did not dissent.
Mr Douglas relied on two decisions - Silk v Zurich Australia Insurance Ltd (1995) 8 ANZ Ins. Cas. 61-259 - a decision of mine, and McCormick v Colonial Mutual General Insurance Co Ltd (1995) 8 ANZ Ins. Cas. 61-262 a decision of Crawford J. of the Supreme Court of Tasmania. I do not propose to repeat what I said in Silk’s Case concerning the meaning of “connivance”. In Silk, I said that the plaintiff was entitled to know the identity of the person or persons who the defendant says lit the fire. I said (at p.75,889):-
“. . .
One does not need much imagination to envisage a situation where, if that material were not supplied, the plaintiff, on being cross-examined at trial, learned for the first time that the defendant’s case is that a particular person (identified) lit the fire and that the plaintiff was secretly privy to the lighting of the fire by that person. Doubtless an adjournment would be sought. That type of situation can be avoided if the defendant provides now almost all the particulars which were sought by the plaintiff . . .”
In McCormick (p.75941) Crawford J said:-
“The defendant intends to rely on a term of the insurance policy that prohibited a claim for a loss occasioned with the plaintiff’s connivance. To plead merely that he connived with an unidentified agent or agents to cause the loss is plainly insufficient to amount to adequate notice of the material facts which will be alleged at the trial to prove connivance on the plaintiff’s part. I emphasise that the defendant is not obliged to disclose the evidence it will call but only the material facts upon which it will rely. The plaintiff is entitled to know what at the trial it will be alleged he did (or did not do and in what circumstances) which amounted to connivance. To tell him that he connived with unknown persons is not enough. If the defendant is unable to particularise what the plaintiff did but instead will seek to have connivance inferred from certain facts then it should at least state the facts upon which it will rely for the drawing of that inference.”
I propose to apply what was said by Crawford J. It became clear during argument that the defence, in responding to the requests for further and better particular is really saying two things:-
1.that Khoury was the mainspring of each of the plaintiff companies and that he, wearing his hat as mainspring of say the first plaintiff, connived with himself wearing his hat as mainspring of each of the other plaintiffs - apart from those matters the defence is unable to specify the identity of any person or persons unknown and allegedly procured by Monty Khoury to cause the fire; and
2.that the case against each of the plaintiffs - as alleged in sub-paras. 14(d), 14(e)(ii) and 14(e)(iii) is a circumstantial one.
It seems to me that the particulars given, especially in relation to para. 14(e)(iii) are insufficient. On my reading of the statement of claim it appears tolerably clear that as part of the circumstantial case to be alleged against the plaintiffs, the defendant will rely on the matters pleaded in paras.3(d) and (e) of its defence - I have earlier referred to them - as indicating in effect that a few days before the fire Khoury increased the cover and then the fire occurred. There may be other matters forming part of the circumstantial case alleged by the defendants and if there are then it is my view that, as Crawford J said, the defendant “should at least state the facts upon which it will rely for the drawing of that inference” - the inference here will be that Khoury caused the fire or procured another or others to cause the fire.
The further and better particulars provided in respect of each of the three sub-paragraphs are inadequate. The defendant should state clearly and succinctly the facts, matters and circumstances on which it relies to justify drawing the inferences appearing in the allegations made in each of these three sub-paragraphs.
I order the defendant to provide the further and better particulars of sub-paras. 14(d), 14(e)(ii) and 14(e)(iii) of the request for further and better particulars for the defence that have been delivered on 5 August 1998. I shall hear argument on the time within which these are to be provided.
I heard argument on costs and I order that the defendant pay the plaintiff’s costs of and incidental to the application to be taxed.