SIMON v NRMA INSURANCE LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP CLARKE HANDLEY JJA 1 October 1991, 22 October 1991 [1991] NSWCA 247 INSURANCE — motor vehicle insurance — agreed value policy owner alleges theft of vehicle — insurer contends that the claim is fraudulent — judge finds that he is not satisfied on probabilities that owner had proved that motor vehicle stolen but expressly refrains from making any finding of fraud against owner: held finding open on footing that probability that the vehicle was stolen was exactly equal to the probability that it was not (Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd (1972) 2 QB 625 at 636 and Compania Naviera Vascongada v British and Foreign Marine Insurance Co Ltd (The Gloria) (1936) 54 LL LR 35 at 50-1 applied). Samuels AP On 19 July 1986 the appellant owned a Toyota Cressida station wagonwhich was insured with the respondent under an "Agreed Value" Policy by which the insurer agreed to pay the sum of $6600-if the vehicle insured was stolen and not recovered. The vehicle was, so the appellant asserted, in good mechanical condition, but was, to a minor extent, affected by rust, and needed painting, which was shortly to be undertaken. It was nine years old, but its generally good condition was authenticated by a Mr R B Simmons who was a mechanic, a friend of the appellant, and acquainted with the vehicle which, in his opinion, in August 1985 at all events, was not unreasonably valued at $6800 or a little in excess of the insured value. On 19 July 1986 the appellant parked his vehicle in an area near the Roselea Community Hall in Carlingford, where he attended a bush dance. When he left in the early hours of the following morning, he could not find the vehicle. It was discovered on 12 September 1986 in a water hole in Taylors Road, West Pennant Hills some two to three kilometres from the Community Hall and perhaps five to ten minutes' drive away. It was substantially damaged and beyond repair, and other things being equal, the respondent would have paid out the agreed value. However, the appellant's claim was rejected and in answer to the statement of claim which was filed on 2 February 1987 and amended on 26 May 1987, the respondent in its further amended grounds of defence asserted first, that the vehicle was not stolen, as the appellant alleged; secondly, that the assertion that it was was fraudulently made; thirdly, that the appellant had fraudulently, and in breach of the terms of the policy, failed to disclose certain traffic offences, and, finally, that the respondent was entitled to rely upon a term in the policy which excluded liability if at the time "of the happening which results in a claim" the vehicle was being used in an unsafe condition. Conomos DCJ, before whom the action came, rejected the third and fourth of these defences and I need say nothing further about them. The learned judge's conclusion was that the appellant had failed to discharge the onus of proving that the vehicle had been stolen; he expressly refrained from making any finding of fraud. 2 UNREPORTED JUDGMENTS The first substantial issue concerned how the vehicle had been removed from the place where the appellant parked it; that is to say, by what means was the steering lock operated in order to free the steering wheel and the ignition started to enable the car to be driven. The appellant's evidence was that at the time he had in his possession one key capable of operating all the locks and a spare key at home; and he assumed that a third key was with his wife from whom he had been separated for a period of approximately twelve months. It is not suggested that the wife was in any way involved in the occurrence. Assuming therefore that on this account it was not either of the appellant's keys which was used, how could the vehicle have been removed? The evidence was that there was only one chance in 10,000 of a duplicate key being manufactured and available, so that that possibility could and was rejected. The evidence led for the respondent however was that the only way in which the steering lock could have been opened was by means of a key or by lock picking equipment. There was a plastic 'shroud' covering the steering wheel lock which was broken, but there was no damage to the lock so that, it may be, the damage to the 'shroud' was deliberately effected so as to suggest some assault on the lock by means, for example, of a slide hammer, which was not in fact employed. The principal witness for the respondent, Mr Mark Weaber, a loss assessor employed by the respondent, firmly established that none of the door locks was damaged, that the ignition lock was intact, although the 'shroud' was damaged, that there was no evidence of any of the wiring having been interfered with so as to by-pass the ignition lock, ie there was no evidence of a 'hot start', that there was no sign of any attempt having been made to remove the ignition lock by drilling or by a slide hammer, so that the only way in which the lock and the ignition could have been operated would have been by means of a key or a pick lock. This was how the evidence stood at the end of the respondent's case, and because serious allegations of fraud had been made against the appellant, the learned judge, quite appropriately in my opinion, permitted the appellant to reopen to call evidence concerning the testimony given for the respondent concerning the way in which the vehicle might have been operated. Pursuant to this leave, the appellant called three locksmiths whose evidence, in substance, was that there would have been considerable wear in the ignition lock of a nine year old vehicle of this type and in the key generally used in the ignition (in which I include the steering lock), so that the chances of using other keys to operate the ignition would be very much increased. The specificity, or the unique character, of a lock and key is diminished after wear so that keys designed for other vehicles can on occasions be successfully introduced into what are essentially foreign locks. Of course, the selection of a key which would achieve the purpose required substantial trial and error. For example, one witness said that ten or twenty out of a hundred keys might be suitable, but using it would involve "jiggling the key around... and manipulating it and shaking it and so on." He put the matter in a little more detail thus: "Firstly, you have to find a key that actually fits into the barrel and then you go through the bucket or whatever it is [where a heap of keys may be kept] to find the same style of key, and then you would start with the jiggling and wiggling and whatever else to get that key to turn." Accordingly, finding a key actually capable of manipulating the lock was a matter of chance. This was, perhaps, the least favourable of the evidence which the appellant called but none of the locksmiths suggested to my mind that the use of an alien key was other than a hit or miss URJ SIMON v NRMA INSURANCE LTD (Samuels AP) 3 operation. Perhaps the fairest way of putting the matter is to quote from the statement made by Mr AM Gilmore: "Having not had the opportunity of inspecting the lock on the subject vehicle I cannot specify the amount of wear that had taken place, however, I assume that the wear in a nine year old motor vehicle would greatly facilitate the manipulation of the lock by other keys." Accordingly, the learned judge was faced with what might broadly be described as three possibilities as to the manner in which the vehicle had been removed from the place where the appellant parked it. First, that the appellant had provided his own key to some accomplice who had taken the car away and had dumped it in the place where it was found, for the purpose of making a fraudulent insurance claim. Secondly, that the car had been driven away by a thief without any cooperation from the appellant, the thief using a pick lock, in which case he or she was likely to have been a thorough professional, or, thirdly, one of a number of keys with which he or she had come equipped, knowing that if the target was a reasonably old car, its ignition could have been operated by a key designed for some other vehicle. When the matter is stated in that way, it seems to me, I must confess, that the third of these possibilities is somewhat improbable. I can imagine a car thief descending upon a car park armed with a pick lock or a slide hammer or other means which are employable against any vehicle whatever its vintage; but I find greater difficulty in imagining a thief with a pocket full of various keys which would only be effective if the target was to be an old vehicle which would not, one would think, necessarily be an attractive proposition. Of course, one knows that people take vehicles for a variety of purposes, to cannibalise, to use for joy-riding or to sell in the market. In all such cases the preferred target is, I think, a new or reasonably new car because of its attractions in the second case, the saleability of its parts in the first and its value in the third. I interpolate that the cassette player had been removed from the vehicle when it was found; and that the steering wheel was then in the locked position. There was no evidence given at the trial as to precisely how a pick lock worked but it was suggested that the Court could assume that it was possible to re-engage the steering lock when it had initially been opened and the ignition started by means of a pick lock. The learned judge's findings are contained essentially in three or four paragraphs, all of which, I think, it is desirable to quote: "The evidence called by the defendant was compelling in this regard. It was obvious by the photographs and the evidence given by the witnesses that there was no interference, apart from the removal of the shroud or cover on the steering column to the motor vehicle and that no damage was effected to the motor vehicle to indicate that it was started other than by the insertion of a relevant key. In order for the plaintiff to succeed on the balance of probability, of establishing that his motor vehicle was stolen, I would have to accept that there were persons a person or persons who had a ready supply of a great number of similar keys and who would use those keys or pick the lock in a sophisticated way merely for a short ride of some two to three kilometres over a time span of five to ten minutes, remove the stereo system and then dump the motor vehicle. That is highly improbable, notwithstanding the evidence given by the locksmiths called on behalf of the plaintiff. I refrain from making any finding of fraud against the plaintiff. I feel it is sufficient for me to say that. I am not satisfied on the balance of probability that the plaintiff has established that the motor vehicle was stolen." 4 UNREPORTED JUDGMENTS The appellant's primary argument was that the finding that the appellant had failed to discharge the onus of proof on the balance of probability was, in the circumstances of the case, necessarily a finding of fraud so that the learned judge had fallen into error by failing to apply to it the requirements of Briginshaw v Briginshaw 60 CLR 336. However, I entirely fail to see how Briginshaw has any bearing upon the failure of the appellant to discharge the onus which clearly rested upon him. Moreover, I do not think that the finding that the learned judge made is necessarily equivalent to a finding of fraud. It was perfectly open to the learned judge to say, as he did, that he was not satisfied that the appellant had proved that the car was stolen, on the footing that the probability that it was was exactly equal to the probability that it was not: see Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd (1972) 2 QB 625 at 636 per Sachs LJ quoting with approval the dictum of Branson J in Compania Naviera Vascongada v British and Foreign Marine Insurance Co Ltd (The Gloria) (1936) 54 LL LR 35 at 50-1. The doubt about the correctness of the passage at which Sachs LJ hints seems not to be justified: see 25 Halsbury's Laws of England (4th Ed) para 74. "Stolen" in this context means, of course, taken away without the cooperation or connivance of the appellant; the only reasonable alternative was that the appellant was involved in the vehicle's disappearance from the place where it had been parked. However, there is a further problem in the case which is of greater significance. Although there was no exact evidence upon the question of how long the vehicle had been in the water hole when it was found, it seems to have been conceded by all that a period of two months given, or assumed on the run, in the course of the evidence was more or less accurate; it was at least taken as an assumption of how matters stood on the point. That period could not be regarded literally because it exceeds by about one week the period which elapsed between the night of the dance and the day upon which the vehicle was discovered. There is no evidence of any kind as to whether the vehicle was driven directly from its parking place and run into the water hole (which could readily have been done as the photographs make clear). It is possible that it might have been taken by joy riders and driven about for some time before being deposited in the water hole. Since a period of two months cannot be taken as accurate, it would not be contrary to the evidence to assume the possibility of the vehicle having been in the hands of someone quite unconnected with the appellant for a period of a day or two, or even a little more, before it was despatched to its final resting place. Obviously, the suggestion that the vehicle was driven straight from the parking place to the water hole tends to suggest complicity on the part of the appellant, because it excludes the sort of purposes for which, as common experience indicates, vehicles are often taken from the possession of their owners, that is to say, for joy riding as an example. If, on the other hand, a period of days had elapsed between the night of the dance and the dumping of the vehicle, the chances of the appellant's having been involved in the matter become more remote. Now, the learned judge said that it was, he thought, "highly improbable" that there were persons who had a ready supply of keys and who would use those keys or pick a lock in a sophisticated way "merely for a short ride of some two to three kilometres over a time span of five to ten minutes." It seems to me, after considering this passage several times, that the learned judge's ultimate conclusion (that the appellant had failed to prove a loss) was based upon, or at least very strongly influenced by, the assumption that the vehicle was taken URJ SIMON v NRMA INSURANCE LTD (Handley JA) 5 straight from the car park to the water hole. But, as I have indicated, this cannot be inferred. It is simply impossible to say when the vehicle was dumped. That being so, it follows, in my opinion, that the finding adverse to the appellant is fatally tainted by an inference of fact which was not open. This is an unfortunate result, because the learned judge plainly dealt with the matter with care and in detail, and it is hardly the sort of dispute, whatever the questions of principle which the respondent might think involved, which should receive two trials. But that, I am afraid, must be the result. The finding against the appellant cannot stand and must be set aside with the consequence which I have indicated. In my opinion, the appeal should be allowed, the judgment for the defendant/respondent set aside, and a new trial ordered. The costs of the first trial should abide the discretion of the judge hearing the second trial. The respondent must pay the appellant's costs of the appeal and, if qualified, is entitled to a certificate under the Suitor's Fund Acct. Clarke JA I agree with Samuels JA. Handley JA I agree with Mr. Justice Samuels. The appeal is allowed, the judgment for the defendant/respondent set aside, and a new trial ordered. The costs of the first trial should abide the discretion of the judge hearing the second trial. The respondent must pay the appellant's costs of the appeal and, if qualified, is entitled to a certificate under the Suitor's Fund Act. Counsel for the appellant: BC OSLINGTON QC/BJ SHARPE Counsel for the respondent: J MACONACHIE OC/BJ FAGAN Solicitors for the appellant: ROWLANDSON and CO Solicitors for the respondent: ABBOTT TOUT RUSSELL KENNEDY