Citation: Sharma v Insurance Australia Limited trading as NRMA Insurance [2017] NSWDC 10
Court: District Court of New South Wales
Date: 3 February 2017
Judge: Montgomery DCJ
Background
The plaintiff was the owner of a residential investment property at Ingleburn, NSW, insured under a Landlord Building and Contents Insurance policy. In May 2012, his tenants were evicted following a warrant from the Consumer, Trader and Tenancy Tribunal, leaving the property vacant. On the night of 12 June 2012, the property was destroyed by fire.
The plaintiff lodged a claim under the policy the following day. The insurer refused the claim in October 2012, alleging that the fire was deliberately lit by a man named Jai Sen, who had entered the property with the plaintiff's consent, and that the plaintiff had made fraudulent statements in the course of the claim.
The plaintiff sued to recover under the policy. The insurer defended on two grounds: first, that the fire was an intentional act committed with the insured's consent, bringing it within the policy's exclusion; and second, that the claim was fraudulently made, entitling the insurer to refuse payment under s 56 of the Insurance Contracts Act 1984 (Cth).
Legal Issues
- Whether the fire was deliberately lit, and if so, whether Jai Sen was the person who lit it while at the property with the plaintiff's consent
- Whether the circumstantial evidence was sufficient to establish those conclusions on the civil standard, having regard to the gravity of the finding (applying Briginshaw v Briginshaw)
- Whether statements made by the plaintiff during the claim process were fraudulently made within the meaning of s 56 of the Insurance Contracts Act 1984 (Cth)
- Whether the policy exclusion for intentional acts by the insured or by a third party with the insured's consent applied on the facts
Decision
Montgomery DCJ found, on the wholly circumstantial evidence, that the fire was deliberately lit using a petroleum hydrocarbon accelerant spread throughout the property. This conclusion rested on expert fire investigation evidence from Mr Stuart Ritchie, confirmed by chemical analysis of samples. There was no evidence to the contrary.
A mobile phone found in the backyard of the property the morning after the fire (referred to throughout the hearing as "Scene Phone") was a falsely registered pre-paid phone operated by Jai Sen. The plaintiff conceded this during the hearing. The court's central factual task was to determine whether Sen was operating that phone at the property at the time the fire was started. The analysis of mobile phone account records was a critical feature of the evidentiary reasoning.
The court found on the circumstantial evidence that Sen was present at the property and deliberately started the fire with the plaintiff's knowledge and consent. The plaintiff had conceded that, as far as he was aware, Sen never attended the property without his consent. That concession, combined with the other circumstantial evidence, brought the event within the policy exclusion for intentional damage caused by a third party with the insured's consent.
On the fraud issue under s 56 of the Insurance Contracts Act, the court found that the plaintiff had made a series of false statements to the insurer, including denials of knowledge of Sen's involvement, denials of knowledge of the Scene Phone, and other material misrepresentations. The court was satisfied, to the standard required by Briginshaw, that those statements were made fraudulently, entitling the insurer to refuse payment. Judgment was entered for the defendant on both grounds.
Orders Made
- Judgment for the defendant
- The plaintiff is to pay the defendant's costs
Key Takeaways
- The District Court confirmed that circumstantial evidence alone can be sufficient to establish arson and consent to deliberate damage by a third party, provided the civil standard under Briginshaw is met given the gravity of the conduct alleged.
- Mobile phone account records were central to the court's factual reasoning, illustrating the evidential significance such records can carry in insurance fraud investigations.
- Under the policy exclusion for intentional acts, a plaintiff's own concession that a third party never attended the insured property without his consent proved pivotal in establishing that the damage fell within the exclusion.
- Section 56 of the Insurance Contracts Act 1984 (Cth) entitles an insurer to refuse payment where it proves the claim was made fraudulently; the court's findings here rested on multiple specific false statements made by the plaintiff to the insurer during the claims process.
- In dismissing the claim entirely, the court required the plaintiff to pay the insurer's costs, reflecting the complete failure of the claim on both the exclusion and fraud grounds.
Legislation and Cases Referenced
Legislation:
- Insurance Contracts Act 1984 (Cth), ss 54, 56
- Evidence Act 1995 (NSW)
- Civil Procedure Act 2005 (NSW)
Cases:
- Briginshaw v Briginshaw (1938) 60 CLR 336
- McLennan v Insurance Australia Ltd [2014] NSWCA 300
- McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
- CGU Insurance Ltd v Porthouse [2008] HCA 30; (2008) 235 CLR 103
- Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500
- Secure Funding Pty Ltd v Insurance Australia Ltd [2010] FCA 1094
- Mutual Community General Insurance Pty Ltd v Khatchmanian [2013] VSCA 144
- Jones v Dunkel (1959) 101 CLR 298
- Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
- Perpetual Trustees Victoria Ltd v Cox [2014] NSWCA 328
- Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
- Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262
- Tobin v Ezekiel [2012] NSWCA 285; (2012) 83 NSWLR 757
- Insurance Commissioner v Joyce (1948) 77 CLR 39
- Luxton v Vines (1952) 85 CLR 352