VLASSIS v. AAMI [2000] NSWSC 1188

1 HIS HONOUR: The plaintiff seeks an extension of time to appeal and seeks to appeal from a judgment of the Local Court on 15 February 2000 for the defendant in an action on an insurance policy for damage to a car. 2 The grounds on which the extension of time is sought appear in the affidavit of Mark James Field sworn 13 April 2000. 3 It is sufficient to note that due to a statutory change, the appeal provisions had altered drastically during the preceding year and the time provided for initiating the appeal had been reduced. The plaintiff's solicitor was unaware of this. Some days out of time, counsel's advice and draft of the relevant summons was received by the solicitor. The summons was then filed promptly. At all times the plaintiff wished to appeal. The defendant does not appear to be prejudiced. 4 There is power to extend the time under Part 51B, Rule 6(2)(a). There being no argument of substance to the contrary, I order that the time for institution of the appeal be extended to and including 16 March 2000, the date upon which the summons herein was filed. 5 The proceedings before the magistrate arose by reason of an action commenced by the plaintiff in respect of damage to his Mercedes motor vehicle against the defendant insurance company. 6 His claim arose out of an allegation by the plaintiff that on the night of 14/15 November 1998 his car was stolen from his home and damaged beyond repair. According to his evidence, the car was left in his driveway at Peakhurst on the evening of 14 November and was discovered badly damaged on the Wombeyan Caves Road, via Moss Vale the following morning. The defendant refused to pay the claim asserting that the claim for the loss was fraudulent; that the vehicle was not stolen; that the plaintiff had connived with a person or persons unknown to remove the car and that the removal was achieved by the use of a key to the car provided to the accomplice by the plaintiff or with his connivance. 7 Although the defence was pleaded in various ways, including by way of reliance on various provisions of the Insurance Contracts Act, the substance of the pleading and the nub of the defence case was the assertion that the plaintiff was fraudulently complicit in the damage to the car. 8 The magistrate held that the defendant, having alleged fraud, must establish fraud on the balance of probabilities by such evidence as, having regard to the unlikelihood of such an occurrence, would sufficiently satisfy him of it in accordance with the principles in Neat Holdings Pty. Limited v. Karajan Holdings Pty. Limited (1992) 67 ALJR 170. He determined that to succeed, it was necessary for the defendant to establish "a wilful act by the plaintiff, his connivance in a wilful act of another, or fraud". Neither party contested the correctness of this approach before me and I was invited to deal with the appeal on the basis that it was correct. 9 So proceeding, notwithstanding the plaintiff's denial in evidence and finding for the defendant's circumstantial case, the magistrate dismissed the action. He also dismissed a cross-claim as entirely unnecessary and inappropriate. 10 The appeal is from the whole of the decision of the learned magistrate. The grounds provided with the summons are as follows:- "1. The magistrate erred in failing to have proper regard to the evidence of the plaintiff and the plaintiff's wife. 2. The magistrate erred in failing to make any findings as to the credibility or lack thereof of the plaintiff and the plaintiff's wife. 3. The magistrate erred in failing to impose the proper standard of proof on the defendant. 4. The magistrate erred in failing to make findings as to the convict in evidence between the plaintiff and the evidence adduced by the defendant. 5. The magistrate erred in drawing inferences which were not established by the defendant having regard to the burden of proof imposed on the defendant. 6. The magistrate erred in failing to pay proper regard to the expert evidence of the plaintiff from Norman Axford and erred in failing to make findings as to the convict of evidence between Norman Axford and Ross Douglas Squire. 7. The magistrate erred in placing unsufficient (sic) weight on the absence of motive. 8. The magistrate erred in placing too much weight on the defendant's expert evidence in circumstances where there was contrary expert evidence and where the defendant's expert evidence was contrary to that of the plaintiff and his wife." 11 In argument, it became apparent that the plaintiff was asserting, by those grounds, at least two underlying errors of law, viz: failing to consider the plaintiff's evidence and case or erring in the application of the onus of proof; and/or failing sufficiently to give necessary reasons for his conclusion. 12 The right of power to appeal is conferred by s.69(2) of the Local Courts (Civil Claims) Act 1970 which provides:- "A party to proceedings under this Act who is dissatisfied with the judgment or order of the court as being erroneous in point of law, may appeal to the Supreme Court therefrom." 13 Section 69(3) provides:- "The provisions of Part 5 of the Justices Act 1902, apply, to the extent to which they are applicable, to appeals under subsection (2) in the same way as they apply to appeals to the Supreme court under those provisions." 14 Section 104(1)(a) of the Justices Act 1902 provides relevantly for appeal on:- "A ground that involves a question of law alone." 15 Section 109 of that Act provides:- "The Supreme Court may, after hearing an appeal, determine the appeal by dismissing the appeal or by doing any one or more of the following:- (a) confirming, quashing, setting aside or varying the conviction, order or sentence appealed against or any part of it; (b) increasing or reducing the sentence appealed against; (c) making such other orders as it things just; (d) remitting the matter to the magistrate who made the conviction or order, or imposed the sentence, to hear and determine the matter of the appeal." 16 On the hearing of the summons, the parties provided most helpful written submissions. In reply to the plaintiff's assertions of error of law in the magistrate's coming to his conclusion of fraud, the defendant's submissions contended that each of the grounds upon which the plaintiff relied were, on their face or upon proper analysis, challenges to "properly made and available findings of fact" and cited the judgment of Glass, JA. in Azzopardi v. Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155, adopting what had been said in McPhee v. S. Bennett Limited (1935) 52 WN (NSW) 8 at 9, for the proposition, generally stated, that if there was before the learned magistrate evidence which, if accepted, was sufficient to establish a fact found, then no error of law could be demonstrated in the magistrate making that finding nor would an argument that the reasoning of the magistrate in so finding was demonstrably unsound, succeed since the only appeal to this court was for error of law. 17 By way of answer to the plaintiff's argument that if the magistrate had rejected the defence case he had failed to express sufficient reasons, it was submitted for the defendant that the magistrate's decision sufficiently revealed the basis of his conclusion and that there was a sufficient compliance with the requirements for sufficiency of reasons referred to in the judgments of Mahoney, JA. at 249 and McHugh, JA. at 282 in Soulemezis v. Dudley (Holdings) Pty. Limited (1987) 10 NSWLR 271. 18 In a further document lodged after the oral argument and by leave, the defendant submitted that the magistrate had no statutorily imposed duty to give reasons and that such duty as there may have been on the magistrate, it having arisen at common law and as an incident of the judicial process was sufficiently discharged by meeting the requirements thereby stated. 19 Further reference was made to the judgment of Mahoney, JA. in Soulemezis (supra) and in particular at 273. In reliance on what his Honour had said concerning the extent of reasons that might need to be given, my attention was drawn to the following passage at 271:- "Reasons need to be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it. … Nor is it necessary that he (stet) reason, and be seen to reason, from one fact to the next along the chain of reasoning to that conclusion." 20 At 273:- "And, in my opinion, it will ordinarily be sufficient if - to adopt the formula used in a different part of the law: see Regina v. Associated Northern Collieries (1910) 1 CLR 738 at 740 - by his reasons the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he has acted. To require that a judge detail the way in which he has reasoned step by step to his conclusions, is, in my opinion, to mistake the nature of the reasoning process." 21 Additionally, reference was made to the judgment of Mason, JA. in Williams v. Bill Williams Pty. Limited (1971) 1 NSWLR 547 at 557 as cited by Mahoney, JA. in Soulemezis (supra) at 265 concerning the circumstance of a decision depending upon an unexpressed finding of fact which may have the consequence that "where an appeal lies from the decision of a question of law only, it is not possible to conclude that the error asserted by the appellant is one of law". 22 Australian Broadcasting Tribunal v. Bond (1990) 170 CLR 321 is cited for the proposition stated by Mason, CJ. at 355-356 that there is only an error in the drawing of inferences which amounts to an error of law in the absence of evidence capable of supporting that inference and that it is no error of law simply to make a wrong finding of fact. Further, it is submitted in reliance upon the judgment of Toohey and Gaudron, JJ. in Bond (supra) at 384, that it is necessary to show that if error has occurred it has vitiated the decision. 23 To those observations, the plaintiff replies that to draw the inference of fraud the unexpressed or unmade findings were essential, that this was not a mere failure to expose in the reasoning a step towards the final conclusion, the taking of which step would be necessarily implied from the expression of other steps but that in the absence of an explicit rejection of the plaintiff's evidence and case, no basis properly remained to draw from the defendant's circumstantial case the inference for which the defendant contended. 24 For the defence, it was contended that by reason that the magistrate had found fraud, implicitly, the magistrate must have considered and rejected the evidence of, and for, the plaintiff, in particular the evidence of the plaintiff denying fraud and implicitly must have rejected other hypotheses inconsistent with that conclusion. Thus, it was argued, that, by reason of the conclusion having been reached, the magistrate must have found the step leading to it and rejected the plaintiff's denials. Reliance is placed on portion of the magistrate's reasons for judgment in which he held:- "An allegation of fraud is the principal defence raised by AAMI. As Mr. Duncan has pointed out, the defendant has the onus of proving fraud on the balance of probabilities, a finding which the court should not make lightly in civil litigation where a party is accused of such conduct: Neat Holdings Pty. Limited v. Karajan Holdings Pty. Limited (1992) 67 ALJR 170. … The defendant has alleged fraud, and must establish fraud by the plaintiff on the balance of probabilities, always of course bearing in mind the test laid down in Neat Holdings (supra). … In this case those objective facts are the litany of suspicious circumstances which I have found established, and which are set out on pp.4 and 5. Cumulatively, those pieces of circumstantial evidence lead me to the firm opinion that the claim is fraudulent, and that the defendant has met its onus of proof." 25 The circumstances to which the magistrate referred had been earlier set out by him in his judgment. He said:- "The defendant relies on a number of suspicious circumstances, which it maintains establish, by virtue of the combined effect of this circumstantial evidence, that the plaintiff's claim is fraudulent." 26 Earlier, in the context of discussing the onus, the magistrate had held that onus had to be approached with some care, given the circumstantial nature of the evidence relied upon by the defence and the consequential bearing that onus of proof may have on the outcome. He had concluded that the plaintiff had met his initial evidentiary onus of establishing the basis for a claim under the insurance policy. In that regard, it appears that the matter to which the magistrate was there referring was that the plaintiff had established a loss or damage. He had concluded that the defendant bore the onus of establishing that that loss or damage was occasioned by the plaintiff's own wilful act or the act of a person with whom he had connived. 27 Except as hereinafter appears in discussion of the suspicious circumstances to which the magistrate had referred and the matter of motive, the magistrate's judgment does not otherwise deal with the plaintiff's case on this latter issue. 28 I summarise the following suspicious circumstances the magistrate held were established:- 1. Nothing was stolen from the motor car, so that theft appeared not to be a motive. 2. The nature of the damage to the car was consistent with deliberate acts and some of that damage appeared to have been made to make it look as though the car had been stolen without the use of a key. 3. The ignition and steering locks did not appear to have been overcome by known methods of bypass by force or manipulation and hence appeared to have been operated by use of a key. 4. Entry to the vehicle did not appear to have been obtained by damage to the door lock, although it might have been obtained through the broken windows. 5. The chance of an innocent coincidence in keys fitting the ignition was very slight and the plaintiff could think of no opportunity for someone to have taken his key to copy it. The magistrate discounted the key having been obtained or copied at the car's last service, some eight or nine months earlier, as a potential thief would appear to have waited a long time. 6. The only key may have been recently duplicated. 7. A new key may have been used recently in the ignition cylinder. 8. The car was probably driven away from the plaintiff's home rather than otherwise removed. 9. The thief would have needed assistance to leave the remote site near the Wombeyan Caves where the car was dumped. 29 It can be seen that these circumstances lead to possible findings that the car had been entered and driven away using a key which could only have been obtained from the plaintiff and that there was an attempt to disguise the use of the key. The basis for the further possible finding of the plaintiff's complicity would seem to lie in his own evidence of his inability to suggest how a key might have been acquired without his knowledge, although his lack of knowledge in this regard would not necessarily suggest a lack of opportunity. These three findings were necessary to support the conclusion. Against such possible findings, he explicitly denied both knowingly providing a key and being complicit in the damage and the fraud. 30 The only explicit examination of the plaintiff's evidence, credit and case occurs in the judgment on the issue of motive. The only motive suggested by the defendant was that the plaintiff may have been trying to bolster a case against the Department of Education relating to harassment of his children and that a suggestion that other people may wish to harm Mr. Vlassis by harming his car which may have been related to that harassment or to a burgling of the family business for which a person had been arrested. 31 In discussion of the Vlassis family involvement with harassment at their childrens' school, the magistrate remarked, concerning motive being a two-edged sword that:- "On the other hand, deficiencies in that evidence assists the defence assertions." 32 That observation was not further developed and it does not appear to be self-evidently correct. 33 The magistrate concluded that:- "The plaintiff's evidence regarding threats and harassment did not come up to his early assertions and the likelihood of an ongoing harassment campaign became remote indeed." 34 Insofar as a note, which the plaintiff said was placed under the windscreen of his van, threatening him was concerned, the magistrate held merely that the provenance of the note was suspicious and "that it does not assist the plaintiff". These matters appear capable of affecting the plaintiff's credit but would not seem to warrant a wholesale rejection of his evidence. They do not seem to be relied on by the magistrate as matters in support of the defence case in the judgment. No reliance is placed in the judgment on any lie by the plaintiff as founding a basis of support for the defendant's contention (see the discussion in eg., Thompson v Government Insurance Office of New South Wales (Rolfe, J., unreported 15 June 1994) and there is no express rejection of the plaintiff's evidence on the matters I have referred to). Although, as I have set out, the magistrate referred to the matter of the plaintiff's inability to refer to an opportunity for another to obtain a key in the "litany" of suspicious circumstance, otherwise he does not deal with the hypothesis that some other person using a key, having not been shown, in accordance with the tests to which the magistrate had referred, to be in connivance with the plaintiff, stealing and damaging the car. 35 Thus, to make the finding of fraud it was plainly necessary for the magistrate to reject the evidence of the plaintiff that he was not complicit in the taking of and damage to the car and that he had not knowingly provided the relevant access to the vehicle. In my opinion, the necessity to deal with that matter was critical to the application of the proper onus and essential for the reader to know the plaintiff's case had been considered. 36 In Dinsdale v. The Queen [2000] HCA 54, Gaudron and Gummow, JJ., in the context of considering the reasoning of the Court of Criminal Appeal of Western Australia, pointed out that it is necessary for a relevant finding or opinion to be "expressed as well as formed, so that, to adapt a statement by McHugh, JA. in Soulemezis (supra) the essential ground or grounds for the formation of the opinion are articulated". The absence of a finding explicitly rejecting the plaintiff's evidence left the essential ground in this case unexpressed and unarticulated. 37 Insofar as the magistrate has articulated the conclusion, it does not appear from what he has said that he has reached his conclusion after considering the evidence for the defendant so far as that evidence relates to whether or not that conclusion should be drawn. If not, the inference would be drawn from an insufficient basis. 38 Alternatively, in the event that in the conclusion he reached might include an implicit rejection of the defendant's evidence and case, he has failed to express within his reasons a matter so fundamental to the proper drawing of that conclusion that the failure suggests an error in the application of the onus on such a serious issue because it is in that regard that one would expect to see at least findings of the kind referred to in Neat Holdings (supra). That decision examined a judgment of a similar kind to this. The approach of the High Court is instructive. 39 It is to be noted that the High Court, when dealing in that case with the trial judge's reasoning process in a circumstance where "realistically, a finding of fraudulent misrepresentation or deceit (as made by the trial judge) in relation to the past weekly turnover or takings or the business, could only have been made against the respondents if the learned trial judge was satisfied, on the balance of probabilities, that the entries which the personal respondents had made in Karajan's weekly takings book had been deliberated falsified", said (at 172):- "It is true that the trial judge did not make an express finding that the entries in the book had been deliberately falsified by the personal respondents. Nonetheless, a careful reading of the whole of the judgment makes clear that his Honour was conscious of the fact that such a finding was implicit in the finding of deceit which he made against the respondents." 40 Their Honours noted that it was necessary for the appellant's case that it persuade the court that the figures in the respondent's takings book were false (at 172):- "As a practical matter, that involved, in the circumstances, persuading the court that the takings book had been deliberately falsified by the personal respondents." 41 The trial judge, their Honours noted, recognised the "real issue" in the case "boiled down to 'who (was) telling the truth about the turnover'" and rejected the evidence of the personal respondents, finding that the misrepresentations about the turnover figures were "not innocent but were made knowingly to induce (Neat Holdings) to purchase the business". Thus it was that their Honours held (at 173):- "Clearly, in the context of the competing allegations about deliberately false takings figures, his Honour would have been conscious of the fact that implicit in these findings was a finding that the entries in Karajan's weekly takings book, which had been made by one or other of the personal respondents, were false to the knowledge of the personal respondents at the time when they were made." 42 Their Honours then turned to disposing of the further aspect of the appeal which asserted that the trial judge's reasoning had been defective, holding:- "In these circumstances, the trial judge's judgment was not vitiated by any failure to make, or to advert to the need to make, any necessary finding in relation to Karajan's weekly takings book. Nor was the judgment vitiated by any failure to disclose the reasoning which led his Honour to conclude that the respondents were guilty of the tort of deceit." 43 Such an examination reveals the importance of an explicit finding to a proper decision and the expression of the reasons for it and of the importance of at least sufficient explicit findings being made to justify the decision in the absence of the express statement of such a finding. 44 In the context of an allegation of this kind propounded in this way, it is apposite to apply to the reasons of the magistrate the test propounded albeit in the statutory context by the Court of Criminal Appeal in Regina v. Maxwell (unreported 23 December 1998) per Spigelman, CJ., Sperling and Hidden, JJ. at 46:- "The appellant had a right to expect that the arguments put on his behalf would be dealt with in such a way that he could be satisfied that they had been understood and, either accepted, or, if rejected, that the rejection was based on a clear and rational process of reasoning." 45 There is an inappropriate circularity to the argument that, because the magistrate found fraud in reliance on the defence case without making the express findings the plaintiff contends to be necessary, nonetheless because of that very finding, he must be taken to have proceeded properly to have considered and rejected, silently, the evidence for the contrary view. I consider the judgment does not comply with the requirements of Maxwell (supra) nor reveal the reasoning sufficiently so that it could be seen the magistrate did not err in law on the application of the onus. 46 I therefore conclude that the learned magistrate erred in law either by failing to have regard to the case of, and evidence for, the plaintiff or by failing sufficiently to expose, in his judgment, essential findings for his conclusion. 47 Since I am unable to ascertain whether the magistrate's error was a failure to make essential findings arising from a failure properly to consider the plaintiff's case or merely a failure to express those findings, the appropriate course is to order the matter be remitted. 48 No argument was presented to suggest that the plaintiff, if successful, should not have the costs. 49 I therefore order that the time be extended; the appeal be upheld; the matter be remitted to the magistrate to hear and determine in accordance with this judgment; and the defendant pay the plaintiff's costs of these proceedings. *******

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Judgment (8 paragraphs)

Cases Cited (7)