New South Wales District Court CITATION: Khatchadourian v GIO General Limited [2007] NSWDC 179 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 6, 7, 8 and 10 August 2007 JUDGMENT DATE: 30 August 2007 JURISDICTION: District Court - Civil Jurisdiction JUDGMENT OF: Johnstone DCJ at 1 DECISION: Judgment for the defendant; plaintiff to pay the defendant's costs, to 12 February 07 on the ordinary basis and thereafter on an indemnity basis CATCHWORDS: Insurance - stolen Porsche - claim for indemnity under a policy of comprehensive motor vehicle insurance - before entering into the contract of insurance, the plaintff fraudulently misrepresented and failed to disclose his true (unacceptable) driving record - insurer entitled to avoid the contract of insurance and refuse payment of the claim - court asked to disregard insurer's right to avoid on the basis it would be harsh and unfair not to do so - no basis established for exercise of discretion in favour of insured LEGISLATION CITED: Insurance Contracts Act 1984 (Commonwealth): s 21, s 28(1), s 28(2) and s 31 CASES CITED: Briginshaw v Briginshaw (1938) 60 CLR 336 PARTIES: Stephen Khatchadourian (Plaintiff) GIO General Limited (Defendant) FILE NUMBER(S): 3715/2005 COUNSEL: Mr S Stanton (Plaintiff) Mr S Kettle (Defendant) SOLICITORS: Arnotts Lawyers (Plaintiff Hickson Lawyers (Defendant) JUDGMENT Introduction 1. Mr Khatchadourian's car, a 1998 Porsche 911 Carrera manual coupe (OGT 300), was stolen from the car park at the Macquarie Centre on 25 February 2005. It was never recovered. He made a claim for indemnity for the loss of his Porsche under a policy of comprehensive motor vehicle insurance issued by GIO General Limited (No 13852530PV) for the period 4 May 2004 to 4 May 2005. 2. The claim was refused by GIO General, which says it is entitled to avoid the contract of insurance or to otherwise decline indemnity by reason of fraudulent misrepresentations and fraudulent failures by Mr Khatchadourian to disclose to it relevant matters, before entering into the contract: s 28(2) of the Insurance Contracts Act 1984 (Commonwealth). In particular, it says that Mr Khatchadourian knowingly, or recklessly, and with the intention that it be acted on by GIO General: · misrepresented his true driving record; · failed to disclose the correct purchase price and the true date of purchase of the Porsche; · failed to disclose that another insurer, NRMA Insurance, had previously declined to insure the Porsche due to Mr Khatchadourian's unacceptable driving history. 3. Some of the factual background leading up to the issue of the insurance policy is not in dispute. But there are other aspects of that background that are obscure or as to which there is a serious dispute. 4. The following facts are not in dispute or were readily proved. 5. Mr Katchadourian purchased the Porsche at auction through the Fowles Auction Group Pty Ltd on 26 November 2003, as a "repairable write-off", for $68,575. In the succeeding months he caused the Porsche to be repaired to a registrable condition at considerable expense, in the region of an additional $80,000 (see his statement at [14] - [18] and T 10.16-19). 6. On 4 May 2004 GIO General issued a Certificate of Insurance in respect of Policy No 13852530PV for the period 4 May 2004 to 4 May 2005 in respect of the Porsche that recorded the following relevant details (see Ex F at pp176-180): Vehicle details 1998 PORSCHE 911 CARRERA manual COUPE Purchased from FOWLES AUCTION GROUP on 04/05/2004 for $148,000 Sum insured Agreed value of $148,000 Listed Drivers Listed driver: STEPHEN KHATCHADOURIAN Excess payable if you claim Basic excess $450 Plus insurance and driving history excess $400 Plus vehicle excess $400 Plus age and inexperience excess - for a listed male driver the excess is $400 Insurance and driving history Other than the matters listed below, in the past 5 years none of the persons listed have had any accidents, thefts or fires…or had any infringement of traffic regulations or any charges or convictions for an offence, relating to the use, control or care of a motor vehicle: 1. STEPHEN KHATCHADOURIAN had a traffic charge on 03/2003 Alcohol was involved Details of the traffic charge: DUI 2. STEPHEN KHATCHADOURIAN had a traffic charge on 08/2001 Alcohol was not involved Details of the traffic charge: SPEEDING FINE In the past 5 years, none of the persons listed…have had any insurance declined or cancelled, or a claim rejected or special conditions imposed on any insurance. In the past 10 years, none of the persons listed have had a conviction (whether recorded or not) or a charge of arson, theft, fraud or other criminal offence. Amount payable Premium $7,50182 Goods and Services Tax $ 750.18 Stamp duty $ 412.60 TOTAL AMOUNT PAYABLE $8,664.60 7. The Porsche was registered that same day, 4 May 2004, at the Silverwater Registry of the RTA, after compulsory third party insurance had been placed through NRMA Insurance (Plaintiff at [31]). 8. Mr Khatchadourian received the GIO General insurance documentation relating to the Porsche, including the Certificate, about a week later. He did not read the documents closely (see his statement at paragraph 32), but only reviewed matters important to him, such as the engine and chassis numbers, the registration number, the agreed value and the premium (T 52.45-58). He did notice that the purchase date and purchase price were incorrectly recorded, but took no steps to correct these errors because he did not think it was important (T 53.1-14). But he did not check the details relating to his insurance and driving history (T 53.32-57). Thus, according to his evidence, he did not see the errors recorded on the Certificate relating to his driving record and insurance history. 9. His driving record was, in fact, considerably worse than the two items recorded on the Certificate. At that time, Mr Khatchadourian had had at least 7 offences recorded against him within the previous 5 years (see Ex F at pp147-8). Nor do those two items bear any relationship to the offences disclosed in his driving record (T 52.9-12). 10. And, he had been refused insurance. In fact, at least three other insurers had already declined to insure the Porsche: AAMI (T 39.44), Allianz (T 40.35-43) and NRMA Insurance (T 9.46-58 and Plaintiff at [26]). 11. Of itself, the failure by Mr Khatchadourian to disclose this insurance history probably did not amount to a material non-disclosure (see Mr Hoffman's opinion at T 147.34-148.10. The reality was, however, was that Mr Khatchadourian's poor driving record and the exotic make of the Porsche made it uninsurable in the conventional domestic insurance market (see T 10.1-10, T 39.15-44, T 40.35-44, Ms J King at [39], Ms Thomas at [46], Mr Pobar at [25], [38] and [49], the Plaintiff at [21] and [25], and Mr Hoffman at T 146.46-49). 12. That Mr Khatchadourian knew the importance of his true driving record to the acceptance of the risk by GIO General is beyond doubt (T 7.16-44, T 28.17-20 and T 28.52-58, and the Plaintiff at [26] - [27]). 13. The only policy of insurance issued by GIO General in respect of the Porsche was Policy No 13852530PV, incepted through its Call Centre on 4 May 2004 at the instigation of Mr Khatchadourian, the relevant operator being Ms Lise-Bjorg Thomas (at [34]). Mr Balafas had no connection with the policy (T92.10-30). 14. I turn then to the matters of controversy. Mr Khatchadourian's version as to the issue of the insurance policy 15. Mr Khatchadourian's case is that having failed to obtain comprehensive insurance for his Porsche, he rang Mr Peter Balafas, who at that time was a small business insurance representative at GIO General, who had looked after the insurances of the Khatchadourian family businesses for a number of years (see his statement at [4] – [6] and the Plaintiff at [19]). Mr Khatchadourian told Mr Balafas he had been having trouble obtaining comprehensive insurance cover for the Porsche. Mr Balafas said to leave the matter with him, and asked for Mr Khatchadourian's driving record, which he then faxed to Mr Balafas (see the Plaintiff at [27]. 16. Mr Khatchadourian faxed his driving record to Mr Balafas on 27 April 2004 from his home phone (No 8836 5855) at 12.47pm (T 5.19-6.15, T 27.30-57, the Plaintiff at [27] and Annexure E at page 55). 17. Mr Balafas telephoned Mr Khatchadourian back some days later and told him GIO General had decided to provide comprehensive cover for the Porsche (see Plaintiff's statement at [30]). Mr Khatchadourian's statement continues: "He (Balafas) went on to say that the premium would be double what would be the ordinary premium…in the order of $8,000 per annum on account of my driving record. A special excess …would apply for at fault claims…I agreed with the quote and the conditions…and I was subsequently provided with a reference number. I cannot now recall that reference number…I enquired of him whether the GIO would provide me with a cover note as I was intending to take the Porsche to the RTA for the purpose of having it registered…Mr Balafas replied to me …that he could not provide me with a cover note and that I would not be covered in the event that anything occurred in the journey to or from the RTA…Later that day I contacted the GIO on their customer service telephone number 131010. I provided the reference number to the operator that Peter Balafas had given me. In the course of my conversation with the operator I confirmed the engine, chassis and registration numbers for the Porsche and my credit card details for payment of the premium. I cannot recall any further details of that conversation" (at [28] – [30]). 18. A number of discrepancies emerged in respect of Mr Khatchadourian's evidence. 19. The first discrepancy relates to the disjunct between the details on the Certificate and the true facts. It was put to Mr Khatchadourian that in the course of the telephone conversation with the GIO General customer service operator he was asked questions about his insurance history, traffic infringements in the last 5 years, the excess, the purchase price of the Porsche and the date of purchase, but he said he was unable to remember being asked those questions (T 55.52-58.44). He was unable to explain why so few traffic infringements were recorded on the Certificate (T 52.22-25), but denied it was because of what he told Ms Thomas (T 65.52-57). He conceded that to do so would have been knowingly false (T 75.19). 20. The second discrepancy relates to the quote. Mr Khatchadourian said he was given an oral quote, which he accepted. He denied receiving a written quote sent to him by Mr Balafas for signature and return (T 31.16-58, T 33.40-48). 21. The third discrepancy relates to the cover note Mr Khatchadourian said he asked for. Mr Balafas denied that Mr Khatchadourian asked him to issue a cover note, and indeed on his version a cover note would not have been required because, as far as he was concerned, the insurance had been effected once the quote was approved and accepted, and he had told Mr Khatchadourian he was covered (T 105.35-106.25). 22. A fourth discrepancy relates to the so-called reference number that Mr Khatchadourian said he was given by Mr Balafas, which he wrote on a piece of paper and used when he rang the Call Centre, but discarded after he received the insurance policy (T 33.50-34.10). Mr Balafas denied that he gave Mr Khatchadourian an authorisation or reference number, there being no reason to do so (T 105.18-22 and T 107.25-37). Ms Thomas denied that Mr Katchadourian gave her an authorisation number (T 160.49-58), and said there is no such term at the Call Centre. If she had been given an authorisation number or a quote number by Mr Khatchadourian she would have searched for it on the computer system, and put him through to the relevant department that had given him the number (T 174.31-175.32). The evidence of Mr Balafas 23. The evidence Mr Balafas gave has elements that corroborate Mr Khatchadourian's version of events, but is otherwise totally at odds with it. 24. He recalled a telephone call about a month prior to May 2004, in which Mr Khatchadourian told him that he had purchased a Porsche 911 in a "good deal" and that he had then carried out work on it. Mr Khatchadourian enquired whether insurance could be arranged for the Porsche, and Mr Balafas told him to contact him when the car was fit to be registered as roadworthy (see his statement at [11]. A few weeks later Mr Khatchadourian rang Mr Balafas again to say the Porsche had been repaired but he was having trouble obtaining insurance, and he wanted to insure it for $150,000, being the amount it would cost to replace it in the event of a total loss. He was given some details such as make and model which he entered into his computer, but he was unable to process the insurance as a message appeared on his computer indicating that authorisation was required from the commercial underwriter. At that time no one in his office at Parramatta was able to approve insurance for exotic cars such as Porsches, Lamborghinis, Maseratis or Ferraris (at 13]). 25. Mr Balafas' statement continues: "I recall either at the time or very soon thereafter informing Mr Khatchadourian that I did not have the authority to approve the insurance cover in respect of the Porsche vehicle and that I would need to seek authorisation from GIO's head office (at [14]). It was either that day or very soon thereafter…that I then contacted Mr Michael Probar (sic – Mr Balafas incorrectly refers to Mr Pobar as Mr Probar throughout his statement). He was the commercial underwriter for GIO General Ltd. He worked at the Clarence Street premises of GIO. I rang him and in the course of the conversation explained to Mr Probar that the client Mr Stephen Khatchadourian wanted to take out comprehensive insurance on his Porsche 911 for cover on a comprehensive basis up to a value of $150,000. In the course of explaining the proposition as a business proposal I also informed Mr Probar that Mr Khatchadourian and his family had at that time three or possibly four commercial policies of insurance with GIO. Further details supplied to Mr Probar were the year, make and model of Mr Khatchadourian's Porsche (at [15]). I distinctly recall that Mr Probar said that he needed Mr Khatchadourian's certified driving record before he could make a decision. It was either immediately thereafter or some time later that day that I contacted Mr Khatchadourian by telephone and in the course of the conversation requested…that he provide me with his driving record. It was very soon after the request was made of Mr Khatchadourian that he supplied me with his driving record...(at [16] - [17]). I say that promptly after it was forwarded to me by facsimile from Mr Khatchadourian I sent it on to Mr Probar. After it was sent to Mr Probar he came back to me some time later and informed me that GIO would comprehensively insure Mr Khatchadourian in relation to his Porsche 911 motor vehicle and gave me an authorisation number which I inserted into my laptop computer. The provision of the authorisation number and its insertion into my laptop computer enabled me to print out a quote for the insurance policy. I say Mr Probar also gave me a premium and excess amounts for the policy which I provided to Mr Khatchadourian as the client (at [18]). The quote which, on my recollection, was a 3 page document as provided was in turn supplied to Mr Khatchadourian by facsimile and he signed it and returned it to me on the day it was provided to him. Upon receipt of the quote and its acceptance it was converted into a policy and the details were put into my laptop and were uploaded to the mainframe computers of GIO General Ltd…" (at [19]). 26. Why then did Mr Khatchadourian place his insurance through the Call Centre? 27. Why did Mr Khatchadourian never once mention to Ms Thomas that Mr Balafas had obtained authorisation to insure the Porsche, and had given him a quote, which he had accepted? 28. Why didn't a commercial motor policy issue with a reference number starting with SB914 (T 93.42-52 and Balafas at [59])? The evidence of Mr Pobar 29. A statement made by Mr Pobar dated 26 March 2007 was in evidence (at pages 89-99). He was not required for cross-examination. In May 2004 he was a Commercial Motor Specialist for GIO General, based in an office at Clarence Street, Sydney. He was the commercial underwriter from whom Mr Balafas said he sought and obtained approval to insure Mr Khatchadourian's Porsche. 30. Mr Pobar did not recall any communication with Mr Balafas in relation to the Porsche, and was unable to find any records of any dealings with Mr Balafas pertaining to Mr Khatchadourian, either on the computer system or on paper (at [13], [14] and [50]). He could find no record of any commercial motor policy taken out by Mr Khatchadourian in respect of the Porsche or any other vehicle (at [15]. 31. The commercial insurance business and the domestic insurance business of GIO General were conducted in two distinct divisions, and operated on independent mainframe computer systems. Commercial used Cogen 1.5 and Domestic operated on the Cogen 3 system (at [6], [7], [19], and [20]). Each division operated exclusively, with its own staff, underwriting criteria, underwriting guidelines and policy wordings (at [21] and [38]). 32. Mr Pobar's statement continues: "Mr Balafas outlines at paragraph 10 of his statement the procedure he asserts he followed in attempting to incept a commercial insurance policy for Mr Khatchadourian over an "exotic" vehicle. He describes how he was prevented from doing so without an authorisation by a commercial underwriter (at [24]). Commercial Motor does not have any definition of an "exotic" or prestige motor vehicle. Vehicles are grouped into categories for rating purposes. Most high valued vehicles such as prestige or exotic vehicles are grouped into one category. A family-type sedan will be rated differently to a more prestige type of vehicle. Not all exotic or prestige vehicles are an immediate referral to an underwriter; however, a Porsche is an automatic referral. A referral allows individual underwriting and pricing, taking into account any unique circumstances (at [25]). A vehicle that is automatically referred is reviewed and accepted, declined or has conditions imposed on its cover by the underwriter. Each underwriter has the discretion to determine exactly what information is required (at [27]). In early May 2004 I was in a position to have reviewed and approved, imposed terms and conditions or declined a referral of the kind mentioned by Mr Balafas if it had been forwarded to me…(at [31]). A referral of the kind described by Mr Balafas requires an authorisation code to be generated and forwarded to the insurance representative…for him or her to insert into their quotation (at [32]). When a vehicle is automatically referred to me, the relevant details of that referral are recorded in an iCover Cl Referral excel spreadsheet. iCover is a front-end quoting tool that includes underwriting rules. It allows the insurance representative to quote and accept business. Cogen 1.5 captures data for rating purposes. Had Mr Balafas contacted me, and I had provided him with an authorisation number, then a record of both the referral and the authorisation number would be found in the iCover Cl Referral excel spreadsheet as well as the Processing Information Sheet. I have searched GIO's computer system and my own office records and can find no indication that Mr Khatchadourian's request for insurance cover over the vehicle was referred to me (at [30]). If I had authorised a referral in 2004 I would have forwarded to Mr Balafas an email with an authorisation code detailing the reason for the authorisation. I can find no record of any such email (at [36]). Had Mr Balafas contacted me in May 2004 as detailed…there would have been a record of the transactions he outlines in an iCover Cl Referral excel spreadsheet and in the Cogen 1.5 system. I can find no information anywhere in GIO's systems which supports Mr Balafas (at [57]). The only reason I may have considered accepting a risk of the kind which would have applied to Mr Khatchadourian, (ie the vehicle type plus his driving history) under a Commercial Motor Vehicle Insurance policy would have been if GIO Personal Motor had accepted it…" (at [38]). 33. In his statement, Mr Pobar details the relevant commercial underwriting guidelines in force in May 2004 and says: "In cases of an existing relationship, the underwriting guidelines would apply regardless of the amount of business a particular customer had with GIO (at [41]). I have reviewed the driving history for Stephen Khatchadourian which Mr Balafas asserts he forwarded to me in May 2004. If I had been requested to review this driving history in May 2004 I would have applied the Commercial Underwriting Guidelines applicable at that time to determine whether to accept or decline any application for insurance cover by Mr Khatchadourian (at [47]). The driving history of Mr Khatchadourian would have led me to issue a "decline"…" (at [48]). 34. It is Mr Pobar's position that if he had been asked to approve insurance over the Porsche he would not have done so given the driving record of Mr Khatchadourian, even under a commercial policy. The Call Centre evidence 35. Statements by Ms Thomas made in September and November 2006 and by Ms J King in September 2006 were in evidence. The screen dumps from the Cogen system relating to the Domestic business of GIO General relating to Mr Khatchadourian and his Porsche were also tendered (see Ex 3). 36. Ms Thomas was the sales consultant at the GIO General Call Centre through whom the policy of insurance No 13852530PV in respect of Mr Khatchadourian's Porsche was incepted on 4 May 2004. 37. Her statement sets out the procedure for incepting of policies of insurance over the telephone and her practice when dealing with customers seeking to place insurance through the Call Centre, including the 'script' she used as at May 2004. She was identified on the Cogen system as TCC 235, and all entries with that identifier were made by her (see her September statement at [33]). 38. Ms Thomas's memory of events was based largely on the information contained in the screen dumps but she did retain some independent recollection of particular matters. She sets out the sequence of events she believes occurred, having regard to the screen dumps and her experience as a telephone call centre operator, as to the conversations with Mr Khatchadourian on 4 May 2004 leading to the inception of policy No 13852530PV in respect of the Porsche (see her October statement at [14] and [23]). 39. She states that in those conversations she asked Mr Khatchadourian a series of questions including such things as his name, date of birth, address, vehicle details including the purchase price, the sum for which it was to be insured, how much excess he wanted to pay the nominated driver(s), and his insurance and driving history. 40. Her September statement records: "The plaintiff advised me that he was the only nominated driver and he had been the subject of traffic infringements and criminal convictions within the timeframes I specified. He disclosed to me that he had one conviction for driving under the influence of alcohol in March 2003 and one speeding fine in August 2001. I entered his driver details into the Driver's details screen. I then entered the details he disclosed about his driving record into the Accident/Charges/Thefts screen (at [38] and [39]). These disclosures fell within GIO's insurance underwriting guidelines but with a pecuniary excess of $800.00, being $400.00 imposed in respect of the conviction involving alcohol and $400.00 additional excess because the vehicle was a high performance vehicle (at [40]). If the plaintiff had disclosed all his driving history as it stood at 4 May 2004, I would have gone to the Risk Summary screen and declined the risk" (at [46]). 41. Ms King, a supervising underwriter, confirmed in her statement that Mr Khatchadourian's full driving history would not have allowed any underwriting officer to accept his application for insurance on any terms and his application for insurance would have been declined (at [39] and [40]). Fraudulent misrepresentation and non-disclosure 42. It was submitted on behalf of the plaintiff, Mr Khatchadourian, that the defendant insurer failed to prove that there were any misrepresentations or material non-disclosures on the part of Mr Khatchadourian. It was further submitted that no fraudulent design or intent on his part was established, at all, or to the standard required in Briginshaw v Briginshaw (1938) 60 CLR 336. 43. In particular, it was submitted that the court should accept that Mr Khatchadourian faxed his full driving record to Mr Balafas on 27 April 2004, who in turn submitted it to Mr Pobar, who then authorised the insuring of the Porsche. A quote was issued which Mr Khatchadourian accepted and the policy then incepted and was subsequently issued (see Plaintiff's submissions at [15] to [17], [24] and at [5] on page 32). Mr Khatchadourian then telephoned the Call Centre to provide identification related details regarding the vehicle (at [18] on page 5), and not for any fraudulent motive such as to obtain a better price (at [19] on page 6, and at the final dot point on page 21). 44. It was submitted that Mr Khatchadourian's recollection was "clear, sorely tested, but from which he never shifted" and that "his testimony, his demeanour and his evidence must be accepted". He was unsophisticated in matters of commerce but nevertheless frank and candid, making appropriate concessions where necessary. Similarly, Mr Balafas gave evidence "which remained unshaken". He was forthright, at pains to be proper and correct and was a witness of truth. The absence of him receiving any commission in respect of the policy did not give rise to any "attendant doubt as to his veracity". 45. For my part, however, I was unable to overcome what counsel described as "a sense of incredulity" in respect of the version given by Mr Khatchadourian in attempting to explain away the Call Centre evidence (see the Plaintiff's submissions at the third dot point on page 21). 46. His evidence in this regard was entirely unsatisfactory. It is completely implausible when considered in the context of the evidence of Mr Balafas, and the discrepancies referred to above surrounding the quote, the cover note and the authorisation number. It was simply not true that he went to the Call Centre for some incidental or follow-up purpose such as "merely to provide identification related details regarding the vehicle". That is not what occurred. The evidence, in particular that of Ms Thomas and the Cogen screen dumps, clearly establishes, beyond a preponderance of probability, that Mr Khatchadourian knowingly placed his insurance through the Call Centre and not through Mr Balafas. His evidence that he provided Ms Thomas with an authorisation number given to him by Mr Balafas is refuted by the evidence of Mr Balafas and is not credible. He never did receive a quote from Mr Balafas. He sought to suggest he received an oral quote. That was at odds with the evidence of Mr Balafas and not in accordance with the standard practice. He did not receive a written quote as Mr Balafas suggests. Even Mr Khatchadourian denies that, and if he had it would be in his Insurance folder (Ex B). His evidence that he only provided a few details such as the engine, chassis and registration numbers is discredited by the Call Centre witnesses, corroborated by the data in the computer. The details of his driving record entered into the Cogen system and appearing on the Certificate were not sourced from Mr Balafas or from the written driving record, and can only have come from him. He was not the unsophisticated innocent his counsel attempted to portray. He was in fact neither frank nor candid. Rather he was selective in his memory. That he was unable to remember answering a series of questions from Ms Thomas is not credible (T 37.15-37). That upon receipt of the Certificate he only looked at the first page and did not see the false details as to his driving record does not sit well with a man desperate to get his Porsche insured, having been refused insurance by three other insurers, and knowing, as he did, that it was his driving record that was the main impediment. 47. I am comfortably satisfied that no policy incepted at the instigation of Mr Balafas, and that he never obtained approval from Mr Pobar or otherwise to offer insurance to Mr Khatchadourian over the Porsche. Mr Balafas did not give Mr Khatchadourian a quote, either in writing or at all. Nor did he ever receive his full driving record and forward it on to Mr Pobar. The combination of the exotic nature of the Porsche and the poor driving record of Mr Khatchadourian meant that the Porsche was uninsurable in the conventional insurance market, and that was why three other insurers had refused to insure it and why GIO General would also have refused insurance had it been told the true facts. 48. Great reliance was sought to be placed on the telephone records (Ex 4). It was submitted that these records were corroborative of the version of the facts proffered by Mr Khatchadourian, in particular that he faxed his driving record to Mr Balafas on 27 April 2004 (Ex 4). However, that evidence is capable of a number of other interpretations equally if not more compelling, and against the other evidence, and in my view the preponderance of probability was that Mr Khatchadourian never sent his full driving record to Mr Balafas. 49. I am comfortably satisfied that Mr Khatchadourian deliberately misrepresented his driving record to Ms Thomas, knowing the information provided was false and with the intention that it be acted upon by GIO General. This was not mere carelessness, rather it was a conscious act designed to overcome past disappointments in obtaining insurance due to a poor driving record. Section 21 Insurance Contracts Act 1984 50. I am comfortably satisfied that before he entered into the contract of insurance with GIO General Mr Khatchadourian failed to disclose the correct purchase price and date of purchase of the Porsche, failed to disclose that other insurers had declined to offer him insurance, and failed to disclose and consciously misrepresented his true, full, unsatisfactory driving record, all matters which he knew were relevant to the decision of the insurer whether to accept the risk. 51. Even were it to have been the case that Mr Khatchadourian faxed his true driving record to Mr Balafas, that would not in my view be sufficient disclosure. The mere possession of that information by Mr Balafas, without more, did not fix GIO General with knowledge of the true driving record of Mr Khatchadourian. That would in my view require the driving record to have been placed on a file or into the computer system so as to be accessible to other underwriters. There could be no relevant connection between providing Mr Balafas with the driving record and the inception of the insurance through the Call Centre. Section 28(1) Insurance Contracts Act 1984 52. I am comfortably satisfied that GIO General would not have entered into the contract of insurance for the same premium and on the same terms and conditions, even if Mr Khatchadourian had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into. 53. The preponderance of evidence clearly establishes that if GIO General had known the true facts, insurance would have been declined, both at the Call Centre and in the Commercial division. 54. I am comfortably satisfied that the failure of Mr Khatchadourian to comply with his duty of disclosure in relation to his driving record was fraudulent and his misrepresentation of it was made fraudulently. 55. GIO General is in my view entitled to avoid the contract of insurance and to refuse payment of the claim by Mr Khatchadourian for indemnity in respect of the stolen Porsche. Section 31 Insurance Contracts Act 1984 56. At the end of the trial, the plaintiff sought to rely, by way of an alternative, on s 31 of the Insurance Contracts Act 1984. This section was never pleaded, nor was it an issue that was agitated at the hearing. 57. It was submitted that the Court should disregard the insurer's right to avoid the contract of insurance, as it would be harsh and unfair not to do so. 58. In my view, however, there were no circumstances established in this case that might justify an exercise of the discretion under s 31. In any event, I could not be satisfied that the insurer has not been prejudiced by the plaintiff's non-disclosures and misrepresentation, or that the prejudice would be minimal or insignificant. Disposition 59. For these reasons I enter a verdict for the defendant. 60. I direct the entry of judgment accordingly. 61. Plaintiff to pay the defendant's costs, to 12 February 07 on the ordinary basis and thereafter on an indemnity basis 10/09/2007 - Typographical error - Paragraph(s) Carchwords DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.