JOBNAME: No Job Name PAGE: 1 SESS: 1 OUTPUT: Mon Oct 22 12:36:23 2007 /reports/caseml]/case/urj/9603285 McHUGH v NRMA INSURANCE CO LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 5 MAHONEY P, PRIESTLEY and SHELLER JJA 4 July 1996, 1 August 1996 [1996] NSWCA 353 Damages — Motor vehicle accident — Liability — Insurance claim — Allegation of fraud — Expert evidence — Photographic evidence — Whether motive for making fraudulent claim — Examination of trial judge's findings — Reasons given by trial judge — Inferences to be drawn by appellate court — Costs — Cross appeal — 15 Claim for indemnity costs — Jurisdiction of District Court to award indemnity costs — District Court Act 1973 DAMAGES — Motor Vehicle accident resulting in damage to BMW motor vehicle — Insurance claim by plaintiff — Defendant insurance company repudiated claim and pleaded claim fraudulent — Judgment for defendant in District Court — Appeal 20 against findings of fact — Expert evidence to support claim of fraud — Evidence of deliberate act of plaintiff supported by broken parts found in shed belonging to plaintiff — Evidence of witness — Inference to be drawn from photographs — Examination of trial judge's findings on evidence to support allegation of fraud — Reasons given by trial judge — Inference to be drawn by the appellate court. Abalos v Australian Postal Commission (1990) 171 CLR 167, referred to. Devries v Australian National Railways Commission (1993) 177 CLR 472, referred to. Fabre v Arenales (1992) 27 NSWLR 437, applied. R v Ames (1964-5) NSWR 1489, applied. R v Travers (1958) 58 SR (NSW) 83, applied. The Public Trustee and Ors v Commonwealth of Australia (Court of Appeal, 20 December 1995, unreported) applied. COSTS - Cross-appeal - Claim for indemnity costs - Jurisdiction of District Court to make order for indemnity costs - Amendment to District Court Act 1973 to authorise "retrospective" making of order for indemnity costs - Whether applicable in this case when decision already given - Applicability of indemnity costs in cases of fraud - District Court Act 1973, s148AB(2), s148AB(3), s148B(1)(c): Attorney General v Vernazza (1960) AC 965, applied. McColl v GIO (Court of Appeal, 11 August 1992, unreported), referred to. Milosevic v GIO (1993) 31 NSWLR 323, applied. Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103, referred to. Wentworth v Rogers (1986) 6 NSWLR 534, referred to. Western Suburbs Hospital v Currie (1987) 9 NSWLR 511, applied. ORDERS 45 1. Appeal dismissed. 2. Cross-appeal dismissed. 3. Plaintiff to pay 95% of defendant's costs of appeal. Mahoney P The plaintiff Mr Dennis McHugh claimed that, on 3 February 1987, a BMW motor vehicle owned by him was damaged in an accident and that 50 he is entitled to claim upon the defendant under his policy of insurance with it. The defendant claims that it is not liable by reason of the fact that, inter alia, the 2 UNREPORTED JUDGMENTS claim was based on fraud: that the damage did not occur in the accident which the plaintiff alleged to have happened. It repudiated liability under the policy. In 1988 the plaintiff sued the defendant in the District Court. On 4 April 1992 the proceeding came for trial before his Honour Judge Patten. After a hearing lasting some fifteen days his Honour, on 4 August 1992, gave judgment for the defendant. The plaintiff has appealed to this Court against his Honour's judgment. The plaintiff's case before this Court is that the trial judge erred in his findings of fact. There are some significant issues of fact and some issues of law for determination. It is therefore necessary to examine the nature of the plaintiff's claim and of the defendant's defence. As the result of the submissions made by Mr Graves for the plaintiff and Mr Seton for the defendant, the issues have been formulated and to an extent narrowed. However, I am conscious of the importance of the matter to the plaintiff. The defendant pleaded and the judge found in effect that the claim was made fraudulently. I shall, in deference to the submissions of Mr Graves, deal with the main issues in some detail. 1. THE PLAINTIFF'S CLAIM: The plaintiff's claim is that, on the day in question, he was driving the motor vehicle along Henry Lawson Drive. He swerved to avoid an oncoming car. The vehicle skidded, rolled onto its top, and was damaged. The context of the plaintiff's claim was described by the trial judge in terms which are not, in substance, in dispute. His Honour found as follows: "The circumstances giving rise to the claim are alleged to have occurred on 3 February 1987. As at that date the plaintiff was the proprietor of a smash repair business under the name 'McQ's Smash Repairs' carried on at 179 River Road, Revesby. In addition he was in partnership with his brother Rodney the proprietor of a towing business carried on from the same premises under the name 'McQ Towing and Salvage'. It is convenient to make mention here of other premises which loom large in this case namely premises situated at 53 Fitzpatrick Street, Revesby. At that address up until 1986 the plaintiff occupied a unit in an industrial complex as a workshop. He sold his interest in the unit to Freeway Auto Repairs in or about May 1986 but retained use of a shed at the back owned by a friend. The unit was near the end of a driveway about 100 metres long. As at 3 February 1986 the shed which was described as about twice as big as the court room contained a motor vehicle known as a 'Corvette Stingray', a chassis aligner, some machinery and some paint. The plaintiff said that there was free access to the shed during the daytime but access was difficult at night because it was through his friend's factory which was fitted with burglar alarms. The BMW motor vehicle with which this action is concerned was purchased by the plaintiff in a damaged condition for $13,500 about 1985. It was repaired by the plaintiff and used by himself and his wife as their private motor vehicle. The car was a 731 model silver in colour. 3 February 1987 was a Tuesday and the plaintiff said that he was in and out of his premises at 179 River Road, Revesby during the course of the day. He left to drive home about 9.30 pm when it was quite dark. He said that this was then his normal time of leaving work as the workload of the business was high following a hail storm the previous year. the plaintiff left the premises in the BMW which he said was in good condition although the paint work was faded and he was planning to re-spray it. URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 3 At the time the plaintiff lived in Kathleen Parade Picnic Point but he did not intend to travel straight home. First he called upon his sister Mrs Robin Sutcliffe who lived but a short distance away in Vega Street, Revesby. She lived in what was formerly the McHugh family home and according to the plaintiff her address was still used for some business correspondence and as the address for motor vehicles registered in his name. He said that on this particular occasion he was looking for some registration papers which he was unable to find. The visit occupied only a short time. From Mrs Sutcliffe's house the plaintiff went to the intersection not far away of Alma Road and Davies Road, his purpose being to identify a 'spotter' who had reported a motor vehicle accident at that intersection and pay her a fee. But she was not at home. It was the intention of the plaintiff to proceed home from the Alma Road and Davies Road intersection via Henry Lawson Drive by way of via Clancy Street. Upon reaching Henry Lawson Drive he made a right hand turn and drove west towards Picnic Point. Henry Lawson Drive at least at that point had no street lighting and the area where he drove was quite dark. The road travelling west takes a right hand bend around what is described on the map as 'Sydney South Substation'. The plaintiff said that he negotiated the bend and was accelerating out of it when he saw the headlights of an approaching car. No sooner had he done so when another car came from behind the oncoming car to overtake it, set its headlights on high beam, and proceeded toward the plaintiff on its incorrect side of the road. At the time the plaintiff said that he was travelling between 60 and 80 kilometres per hour. Traffic was light. The overtaking car was travelling 'pretty fast'. The plaintiff thought that he would collide with it and applied his brakes hard. The other vehicle then managed to complete its overtaking movement cut in front of the car it was overtaking and continued on its way. It made no contact with the plaintiff's car so far as he was aware. However the plaintiff's car as a result of the sudden application of its brakes went into a sideways skid, the back of it slewing to the left. According to the plaintiff after that 'it seemed to be a split second. I remember two bangs and next minute I am upside down.' The plaintiff said that his car was on its roof when it came to rest at roughly right angles to the roadway. He was assisted out of it by the driver of a following vehicle. The front of the BMW was facing south that is away from the substation and the car whilst on its roof and, presumably because of the weight of the engine, was tilted in that direction. The plaintiff did not take the name or address of the man who assisted him out of the BMW but he asked him if he would telephone his workshop and request his brother Rodney to come to the scene of the accident with a tow truck. Rodney McHugh was still working at the back of the premises when the plaintiff left them. According to the plaintiff his brother Rodney did in fact arrive in a tow truck about 10 minutes later. He then pulled the BMW on to its wheels and hooked it up on the tow truck. By then another motorist had stopped and he assisted Rodney McHugh in righting the BMW and attaching it to the tow truck. The plaintiff said that one or two other cars also stopped but no record was made of the names of any of the other drivers. 4 UNREPORTED JUDGMENTS The plaintiff from a short distance away watched his brother's salvage activities but did not participate in them. He observed that the BMW was first hooked up to the tow truck by the rear but because the nearside front tyre was scrubbing on the mud guard the car was turned around and hooked up by the front in which position it was towed from the scene. The plaintiff did not notice glass or other debris at the accident scene nor could he say whether the windscreen had broken or was intact. Once the BMW was hooked up ready to go the plaintiff joined his brother in the cabin of the tow truck and accompanied him away from the scene. They drove along Henry Lawson Drive to Picnic Point Road from whence via other streets they arrived a few minutes later at the Revesby Police Station on the corner of Sphinx and River Roads. The plaintiff went in to the police station alone and made a report of the incident to Constable Gregory Butler. Constable Butler who gave evidence said that the accident was reported at about 10.30 pm and that he typed up an Accident Report Form in the plaintiff's presence from information given direct to him by the plaintiff. The gist of what was told to him by the plaintiff as he recorded it was that the plaintiff whilst travelling west on Henry Lawson Drive swerved to the left to avoid a collision with an oncoming car being driven on the incorrect side of the road, slid on the gravel shoulder and overturned. His stated speed to Constable Butler was about 60 kilometres per hour. Constable Butler could not recall anything remarkable about the plaintiff's manner or appearance except that he seemed angry at the damage to his motor vehicle. He had an independent recollection of the incident and remembered that whilst the plaintiff was still at the Police Station an employee from the plaintiff's smash repair business came in and spoke to the plaintiff. After reporting the matter to Constable Butler the plaintiff said that he walked to his smash repair yard a very short distance away and from there was driven home by Rodney who in the meantime had put the BMW in the yard out the back. The next day the plaintiff made a claim against the defendant under his policy. In the claim Exhibit 'C' he described the road surface as wet, his speed as in the 30 to 60 kilometres per hour range and made this statement as to how the accident occurred: 'A vehicle in the opposite direction overtook another car - I braked and swerved left - the car skidded on the slippery road - hit the rock wall and rolled over.' The plaintiff was aware that within a day or so an assessor from the defendant called and inspected the car and thereafter it was towed to the defendant's salvage centre at Smithfield. It was then out of the plaintiff's possession until it was returned to him following the completion of some criminal proceedings at the end of 1989. It remains in its damaged condition at Mrs Sutcliffe's home. By the time the plaintiff made claim upon the defendant under the policy the BMW was indeed extensively damaged. Few panels were untouched, the most extensive damage being to the front nearside of the vehicle, the turret, roof and rear nearside panel. At the hearing it was common ground that then and now the vehicle should be treated as 'written off'. The plaintiff identified five photographs (Exhibit 'B') taken by the defendant's assessor, Mr Ross Craven a day or two after February 7, 1987 as depicting the BMW in its damaged condition. It will be necessary to deal with certain of those photographs in greater detail at a later stage of this judgment. URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 5 It is convenient to mention at this stage one matter of consequence, the evidence as to which lay within a narrow compass, namely, the value of the BMW as at February, 1987. I have already mentioned that the car was purchased for $13,500. The plaintiff's evidence was that he spent some further money on parts etc so that by February 1987 it 'owed' him about $18,000. The only evidence as to the car's market value in February 1987 was from Mr Craven namely that the value was $20,000. As the defendant in this case asserts that the plaintiff's claim is fraudulent, evidence of value is important if it establishes a motive for fraud. I infer from the evidence that the plaintiff stood to gain about $5,000 by claiming under the policy rather than by selling the car on the open market. There was no evidence as to his financial circumstances in February 1987." The main evidence given in support of the plaintiff's claim was given by the plaintiff, his brother Rodney McHugh and his sister Mrs Sutcliffe. An employee Mr Carter gave evidence in respect of the matter to which I have referred. The police constable gave evidence of the matters to which, in his account of the context of the claim, his Honour referred. 2. THE DEFENDANT'S DEFENCE: The defendant raised a number of defences but that which is now in question is the defence of fraud. That defence was supported by evidence falling into two main categories which I shall, for brevity, describe as "the expert evidence" category and the "broken parts" category. AS TO THE "EXPERT EVIDENCE" DEFENCE: The defendant called evidence from persons claiming expertise in the relevant matters to establish, inter alia, that the vehicle had not turned upside down and rested in that state for the time alleged. That evidence suggested, inter alia, that if the vehicle had turned upside down and remained there for the relevant time, oil would have come from the engine and would have been discovered in or about the engine compartment. None was discovered. The plaintiff called evidence in reply to the defendant's experts. I shall not pursue in detail the evidence of either party in this regard. The learned judge said that: "\.. in the light of the view which I have formed as to the credibility of witnesses and other aspects of the case it is not necessary for me to reach a conclusion upon these scientific issues and for that reason I do not propose to review in any detail the evidence upon them". Evidence was called by both sides "... as to whether the damage to the BMW was consistent with the vehicle striking walls and rolling over in the manner described by the plaintiff or whether the damage indicated deliberate acts of violence caused for instance by the use of chains". His Honour said: "Again I find it unnecessary to resolve this conflict it not being suggested as I understand the evidence that the damage to the BMW could not have been deliberately inflicted in some manner." Before this Court Mr Seton, for the defendant, submitted that, whatever view be adopted by this Court upon other matters, the defendant should succeed upon the expert evidence ground. He submitted that the evidence in this regard called by the defendant was so overwhelming or otherwise so compelling that the Court could and should hold that the accident had not happened as the plaintiff claims. I do not think that this Court should determine the matter by reference to that evidence. There was, as his Honour indicated, a significant conflict between the experts. From a perusal of the evidence I do not think that it is proper to conclude that the evidence of one side was so compelling that the truth of that aspect of the 6 UNREPORTED JUDGMENTS matter clearly appears. If that matter were to be determined, it would I believe be necessary or at least appropriate that the Court evaluate the respective expert witnesses before it: see The Public Trustee and Ors v The Commonwealth of Australia (Court of Appeal, 20 December 1995, not yet reported). This Court has not had the opportunity to do this. In addition, for the reasons to which I shall refer, I have come to a clear conclusion in relation to other aspects of the matter. Accordingly, I shall not determine the matter by reference to the "expert evidence" defence as advanced for the defendant. AS TO THE "BROKEN PARTS" DEFENCE: The "broken parts" defence is of a different kind. As I have indicated, the defendant's defence was that the vehicle had been damaged not in the accident alleged by the plaintiff, but by a deliberate act of the plaintiff. As the judge indicated, it was not seriously in contest - at least, it is, I think, clear - that the plaintiff could have caused damage of the kind in question. He was in his business involved with smashed motor vehicles. He had available to him a tow truck which could move the vehicle; the tow truck was, he claimed, used to take it from where it was on Henry Lawson Drive, on its top, back to the plaintiff's premises. The defendant's case, in this regard, was that the plaintiff had, in addition to his business premises, a shed at other premises at 53 Fitzpatrick Street, Revesby. Broken portions of the car were found at the Fitzpatrick Street premises. The defendant claimed that it should be inferred from what was found there that the car had been damaged, not on Henry Lawson Drive but at the Fitzpatrick Street premises. It was not denied for the plaintiff that the parts so found were parts from the car. His Honour described the parts found as follows: "... two pieces of back plastic... consistent with the colour and material in the broken offside section of the radiator grill, fragments of amber lens... consistent with the fractured offside lamp body and the nearside turning indicator lamp of the BMW, paint flakes collected... consistent with samples of paint removed from the damaged region of the offside front guard and, in my view most significantly of all, a part number on a fragment of the driving light lens housing found at 53 Fitzpatrick Street matched the number on a part removed from the BMW". The circumstances in which the broken parts were found at the Fitzpatrick Street premises were relied on for the defendant. Mr Seton, for the defendant, referred in his submissions to the sequence of events. This was as follows: On 3 February 1987 the accident is alleged to have occurred. On 4 February 1987 the plaintiff made a claim upon the defendant under his insurance policy. On 5 February 1987 a Mr Craven inspected the vehicle at the plaintiff's premises and took photographs of it in its damaged state. On 6 February 1987 (and again on 19 March 1987) Mr Cannon, an assessor engaged by the defendant, received the first two anonymous telephone calls in relation to the car. His Honour said: "According to Mr Cannon's note during the first conversation Mr Cannon was told that the BMW had not been damaged at Henry Lawson Drive but had been deliberately damaged elsewhere with the aid of a tow truck. In the second conversation the caller said to Mr Cannon: 'I forgot to tell you that McHugh was doing a 'cut and shot' on a BMW in the backyard of McHugh's sister at 25 Vega Street, Revesby and the rear section being replaced was from a stolen vehicle.' URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 7 During the later conversation that is the one that occurred on 19 March 1987 Mr Cannon was told that if he examined the wall opposite Freeway Smash Repairs at 53 Fitzpatrick Street, Revesby he would find marks on it to indicate that this was the scene of a staged accident. This piece of evidence explains the reason for the examination by Mr Robinson of the Fitzpatrick Street premises on March 20, 1987." On 9 February 1987 the vehicle was transferred to the Salvage Centre for the defendant. On 11 February 1987 a Mr Robinson, on behalf of the defendant, inspected the car at the Salvage Centre. On 17 February 1987 Mr Robinson and a Mr Tozer went to Henry Lawson Drive but were unable to find any sign of the accident. On 2 March 1987 a Mr Gilbert, acting for the defendant, interviewed the plaintiff. Mr Gilbert and the plaintiff went to Henry Lawson Drive. The plaintiff claimed but Mr Gilbert denied that they there found debris from the accident. On 18 March 1987 Mr Gilbert and Mr Robinson went to Henry Lawson Drive and did not find any sign of the accident. On 19 March 1987 Mr Cannon received the third of the telephone calls. On 20 March 1987 Mr Gilbert and Mr Robinson went to the premises at Fitzpatrick Street and the broken parts were found. If the evidence had remained there, it would have been proper to draw the inference that the damage to the car took place not on Henry Lawson Drive but at the Fitzpatrick Street premises. Subject to what I shall say, the plaintiff offered no suggestion as to how the broken parts could otherwise have come to be at the Fitzpatrick Street premises. However, the plaintiff did advance an explanation of how the broken parts came to be there. In or about July 1986 he had had a disagreement with Mr Cannon, who acted for the defendant. There was, he suggested, disagreement and resentment between them. A dispute had arisen in relation to a claim made by Mr Cannon that he, Mr Cannon, had had a particular luncheon engagement and the implications of it. It may be accepted for present purposes that, in this regard, Mr Cannon did not tell the truth. Subsequently, in 1989, Mr Cannon confessed to the defendant and to a police officer that his account in relation to the lunch had been false. The plaintiff's claim was that Mr Cannon had taken the broken parts from the car at the Salvage Centre at some time after its arrival there on 9 February 1987 and had placed them at the Fitzpatrick Street premises. The plaintiff's claim was that Mr Cannon had done this to lead to the conclusion that the plaintiff's claim in respect of the accident was false and fraudulent. Mr Cannon was not called as a witness at the trial, by either party. The plaintiff did not call him, presumably because Mr Cannon would be unfriendly to the plaintiff. The defendant did not call him. It had previously dismissed Mr Cannon from any service with it. Before this Court, no suggestion was made, or at least pressed in oral argument, that an inference should be drawn against either party by reason of the fact that Mr Cannon was not called to give evidence. However, in his case in reply, the defendant tendered evidence which had been given by Mr Cannon on an earlier occasion. As the Court has been informed, the plaintiff and his brother Mr Rodney McHugh had been charged with an offence based upon the claim made upon the plaintiff's policy for damage to the car. Committal proceedings were had. Mr Cannon gave evidence during the committal proceedings. The defendant and his brother were not committed for trial; they 8 UNREPORTED JUDGMENTS were discharged. It is the evidence which Mr Cannon gave at the committal proceedings which was tendered by the plaintiff in the present proceeding. In the tendered evidence, it was in effect suggested to Mr Cannon that he had placed the broken parts at the Fitzpatrick Street premises: he denied that he had done so. Against this background, I come to the reply which the plaintiff made to the inference otherwise to be drawn from the broken parts evidence. To support his claim that the broken parts had been placed at the Fitzpatrick Street premises by Mr Cannon or otherwise the plaintiff relied essentially upon two things: the photographs taken of the car by Mr Craven on 5 February 1987 when he inspected the car at the plaintiffs premises; and the evidence of an employee of the plaintiff Mr Carter. The defendant contended that Mr Craven's photographs were evidence against the plaintiff and that Mr Carter's evidence should not be accepted. As may be expected of a trial lasting some fifteen days the evidence on this and associated matters was long and detailed. Mr Graves, in his written and oral submissions to the Court, has, in my opinion, gone to the crux of the evidence in this regard. His submissions have suggested that the broken parts evidence was directed in the main to two things: the broken housing of the offside front driving light and the glass reflector part of that light. Mr Carter said that on 5 February 1987, shortly after the photographs of the car had been taken by Mr Craven, he inspected the relevant part of the car. He said that he was interested in taking the part of the offside front driving light for use in another vehicle of the plaintiff which he was permitted to drive. He said that, when he looked at that light, he noticed two things: that there was slight damage to the black plastic housing of the light; and that the lens of the light was intact. His evidence suggested that he had looked at these things particularly because he wished to use them in the vehicle he was to drive. In the event, he said, he was not permitted to use them; the plaintiffs brother refused permission. As to the black plastic housing (being the plastic which constituted or lined the concave portion of the car in which the light was contained) he said that it was intact. It had been very slightly damaged but was, as to 95% or 99%, intact. The damage consisted of very small pieces of plastic which could be glued back into place. The lens or glass portion or the driving light was, his evidence suggested, contained in a part of the apparatus which, at the time, was attached to the damaged vehicle by the electrical leads from the interior of the body of the vehicle. He suggested that the glass lens which was on the front portion of the light was there and intact; if it had been broken it would, of course, have been of no use to him in the other vehicle. If these two portions of Mr Carter's evidence were accepted as correct, they provided a strong basis for the inference that the broken parts, discovered on 20 March 1987 at the Fitzpatrick Street premises, had been placed there after the inspection of the car by Mr Carter on 5 February 1987. This would provide strong support for the view that some person had sought to damage the plaintiff in the manner suggested by him. The defendant's claim in this regard was that Mr Carter's evidence should not be accepted. It was to the issues joined in this regard upon the broken parts defence that in the main the submissions were made. 3. THE TRIAL JUDGE'S CONCLUSIONS: URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 9 The main conclusions of the trial judge were two: he rejected the evidence of Mr Carter and accordingly accepted the effect of the "broken parts" defence; and he did not accept the plaintiff, his brother or his sister as credible witnesses. The rejection of the plaintiff and his brother as credible witnesses would no doubt have been sufficient to warrant the rejection of the plaintiffs claim. (The evidence of the plaintiffs sister Mrs Sutcliffe dealt with matters collateral to or on the fringe of the main issues and I shall not lengthen this judgment by dealing in detail with the significance of what she said). Subject to the comment to which I shall refer, the judge was or is to be taken to have been influenced in this regard by what he observed of the witnesses in their evidence: see Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472. The judge gave reasons which influenced his rejection of the evidence of these witnesses and to these I shall refer. These, if accepted, may warrant the rejection of their evidence and of the plaintiff's claim without reference to the "broken parts" defence. But against the possibility that the judge may have been influenced in his rejection of the evidence of the plaintiff and his brother by the "broken parts" defence and the findings in relation to it: cf Fabre v Arenales (1992) 27 NSWLR 437; I shall deal first with the "broken parts" defence. If Mr Carter's evidence was accepted, the "broken parts" defence would fail. In order to understand why this is so, it is necessary to refer in more detail to the evidence of the state of the car when photographed by Mr Craven on 5 February 1987 and of the broken parts found at the Fitzpatrick Street premises on 20 March 1987. I have indicated the judge's findings as to what was found at the Fitzpatrick Street premises. For present purposes two things are significant. First, those acting for the defendant found a broken glass or part of a lens with an identification upon it. It is accepted that the glass or lens came from the car. If the lens was, as Mr Carter said, on the car and unbroken on 5 February 1987, then, the inference was, it was taken from the car and placed at the Fitzpatrick Street premises only after that date. It did not come there because the plaintiff had damaged the car at the Fitzpatrick Street premises before 5 February 1987. Second, the broken parts found included a part of the black plastic cover which had been part of the offside driving light of the car. When found, it was in a broken state: two significant portions had been broken from the plastic, at the bottom right and left hand portions of it. Mr Carter had said that, when he inspected the light on 5 February 1987, it was, to the extent to which I have referred, essentially undamaged. The thrust of his evidence was that it was not in the damaged state in which it was found on 20 March 1987. At the trial, Mr Carter's evidence upon both aspects, the lens and the plastic cover, was strongly contested. His evidence in relation to the lens was contested by reference to Mr Craven's photographs of the state of the vehicle on 5 February 1987. The trial judge had the benefit of the photographs in a substantially enlarged state. At the trial the witness Mr Craven gave evidence of what, with assistance, could be seen from the photographs. His evidence was to the effect that the photographs showed that, when they were taken, there was no unbroken lens in position. Mr Craven referred, inter alia, to two things. He referred to the fact that the lens was, in effect, not flat and flush with the edge of the housing of the light but extended beyond it in the manner he indicated from the state of the undamaged nearside front driving light. The thrust of his evidence was that, if the lens had been in the damaged front offside driving light, he would have been able to see it or the sign 10 UNREPORTED JUDGMENTS of it in the photograph but there was no such sign of it. In addition, his evidence suggested that glass would have remained in the ridge of the fitting into which the glass had been placed and there was no glass then visible. The learned judge did not express any opinion in relation to this aspect of the evidence. He did not find, in terms, whether Mr Carter's evidence that the lens was in position and unbroken when the photographs were taken or immediately thereafter was accurate. He did not, I think, find it necessary to do so. He put aside the evidence of Mr Carter by reason of his finding in relation to the black plastic light housing. In relation to the plastic light housing Mr Carter had said that, as I have indicated, it was substantially uninjured; he could have repaired the damage to it by gluing back into place the small pieces that were broken. He accepted that the plastic housing was not broken to the extent of the damage appearing from the portion of the housing when it was found at the Fitzpatrick Street premises. Mr Carter was cross-examined at length as to what Mr Craven's photographs showed in this regard. It was put to him that the photographs showed that there were portions of the plastic housing broken off, more or less to the extent of what appeared from the housing when it was found at the Fitzpatrick Street premises. Mr Carter was not willing to admit that the Craven photographs showed damage to that extent. However, as the cross-examination progressed he came, I believe, to accept that, closely examined, the photographs did show damage to the plastic housing greater than he contended had existed when he saw it on 5 February 1987. The trial judge had the opportunity of examining the photographs with the aid of a magnifying glass. His Honour indicated in his judgment what he had seen on his examination of the enlarged photographs. His Honour said: "If I accept the evidence of Mr Carter I must necessarily conclude that sometime after the BMW was examined and photographed by Mr Craven a piece of the offside driving light housing was deliberately broken off (presumably by an employee of the defendant) and placed in the area where it was found at 53 Fitzpatrick Street. However as I have indicated I am satisfied from my own observation of the relevant photograph that parts of the offside driving light housing were broken before it was photographed by Mr Craven and I am also satisfied that the broken parts found at 53 Fitzpatrick Street matched that part of the housing still attached to the car. For that reason I reject this part of the evidence of Mr Carter". The Court has, for the purpose of considering the submissions upon appeal, examined the photographs to which his Honour referred. I am conscious of the dangers involved in drawing inferences from photographs: see R v Travers 58 SR (NSW) 83 at 108-9; R v Ames (1964-5) NSWR 1489 at 1491. I am particularly conscious of the danger of drawing inferences of this kind where the result is or may be to find fraudulent conduct upon the part of a party to the proceeding. But in my opinion the close examination of the photographs provides support for the conclusion drawn by the trial judge that the black plastic housing was damaged to a significantly greater extent than was said by Mr Carter. The state of the black plastic housing is, I think, confirmed by what was said in due course by Mr Carter in cross-examination and, perhaps, by the effect of the evidence of Mr Craven. In the end, I am satisfied that Mr Carter's description of the state of the black plastic housing was incorrect. In my opinion, it was incorrect to an extent which was significant for present purposes. URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 11 lam satisfied that the evidence as to the extent of the damage to it as appearing from the Craven photographs, from the ultimate effect of the evidence of Mr Carter and otherwise indicates that it was, on 5 February 1987, damaged essentially to the extent that it was found to be damaged subsequent inspection. Mr Graves' submissions suggested, I think, that even if this be so, it does not justify the rejection of Mr Carter's evidence as to the lens and that, indeed, his Honour did not reject that part of Mr Carter's evidence. Mr Graves submitted that his Honour's finding was merely that "this part of the evidence of Mr Carter" was rejected, that is, that part relating to the plastic housing. I do not think that that is what his Honour meant by what he said in the passage to which I have referred. His Honour was, in my opinion, referring to the evidence of Mr Carter as to what he saw on 5 February 1987. Mr Carter gave evidence as to other matters: for example, he explained the circumstances in which his recollection of 5 February 1987 had occurred, when it had been made known to the plaintiff and his solicitors, and what he had done in relation to it. These matters were, in cross-examination, the subject of some contest. His Honour did not feel it necessary to pass upon those matters in the passage to which I have referred. I think that in the passage in question his Honour was referring to, and rejecting, that part of the evidence of Mr Carter which related generally to and explained the broken parts that were discovered at the Fitzpatrick Street premises. But Mr Graves' submissions suggested that the judge did not indicate the effect of these findings upon Mr Carter's evidence as to the lens or glass and why his Honour rejected it and that therefore the judgment was defective. I do not think that that submission should be accepted. It is in my opinion proper to accept that the judge was conscious that Mr Carter's evidence was directed both to the black plastic housing and to the lens or glass and that he appreciated the significance of finding the broken glass at the Fitzpatrick Street premises. The issue was whether, as the judge indicated, the relevant parts of the offside driving light housing had been deliberately broken off after 5 February 1987 and placed at Fitzpatrick Street. If the judge did not accept Mr Carter as a credible witness insofar as he said that the black plastic housing had been only slightly damaged, that was a reason why he should reject Mr Carter upon that part of his evidence which went to that allegation of the plaintiff. It was, of course, possible for the judge to reject what Mr Carter had said about the housing but accept what he had said about the lens. But that, I think, would have involved drawing distinctions which, as I read the thrust of the evidence and the cross-examination, were not drawn. The cross-examination of Mr Carter started with the suggestion that he was not a truthful witness and that suggestion went, I think, to the whole of his evidence as to the inspection he claimed he made. The case was one in which, if Mr Carter was to be rejected on part of the inspection evidence, his evidence as a whole on that part of the case was appropriate for rejection. But, as Mr Graves has insisted, the judge did not refer to this part of the matter in terms. It would, of course, have been desirable - at least, it would have pre-empted a point such as the present - had the judge dealt in terms with each and every point that was raised and pursued the detail of it to an expressed conclusion. But it is not essential that a trial judge, in the course of a detailed judgment extending over 22 pages and more, should do so. 12 UNREPORTED JUDGMENTS In my opinion an appellate court should not draw inferences such as are here suggested from the fact that a judge does not deal expressly with each point or pursue each point to its conclusion. I appreciate the requirement that a judge or a court must, in giving judgment, provide proper and sufficient reasons for what it has done. But there will inevitably be interstices - or even gaps - in the reasons provided and the appellate court must determine what inference it will draw from the fact that every point which could or should have been dealt with has not in terms been dealt with. In approaching the judgment of a trial judge or of a court from which an appeal has been brought, a court may adopt a critical or a beneficial view of what has been done. It may, as Mr Graves' submissions here infer, adopt a critical approach: it may infer from the fact that it has been omitted that it has been forgotten or that the gap not filled in terms could not have been filled except in a way which would demonstrate error. In my respectful opinion, this is not the approach which, in general, an appellate court should take. It should - and a trial judge is entitled to expect that it will - adopt a beneficial approach to what he has done. It will understand the exigencies of the preparation of a judgment in a busy court. It will examine the judgment to see whether what has been omitted has been omitted because the judge may have believed there was no need to pursue it or spell it out. If he has dealt with a matter but has left a gap in his statement of what he has done in respect of it or why, the court will give effect to the thrust of his judgment in inferring what the judge has done and why the elision has occurred. These principles are applicable in the present case. The issue was fraud and, in respect of such an issue, the conclusions on which a finding is made must be clear. In my opinion, they are. I infer that his Honour did not deal in terms with Mr Carter's evidence concerning the lens because, having rejected him in respect of the black plastic housing, he felt it plain or obvious that he should not accept him in respect of the lens. For these reasons I conclude that the judge rightly found the "broken parts' defence established. I have dealt with what is in my opinion the crux of the appeal, the matter to which the submissions have been mainly directed. However, in deference to Mr Graves' submissions and in an endeavour to prevent to misunderstanding, I shall refer briefly to the main submissions made otherwise by him. As I have indicated, the trial judge concluded that the plaintiff and his brother were not witnesses of credit. He gave a number of reasons for this conclusion. The judge saw the plaintiff's demeanour in the witness box as "not untoward". It was suggested that this means that Abalos and Devries have no application. I do not think that is the significance of what the judge said. But, that aside, the judge said that there were "many aspects of his evidence which caused me to scrutinise it with great care". It has been submitted that, in the reasons he gave, he erred. In my opinion there was no substantial error in the reasons which the judge briefly summarised. The plaintiff, on his evidence, had stood by or close to the vehicle for some twenty minutes. He had failed to take the name and address of the person who had telephoned his brother about the accident or any other bystander. He had no details of the persons who could speak as to the accident which he said had occurred and he was unable to pin-point the place where the accident happened "with any accuracy". Mr URJ McHUGH v NRMA INSURANCE CO LTD (Mahoney P) 13 Graves has emphasised, and I appreciate, the effect which an accident of the suggested kind may well have had. But on his own account of what happened the plaintiff did not lose his self-possession at the scene of the accident. He was a person whose business involved vehicles involved in motor accidents. He had the car moved before he reported the accident to the police and so the police could not confirm that the accident happened by seeing it at the scene. What he had done or failed to do could, I think, be thought by the judge to be "inappropriate to the circumstances". His Honour referred to "his conflicting accounts to the police and in evidence as to what actually transpired". Mr Seton, in his submissions, submitted that the conflicting accounts included: he told the police he was driving at 60 kilometres per hour, in evidence he said 80 kilometres per hour; he told the police the roadway was dry, in evidence he said it was wet; he did not tell the police he had hit rock walls, in evidence he said he hit one or two; he told the police he slid on gravel, in evidence his account was different; and he told the police the accident occurred "whilst rounding a corner", in evidence he said it occurred on a straight section of the roadway. It is not necessary to pursue detail by detail the opposing submissions as to these matters nor do I overlook the lapse of time involved between the two accounts of what occurred. But the two accounts had differences which may have been thought, on investigation, to have been of significance If there was error in what the judge considered in respect of any of these matters, it was an error of detail which does not invalidate the references which the judge drew. The judge noted that he had reported the matter to the police "without any sign of agitation or dishevelment within half an hour or so of having been involved in a very substantial impact involving a collision with two stone walls and an overturning car". This observation is, I think, substantially correct. He had, as the constable recalled, appeared angry at what had happened. But that does not invalidate his Honour's observation that a person who had been in such an accident as the plaintiff described would probably have been in a condition different from that in which he appeared. Other matters to which the judge referred are, as I have indicated, of varying significance: the significance of the meteorological records in respect of rain may perhaps be questionable. But taken together the matters in question provided a basis upon which the judge could conclude that the plaintiff's evidence was not convincing. It left him, his Honour said, with "an impression that the plaintiff tailored his evidence to ensure that it contained such little particularity as to minimise the risk of discrepancies appearing with the evidence of other witnesses". Accordingly, I am of the opinion that the decision of the learned trial judge was correct. I have considered whether the standard of proof required for a finding based upon fraudulent conduct has been attained. Subject to one matter, there has been no, or no substantial, attack upon the judge's judgment in this regard. His Honour applied the appropriate Briginshaw test and drew attention to the standard which that test requires. Mr Graves argued that the fraud was not proved because the evidence did not establish that this plaintiff had any motive for making a fraudulent claim. The judge did not find a particular motive and did not rely on any in coming to his conclusion. That is an important matter to be taken into account. The evidence suggested that the car had a resale value of about $20,000. It was said for the plaintiff that, as a wreck, it had cost the plaintiff about $15,000 and had been 14 UNREPORTED JUDGMENTS restored by him. Whether it was important to the plaintiff, at the time of the accident, to have the insurance payment for the car does not appear, one way or the other. The judge did not accept the plaintiff as a credible witness but the defendant did not seek to prove that it was important. Considering the matter afresh, I am satisfied that the defence of the defendant has been established to the standard required. The judge was not satisfied that the accident happened as the plaintiff and his brother claimed. To that is to be added the effect of the missing parts evidence. The significance of that evidence has already been noted. These matters together provide evidence of sufficient weight to establish the defendant's defence. For these reasons I am of opinion that the appeal should be dismissed. 4. CROSS-APPEAL: CLAIM FOR INDEMNITY COSTS: At the trial the defendant sought indemnity costs. The judge held that he had no jurisdiction to award indemnity costs and, in his judgment of 11 November 1992, dismissed the defendant's application. His Honour said: "Counsel for the plaintiff did not, as I understand it, submit that if I hold there is jurisdiction to make an order for costs on an indemnity basis this is not a matter which calls for the making of such an order. Indeed it would be difficult to mount such an argument as my finding that the claim was fraudulent seems to bring the case squarely within the principles enunciated by the authorities which I have mentioned." His Honour had, in his judgment, referred inter alia to Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103; Wentworth v Rogers (1986) 6 NSWLR 534; and McColl v Government Insurance Office (Court of Appeal, 11 August 1992 unreported). His Honour's conclusion that he had no jurisdiction to make an order for indemnity costs accorded with a subsequent decision of this Court: Milosevic v Government Insurance Office (1993) 31 NSWLR 323. An application was made to the High Court of Australia for leave to appeal against that decision but, prior to the application being dealt with, the District Court Act was amended to authorise the District Court "retrospectively" to make orders for indemnity costs. Mr Seton referred the Court to, inter alia, the amendments made to the District Court Act by Act No 80 of 1993 and by Act No 87 of 1993. He submitted that this Court, as on a rehearing, should exercise such powers as had been given to the District Court between the date of the judge's judgment and the date of this appeal: see Western Suburbs Hospital v Currie (1987) 9 NSWLR 511; Attorney General v Vernazza (1960) AC 965. At the time Patten DCJ gave judgment refusing indemnity costs, 11 November 1992, his Honour was correct in holding that he had no jurisdiction to make the order sought: the majority judgment in Milosevic v Government Insurance Office; is to be taken to be correct for that purpose. The effects of the amendments made by the legislation after Milosevic is by no means clear and the argument has not satisfied me that they now authorise this Court to do what is now sought. Mr Seton relied for his claim that this Court now has jurisdiction to order costs upon s148AB(2) which provides that the District Court is to be taken to have been authorised since 28 April 1989 to make orders for indemnity costs. But s148AB(3) provided that the section was to be repealed on the commencement of s148B(1)(c). The effect of the last-mentioned provision was not pursued. It would appear that s148AB was repealed as from 1 July 1994 and s148B operated URJ McHUGH v NRMA INSURANCE CO LTD (Sheller JA) 15 in its amended form from | July 1994. That provision, on the face of it, was not expressed to operate retrospectively. In particular, it was not expressed to operate in respect of decisions already given or in pending proceedings where an order had been made or refused. Tam conscious of what was said by Patten DCJ in his judgment as to the merits of this application. A case fraudulently brought is a case in which an order for indemnity costs can, though not necessarily must, be made. The present proceeding was before the trial judge for, the Court is informed, some fifteen days. The material before this Court on appeal extends over more than 1750 pages. It does not appear why the evidence given, insofar as it is before the Court in the appeal papers, led to the proceeding lasting so long. It may be that matters were argued or dealt with other than what appears in the appeal papers. Were I exercising jurisdiction to order costs at first instance, I would require to be satisfied inter alia as to the time occupied in the hearing of the case by the respective contentions of the plaintiff and the defendant and to examine in some detail the evidence which occupied such a time. The fact that one of the defences pleaded, that relating to fraud, has succeeded would not, without more, lead me to make an order for indemnity costs in respect of the proceedings or the whole of it. It is no criticism of counsel in this appeal that they have not taken the Court to the detail of the proceeding or of the evidence in this regard. But the statutory provision relied on, s148AB(2), as the application was initially put is not available. The statutory basis of the application is uncertain. And the factual matters to which I have referred are not clear. In the circumstances, I am not satisfied that an order for indemnity costs should be made. The cross-appeal should therefore be dismissed. In my opinion the appeal and the cross-appeal should be dismissed. The defendant/respondent should have the benefit of the costs of the appeal. The plaintiff is entitled to the benefit of his success upon the cross-appeal. However, the cross-appeal and the submissions made in relation to it have occupied a very small part of the time taken for the appeal. To avoid the need for separate calculations of the costs involved in the appeal and the cross-appeal and the set off of the one against the other, the order for costs in the proceeding should be that the plaintiff pay 95% of the defendant's costs of the appeal in this Court. Priestley JA In his reasons Mahoney P explains the two categories of evidence upon which the defendant insurer based its defence. I agree with his analysis of the "broken parts" evidence and with his conclusion that the black plastic housing was substantially as badly damaged at the time when the Craven photographs were taken as at the later relevant times. My own inspection of the photographs leads me to a conclusion adverse to the appellant in regard to the lens. I agree also with Mahoney P's reasons for rejecting the plaintiff appellant's attack upon the trial judge's findings concerning the credibility of the plaintiff and his witnesses. Once this point is reached it seems to me the conclusion necessarily follows that the appeal should be dismissed. I agree with Mahoney P's reasons for dismissing the cross appeal. In my opinion the orders which should be made are those proposed by Mahoney P. Sheller JA I agree with the orders proposed by Mahoney P and the reasons for them. 16 UNREPORTED JUDGMENTS 1. Appeal dismissed. 2. Cross-appeal dismissed. 3. Plaintiff to pay 95% of defendant's costs of appeal. 5 Counsel for the appellant: JJ Graves Solicitors for the appellant: Adelsteins Counsel for the respondent: RW Seton 10 Solicitors for the respondent: Abbott Tout Russell Kennedy