Watson v AMP Insurance No. Scciv-01-1305

WATSON v AMP INSURANCE
[2002] SASC 38
Civil

BESANKO J This is an appeal pursuant to s 40 of the Magistrate’s Court Act 1991 against the decision of a Magistrate. The appeal is by way of re-hearing[1].
[1] Aubigny Pty Ltd v Kowsha Enterprises Pty Ltd (1997) 191 LSJS 202 per Duggan J at 205-206
The plaintiff claimed damages against the defendant in the sum of $12,000.00, being the sum insured under a contract of insurance between the plaintiff and the defendant. The claim related to the loss of an 18 carat pirouette diamond ring (“the ring”) said to have been owned by the plaintiff. The plaintiff claimed that on 29 May 1999 the ring was stolen from premises at 27 Matthews Avenue, Seaton, in the State of South Australia (“the premises”). An application to amend the Particulars of Claim to allege that, in the alternative the ring was lost, was made during the course of the trial. It was refused.
The defendant admitted in its Particulars of Defence that there was a contract of insurance between it and the plaintiff. Subject to arguments about ownership of the ring, it was accepted by the defendant that the ring was insured under the contract.
At trial, there was a dispute between the parties about the terms and conditions of the contract of insurance. The defendant alleged that the terms and conditions of the contract included the terms and conditions set out in a policy booklet (Exhibit P5) it had sent to the plaintiff. The plaintiff denied receiving the policy booklet, and said that therefore the policy booklet did not form part of the contract. The Magistrate found that the plaintiff did receive the policy booklet and that it formed part of the contract of insurance between the plaintiff and the defendant. That finding is not challenged on the appeal.
A term of the contract of insurance excluded liability if the property insured was lost by,
“theft, burglary or malicious damage caused by tenants or any other person living at the home building, or by people you invited on to the site”
During the trial, the Magistrate admitted in evidence over the objection of the plaintiff two documents which are records of the South Australian Police Department. The first is a statement of Victoria James given to a Detective Farrington on 26 August 1999 (Exhibit D2). The second is an investigation diary of the Police Department relating to the alleged theft of the ring (Exhibit D3). The main importance of the investigation diary is that in effect (to use the Magistrate’s words) “it replicates the crucial aspects of Victoria James’ statement”.
The Magistrate admitted the documents in evidence on the basis that they were business records under s 45A of the Evidence Act 1929. He delivered written reasons for his ruling on 6 April 2001.
At the trial, the Magistrate heard evidence from the plaintiff, the plaintiff’s partner a Mr Mark Tolhurst, and Detective Farrington.
The Magistrate dismissed the plaintiff’s action on two grounds. First, he held that the plaintiff was not the owner of the ring, and he said that the plaintiff therefore had no standing to bring the claim. Secondly, the Magistrate held that the insurance policy did not provide cover because the ring had been stolen either by a tenant of the premises, or by a person living on the premises, or by a person invited onto the premises by the plaintiff (or by a member of the plaintiff’s family). In those circumstances, the exclusion clause relating to theft applied.
The Magistrate went on to order, “that the plaintiff pay to the defendant the costs of this action which will be assessed as follows: 75% on full Supreme Court solicitor/client scale – 75% of a full indemnity order – those costs to be agreed or taxed.”
To succeed on the appeal against the order dismissing his action, the plaintiff must show that the Magistrate erred on both the grounds referred to above.
The Magistrate’s Findings
In May 1999 four men lived in the premises.
The plaintiff and Tolhurst lived in the premises. They were in a relationship which had started in December 1997. Tolhurst is a disability pensioner who is 26 years of age. He suffers from a mental illness, namely, manic depression. He takes medication for this condition. The plaintiff cared for Tolhurst and he received a carer’s payment from the relevant government authority. The Magistrate found that the plaintiff did the cooking and housework for Tolhurst and, among other things, helped him with his business matters.
In 1997, the plaintiff received a legacy from his deceased mother’s estate. In February 1999, he used the legacy to have two diamond rings manufactured by manufacturing jewellers, Bell and Brunt Pty Ltd. One ring he kept for himself. The other ring which is the subject of these proceedings was given to Tolhurst. There is a dispute about whether the plaintiff made a gift of the ring to Tolhurst which was effective at law. I will need to return to this issue.
The plaintiff insured the two rings and other items of personal property under a contract of insurance with the defendant. The contract names the plaintiff as the insured, and is for the period from 12 March 1999 to 12 March 2000. The items insured are various items of specified portable property and home contents.
The insurance cover for the specified portable property is expressed in the following terms:
“We will pay for …
Unspecified and specified portable property
If any of your portable property is lost, stolen or accidentally damaged during the period you are covered by this policy
and
you are in, or travelling directly between,
Australia or New Zealand
Then we will choose to pay the lesser amount of the following options:
§repairing the item
§replacing the item with a new item which is similar to the original
or
§paying the cash equivalent of the cost of replacement or repair, whichever is the lesser.”
There is a definition of “You and yours” in the following terms:
“is the insured person shown on the insurance certificate and any member of the insured’s family who ordinarily live with the insured.”
One of the general conditions provides as follows:
“Other persons or entities interested in this insurance
If any other person or entity has an interest in your building, contents, portable property or boat
then:
they are not covered by this policy unless they are shown on the insurance certificate.”
Finally, the whole of the clause which includes the theft exception is in the following terms:
“Some other damage
If your unspecified or specified portable property is lost or damaged by:
·wear, tear, rust or gradual deterioration
·breakdown, malfunction or non-operation of any mechanical, electrical or electronic item or component
·power surge or power failure (unless caused by lightning)
·inherent defects
·drying or applying heat to an item unless it results in a fire
·heat, soot or smoke that is not a result of a fire
·cleaning, repair, renovation or alteration
·moths, mildew, vermin, or other insects
·theft, burglary or malicious damage caused by tenants or any other person living at the home building, or by people you invited onto the site
then
·we will not pay for the loss or damage”
The two other men who lived in the premises in May 1999 were Mr Robert Burton and Mr Ronald Mann. Burton and Mann were in a relationship.
The Magistrate heard evidence about the personal lifestyles of Burton and Mann which he described in the following terms:
“Burton was known to be a heavy marijuana smoker, consuming up to 10 or 15 cones of marijuana a day. Mann is a person who has a history of medical illness. He is schizophrenic and a known heroin addict. Both were in receipt of disability pensions.”
The premises were leased from a person who lived next door to the premises. The lessees were the plaintiff and Burton.
Another person who is important in the events which occurred is Tania Delorenzo. At the relevant time she was a friend of Tolhurst. The Magistrate referred to her as “Tania” and so will I. He said of her,
“Tania was herself a drug addict. She had a heavy dependence on prescription tranquillisers such as valium and serepax. On the evening in question, Watson observed that she was noticeably affected and he used the expression that she was ‘her usual self – off her face’. Tania also used a number of aliases, including Victoria James, and such aliases were utilised regarding accounts she had with public utilities such as the gas company, the electricity supplier and the telephone company.”
Tania did not live on the premises.
During the afternoon of 29 May 1999 the plaintiff and Tolhurst went out for a drive. On their way home they stopped to see Tania. It was agreed that she would accompany them back to the premises for the evening meal. There is a dispute as to whether Tania was invited to the premises or, in fact invited herself. I will need to return to this issue.
On arriving back at the premises at about 5.30 pm or 6.00 pm, Tolhurst was tired and went into his bedroom to lie down. He took the ring off and put it on a bedside table. The plaintiff and then Tania went into the bedroom to talk to Tolhurst. Tania remarked upon how easy it would be to steal the ring. At some stage, Mann entered the bedroom and asked if anyone wanted coffee. He removed a coffee mug from the bedside table. A short time later, Mann returned with the coffee and then left the room.
At some stage the plaintiff said that they should leave the bedroom so that Tolhurst could rest. The plaintiff and Tania went into the kitchen to prepare the meal. The ring was on the bedside table when the plaintiff left the bedroom.
A short time later Tania said that she wanted to go home. It appears that her decision was made on the spur of the moment and was unexpected. The plaintiff offered to drive her home. Tolhurst indicated that he wished to accompany the plaintiff. The plaintiff, Tolhurst and Tania left the premises.
Tolhurst gave evidence that when he left the premises the ring was on the bedside table. The Magistrate did not make a finding on this issue, nor did he indicate whether he found Tolhurst’s evidence generally reliable.
The plaintiff and Tolhurst took Tania to her home. They then returned to the premises for dinner. After dinner they went to visit Tolhurst’s sister who lived in Kilkenny. They stayed there for a couple of hours and then visited a café in Unley. When they returned to the premises it was nearly midnight.
The premises had a front and back door. In addition there was a security or flyscreen door on each entrance. There was a conflict between the plaintiff and Tolhurst as to whether the doors were open or closed when they returned to the premises at nearly midnight. The Magistrate did not resolve this conflict, nor did he indicate which witness he found the more reliable.
The plaintiff said that the front door and security or flyscreen door were open and the back doors were open when he and Tolhurst returned home. Under cross examination the plaintiff agreed that no other items of property were taken on the night of 29 May 1999, nor was there any evidence of forced entry into the premises or of any damage to property.
Tolhurst gave evidence that the back door and security or flyscreen door were shut and locked. The back door had a deadlock mechanism and usually it was locked of an evening at 10.30 pm approximately. He said the front door was open, but the security or flyscreen door was shut.
When the plaintiff and Tolhurst returned home at nearly midnight, Mann and Burton were watching television in the front lounge room. Tolhurst went to his bedroom and noticed that the ring was not there. He asked the plaintiff where the ring was. The plaintiff conducted a search first of Tolhurst’s bedroom and then of the whole premises except for the bedroom of Mann and Burton.
The plaintiff contacted the police and reported the ring missing. He told the police that there were no signs of forced entry. The plaintiff was convinced Tania had taken the ring and with her consent he searched her home. The ring was not found. He then conducted a further search of the premises.
Mann and Burton told the plaintiff that on the night in question they had been watching television. For a reason never made clear, Mann had for a time gone next door to visit the landlord.
There were further developments in August 1999. On 26 August 1999, Tania came to visit the plaintiff and Tolhurst. Tania told them that Burton had taken the ring on the night in question. Tania and the plaintiff went to the Port Adelaide Police Station and each of them gave a statement to Detective Farrington. The plaintiff related what Tania had told him. He also gave details of a telephone conversation he had with Burton on 26 August 1999. Relevantly, Burton had said to the plaintiff,
“If you want to know where the diamond ring is go and search Ron’s mother’s place.”
In the statement which became Exhibit D2 Tania told Detective Farrington the following:
“I can remember that on the night the ring went missing I walked into Robert’s (Burton’s) room to speak with him and I saw that he had a ring in his hand. As I saw it he told me to close his bedroom door as he wanted to speak to me. He then said, ‘if you mention the ring to anybody, I will blow your head off with a .22’. I was scared and crying so I didn’t say anything to anyone. This is the reason I didn’t say anything to police because I was scared of what Robert had said.”
By 26 August 1999 Burton and Mann had left the premises. Burton was living in New South Wales.
The ring has not been found. The plaintiff has made a number of enquiries with second hand shops, jewellers and pawnbrokers, but these have proved fruitless. No one has been charged with the theft of the ring.
In the claim form lodged with the defendant, the plaintiff said that he believed Tania had taken the ring.
Before leaving this review of the primary facts, I should indicate my approach to the two matters in relation to which the Magistrate made no findings. First, there is the question of whether the ring was on Tolhurst’s bedside table when he and the plaintiff left the premises to take Tania home. If Tolhurst is wrong about this then it is almost certain that the ring was taken by one or more of Tania, Mann or Burton. For the purposes of considering the outcome of the appeal, I think I should proceed on the basis that Tolhurst is right and the ring was on the bedside table when he and the plaintiff left the premises. If this leads to a different conclusion to that reached by the Magistrate, then I will have to consider whether I should remit the matter for rehearing in the Magistrates Court. Secondly, there is the question of whether the front and back doors were open or closed when the plaintiff and Tolhurst returned to the premises at nearly midnight. Perhaps the Magistrate did not make a finding on this issue because he did not consider it to be particularly significant. The fact that the doors were open or closed at nearly midnight does not prove that they were open or closed during the course of the evening, or for that matter at any time just prior to the return of the plaintiff and Tolhurst to the premises. For the purposes of considering the outcome of the appeal, I think I should proceed on the basis that the plaintiff’s evidence is correct and that both the front and back doors were open. Again if this leads to a different conclusion to that reached by the Magistrate, then I will have to consider whether I should remit the matter for rehearing in the Magistrates Court.
Subject to these comments, and subject to the plaintiff’s challenge to the finding that he gave the ring to Tolhurst and to the admission of Exhibits D2 and D3, there was no challenge to the findings of fact set out above.
Based on these primary findings of fact, the Magistrate reached certain conclusions as to the two issues before him.
As to the plaintiff’s right to claim the loss, the Magistrate said:
“39. It follows that in my view Watson does not have a sufficient interest in the ring and that he is not properly the plaintiff in these proceedings, lacking as he does locus standi. If I am wrong in that, one merely has to examine the terms of the policy to note that in relation to other people or entities expressing an interest in the insurance then such other persons or entities must appear on the insurance certificate. Tolhurst’s name does not so appear.
40. As I said earlier in these reasons, Watson is the only person named in respect of the policy. There is no mention of Mark Richard Tolhurst. In this context I refer to p. 91 of the policy booklet (Exhibit P5) which describes general conditions for all insurance, among which is the following provision:
‘If any other person or entity has an interest in your building, contents, portable property or boat
then:
-they are not covered by this policy unless they are shown on the insurance certificate.’
41. It is clear to me, and I find, that Tolhurst is not shown on the insurance certificate and therefore is not entitled to coverage under the policy.”
As to whether the circumstances fell within the exclusion clause, the Magistrate said:
“42. If I am wrong on the question of insurable interest and locus standi, it seems to me that the probabilities are cogently against Watson recovering under the policy by virtue of the provision which was quoted earlier in these reasons and which appears at p.56 of the policy booklet.
44.    In my view the clear probabilities are that no unknown or external third person or third persons caused the ring to become lost, stolen, or disappeared.
45.    I think that it is, on the evidence before me, more likely than not that the ring was taken on the night in question by one of Tania, Burton, or Mann, or a combination of them.
46.    I do not need to be more specific than that. If Tania was lying on 26 August 1999 and sought to incriminate Burton, then she would have only been incriminating herself because her consciousness of guilt would point to her own criminal activity. If she were telling the truth and was properly incriminating Burton then there is the culprit. It may be that Mann had some involvement by way of complicity with Burton and he may have had guilty knowledge of the act having been performed. It is less safe for me to make a finding on that account. It is interesting that Burton should point the finger at Mann by telling Watson to check the house of Mann’s mother. It seems to me that we have a triangle of unreliable people, each of whom is pointing the finger at the other.
47.    I need not be satisfied that any particular one of them committed the offence of theft of the ring on the night in question. What I am satisfied on the balance of probabilities is that one of them did it and it seems to me that the most likely perpetrators were either Tania or Burton. As to the former, however, it seems to me that the evidence of Tolhurst would tend to exonerate her given that she had left Tolhurst’s bedroom before Tolhurst did and when Tolhurst did he espied the ring still on the bedside table.
48.    It may be that her precipitate departure, and expression of her wish to depart precipitately, is consistent with the sort of statement she gave to the police that Burton had actually threatened her. One can imagine that if he threatened her in the way she alleged then a nervous and distraught individual such as herself may have reacted in the manner deposed to by Watson and Tolhurst. It may be, accepting Tolhurst’s version that it was Burton who did it. On that interpretation of the evidence before me, I find him to be the most likely of the three suspected culprits to have committed the theft.
49.    On that footing alone I find that, more likely than not, the theft of the ring was effected by another person living at the home building (ie Burton) or by a person (ie Tania) who was invited on to the site by Watson or Tolhurst.”

As I have said the plaintiff challenges the Magistrate’s conclusions on both the grounds upon which he found against him. It is convenient to start with the challenge to the Magistrate’s conclusions with respect to the exclusion clause relating to theft.
The Exclusion Clause
The plaintiff’s main argument on this aspect of the appeal was that the Magistrate erred in admitting Exhibits D2 and D3 in evidence. Three other arguments were put and it is convenient to consider those arguments first.
First, it was argued that insofar as Tania may have been the thief, the Magistrate erred in finding that Tania was a person invited onto the site. I reject this submission. It is true that there was evidence that it was Tania who suggested that she come back to the premises for the evening meal. Nevertheless, the plaintiff and Tolhurst agreed with this course of action and drove her back to the premises. I do not think the fact that she suggested it herself, or indeed asked herself, means that in the circumstances she was not invited onto the premises. The Magistrate found that Tania was invited onto the site by the plaintiff or Tolhurst or by both of them. It was accepted by both parties that even if the invitation was from Tolhurst alone this was sufficient because the definition of “You and yours” included a member of the insured’s family. Both parties accepted that Tolhurst was a member of the plaintiff’s family. I will return to this issue when I come to consider the plaintiff’s right to claim the loss.
In any event, in my opinion the proper finding on the facts is that the plaintiff (either alone or with Tolhurst) invited Tania to the premises.
Secondly, the plaintiff argued that the Magistrate erred in considering that the exclusion clause was made out when he was unable to conclude that any particular person was responsible for the disappearance of the ring. I reject this submission. I do not think that it is correct as a matter of logic, although it is probably true to say that the less precise the defendant can be in identifying what happened the more likely it is that it will be held that it has not satisfied the onus of showing that the circumstances of the case fall within the exclusion clause.
Thirdly, the plaintiff argued that the Magistrate failed to apply the principle in Briginshaw v Briginshaw[2] which principle (so it was said) applies equally to allegations of criminal conduct by non parties.[3]
[2] (1938) 60 CLR 336
[3] Cubillo v Commonwealth [2000] 174 ALR 97 per O’Loughlin J paras [345] – [352]
Counsel for the defendant submitted that the standard of proof was on the balance of probabilities, although he accepted that the Magistrate needed to be particularly careful and confident in making findings of criminal conduct.
I think the approach I should adopt is that set out in Neat Holdings Pty Limited v Karajan Holdings Pty Limited[4] where Mason CJ, Brennan, Deane and Gaudron JJ said (at 171):
“On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.”
[4] (1992) 67 ALJR 170
I turn now to the plaintiff’s main argument, namely, that the Magistrate erred in admitting Exhibits D2 and D3 in evidence.
Section 45A of the Evidence Act 1929 provides:
“Admission of business records in evidence
45A.(1)An apparently genuine document purporting to be a business record-
(a)shall be admissible in evidence without further proof; and
(b)shall be evidence of any fact stated in the record, or any fact that may be inferred from the record (whether the inference arises wholly from the matter contained in the record, or from that matter in conjunction with other evidence).
(2)A document shall not be admitted in evidence under this section if the court is of the opinion -
(a)that the person by whom, or at whose direction, the document was prepared can and should be called by the party tendering the document to give evidence of the matters contained in the document; or
(b)that the evidentiary weight of the document is slight and is outweighed by the prejudice that might result to any of the parties from the admission of the document in evidence; or
(c)that it would be otherwise contrary to the interests of justice to admit the document in evidence.
(3)For the purpose of determining the evidentiary weight, if any, of a document admitted in evidence under this section, consideration shall be given to the source from which the document is produced, the safeguards (if any) that have been taken to ensure its accuracy, and any other relevant matters.
(4)In this section -
“business” means business, occupation, trade or calling and includes the business of any governmental or local governmental body or instrumentality;
“business record” means –
(a)any book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business; or
(b)any reproduction of any such record by photographic, photostatic, lithographic or other like process.
As the significance of Exhibit D3 is that it contains a summary of what is in Exhibit D2, I approach the matter by considering the admissibility of D2. In other words, the fate of the two documents will be the same.
In ruling that Exhibit D2 was admissible as a business record, the Magistrate adopted the following line of reasoning:
1.The Magistrate was told from the bar table that Tania was in New South Wales. There was therefore some cost and delay associated with calling her as a witness.
2.It would be unfair to require the defendant to call Tania because it would be placed in “the invidious position of having to cross-examine her in effect”.
3.The probative value of the document was high. It seems the Magistrate considered that Tania would not raise such serious allegations so long after the event unless they were true. Furthermore, the timing was very important. Tania had come forward after being told that Burton was no longer in South Australia.
Finally, he referred to the fact that the statement was against Tania’s interest in that she was admitting she withheld information relevant to a police investigation for some months. I must say it is not clear to me whether the Magistrate is saying that in some way the statement was an admission against interest. On the appeal the defendant did not argue that the statement was an admission against interest.
Accordingly, the Magistrate found the “evidentiary weighing” of the document was not slight and that it was not outweighed by any prejudice which might result from the failure to call Tania.
4.The Magistrate observed, “that the ultimate presentation of the document in the overall evidentiary context” may place the plaintiff on the horns of a dilemma being,
“… either Victoria James is lying, and therefore completely implicating herself in the act, or she is telling the truth and thereby clearly implicating, expressly, somebody else who was a cohabitant, at the time, of the premises.”
This is a theme the Magistrate returned to in his reasons for judgment (see paragraph 46 set out above).
I pause to note at this point one feature of the Magistrate’s reasoning. It relates to paragraph 2 above. Tania’s statement puts the blame on Burton. Burton was a tenant of the premises. If he took the ring the facts would clearly fall within the exclusion clause. In these circumstances it is not clear why the defendant would want to cross-examine Tania. I can only think that the defendant was saying that there were at least grounds to think Tania was the thief and that her statement was unreliable. The Magistrate accepted the defendant’s submission.
Tania’s statement is a business record of the South Australian Police Department.[5] It may be evidence of a fact stated in the record, namely that Burton had the ring, and either by itself or with other evidence, that he had stolen it. I will need to return to this issue because the question of what fact the record was put forward to prove is an important one.
[5] The Queen v Perry (No 4) (1981) 28 SASR 119
The document was prepared at the direction of Tania[6], and she was a person who could have been called by the defendant. Even accepting the evidence from the bar table that she was in New South Wales, and that there would be some delay and expense involved in calling her as a witness, nevertheless, she was a person who could have been called.
[6] R v Calabria (1982) 31 SASR 423 per King CJ at 431; Duke Group v Arthur Young (No 1) (1990) 54 SASR 498 per Perry J at 505-507
The plaintiff argued in his written submissions that the evidence contained in Tania’s statement was inadmissible in any event, and that as such it could not be admitted under s 45A of the Evidence Act. Insofar as that argument was based on the proposition that Tania could not have given the evidence contained in the statement in the witness box, I reject it. I think that she could have given the evidence in the witness box. I do not think the statement contains any element of impermissible hearsay, but even if it does, that fact does not prevent its admission under s 45A[7].
[7] Ryan & Ors v ETSA & Ors (No 2) (1987) 47 SASR 239; Southern Equities Corporation Ltd (in liquidation) & Ors v Bond & Ors [2001] SASC 70 per Lander J at paras 149-191 especially his Honour’s discussion at paras 175-189 of the effect of the decision in Question of Law Reserved (No 3 of 1997) (1998) 70 SASR 555.
With these general propositions in mind, I turn to consider whether the Magistrate erred in admitting Exhibit D2 in evidence.
Ordinarily, evidence in a document admitted under s 45A is admitted as evidence tending to prove the truth of what is asserted in the document. In my opinion, it would be most unusual (if not impermissible) to admit a document containing evidence of a non party[8] on the basis that the evidence is untrue, and to draw an inference from that untrue evidence of a consciousness of guilt. That is not to say that documents may not be admitted under the section on a basis other than as tending to prove the truth of the contents thereof. A document may be admitted because it enables one to infer that a party has received the document and made some use of the document[9]. Similarly, a document may be admitted because rather than tending to prove the truth of the contents, it tends to prove the information which would have been available to a party had that party read the document.[10] Neither of those examples is relevant here. In this case the document was being tendered to prove either the truth or (with other evidence it seems) the falsity of its contents. As I have said, I do not think the document of a non party should be admitted under s 45A of the Evidence Act if the basis of the tender is that whilst other evidence will show the statement in the document is false or is likely to be false, the document should be admitted because it proves the statement was made and the fact to be inferred therefrom is a consciousness of guilt.
[8] The position of a party does not arise on the appeal.
[9] Duke Group v Arthur Young (No 3) (1990) 55 SASR 11 per Perry J at 17.
[10] Sheahan v Verco [2001] 79 SASR 109 per Mullighan J at 142
With respect, I think the Magistrate erred because in applying one part of s 45A he appears to have proceeded on the basis that the contents of the document were at least possibly untrue (s 45A(2)(a) and paragraph 2 of his reasoning as set out above) and in applying another part of the section he appears to have proceeded on the basis that the contents of the document were likely to be true (s 45A(2)(b); and paragraph 3 of his reasoning as set out above).
It would have been open to the Magistrate to admit the document as tending to prove the truth of its contents. However, his reference in the context of s 45A(2)(a) to the defendant (the party tendering the document) being placed in the invidious position of having to cross examine Tania, and his reference to the plaintiff being placed on the horns of a dilemma, suggests that he considered the evidence in the document may be untrue. By contrast, in considering the requirements of s 45A(2)(b), he appears to have proceeded on the basis that there were reasons to think that the evidence was true. I do not think one can apply s 45A in that way at least in the case of a document containing the statement of a non party.
In my opinion, this error in the Magistrate’s reasoning leads to the conclusion that Exhibits D2 and D3 should not have been admitted. I say this because his reasoning suggests that he had considerable doubts about the veracity of Tania’s statement. In these circumstances the document containing the statement should not be admitted under s 45A.
As I have already said, under s 40 of the Magistrates Court Act, the appeal to this Court is by way of a rehearing. If I am satisfied that the same result would follow on the evidence excluding Exhibits D2 and D3, then I should dismiss the appeal on this ground. If I am not so satisfied, then the matter will have to be remitted to the Magistrates Court for rehearing.
The plaintiff pleaded that the ring was stolen. During the trial he sought to raise as an alternative case an allegation that the ring was lost. He was not permitted to amend his pleading. Whether he ought to have been permitted to amend or not, the strong likelihood is that the ring was stolen rather than lost. The plaintiff conducted thorough searches of the premises. At the time it disappeared the plaintiff thought that the ring had been stolen rather than lost. The ring was put on the bedside table by Tolhurst. He did not take it with him when he and the plaintiff took Tania to her home. In those circumstances, there was virtually no opportunity for the ring to be lost.
In my opinion the evidence supports the conclusion that the ring was stolen from Tolhurst’s bedroom some time between about 5.30 pm and nearly midnight. The four occupants of the premises and Tania knew of the ring and knew that it was kept in Tolhurst’s bedroom. One can probably infer from the facts that Burton and Mann were in for a good part of the evening. In fact the plaintiff gave evidence in chief along the following lines:
“QNow, were you aware if anyone else would have had access to the house at the time that you were away?
ANot until – I wasn’t aware until I got home. Robert was in – spent most of his time in his room and Ron had gone next door to see the landlord and had left the front door open and the front screen.”
There were no signs of forced entry, nothing else was stolen and there was no damage to the premises or to any other property.
In those circumstances, I think that the appropriate finding is that the ring was stolen by one or more of Burton, Mann or Tania. I have reached this conclusion on the assumption that the plaintiff is right when he says the doors were open when he came back to the premises at nearly midnight, and on the assumption that Tolhurst is right when he says the ring was on the bedside table when he and the plaintiff left the premises to take Tania to her home. It seems to me that if one makes the contrary assumptions (particularly the latter), then the inference that the ring was stolen by one or more of Burton, Mann or Tania is even more compelling.
For these reasons, I think it is proper to find on the evidence excluding Exhibits D2 and D3 that the ring was lost in circumstances falling within the exclusionary provision.
That is sufficient to dispose of the appeal. However, it is appropriate that I say something about the other ground argued before me.
Ownership of the Ring and the Plaintiff’s Right to Claim the Loss
The plaintiff argued that the Magistrate had erred in holding that he had given the ring to Tolhurst.
The plaintiff pointed to the fact that he was the one who insured the ring and that there was very little, if any, evidence that Tolhurst had ever claimed ownership of the ring. The plaintiff also pointed to evidence he had given to the effect that he did not know if it was his intention that Tolhurst keep the ring should their relationship come to an end.
The plaintiff arranged and paid for the ring to be manufactured. The test for an effective transfer of personal property is clear. There must be a manifestation of an intention on the part of the donor to give the property to the donee and sufficient acts of delivery.[11] In my opinion, there was ample evidence to show that both elements were satisfied in this case. In fact, I think that in the end the plaintiff admitted in cross examination that he had given the ring to Tolhurst for him to keep. It was not suggested that there had not been a transfer of possession to Tolhurst. In my opinion, the Magistrate was right to hold that the plaintiff had transferred ownership of the ring to Tolhurst.
[11] Corin v Patton (1990) 169 CLR 540 per Mason CJ and McHugh J at 558; Knapp v Knapp [1944] SASR 257; Flinn v White [1950] SASR 195
The plaintiff argued that even if the ring had been given to Tolhurst it was nevertheless covered by the contract of insurance. He referred to the definition of “You and yours”.
As I have already said, both parties submitted that Tolhurst was a member of the plaintiff’s family who ordinarily lived with him. In fact, the defendant had asserted as much in correspondence with the plaintiff before the trial. I am prepared to proceed on that basis, and it therefore becomes unnecessary to consider in any detail the test of when a person is a member of another’s family. I was referred to Dyson Holdings Ltd v Fox[12] a decision of the Court of Appeal in England. The Court said that, subject to the particular context in which the question arises, the issue of who is a member of another’s family is answered according to the understanding of the ordinary man, and that this means that changing social conditions will be taken into account. The Court said the relationship must exhibit an appropriate degree of permanence and stability.
[12] [1975] 3 All ER 1030
In this case the plaintiff and Tolhurst had been in a relationship since December 1997. The plaintiff cared for Tolhurst for which he received a carer’s payment. As I have said, the Magistrate found that the plaintiff did the cooking and housework for Tolhurst and, among other things, helped him with his business matters. In these circumstances it is appropriate to proceed on the basis that Tolhurst is a member of the plaintiff’s family and therefore the ring is covered by the contract of insurance.
I should add at this point that the defendant does not seek to support two aspects of the Magistrate’s reasoning. First, it does not seek to analyse the situation in terms of whether or not the plaintiff had an insurable interest in the ring. That issue is now governed by ss 16 and 17 of the Insurance Contracts Act (Cth) 1984. Secondly, it does not seek to support the Magistrate’s reasoning insofar as it is based on the contention that Tolhurst was not covered by the policy because his name was not shown on the insurance certificate as required by the general condition which applies where any other person or entity has an interest in the insured property.

The defendant accepts that the ring is insured under the contract of insurance. The defendant accepts that by reason of the definition of “You and yours” Tolhurst is a person to whom the insurance cover provided by the contract extends. The defendant accepts that by reason of s 48 of the Insurance Contracts Act Tolhurst could have brought proceedings against it. That section provides:
“(1)Where a person who is not a party to a contract of general insurance is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends, that person has a right to recover the amount of the person’s loss from the insurer in accordance with the contract notwithstanding that the person is not a party to the contract.
(2)Subject to the contract, a person who has such a right:
a) has, in relation to the person’s claim, the same obligations to the insurer as the person would have if he were the insured;
and
b) may discharge the insured’s obligations in relation to the loss;
(3)The insurer has the same defences to an action under this section as the insurer would have in an action by the insured.”
The defendant submits that the contract of insurance is an indemnity contract and the plaintiff cannot succeed because he cannot show that he has suffered loss and damage by reason of the loss of the ring. Tolhurst could have sued but he has not done so. This is more than a technicality. The plaintiff has been on notice of this point right from the outset and yet no application has been made to join Tolhurst. Tolhurst has not been exposed to the possibility of adverse costs orders and the like. Such were the arguments of the defendant.
The plaintiff responded by putting forward three submissions which as far as I can see were not put to the Magistrate.
First, the plaintiff argued that the circumstances of this case were analogous to those considered by the High Court in Advance (NSW) Insurance Agencies Pty Ltd & Anor v Matthews & Anor.[13] Reliance was placed on the following passage in the reasons of Deane J (at 620):
“The policy of insurance between the appellant insurer and the respondents, Mr and Mrs Matthews, was a joint one. True it is that it extended to both jointly-owned and separately-owned property. However, it applied indifferently to both classes of property and treated the separately-owned property as if it were jointly owned. The insurer was not concerned with questions of ownership as between Mr and Mrs Matthews. Its obligation was to them jointly only. The question whether, in the absence of Mrs Matthews, the insurer was entitled to make payment to Mr Matthews alone does not arise on the appeal.”
[13] (1989) 166 CLR 606
The circumstances of this case are different. Tolhurst is not a party to the contract of insurance. I do not think that the effect of the contract is to enable the plaintiff, as against the insurer, to treat any property owned by a member of his family as if it was his property. Rather it seems to me that the effect of the policy is to extend the insurance cover provided by the contract to such persons. I reject this argument.
Secondly, the plaintiff argued that it is able to prove a loss because there was evidence before the Magistrate that he intended to replace the ring. He referred to what Samuels J.A. said in Advance (NSW) Insurance Agencies v Matthews [14] (at 255):
“In the present case it becomes impossible to assume that neither spouse had an insurable interest in the other’s personal effects, since either of them may have accepted an obligation to contribute to their replacement or repair in case of loss or damage. If Mr Matthews was the principal or only income earner it is readily to be inferred that he had an economic, and thus an insurable, interest in the integrity of his wife’s clothing.”
[14] (1988) 12 NSW LR 250
The argument relies on s 17 of the Insurance Contracts Act which provides:
“Where the insured under a contract of general insurance has suffered a pecuniary or economic loss by reason that property the subject matter of the contract has been damaged or destroyed, the insurer is not relieved of liability under the contract by reason only that, at the time of the loss, the insured did not have an interest at law or an equity in the property.”
The original Particulars of Claim alleged that the plaintiff was the owner of the ring. Amended Particulars of Claim maintained this allegation, but alleged in the alternative that Tolhurst was the owner of the ring. There has never been an allegation that the plaintiff intended to replace the ring and therefore suffered a pecuniary or economic loss by its disappearance. The plaintiff’s evidence on the point is somewhat meagre. The Magistrate has not addressed the matter in his reasons probably because the argument was not put to him. Before me the parties, understandably perhaps, directed the bulk of their respective submissions to the question of the exclusion clause. There were no submissions on whether the plaintiff’s intention to replace which was not a legal or practical obligation to replace, was sufficient to bring the case within the terms of the section. I would be inclined to think not[15] but I need not decide the point because I do not think it is appropriate in the circumstances to allow the plaintiff to raise this argument for the first time on appeal.
[15] See the general discussion in Australian Insurance Law. 2^nd ed. Tarr Liew and Holligan pgs 56 - 59
Thirdly, the plaintiff argued that even if the ring belonged to Tolhurst he could pursue a claim for a declaration that the defendant was under an obligation to indemnify Tolhurst. The Particulars of Claim did not claim a declaration. The Magistrates Court has the power to make declarations on matters within its jurisdiction[16]. Furthermore, the Court also has power to grant relief other than the relief claimed if it is more appropriate to the circumstances of the case[17]. Despite the presence of these powers I do not think that it would be appropriate to make a declaration at the suit of a party to a contract of insurance to the effect that the other party must indemnify a third person when there is nothing to prevent the third person from instituting proceedings on his own behalf.
[16] s.32 Magistrates Court Act
[17] s 31 Magistrates Court Act
In the alternative to the claim for a declaration the plaintiff submitted that he was a trustee of the contractual promise to indemnify. Tolhurst was the beneficiary. The plaintiff could bring proceedings on his behalf[18]. The proposition that the plaintiff was a trustee of the contractual promise was neither pleaded, nor put to the Magistrate. It was the subject of limited argument before me. It raises at least two substantial issues. The first is whether an intention to create a trust is made out on the facts.[19] The second is whether the enactment of s 48 affects whether a court will find as a matter of reasonable inference an intention on the part of the plaintiff to hold the defendant’s promise under the contract upon trust.[20] I do not think that it is appropriate in the circumstances to allow the plaintiff to raise this argument for the first time on appeal.
[18] Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 per Deane J at 147
[19] See Mason CJ and Wilson J at 121; Brennan J at 140; Deane J at 149; Dawson J at 157
[20] Australian Insurance Law op. cit. pgs. 62 - 66
The course of action I would have followed had I decided to otherwise allow the appeal would have been to give the plaintiff the opportunity to join Tolhurst even at this late stage. In saying this I recognise that the plaintiff was on notice at an early stage that the defendant was saying that the plaintiff had no right to recover the loss claimed. I refer to the correspondence put before me in relation to the Magistrate’s order as to costs. Despite this, it is not apparent to me that there would be any prejudice to the defendant which could not be remedied by an appropriate order as to costs if I were to allow Tolhurst to be joined as a party to the proceedings[21]. Had I been minded to otherwise allow the appeal I would have invited the plaintiff to apply to join Tolhurst and I would have heard both parties on the issue.
[21] See the provisions of rule 23 (Parties) of Magistrates Court (Civil) Rules 1992
The Costs Order
The Magistrate gave no reasons for his costs order. The order was apparently made having regard to certain correspondence from the defendant to the plaintiff raising the issue as to whether the action named the correct plaintiff and offering to settle the action on certain terms. There was also an offer by the defendant to refer the plaintiff’s claim to a body called the IEC. This offer was rejected by the plaintiff.
An appeal court is normally very reluctant to interfere with the exercise of a discretion as to costs. It has been said that an appellant must show that the decision was so unreasonable or unjust as to require the appellate court to substitute its own discretion.[22] At one stage, I was inclined to think that the order made by the Magistrate was too severe in the circumstances of the case. However, on reflection, I am not satisfied that there are grounds to interfere with the wide discretion of the Magistrate as to costs.
[22] Southern Resources v Residues Trading (1990) 56 SASR 455 at 480
Conclusion
I dismiss the appeal.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1. Aubigny Pty Ltd v Kowsha Enterprises Pty Ltd (1997) 191 LSJS 202 per Duggan J at 205-206
2. (1938) 60 CLR 336
3. Cubillo v Commonwealth [2000] 174 ALR 97 per O’Loughlin J paras [345] – [352]
4. (1992) 67 ALJR 170
5. The Queen v Perry (No 4) (1981) 28 SASR 119
6. R v Calabria (1982) 31 SASR 423 per King CJ at 431; Duke Group v Arthur Young (No 1) (1990) 54 SASR 498 per Perry J at 505-507
7. Ryan & Ors v ETSA & Ors (No 2) (1987) 47 SASR 239; Southern Equities Corporation Ltd (in liquidation) & Ors v Bond & Ors [2001] SASC 70 per Lander J at paras 149-191 especially his Honour’s discussion at paras 175-189 of the effect of the decision in Question of Law Reserved (No 3 of 1997) (1998) 70 SASR 555.
8. The position of a party does not arise on the appeal.
9. Duke Group v Arthur Young (No 3) (1990) 55 SASR 11 per Perry J at 17.
10. Sheahan v Verco [2001] 79 SASR 109 per Mullighan J at 142
11. Corin v Patton (1990) 169 CLR 540 per Mason CJ and McHugh J at 558; Knapp v Knapp [1944] SASR 257; Flinn v White [1950] SASR 195
12. [1975] 3 All ER 1030
13. (1989) 166 CLR 606
14. (1988) 12 NSW LR 250
15. See the general discussion in Australian Insurance Law. 2^nd ed. Tarr Liew and Holligan pgs 56 - 59
16. s.32 Magistrates Court Act
17. s 31 Magistrates Court Act
18. Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 per Deane J at 147
19. See Mason CJ and Wilson J at 121; Brennan J at 140; Deane J at 149; Dawson J at 157
20. Australian Insurance Law op. cit. pgs. 62 - 66
21. See the provisions of rule 23 (Parties) of Magistrates Court (Civil) Rules 1992
22. Southern Resources v Residues Trading (1990) 56 SASR 455 at 480

[2002] SASC 38

15 February 2002