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[2011] NSWDC 31
District Court of NSW
2009-11-23
Original judgment source is linked above.
d Defendant / Second Cross-Claimant) Insurance Australia Ltd (First Cross-Defendant / Second Cross-Defendant) Representation: A R Vincent (Plaintiff) C H Cassimatis (First Defendant / First Cross-Claimant) A D Crossland (Second Defendant / Second Cross-Claimant) G B Carolan (Cross-Defendant) Deacons (Plaintiff) Craig Milne and Co (First Defendant / First Cross-Claimant) Legal Aid NSW (Second Defendant / Second Cross-Claimant) Mason Black Lawyers (Cross-Defendant) File Number(s): 315172/2008
Introduction 1These cross-claims concern the loss of a black 2002 BMW X5 motor vehicle registered number GH1272, which police located on fire at about 9pm on 29 March 2007 on Richmond Road, Marsden Park. It is accepted that the vehicle was a "write-off". The vehicle had an agreed value of $85,444. 2The vehicle was purchased, second-hand, by the first cross-claimant, Mr George Halikiotis (who is now known as Mr George Styles), for his then wife, Ms Maria Halikiotis, as a birthday present. Her birthday is on 7 July. The vehicle was purchased on 22 July 2005. According to the vendor's tax invoice, the purchaser was Mr George Halikiotis. Finance was obtained from the plaintiff, Volkswagen Financial Services Australia Ltd, through a hire purchase agreement. The hirers were George and Maria Halikiotis. According to the pleading in the second cross-claim, Mr George Halikiotis took out a contract of insurance with Insurance Australia Ltd trading as NRMA Insurance at the time of the delivery of the vehicle to the Halikiotis couple on or about 22 July 2005. A new policy of Comprehensive Motor Insurance was taken out by Mr George Halikiotis on 20 September 2006, being policy no. MOT 290 393 259. That policy noted the interest of Volkswagen Financial Services. The insured was George Halikiotis and both George and Maria Halikiotis were nominated as drivers of the vehicle. This policy was in force at the time of the loss of the vehicle. In these cross-claims Mr and Mrs Halikiotis seek to enforce this policy. On 30 October 2009 the plaintiff obtained judgment against each of the defendants / cross-claimants for $98,786.82. The question of the plaintiff's costs has been reserved until these cross-claims have been determined. Enforcement of that judgment has been stayed until these cross-claims have been determined.
The pleadings 3The pleadings have not been amended to reflect the first cross-claimant's change of surname. As the pleadings remain unamended and as all the documentary evidence refers to him as George Halikiotis, I shall continue to refer to the first cross-claimant as George Halikiotis. I intend no discourtesy to him by doing so. I shall refer to the first cross-claimant hereafter as either "George" or "George Halikiotis". 4Paragraphs 5 to 8 of George's cross-claim are: 5 On or about 29 March 2007, the Vehicle was stolen and found damaged ('Loss').
Particulars a. The Vehicle was stolen from 12 Renway Avenue, Lugarno on about 28 March 2007. b. The NSW Police found the Vehicle at Richmond Road, Marsden Park - burned out on 29 March 2007. 6 The cross-claimant notified the cross-defendant of the Loss on about 29 March 2007 by telephone and thereby made a claim under the Policy for indemnity on account of the Vehicle being stolen and damaged. 7 The damage to the Vehicle: a. Constituted or amounted to "stolen and found damaged" in accordance with the terms of the Policy; b. Occurred during the Period; and c. Was not excluded by the exclusions in the Policy. 8 In the premises, the cross-claimant was entitled to indemnity pursuant to the terms of the Policy. The pleading goes on to allege breach of contract because of the failure of the cross-defendant ("IAG") to indemnify George. Save that it admits receiving notification from the cross-claimant of a claim, IAG does not admit any of the facts alleged in the pleadings I have quoted. 5Paragraph 7 of IAG's defence to the cross-claim is this: Further, in answer to the allegations in the Cross-Claim, the Cross-Defendant: (a) Does not admit that the Cross Claimant had an insurable interest in the vehicle; and (b) Says that it was entitled under the terms of the policy to refuse indemnity in circumstances: (i) Where any loss or damage to the vehicle was caused intentionally by the insured or by a person acting with the express or implied consent of the insured; or (ii) A claim was made in circumstances where the insured failed to make full and frank disclosure of the circumstances of the claim or the claim was otherwise made in breach of the duty of utmost good faith; Subparagraph (a) of that defence was never pressed. 6Paragraphs 11 to 14 of the second cross-claimant's cross-claim are: 11 On or about 29 March 2007, the Vehicle was (a) Found stolen and damaged, such damage being by fire and putting the Vehicle beyond repair. (b) In the alternative, damaged by vandalism or a malicious act, such damage being by fire. 12 The damage to the Vehicle occurred during the period of the comprehensive insurance policy entered into between NRMA and George Halikiotis. 13 By reason of s.48 of the Insurance Contracts Act 1994 (Cth), Maria Halikiotis has a right to recover the amount of her loss in accordance with the insurance contract. 14 Maria Halikiotis' right to recover her loss under the insurance contract is not a loss excluded by any term of the contract. Particulars In the event that the Court finds that George Halikiotis or someone acting on his behalf intentionally damaged the vehicle (as the Cross Defendant alleges), Maria Halikiotis' right to recover her loss is not excluded by the contract because the Vehicle was in those circumstances damaged by fire and/or malicious damage or vandalism and the car was not intentionally damaged by her. IAG admits paragraph 12 but does not admit any of the other facts alleged in the pleadings I have just quoted. Paragraph 7 of IAG's defence is this: Further, in answer to the allegations in the Cross-Claim, the Cross-Defendant: (a) Says that it was entitled under the terms of the policy to refuse indemnity in circumstances: (i) where any loss or damage to the vehicle was caused intentionally by the insured or by a person acting with the express or implied consent of the insured; or (ii) a claim was made in circumstances where the insured failed to make full and frank disclosure of the circumstances of the claim or the claim was otherwise made in breach of the duty of utmost good faith; and that its refusal of indemnity was made after taking these matters into consideration.
Issues at Trial 7The issues tendered for my determination are: (a) whether the vehicle was "stolen and found damaged" (a term of the insurance policy); (b) whether the vehicle was "damaged by vandalism or a malicious act" (another term of the insurance policy); (c) whether an exclusion in the policy applies, as pleaded in paragraph 7(b) of IAG's defence to the first cross-claim; (d) if the first two issues be decided adversely to George, whether Maria is nevertheless entitled to succeed under the Insurance Contracts Act 1984 (Cth), section 48.
Background 8George was born on 31 December 1972. At this time of the loss he was 34 years old. Maria was born on 7 July 1975. At the time of the loss she was 31 years old. The couple married in 1993. There are three children of their union. 9In or about 2001, the couple bought the Lugarno Deli at 122 Forest Road, Lugarno from George's parents. Both George and Maria worked in that business. The evidence does not suggest that they bought the realty, merely the business. According to Maria, her relationship with George started to deteriorate in or about 2004 and "to get the relationship back on track" they sold the Lugarno Deli and bought another delicatessen at Jannali. Again, I infer that only the business was bought, not any realty. Information supplied by the couple to the plaintiff ("VWFS") indicates that they commenced the delicatessen business at Jannali about one month prior to the purchase of the vehicle concerned in these proceedings i.e. in or about June 2005. Both of the couple then commenced to work in that shop. From what occurred later, it appears that the Lugarno Deli was sold back to George's parents. 10In his first affidavit, of 12 November 2008 (Exhibit A), George said (at paragraph [8]): In an attempt to try and restore our relationship I decided to (amongst other things) purchase a BMW motor vehicle for my wife as a 30 th birthday present. I intended on using my 2001 Holden Special Club Sport ('Holden') as a 'trade in' - to assist with the purchase. In her affidavit of 27 August 2008 (Exhibit E), Maria said: 11 I recall in about late June or early July 2005 on several occasions at the Jannali Deli shop or at home George said words to me to the following effect: "I want to buy you a 30 th birthday present. It is a BMW four wheel drive wagon." 12 My birthday is on 7 July. 13 I recall George mentioned that he had looked at a black BMW and I told George that I would like the inside colour to be black too. 14 I recall one day in about early July 2005 George said words to me to the following effect: "The car dealer has another black BMW four wheel drive. I have checked the car. Both the body and inside are black. You will like it. We will get finance, but the finance company also wants you to be the co-borrower. The car dealer has taken care of everything, and everything is ready. We only need to sign the finance contract." 15 I said to George "I'm happy to sign the contract." 16 At that time we had two cars: I drove a Holden Commodore SS and George drove a Holden Commodore Club Sport. It was agreed between us that George would trade in his Club Sport and when I got the BMW, George would drive the Commodore SS. 17 I recall I and George signed the finance contract separately, but I cannot remember when George signed the contract. 18 In or about late July 2005, I went to the office of the dealer at Victoria Road in Balmain to sign the finance contract. I recall George had a business appointment on that day, so I went on my own. I also recall that I had not been given the contract documents beforehand. 19 When I first arrived at the dealer's office, an elderly male person in his fifties smiled at me and introduced himself. He probably said he was the manager. I also remember he saying words to the effect of: "Happy Birthday!" "A BMW, what a nice birthday present!" 20 Then that same elderly person gave me all the documents. Everything had already been prepared beforehand, and really all I needed to do was to sign at the last page of the finance contract. 21 I recall that it took me about 10 minutes or less to finish signing the contract. No one explained anything to me; and I even had not read the documents before signing it. No body told me that the car loan was business loan or that I needed to sign any business purpose declaration. I did not notice there was a business purpose declaration. I though[t] the loan contract was a standard one, and just signed at the last page. I did not say anything about requiring the BMW for a business, for I and George never used our two cars for the deli business at all. 22 After I signed the contract, the dealer showed me the BMW. 23 Several days after I signed the contract, I got the BMW. 24 From the very beginning, I used the BMW to drove [sic] the kids to schools and pick them up after they finish the school. I also used the BMW to attend the appointments with the doctors to check the conditions of my sons John and Dennis. I also drove it o work and to go shopping. Apart from driving to and from work, it was not used for the deli business. I never intended it would be. There was never any discussion between George and I to the effect that it would be used for the business. That was never considered. 25 I remember George arranged everything for the BMW including insurance and registration. Initially George was the registered owner. An inference can be drawn, and I do draw it, that the vehicle was hired "wholly or predominantly for business purposes" (Acknowledgment no.6 of the Hire Purchase Agreement - Exhibit 7) in order that expenses referable to it would be claimed as an expense of the delicatessen business. Such a claim, on the evidence before me, would have been improper. 11The vendor's tax invoice for the sale of the vehicle gives the following details: Price excluding GST $77,272.73
The "payout" appears, from the same document, to have represented moneys owed on the traded-in vehicle, a 2001 Holden Special Clubsport. Since the payout on the Holden was greater than the sum of the trade-in value and the $2,000 deposit, George had no equity in the Holden. The amount financed on the hire purchase of the BMW vehicle was $90,031.32. The total price of the BMW vehicle was $85,000 (incl. GST) which was less than the amount financed, so neither George nor Maria had any equity in the BMW vehicle. The instalments due under the hire purchase agreement were $1,522.78 per month. 12The BMW vehicle originally had registered number ALV30T. GH1272 was originally the registered number of the 2001 Holden Special Clubsport, but its registered number was transferred to the BMW vehicle after George brought it for Maria's use. George conceded that it was his personalised number plate. 13Exhibit 1 is a Loan Statement Account for the Hire Purchase Agreement with VWFS. The first instalment was due on 22 August 2005. Arrangements had been made for payment of the monthly instalments by direct debit. The payment due on 22 August was dishonoured. Fees amounting to $124 were then incurred. The second instalment was due on 22 September 2005. On 23 September, $3,169.60 was paid but not by direct debit. The sum of the two instalments then due and the fees incurred was $3,169.56. The next instalment was due on 22 October 2005 but payment of it by direct debit was dishonoured. Fees amounting to $91 were then incurred. On 18 November a payment of $1,613.74 was made. That payment was four cents less than the instalment due on 22 October 2005 and the fees incurred. However this payment of $1,613.74 was also dishonoured. Thereafter, all direct debit payments due on 22 of each month were dishonoured, as were a number of other irregular or manual payments. The borrowers incurred a large number of fees as well. By 12 December 2006, the borrowers ought to have paid 16 instalments of $1,522.78, the total of which amounts to $24,364.48. The opening balance on the Loan Account Statement is $118,344.74. By 12 December 2006 that ought to have been reduced to $94,080.26 but the actual balance at that time was $97,306.22. I shall return to this aspect of the matter later but it ought be noted at this time that, from the beginning, George had great difficulty in paying the instalments due on the Hire Purchase Agreement. 14Neither the new business at Jannali nor the BMW vehicle had its desired effect. Maria stopped working in the Jannali delicatessen in October 2005. The couple separated in November 2005. Since that time, Maria has been receiving Commonwealth benefits. George has been paying $26 per month maintenance to his (former) wife for herself and their three children. Such a small payment indicates that he either assesses himself, or has been assessed as, only having a very small income. 15The couple had originally been living in Coolangatta Avenue, Beverly Hills which, according to what they told VWFS when applying for the Hire Purchase Agreement, was valued at $1,350,000 but was subject to a mortgage of $430,000. Maria continued to live there with the children until in or about March 2007 when she moved to Albion Street, Roselands (Exhibit E, par 36). 16At some stage George moved to Cronulla to live. When that occurred is unclear. His second affidavit, of 19 February 2009 (Exhibit B), implies that it was after his separation from Maria. Paragraph 3 of that affidavit is this: My ex wife and I separated in about November 2005. In about late April 2006 after spending a short while in Cronulla, I moved in with my parents at 13 Renway Avenue, Lugarno ('Home'). The date given in the second sentence is clearly wrong. If one merely relied on what one read in Exhibit B one would be forgiven for thinking that, at the time of the loss, George had been living with his parents at Lugarno for 11 months. Such an impression would be erroneous. 17In [2] above I recited that, according to the pleadings, the vehicle was insured at the time of its purchase / delivery by George with IAG. That is also his evidence at paragraph 7 of Exhibit B. I also recorded how a second policy was taken out on 20 September 2006. The first policy must have elapsed by effluxion of time and was not renewed. The inference I draw from his difficulty in paying the loan is that he had financial difficulties in renewing the insurance. When the new insurance was taken out the premium was $1,981.33 (Exhibit F). The same exhibit suggests why the fresh insurance was taken out: under the guide-tab "Message" is this note: "Dina - M965 - from claims received a call from Craig at insurers hotline notifying her that this car had been involved in a car accident on 20-9-2006 at 9.20am. Policy taken out at 4.08pm." There is no suggestion that the vehicle was anything other than very slightly damaged and no claim was made in respect of the event of 9.20am. It appears that this "bingle" alerted George to the necessity of taking out insurance. The same exhibit also contains information that George was late in making payment of the first instalment of premium due on 11 October 2006. 18At the time of taking out the second policy of insurance, George gave as his address 1 St Andrew's Place, Cronulla. He must have been living there on 20 September 2006. George was interviewed after the loss by an assessor on behalf of IAG on 12 June 2007. The record of interview ("ROI") is part of Exhibit 8. He gave as his then address 13 Renway Avenue, Lugarno, his parents' address. He said he had been living there off and on but "now probably from March of this year". He confirmed he meant March 2007. He gave as his former address the Cronulla address I have recorded and said he had lived there "from November till March" and then agreed it was for "a short period". One might infer from that that he meant from November 2006 to March 2007 but, given the other material to which I have referred, he may have meant form November 2005 to March 2007, but that is hardly a "short period". 19The question then arises as to when George returned to live with his parents at Lugarno. In cross-examination, George was shown three letters dated 24 April, 21 June and 31 July 2007 addressed to him at the Cronulla address by Manheim Fowles, consignment automotive auctioneers, to whose yard the vehicle had been sent by IAG after its recovery. Their Sydney premises are at 144 Moorebank Avenue, Moorebank and their yard was at Smithfield. George denied seeing those letters. At transcript ("T") 45.32 this evidence was given: "Q. They were certainly addressed to you at an address where you lived up until March 2007? A. It was April. I wasn't there in April." George clearly accepted that he lived at Cronulla until some time in March 2007. The loss is alleged to have occurred during the night of 28 to 29 March 2007. I just do not know (because of a lack of evidence) as to when George returned to live at Lugarno, although Mr Carolan, for IAG, clearly accepted that George resided at Lugarno on the evening of 28 to 29 March 2007. Exhibit 2 is a copy of George's Access Advantage Cheque Statement from 1 March 2007 with the ANZ Bank that shows transactions at the BP Service Station at Cronulla on 16 March 2007 at 6.19pm and also on 17 March 2007. The exhibit shows transactions at Lugarno on 15 March and a number of transactions commencing on 18 March 2007 and thereafter at Lugarno. I am prepared to accept that George moved to Lugarno on 18 March 2007, ten days before he says he last saw the vehicle. 20The next relevant event, after the taking out of the second insurance policy, was the repossession of the car by VWFS. Paragraphs 30 to 32 of Maria's affidavit are: 30 I recall in about September or October 2006 the employees of the finance company Volkswagen Financial Service Australia Pty Limited (VWFS) came to my place at 57 Coolangatta Road, Beverly Hills trying to repossess the BMW, because George could not pay the monthly repayments on time. I immediately called George and had a conversation with him to the following effect: MH: "The finance company is taking away the BMW." GH: "I'll pay the arrears. I'll fix the problem. Let me talk to the finance company people." 31 I then gave the phone to one of the VWFS employees. After talking to George over the phone, they did not take the BMW away. 32 In about December 2006 the VWFS employees came to my place again and they repossessed the BMW on that same day, for again George could not pay the monthly repayments. I recall on that occasion I clearly said words to the following effect to them: "I have separated from my husband George. George has been paying the car loan. I have never paid nor could I ever afford to pay the monthly payments." The exact date of repossession was 12 December 2006 (Exhibit E, annexure 3). In [13] above I have pointed out the financial position as far as the Hire Purchase Agreement was concerned at 12 December 2006. On 30 January 2007, George paid $7,154.94 to VWFS, reducing the loan balance to $90,958.04. The sum paid to VWFS appears to have covered the arrears owing at that time. Paragraph 35 of Maria's affidavit establishes that VWFS offered to return the vehicle to her: In or about January 2007 VWSF called me asking whether I wanted the BMW back, and we had a conversation to the following effect: VWSF employee: "Do you want the BMW back?" MH: "No, thank you. I do not want it anymore." The vehicle was bailed to George on 16 February 2007. He was definite about that date when interviewed on 12 June 2007. That certainty as to the date must be contrasted with his vagueness at other times both when being interviewed and when giving evidence. In the ROI, he was being questioned about an electronically recorded image of the vehicle. The following was said: Q324 Any idea when they would've been taken? A324 That would've been in January. Q325 Right. So that's when you took possession of it? A325 Yeah. Q326 Now, apart from yourself - - - A326 16 th of the 2 nd Q327 16 th of February? A327 Yeah. 21After the vehicle was given to George, instalments were due to VWFS on 22 February 2007 and 22 March 2007. Both those payments were dishonoured. At 29 March 2007, the day on which police found the vehicle burning, the amount outstanding to VWFS was $91,130.30. 22The vehicle was due to be re-registered on 19 March 2007 but was not (Exhibit 3, p.2). Maria was interviewed on 25 June 2007 by the same assessor who had interviewed George on 12 June 2007. Maria's ROI is also part of Exhibit 8. On the issue of re-registration, Maria said this: Q37 Okay. So the vehicle - who's name is it registered in? A37 Mine, my name. Q38 Would you happen to have the registration papers at all? A38 I gave - oh, I think I do. Because I did give a copy to NRMA also. Hang on, is that it? Yeah, there you go. Q39 Ta. Now, I understand at the time that this car was stolen it was unregistered? A39 Correct. Q40 Are you aware of that? A40 Yes. Q41 And do you know why that is so? A41 Okay. Because the car got repossessed in December of 2006, and so they took it - I wasn't paying for the finance he was, so yeah I don't know, he couldn't afford it at the time, so they repossessed it, and he got it back after because he sold the business or something, whatever he had because that was under his name, he got some money and he paid seven grand or whatever it was, he paid that, got the car - the vehicle back. So he started paying the instalments. Q42 Right. A42 And actually the finance company rang me and they said, "Do you want to", I said, "I can't afford the vehicle, if he wants to take it he can take it", but that's why it wasn't - like, I had nothing to do with it, like he took it anyway, so that's why I thought, I'm not going to register it, it's not - it's no longer mine. So he took it, it's in his possession, he should - if he wanted it he should've, you know, deal with all the registration stuff and that, that's why. Q43 All right. So did you actually receive this in the mail? A43 Yes. Q44 And did you ever let George know that you had it? A44 Yes. Q45 And did he know that the registration was due on the car? A45 Yes. At the commencement of cross-examination, Maria gave this evidence: Q. Mrs Halikiotis, the registration of the vehicle finished on 19 March 2007, do you recall receiving the renewal form? A. Yes. Q. When you received the renewal form, what did you do? A. Well, I did tell him that he had the vehicle that is due for renewal. Q. Can I ask you this, did you telephone your husband? A. I might have - I can't remember if I telephoned him or when he picked up the children. Q. So assuming you got the renewal sometime in early March-- A. That was sent over to the - I think it was sent to my mum's because at the time I had - I was moving houses at the time. Q. Did you give it to your husband before it fell to you for renewal. A. No. Q. When did you give it to him? A. I don't recall giving it to him. Q. Did you post it to him then? A. No. Q. So you simply telephoned him, did you? A. Yes. Q. Or alternatively, you offered the explanation you may have spoken to him? A. To him or - yeah. Q. When he picked the children up? A. Yeah. Maria's position is clear: she told George that the vehicle was due for re-registration prior to the registration expiring. George's position is to the contrary, but I accept Maria's evidence in this regard. 23When interviewed, George said this about the vehicle's registration: Q119 All right. Now, I understand that the registration was due on the - it was due on the 19 th of March, 2007 from what I've been told. A119 So it had lapsed? Q120 Yeah, so at the time of its theft the vehicle was unregistered, were you aware of that? A120 No, I didn't know that. That's probably another - another thing that my ex didn't want me to.... The rego is in her name. No, I didn't know that, that's - that's a bit of a shock, actually. In his evidence George said he was "unaware" that the registration had expired (T44.02) but I do not accept that evidence at all. Furthermore, the alleged ignorance of George ignores these facts: (a) George had been driving the vehicle since 16 February 2007; every registered vehicle has attached to it a registration sticker which will advise the driver, the passengers, the police and any member of the community who looks at the car when the registration will expire; (b) all outgoings in the vehicle had, in the past, been paid by George: he must have re-registered it in 2006 and such an experience one year earlier would lead any reasonable motorist to the expectation of having to do it one year later; (c) at the same time as re-registration is required, so is renewal of Compulsory Third Party Insurance and the evidence is completely silent as to who that insurer was, and as to where the renewal papers were sent: to George at Cronulla, to George at Lugarno or to Maria at Beverly Hills? The inference that I draw is that, owing to his financial position, George was unable to afford to pay for the renewal of the registration and of the CTP Insurance. 24I return to the question of George's financial position. He sold the Jannali delicatessen business in January 2007 (T16.16). He sold it for $80,000 (T17.31). In evidence he said he used the proceeds of sale to pay some debts, not more than "a couple of thousand [dollars]" (T17.46). On 28 December 2006, Energy Australia obtained judgment against George for $1,958 in the Local Court. When interviewed, George claimed to know 'nothing' about that judgment debt but, assuming regularity and due process, he must have been served with the process of the Local Court. At ROI, A550 George said that "that would probably be for my business at Jannali". At A561 he went on to say that 6 months prior (presumably to 28 December 2006) he had changed electricity provider to Integral Energy. The fact that the judgment debt was obtained and remained outstanding at 12 June 2007 (the date of ROI) indicates that George had difficulty in paying the outgoings of the Jannali business. 25The assessor then asked George about a second judgment debt of $6,464 entered on 10 January 2007 in favour of the Westpac Banking Corporation for arrears of mortgage payments. This can only have been in respect of the former matrimonial home at Beverly Hills in which his wife and children were still living. George said he had "no idea" about this judgment debt. 26The evidence does not adequately explain how the proceeds of the sale of the Jannali business were disbursed. However, I infer that the payment made to VWFS on 30 January 2007 was made from the proceeds of the sale. In support of this finding it must be noted that, when she was interviewed, Maria said: Q73 Okay. Do you know how far in arrears he was? A73 When it got repossessed? Q74 Yeah. A74 Yeah, it was about - I think it was about four or five payments behind. Q75 All right. A75 Yeah. Q76 And do you know why it was behind that far? A76 Yeah, well he was selling the business and he - he didn't have any money, that's why he was selling the business so he can get the car back. 27As at 29 March 2007 such evidence as there is indicates this: (a) George owed VWFS $91,130.30; (b) he was in arrears in his mortgage payments; (c) his current account with the ANZ Bank was overdrawn $336.19 (Exhibit 2); (d) he had not paid the renewal of registration of the vehicle and, I infer, of the CTP Insurance; (e) he owed Energy Australia $1,986; (f) he was paying little, if anything, to maintain his wife and children; (g) he probably had a credit card debt or debts (to which subject I shall return later); (h) he had no money in the bank (T13.39). 28What income did George have in early 2007? According to what he told the assessor on 12 June 2007 and what he told me in his evidence, he had cash income from at least one of two sources but there is not a scintilla of evidence, either oral or documentary, to support his assertions. On 12 June 2007, he told the assessor that probably from March 2007 he was working for Gourmet Smallgoods (A30, A31) of Gibson Avenue, Penshurst (A607) as a driver (A33) with use of a van/truck to drive to and from work (A611) earning $500 per week (A577) and that "I'm supposed to be on the books, but we haven't done a tax return yet though ... but I haven't given my tax file number ... because we were supposed to be doing that eventually..." George also told the assessor that whilst working for Gourmet Smallgoods, he was helping out at the Lugarno Deli (A5783). However, in cross-examination, George gave this evidence: Q. ... You told Mr Adams that you were working for the wholesale smallgoods company? A. At the time in June? Q. Yes? A. Yep. Q. How long had you been working for that company? A. It was only for a small stint because at the time he was a friend and he needed a driver for a little while. Again that was another sort of cash job that he needed me to help and that was it. Q. When did you start working for him? A. Again, it was only for two, three months in June, July, August - I can't remember. Q. June, July, August you're sure about that? A. I'm not a hundred per cent sure, no. Q. Is it possible you were working there in March 2007? A. No. Well, again I'm not sure. I'm not - I don't think so. Q. You certainly had a work vehicle, didn't you? A. Not at the time, no. Q. Didn't they give you a truck? A. I had a van to use at their time, in their time, not to take home. Q. Didn't you tell Mr Adams that you had a work truck and that they paid for the petrol in the work truck? A. They did, yes. Q. The truck was yours to be used after hours, wasn't it? A. No, not - I had taken it a couple of times but it wasn't for me to take. There is no documentary evidence from Gourmet Smallgoods, nor was anybody from that business called to give evidence. 29George told me in evidence that in March 2007 he was working at the Lugarno Deli, for his parents, earning between $500 and $700 per week in cash (T20.49). There is no documentary evidence to support such income and neither of George's parents were called to give evidence on any issue, although they could have been called (T46.14). 30For reasons which may be apparent by this time but will soon become clearly apparent, I am unable to accept George Halikiotis as either an accurate, reliable or honest witness. His evidence as to his income in March 2007 is quite unreliable and uncorroborated. I do not accept that in the early part of 2007 he had sufficient income or disposable assets to satisfy his recurrent debt.
The Initial Report of the Loss 31It is common ground that George first reported the loss to the police. That became COPS entry E 29591425. The report was made at 7.24am on Thursday 29 March 2007. The relevant part of the entry is this: Between 19:30 on Wednesday 28 March 2007 and 06:30 on Thursday 29 March 2007 Person reporting had parked and secured motor vehicle GH1272 - 2002 Black BMW X5 on the street in front of the premises at the location. Person/s unknown have stolen the vehicle by unknown means. ******** YES TOW REQUIRED UPON RECOVERY ******** When asked Person Reporting HAS consented to vehicle being examined if recovered.
The Version given to the Loss Assessor on 12 June 2007 32In the normal course of human affairs one would think that George's recollections of 28 and 29 March 2007 would have been more accurate and more reliable on 12 June 2007 than it would be later i.e. than when he gave evidence on 3 November 2009 (31 months after the relevant events and 28 months after the ROI). 33This is a condensed version of the relevant events described by George in the ROI. On Wednesday 28 March George did not go to work (A346). He probably went for a drive or may have gone shopping - he could not remember (A347). He drove home to Lugarno and parked the vehicle at 5.30pm (A350) out the front of 13 Renway Avenue (A352). He then walked the short distance to the Lugarno Deli (A351) and helped out [his parents] (A360) and closed the shop up at 7pm (A359). He then walked back home arriving at about 7.15pm (A360) where he saw the car still parked out the front of the house. That was the last time he saw the vehicle (A362). The vehicle was locked (A365), the alarm was working (A374). I interpolate at this point that the alarm is automatically engaged when the vehicle is locked, according to the manufacturer and the expert evidence. All the windows, which were power windows, were up (A379). When he reached home, his parents were already there (A436). After arriving home he watched television and went to bed (A384). He did not go out during the night (A459). 34When the vehicle was purchased, he was given two sets of keys (A392). He was only aware of two sets of keys (A391). At the time the vehicle was lost he had both sets of keys (A408). As to other keys he said this: Q398 So there was no keys left in or attached to the car in any way that you're aware of? A398 No, no. Q399 And have you ever had any keys lost or stolen? A399 No. Q400 Have you ever had any keys duplicated in any way. A400 No. Both keys were kept in his bedroom (A396). No one else had access to those keys (A397). The keys had been handed to him when the vehicle was returned to him [on 16 February 2007] by VWFS (A530 to A533). No one else drove the vehicle after 16 February 2007 (A327). 35George's bedroom was at the front of the house (A419), 15 metres from where the vehicle was parked (A417). Overnight he heard nothing (A420). He then said: Q421 Not a thing, all right. Now, when did you find the car missing? A421 Well, I started - I started work here at, I think it was 6.30, and it was when I walked out to get in to the car, there was no car. Q422 All right. A422 So I had to walk to work. Q423 Okay. And did you notice anything on the ground which may have indicated how they got into the car? A423 No, nothing, nothing, no - - - Q424 No glass, no - - - A424 - - - glass, nothing. Because this like - well I - I was a bit shocked, because I thought, where's it gone, maybe my father moved it or something, you know, like - not that he could, but - because he's never been in the vehicle, you know. Then I went inside to see, you know, whether the key has been moved, and it hasn't been moved. Then I came up to - I came up to the shop and I said to mum, "Mum, have you seen the car?", and she goes, "Isn't it there?", I said, "No", and that was it, like I - I got a bit - I lost it then. He rang the police and reported the loss, from the Deli (A445). Two hours later he rang [IAG] (A439). 36The first that George knew about the recovery of the vehicle was when Kellie from [IAG] Claims rang him (A493) three to four weeks later (A500). He "had to wait a while before [he] heard anything about it" (A501). The police did not ring him (A508) nor was he aware of their ringing any member of his family (A509).
The Version given in Evidence by George Halikiotis 37There are many inconsistencies between that version of events and George's evidence. Attempting to keep to the same order as that version, the following is the substance of George's evidence. On Wednesday 28 March 2007, George went to work at the Lugarno Deli (T23.23) at the usual time around 6am (T23.26). He did not think that he drove the vehicle on 28 March (T24.32). He came home at the "usual time of 6, 6.30" (T24.49). The car was still parked directly out the front of the house (T25.05). Commencing at T31.18, George gave this evidence: Q. Now, when you left the car some time prior to the 28 th , was it locked? A. I'm assuming so. Q. Do you know? A. I don't know. Q. Did you regularly or did you use the-- A. Lock button yes. Q. --the lock button when you left the car usually? A. Yes. Q. And the car was fitted with an alarm, wasn't it? A. Its own factory one, yeah. Q. And how was that alarm activated? A. Explain that, or how do you mean activated? Q. How did you set the alarm? A. To lock and unlock, we just - pretty much by locking and unlocking the car. Q. So when you locked the car using the button on the remote-- A. Yes. Q. --the alarm was activated? A. Yes. Q. Do you recall whether the windows were up? A. They should have been. I don't recall. The thing is, it was parked there. Whether it was unlocked, I'm assuming it was locked. He stayed home that evening with his parents (T25.08). 38He had two keys to the vehicle (T25.39). The second key to the vehicle was hanging up in the kitchen (T25.41 - T25.48). His father "every now and again" used the vehicle (T27.04). Of that he was sure (T27.34). When cross-examined about this inconsistency with what he had told the assessor, George eventually said (at T28.39 to 28.41): Q. Did you tell Mr Adams that, as far as you were aware, your father had never been in the vehicle prior to the morning when you realised it was stolen? A. Yeah, he had been prior, it just wasn't on that time, on that day. He slept at the front of the house (T33.48), 10 to 15 metres from where the car was parked (T34.01). He heard nothing during the night (T33.38), neither the alarm going off (T33.31) nor a tow truck out the front (T34.44). When initially asked in cross-examination what occurred on the morning of 29 March 2007, George said this at T25.11: A. I got up and I had - again went to work and the car wasn't there. I sort of didn't realise - I thought maybe my father might have taken it so I walked to work and it was gone so I rang up the police straight away. Later, commencing at T28.49, he said this: Q. So you came out of the house, found the car wasn't there? A. Yeah. Q. Did you go back and check where the keys were? A. Yeah, I did. Well, the actual key was still in the kitchen. Q. And the other key on the key ring was with you? A. The actual - my house keys and my key, I actually went to the deli first, and wanted to see whether dad was there, but no, I actually came back afterwards, and it was in the kitchen. He was later asked whether he looked at the area where the vehicle had been parked. He said this (commencing at T44.06): Q. When you went to - when you inspected the area outside your house where the car had been parked on the evening of the 28 th ? A. Yeah. Q. Did you see anything on the ground? A. No, I don't think so. Q. There was no broken glass? A. No. Q. No sign of the car being dragged away? A. I don't think so, no. 39George did not receive any call from the police (T36.23). He was unaware whether his mother received a call from the police as his mother did not tell him that she had (T36.40). Similarly, he was unaware of the police calling his wife as she did not tell him that they had called her (T37.08). He then gave this evidence: Q. When did you find out that the car had been located? A. Well, what happened was, because I hadn't heard anything, I actually found - I rang up NRMA and asked, you know, what had happened, and as I said, they have actually recollected it, and I was at the Smithfield Yard, and I said, "Well, I have personal items in there, and I want to find out where it was so I can actually go and get them". I had sunglasses, CDs, bits and pieces. I had the kids' toys in the back, you know, and then they said to me, "Yeah, they had been recollected", and that was it. Q. Now, do you know where the car was located? A. They had mentioned somewhere out west somewhere. Q. Are you familiar with Marsden Park? A. No, I'm not. Q. Never been there? A. No. In paragraph 13 of his second affidavit (Exhibit 13) George had said: At about the end of April 2007, I called NRMA to ascertain what (if anything) had been done with my claim. During that conversation we said words to the following effect: Me: "Has my car been found yet?" NRMA: "Yes. Have you been notified?" Me: "No. I am ringing to see if you can tell what's going on with my claim." NRMA: "The car has been found and it is being held at the Smithfield Salvage Yard." Me: "What happened to the car? I would like to get some of my possessions out of it." NRMA: "You will have to make an appointment to come and see it. It has been damaged by fire, you probably won't be able to get the things you want out of it as they have probably been destroyed by the fire."
Inconsistencies 40The significant inconsistencies arising from these version are: (a) Did anyone other than George have access to the keys of the vehicle? According to the ROI, this question is answered 'no' but according to George's evidence the second set of keys was hanging in the kitchen and could be used by his father. The father was not called to elucidate, when he could have been called. (b) Did anyone other than George drive the vehicle after 16 February 2007? According to the ROI, this question is answered 'no' but, according to evidence, is answered "yes": his father drove from time to time. Again, evidence from his father could have elucidated this point. The answer to the inconsistency given by George in his evidence is, in my judgment, unacceptable when one reads the ROI carefully as a whole. (c) What were George's movements on 28 February? Did he work or did he not? Again, the evidence of his parents may have elucidated this point. (d) When did George check to see if the second set of keys was missing, before or after he went to the Deli? If after he went to the Deli, as given in evidence, why return to the Deli to call the police? (e) Was the vehicle "secured" when parked on the evening of either 27 or 28 March? According to the report made to the police and according to the ROI, this question must be answered 'yes', but in his evidence George was less sure, he "assumed" it was locked. There were good reasons why George ought to have ensured that the vehicle was locked, to which reasons I shall in due course turn. However, a change in his position on this issue would assist his case, in particular the expert evidence called in his case. 41Other inconsistencies require the consideration of further evidence: (f) Did George "lock up" the Deli on the evening of 28 March, arriving home after his parents, as stated in the ROI? According to his evidence, George had no key to the Deli (T25.48). He could not lock up without his parents being present (T26.05). This inconsistency was not explored in further cross-examination. (g) When did George become aware that the vehicle was recovered? The passivity of George in trying to ascertain whether the vehicle was recovered, as given in both the ROI and his evidence, is implausible. As was submitted by learned Counsel for IAG, his disinterest in the fate of the vehicle is explicable by his knowing what had actually happened to it. However, I am unable to accept George's claimed lack of knowledge of the recovery of the vehicle until late April 2007. In her ROI, Maria said: Q121 Okay. Now, did you know that the car had been found? A121 Well, the police did ring me saying that they found a burnt vehicle, that's all I got. Q122 All right. And do you know how long after the theft that was? A122 Oh, no, three days or something. In her evidence Maria said that George telephoned her in late March 2007 to tell her the vehicle was stolen (T79.04 to 79.09). On that same day she received a call from the police (T79.12). This was in "late March" (T81.07) and she agreed that it was probably "on or about 30 March or thereabouts" (T81.10). Her evidence continued at T79: Q. The same day. When you got the call from the police, did you call your husband? A. No. Q. Did you notify him that the car had been located? A. Been located to - where it was burnt or-- Q. Yes? A. Well they told me that it was - that they found the vehicle like at Marsden Park and that's about it. But I didn't even know where Marsden Park is. HIS HONOUR Q. Who told you, was that the police? A. Well, what happened was, two days before, I got a - because the car was registered under my name, I got a phone call saying that we found a burnt vehicle but we can't exactly recall the numberplates because it was that badly damaged. So I was - I didn't know what they were talking about. So I went down to the police station. And they couldn't find that in their records either in the computer. Because another vehicle was coming up. CROSSLAND Q. The other vehicle was your Commodore wasn't it? A. His Commodore because those plates were on the Commodore that he actually trade in for the BMW. Q. Yes. So after you went down to the police station-- A. Mm-hmm. Q. What did you do then? A. Well, I've put in a statement. I wrote a statement over at Riverwood saying that, "I don't know, can you please" - because I was in - I didn't know what happened that's why I went down there to find out. Q. You didn't call your husband? A. I think I did call my husband. Q. And when was that? A. Probably I don't know two days later. Q. So in early April, you had a conversation with your husband? A. Yes. Q. And do you recall what you said to him? A. I just said that, "Someone's called me saying about a burnt vehicle with these number plates". That's all I recall. Q. Do you recall what he said? A. It's been so long, I can't remember. Maria then made a call to IAG "[b]ecause I wanted to get answers" (T80.17) and she then again called George (T80.30). This was in "early April" (T80.42). On Maria's evidence, which I accept, George was well aware that the vehicle had been recovered, burnt, in early April 2007, perhaps as early as 2 April or 3 April. George's lack of knowledge of the recovery of the vehicle until late April 2007, I can only accept, is feigned.
Earlier Losses 42George admitted that, prior to this loss, he had had three vehicles stolen. The first was a Jeep Cherokee which he owned "for a little while" (T32.34), the second was a Mitsubishi Scorpion which he owned jointly with his father, perhaps in 2002 (T33.15) and the third was a white BMW 218i stolen in 2003 (T33.18). The order I have just given is the order given in cross-examination and it may not be chronologically accurate - but nothing turns on this. No defence is raised by IAG of either non-disclosure or misrepresentation nor was it suggested to George Halikiotis that he was in any way complicit in the theft of the earlier vehicles. Rather, IAG relies on George's earlier experiences of motor vehicle theft to point out that George, more than most other motorists, had good reason to ensure that when he left his vehicle parked in a public place, such as a street, it was properly secured. I have referred to this argument in 40 above. The argument is, in my judgment, a sound one.
Further Considerations of George Halikiotis' Credit 43I did not form a favourable impression of George as he was giving evidence. In addition to the inconsistencies to which I have referred, there are two further aspects of his evidence which demonstrate his unreliability. At [13], [20] and [21] above, I have pointed out the difficulties that George had in repaying the loan for the purchase of the vehicle. Cross-examination of him on those issues commenced at T10: Q. And how much were your repayments for this vehicle? A. 1500 a month. Q. You had trouble making those repayments, didn't you? A. Did I? No. Q. You didn't? A. Well, no. Q. Are you sure of that? A. Yes. He was then shown the document which became Exhibit 1 and was further cross-examined. At T12 the following evidence is recorded: Q. Do you still say you had no trouble paying for this car? A. There might have been dishonoured fees but I still paid - that's my banking misjudgements that I'm not good at with banking any way; I'm a worker, I'm not a - not good with my own paper work. Q. So every month you failed to meet your payments? A. Not every month but I had - yeah. Q. Was there one month there that I missed? A. I had, I had problems with my marriage, I had issues. Q. The fact is, sir, you just didn't have enough money to meet the payments, did you? A. Definitely not, I always had money, always was a cash business. In addition to the excuses of not being good with his own paperwork and having matrimonial difficulties, the following excuse was later expressed (At T43.29): ... what happens was we had separated in November 06 and then she kept it for over a year. And then I found out that her boyfriend was driving it and I didn't want to be paying it. That's why all the dishonoured fees and all that happened because I didn't want to pay for that amount of money for that sort of car and her boyfriend was driving it. And then it just, oh no, the kids and the kids and I take them to school. Okay, well I'll keep paying, keep paying. Until subsequent - well, if I'm paying for it, I should be driving it. These are unacceptable excuses and the excuses are inconsistent with his initial evidence that he had no trouble making the payments. These excuses are unacceptable because a direct debit had been set up to pay the instalments, but they were constantly dishonoured. George did not have the money to pay the instalments and the evidence in that regard I have already canvassed. 44At [42] above I discussed George's earlier losses. The theft of a motorist's vehicle is, fortunately, not commonplace. To have previously had three vehicles stolen is most unfortunate and it appears to me to be something relatively rare and thus not easily forgotten. Some of George's answers in cross-examination on this subject are completely unsatisfactory. He admitted to "some problems with cars going missing previously" (T32.01). He then gave evidence of the theft of the white BMW 218i in 2003 from the front of the matrimonial home at Beverly Hills. The cross-examination then continued (commencing at T32.26): Q. Have you ever had any other cars stolen? A. Prior to that, maybe, I can't remember. I really don't. Q. How many cars have you owned? A. I've lost count. I've had a Mitsubishi Scorpion, I had a white BMW, I had a Holden Commodore, I had a Club Sport, the BMW. Q. Did you ever own a Jeep Cherokee? A. Yeah, I did have a Jeep Cherokee for a little while. Q. That was stolen, wasn't it? A. Yeah, it was stolen. Q. When was that? A. I don't remember. Q. You don't remember? A. No. Q. When did you own it? A. I really don't remember when I owned it. It was a while back. In between - it would be in between - I can't remember whether it was either before or after the white car. Q. And you had a Mitsubishi Sigma? A. A Scorpion. Q. That was stolen as well? A. That was jointly with my father, that one. Q. It was stolen though? A. Yeah, it was. Q. When was that? A. I know, I actually remember, that was done, that was actually, that was taken around the back of the shop there actually, but I don't remember where it actually was. Q. Would that have been 2002? A. Might have been. Q. And the white BMW taken in 2003? A. Yep. Q. Correct? And when was the Cherokee stolen? A. Did I have that after the white one, or? HIS HONOUR Q. We're asking you? A. I'm not sure, sir? CAROLAN Q. So you had three cars, four cars stolen now, isn't that right? A. Yep. Q. So you'd be pretty careful about securing them outside when they're out in the street, wouldn't you? A. I suppose, yeah, of course. The number of "I don't remember" answers strains credulity. 45In his ROI, George said the following about credit cards: Q613 Okay. Credit cards? A613 Yeah, the Westpac one. Q614 Westpac one? A614 Yeah. Q615 All right, so what's your limit on that? A615 I think it's 6000, by the looks of it. Q616 So you're obviously up to - - - A616 Yeah, maxed out. At T14.26, George commenced to give evidence about credit cards: Q. Did you have a credit card? A. Not that I can remember. Q. Sure about that? A. I can't remember. At T15.28, the cross-examiner returned to this issue and the following evidence was given: Q. Let me ask you the question, did you have a credit card? A. Well, the answer is yes. OBJECTION (CASSIMATIS). QUESTION UNCLEAR. HIS HONOUR Q. Mr Halikiotis, you have previously been asked did you have a credit card and you said you did not remember. You were asked whether you had a Westpac account and you said you could not remember. You were asked whether Westpac sued you and obtained default judgment against you and you said you were unaware of that? A. That's correct. Q. Now the questions you're being asked at the moment are about a credit card and not about the ANZ Bank, do you understand? A. I'm-- Q. Right, did you have a credit card? A. No, I don't remember having one. Later George was cross-examined about what he had told the assessor about credit cards: Q. You were asked a question there a question 613 about whether you had any credit cards? A. Mm-hmm. Q. And you referred to the Westpac credit card? A. There you go. Q. Do you recall that? A. It's on the paper. Q. Well, does that refresh your memory? A. I honestly don't remember that I had said that so-- Q. Well, did you have a Westpac credit card in March 2007? A. Again, I don't remember although I have said on this here I don't remember - actually recollect saying it, so-- Q. Well, did you have a Westpac credit card in March 2007? A. Again, I don't remember although I have said on this here I don't remember - actually recollect saying it, so-- Q. That was then as you described it, "maxed out to its limit" of $6,000? A. Right by the looks of it. Q. You said to Mr Adams that you were going to go to Westpac and enquire about that, didn't you? A. So it says. Q. Did you do that? A. I didn't obviously. George's vacillation on this topic is unacceptable. Initially he did not remember having a credit card but then frankly admitted that he did and the substance and tone of what he said dearly debunks his earlier lack of memory. However his Counsel then objects, the inconsistency is displayed and he reverts to the earlier lack of memory. The truth is that he did have a credit card, as he admitted to the assessor. 46On a review of all this material, I am unable, as I stated earlier at [30], to accept George Halikiotis as either an accurate, reliable or honest witness. I am unable to accept his evidence on any contested issue unless it be corroborated.
The Expert Evidence 47The cross-claimants relied on evidence, called by Counsel for George Halikiotis, from Mr Ross Douglas Squire, a Master Locksmith and Certified Forensic Locksmith, the principal of ABC Forensic Services Pty Ltd. IAG relied on evidence adduced from Mr Leslie Mitchell Fuller, also a Master Locksmith and principal of Maxim Forensic Locksmith Services. Mr Fuller initially examined the burnt out vehicle on 5 July 2007. Mr Squire did not examine the vehicle until 4 and 5 June 2009. At those times, the vehicle was at Mannheim Fowles salvage yard at Smithfield. 48As Mr Fuller was the first in time to examine the vehicle, it is convenient to commence with his initial opinion. That is contained in a report dated 13 June 2007, being annexure A to his affidavit (Exhibit 6). At the commencement of his report, he provides the following synopsis: The drive-away theft of this 2002 BMW X5 requires three security systems to be defeated;
The Policy of Insurance 65On page 13 of the Policy Booklet this provision is found: "If your vehicle is stolen and found damaged...... we will decide whether to ............ pay you
The First Issue at Trial 72At [7] above I listed the issues tendered for my determination. The first issue is whether the vehicle was "stolen and found damaged". The onus is upon the cross-claimants to establish the facts that entitle either of them to rely on the policy. That the insured is George Halikiotis is clear from the Certificate of Insurance (Exhibit 9). George must establish on the balance of probabilities that the vehicle was "stolen" and later "found damaged". Maria bears the same onus insofar as she relies on this provision of the policy. The following have not been proved on the balance of probabilities: (a) forced entry into the vehicle: it must have been left unlocked or entry was obtained by using a correct key. I have discussed the inconsistencies in George's evidence as to whether the car was secured at 40 above. Clearly his initial position was that the vehicle was "secured". His backsliding in evidence was perhaps to fit in with the hypothesis advanced by Mr Squire; (b) that there were an emergency key or a valet key in the driver's compendium in the glove box of the vehicle, a subject I have already canvassed at length; (c) the taking and/or asportation of the vehicle without his consent. Since the vehicle was driven to the site at which it was found by the police with a correct key and the only two keys were within the power or control of George Halikiotis, relevant elements of larceny have not been established. I must point out that there was no suggestion of any breaking, entering and stealing from the property at 13 Renway Avenue, Lugarno or any entering and stealing from that property and the two keys which he had were given by him to Maria who gave them to IAG which made them available to the experts. 73The first cross-claim must, accordingly, fail. My findings above do not establish a positive case, merely that the cross-claimants have failed to establish that they can rely on the policy: Compania Naviera Vascongada v British & Foreign Marine Insurance Co Ltd (The Gloria) (1936) 54 L1.L.R 35; Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd [1972] 2 QB 625; Simon v NRMA Insurance Ltd (NSWCA, 22 Oct 1991, unreported); Hammoud Brothers Pty Ltd v Insurance Australia Ltd [2004] NSWCA 366. The second cross-claim must also fail insofar as it relies on this provision of the policy.
The Second Issue at Trial 74Did the vehicle suffer "loss or damage caused by vandalism or a malicious act", the provision referred to in [66] above, relied upon by Maria, but not by George. Since "vandalism" is defined by the policy to mean a "malicious act" the policy wording is pleonastic. Maria must establish damage "done with intent and without your consent", importing the definition of "malicious act". By importing the definition of "your" provided by the policy, Maria must establish, on the balance of probabilities, that the vehicle suffered "damage done with intent and without the consent of the insured". 75I accept that there was a fire deliberately lit in the vehicle causing damage, such that the vehicle was a "write off". I accept that there was arson, which is an intentional act. It has never been suggested that the fire was accidental. However, I do not accept that Maria has discharged the onus of proving that the arson was done without the consent of George Halikiotis. That is not a positive finding that George was complicit in the arson. The Court is not satisfied that Maria has established on the balance of probabilities a necessary ingredient to succeed under this provision of the policy. Relevant considerations, in my judgment, are these: (a) as I do not accept the evidence of George unless it be corroborated, I cannot accept his assertion that the damage was done without his consent, just as I cannot accept that the vehicle was taken and driven away without his consent; (b) on my analysis of George's financial position, relying, inter alia , on the evidence of Maria, George had a motive to dispose of the vehicle: he could not afford to pay either the loan repayments or for its re-registration: he had bought the vehicle for $85,000 21 months earlier and it had an agreed value for insurance purposes of $85,444. George also had the opportunity to dispose of the vehicle: he had its keys and it was in his possession and his whereabouts on the night of 28 to 29 March 2007 and on the evening of 29 March have not been corroborated; (c) many possible motives for why an offender should have stolen and burned this vehicle can be excluded on the available evidence; this was a valuable, sophisticated vehicle and there is: i. no evidence that it was stolen to be "rebirthed" or to be stripped of its valuable components and accessories; ii. no evidence that it was used in any other crime e.g. as a get-away car in robbery, for a drive-by shooting, to be rammed into an ATM, shopfront or shopping mall in order to facilitate theft, to make off with the proceeds of a breaking, entering and stealing and, in particular a breaking entering and stealing at 13 Renway Avenue, Lugarno which included the finding by an offender of spare keys to the vehicle parked at that address, the vehicle then being stolen to make off with the householder's goods (a common modus operandi amongst criminals); iii. therefore, in effect, only leaving the suggestion that the vehicle was taken for the purposes of "joy riding", for temporary transport from Lugarno to Marsden Park, a distance of 54.1km by the most direct route and then the vehicle's being "torched" by an offender, presumably to destroy fingerprint and DNA evidence; iv. to be added to this last factor are the difficulties of taking and driving this vehicle without proper keys, when, on the evidence, it was last used under its own power by a correct key. 76In making my findings on the first and second issues at trial, I have not overlooked the observations I made at [31] above, that the time of the report of the loss by George, at 7.24am on 29 March 2007 (over 13 hours before the vehicle was found by police, burning) and George's consent to the vehicle's being forensically examined were the strongest factors in favour of the cross-claimants. The first of those factors preoccupied my attention during the hearing; it would be foolish of someone to drive a vehicle on public streets, over a long distance, after it had been reported stolen. However, a number of things could have occurred which could only be rebutted by evidence from George which, in light of my finding on credit, would require corroboration. Of course, a foolish risk could have been taken. Equally the vehicle could have been driven to Marsden Park during the night of 28 to 29 March but not set alight until the following evening. Equally, the vehicle could have been driven to some intermediate place on the night of 28 to 29 March, perhaps not too far from where it was eventually found, and then driven to that place on the evening of 29 March and then set alight. The second factor carries much lesser weight: since George had been the usual driver of the vehicle since 16 February 2007 (and, quaere , whether his father had also driven the vehicle during that period) one would expect to find his (or their) fingerprints and/or DNA on or in the vehicle in any event and this discovery forensically would not indicate complicity in the loss of the vehicle.
The Third Issue at Trial 77The first positive defence pleaded by IAG in the exclusion I have recorded at [67] above. In light of my findings on the first and second issues for trial, it is unnecessary for me to consider the exclusion clause. Before an exclusion clause is applicable, there must first be a valid claim under the policy. The policy must cover the risk involved. I have held that the cross-claimants have failed to establish that the policy covers the loss. It is therefore not necessary to apply the exclusion clause. Were it necessary to apply the exclusion clause, the onus of proof would be on the insurer, IAG, to establish that the exclusion applied: Sutton, Insurance Law in Australia (2 nd edition) 1991, [9.81], p.556; Derrington and Aston, The Law of Liability Insurance (2 nd edition) 2005, [10-22], p.809. Were it necessary to apply the exclusion clause, IAG would have to prove that the arson of the vehicle was caused by George Halikiotis or by a person acting on his behalf. I am not called upon to make such a positive finding. 78Pari ratione , it is not strictly necessary to consider the second positive defence pleaded by IAG, which, as I said at [69] above, appears to be based on the policy provision I set out in that paragraph. However, it is appropriate to make some observations on this "defence". When interviewed by the assessor of 12 June 2007, George was asked to provide certain information to IAG: i. Statement for his Westpac Credit Card (Q617 - A62); ii. ANZ Bank Statements (Q638 - A642) for March and April 2007 (Q651); iii. RTA Driving History (Q646); iv. Telephone records for the Lugarno Deli showing calls made to the police and IAG (Q648); v. Mobile Telephone records for the period 26 March to 30 March 2007 (Q647); vi. Telephone records for the land line at 13 Renway Ave, Lugarno for the same period (Q650). Some of these documents were produced to IAG "2 to 3 weeks" before 19 November 2008, on 19 November 2008 and 8 December 2008 (Exhibit D) but what the documents were is not clear from that exhibit. One must note the time delay - from 12 June 2007 to very late October 2008, at the earliest, a delay of over 14 months. VWFS had commenced proceedings against George and Maria Halikiotis on 12 February 2008. George commenced the first cross-claim on 12 January 2009. Exhibit 3 is a letter from IAG to George Halikiotis, regarding his claim. On page 2, the first new paragraph to commence is this: The following has not been forthcoming, A copy of the loan statement for the period of December 2006 - April 2007 A copy of your ANZ Credit Card statement for the period of March 2007 A copy of the Westpac Credit Card statement for the period of March 2007 A copy of your itemised mobile phone statement for March 2007 (Number: 0416 689 070) A copy of your home phone statement for March 2007. 79It is clear from cross-examination that George did not produce documents numbered (i) above: T19.16. He also did not provide records numbered (v) above as "[t]hey wouldn't give me an itemised phone because it was a pre-paid account at the time" (T41.08). According to the ROI, his mobile pre-paid telephone was with Vodafone (A464) but pre-paid call records, it was suggested to him, could be obtained from the Internet (Q473). The matter is further complicated as Exhibit 2 (ANZ Bank Statements) shows an attempt to pay Vodafone $1,320.28 on 26 March 2007, the payment being dishonoured. The complication is compounded when one notes that George told the assessor his mobile phone number was 0416 698 070 which is the number for which IAG requested records but the COPS entry (Exhibit 4) shows his mobile number as 0405 907 772. 80The question then arises as to whether George was "truthful and frank" when interviewed by the assessor. It is impossible to know which of George's various statements (if any) be truthful. If he were truthful in his evidence to me, he was not truthful when interviewed by the assessor. If he were truthful when interviewed by the assessor, he was not truthful before me. Were it necessary to decide, I would decide that George Halikiotis was not honest and truthful in making his claim and, therefore, that IAG was entitled to refuse his claim. However, that might give rise to the provisions of s 54 of the Insurance Contracts Act 1984 (Cth), which was not the subject of any submission by any party.
Fourth Issue at Trial 81Notwithstanding the findings I have made on the first two issues at trial, Maria claims that she is entitled to succeed because of the provisions of section 48 of the Insurance Contracts Act 1984 (Cth). The provision is this: Entitlement of named persons to claim (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 the person 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. In essence Maria says that as the vehicle was taken and carried away without her consent and damaged and/or suffered damage done with intent without her consent, she is entitled to rely on the policy. Does the section give to Maria a greater right than that enjoyed by the insured or, perhaps to put it more appropriately, give her a right to recover which the insured does not have? 82The second cross-claimant cited Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 (Brownie J) and Commercial Union Assurance Co of Aust. Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389. The first decision is very well known and requires no further consideration. On one view of section 48, the section merely enshrines the ratio of that decision in statute. The third authority cited was affirmed in the High Court: (1993) 176 CLR 332, but the authority provides me with no assistance as it concerns section 54 of the same Statute. 83The facts and the nature of the litigation in Barroora can be gleaned from the first two paragraphs of the judgment: BROWNIE J. This is an action upon two insurance policies, only one of which is presently relevant. By that policy (the Combined Policy) the defendant undertook to indemnify "the insured" against loss of or damage to certain property by fire. Certain of that property was destroyed by fire on 13 June 1991, but the defendant asserts that that fire was deliberately lit by one or more of the "principals" of the first plaintiff "Barroora", either directly or through some agent or agents. It does not suggest that the second plaintiff, BLE Capital Ltd (Capital) was in any way involved. On 13 December 1991, I ordered that certain questions be separately decided. For the purposes of that separate hearing, evidence was led without objection, but upon the agreed basis that the evidence showed that the questions so posed were not hypothetical; that the evidence was not led for the purpose of any question being decided except those separate questions; and in particular that the evidence was not led for the purpose of resolving any question concerning the alleged arson, or the quantum of the claim. Commencing at 181D his Honour said: Is Capital entitled to be indemnified, if it should be held that the fire was deliberately ignited by or on behalf of Barroora? In my judgment the effect on this case of the decision in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd is that the defendant is bound to indemnify both Barroora and Capital. If that is correct, it follows that the defendant's liability to those two companies is a several liability, because their respective interests are several: Lombard Australia Ltd v NRMA Insurance Ltd (1968) 72 SR (NSW) 45 at 50-53; 89 WN (Pt 2) (NSW) 70 at 74-77; and therefore that if Capital was not implicated in the supposed arson of Barroora, it is entitled to be indemnified against its loss: Lombard , P Samuel and Co, Ltd v Dumas [1924] AC 431 and V L Credits (at 76,055ff). On the other hand, in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd , McHugh JA said (at 288): "To be able to sue at common law the beneficiary must be a person who is specified or referred to in the contract, whether by name or otherwise. The insurer is entitled to the same defences as he would have in an action brought by the promisee-party. Moreover, so that the insurer will not be liable at the suit to the promisee-party, the latter will need to be a defendant in the action." That statement is of course entitled to the most respectful consideration, although it is not a part of the reasoning which led his Honour to conclude that McNiece was entitled to be indemnified. I have previously summarised that chain of reasoning, appearing at 284-287. His Honour equated the position in respect of liability insurance with the position concerning bankers' letters of credit, and then turned to the question concerning the old rule that consideration must move from the promisee, before coming to the passage which I have just quoted. Earlier (at 275) his Honour had listed the issues which were before the Court of Appeal, and these issues did not include any matter discussed in the second and third sentences of the passage I have quoted, except perhaps whether McNiece breached any condition of the policy. Perhaps that it what his Honour was intending to refer to, for he went on (at 289) to say that the failure of McNiece to give timely notice of the claim as required by the policy conditions, should be excused under the provisions of s 18 of the Insurance Act 1902. If that is what his Honour meant, there is no inconsistency between his view and the view that I have expressed: each party entitled to indemnity, whether or not the named insured, must suffer loss by fire without deliberate conduct on his part, and must comply with the policy conditions, before being entitled to be indemnified in a particular situation. If however his Honour meant something more extensive, then I respectfully conclude, first, that what he was said was obiter; and secondly, that the succeeding judgment of the High Court casts doubt upon its validity as a general or universal proposition. See in particular Toohey J, in the passage already quoted, Brennan J (at 136ff) and Deane J (at 152-153) (where his Honour pointed to the problems involved if the named insured purported to terminate the contract). I do not mean to say that one can extract any binding authority from the dissenting judgments: cf Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 314; but I do consider that the judgments delivered in the High Court require trial judges to consider carefully to what extent the obiter dictum of McHugh JA (with which the other members of the Court of Appeal agree) should be treated as binding. Independently of these considerations, I doubt whether the second sentence in the passage I have quoted was intended by his Honour to mean that in that case Trident was entitled to raise against McNiece the same defences which it could have raised against Blue Circle, and only those defences. For example, it seems to have been treated as axiomatic that it was the failure of McNiece to make a timely claim that was significant; and it is easy to contemplate situations where claims might be made by both a named insured and by some other person, who generally speaking was entitled to be indemnified. If in those circumstances separate actions were commenced by each claimant for indemnity, a payment made towards the satisfaction of one claim will not ordinarily be regarded as partly satisfying the other claim; a release by one claimant would not of itself necessarily release the insurer from its liability to the other claimant; and if the action of one claimant were to be held to be statute barred, or if the proceedings brought by one claimant were struck out for want of prosecution, or for breach of an order of the court, it is difficult to imagine that that would of itself automatically amount to a defence to the other action. This, of course, supports the second cross-claimants' contention. 84IAG cited GIO Australia Ltd v P Ward Civil Engineering Pty Ltd [2000] NSWSC 371 (Simpson J) and General Motors Acceptance Corp Aust v RACQ Insurance Ltd [2003] QSC 80 (Muir J). However, some earlier decisions need to be considered. Section 48 was considered by Giles J in Commonwealth Bank of Australia v Baltica General Insurance Co Ltd (1992) 28 NSWLR 579. His Honour's consideration of the provision is very helpful but what was before him was limited. This was a separate trial of various questions. At 581D his Honour said: On 24 July 1992, it was ordered that certain questions be tried separately and before any other questions in the proceedings. Adapting their terms to the descriptions used in these reasons, they were:
A Further Issue? 91At [5] above I pointed out that IAG pleaded that George had no insurable interest in the vehicle and that that defence was never pressed. No such defence was pleaded against Maria. However, the final written submission on behalf of IAG is this: "In January 2007 Maria had abandoned any interest in the vehicle when she told [VWFS]'s representative, after the vehicle had been repossessed: "I do not want it any more"." Maria did not want the vehicle as she could not afford the costs associated with it. Nevertheless, she retained an interest in the vehicle, a chose-in-action: she was a co-hirer of the vehicle with George from VWFS and remained liable to the vehicle's legal owner, VWFS, under the hire purchase agreement. The chose-in-action may have amounted merely to a debt, yet it was a legal or equitable "thing" which Maria owned and gave her an insurable interest in the vehicle.
Orders (1)I give judgment for the first cross-defendant against the first cross-claimant. (2)I order the first cross-claimant to pay the first cross-defendant's costs. (3)I give judgment for the second cross-defendant against the second cross-claimant. (4)I order the second cross-claimant to pay the second cross-defendant's costs. It appears that certain ancillary orders ought be made, but I shall hear the parties prior to making any such orders. The ancillary orders that appear to me to be appropriate are: (5)I order the first and second defendants to pay the plaintiff's costs. (6)I dissolve the stay of execution of the judgment entered against the defendants on 30 October 2009.
Amendments 21 November 2012 - Amended title - surnames of plaintiffs only DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 November 2012
Halikiotis & Halikiotis
Insurance Australia Ltd
[2003] QSC 80
(1992) 26 NSWLR 170
(1993) 32 NSWLR 25
(1991) 22 NSWLR 389
(1992) 28 NSWLR 579
(1967) 117 CLR 326
(1988) 165 CLR 107
(1993) 176 CLR 332
(1987) 163 CLR 303