New South Wales Court of Appeal CITATION : Suncorp Metway Insurance Limited v Scarf [2003] NSWCA 185 HEARING DATE(S) : 3 July 2003 JUDGMENT DATE : 3 July 2003 JUDGMENT OF : Handley JA at 13; McColl JA at 1; Palmer J at 14 DECISION : Appeal dismissed with costs. CATCHWORDS : INSURANCE - Motor Vehicle Accident - where term of policy refusing indemnity if, at the time of the event which gave rise to the loss, the motor vehicle was being driven by a person whose faculties were impaired or who was under the influence of alcohol - whether the insurer had established entitlement to refuse indemnity - difficulty of attracting appellate intervention where trial judge comes to a conclusion in favour of party upon whom burden of proof does not lie - where there is competing expert evidence - whether trial judge's conclusions based on credit were inconsistent with, incontrovertibly established facts - whether insured made a fraudulent misrepresentation under s 28(2) Insurance Contracts Act 1984 (Cth) - whether insurer obliged to pay interest in accordance with s 57(2) of the Insurance Contracts Act - ND LEGISLATION CITED : Insurance Contract Act 1984 (Cth) Dearman v Dearman (1908) 7 CLR 549 CASES CITED : Fox v Percy [2003] 197 ALR 201 House v R (1936) 55 CLR 499 PARTIES : Suncorp Metway Insurance Limited (Appellant) Charles Alexander Scarf (Respondent) FILE NUMBER(S) : CA 40059/03 COUNSEL : J Graves SC (Appellant) P McEwen SC (Respondent) SOLICITORS : A R Conolly & Company (Appellant) Greg Walsh & Co (Respondent) LOWER COURT District Court JURISDICTION : LOWER COURT DC 332/01 FILE NUMBER(S) : LOWER COURT ADCJ Boyd Boland JUDICIAL OFFICER : - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40059/03 HANDLEY JA McCOLL JA PALMER J Thursday, 3 July 2003 SUNCORP METWAY INSURANCE LIMITED v Charles Alexander SCARF Judgment 1 McCOLL JA: This is an appeal from a decision of Boyd Boland ADCJ in which he awarded the respondent $224,527 in respect of the total destruction of his 1999 Porsche Carrera motor vehicle in an accident on 13 August 2000 in Victoria Road, Bellevue Hill. The appellant had insured the respondent against loss or damage to that vehicle. 2 The appellant defended the proceedings before Boyd Boland ACDJ on the basis of a term of the policy entitling it to refuse indemnity if, at the time of the event which gave rise to the loss, the motor vehicle was being driven by a person whose faculties were impaired or who was under the influence of alcohol. It alleged that at the relevant time the vehicle was being driven by the respondent's son, C P Scarf. It bore the burden of establishing that proposition. It was common ground that C P Scarf was in the motor vehicle at the time of the accident and that he was under the influence of alcohol. 3 The respondent asserted before Boyd Boland ADCJ that, at the relevant time, a Mr Milicic was driving the motor vehicle. 4 The events which occurred after the accident were certainly such as would excite suspicion on the part of the appellant as to the true identity of the driver. Mr Milicic originally denied he was the driver at the time of the accident. While he conceded he had been driving it some time before, he originally told the police the car had been hijacked. At the hearing he gave evidence that he was the driver. The trial judge formed the view that it would be imprudent to rely on his evidence unless there were other factors bearing on his evidence which made it safe to do so. 5 Considerable expert evidence was called at the trial concerning, among other matters, the pattern of glass distribution within the motor vehicle. This was significant because the appellant sought to dispute Mr Milicic's evidence that he had been the driver for, among other reasons, the fact that there were no glass fragments on his clothes. This, it argued, was inconsistent with him being in the motor vehicle whose windscreen had shattered at the time of the accident. The trial judge preferred the respondent's expert, Mr Johnson, on the basic questions associated with the distribution of the glass. 6 His Honour accepted that the case was finely balanced. After a careful review of the evidence he concluded that the appellant had not discharged its onus of establishing that the exclusion could be relied upon. Indeed, he also found on the balance of probabilities that Mr Milicic was the driver at the time of the accident. 7 In this respect it is worth reminding those who appear before us of the observations of Griffith CJ in Dearman v Dearman (1908) 7 CLR 549 at 553 where the Chief Justice said: "… If the tribunal of first instance having seen and heard the witnesses comes to a conclusion in favour of the party upon whom the burden of proof does not lie it is almost hopeless to try to induce a Court of Appeal to interfere with that finding unless it has clearly proceeded upon a wrong principle. That is the general rule of law which prevails in Courts of Appeal." 8 The appellant sought to challenge the process of reasoning which led his Honour to his conclusion. This was a difficult task to undertake. This was not a case where his Honour's conclusions could be said to be based on findings of credit which were inconsistent with incontrovertibly established facts (compare Fox v Percy (2003) 197 ALR 201). There was clearly a lively contest as to the issue of who was the driver and, as I have said, after a careful analysis of the evidence his Honour was not persuaded by the appellant's case. 9 In my view the appellant had not demonstrated any appellable error in his Honour's conclusion on this issue. 10 The appellant also sought to avoid the policy relying upon s 28(2) of the Insurance Contracts Act 1984 (Cth). The misrepresentation alleged was that the respondent had provided the wrong address at which the motor vehicle was to be garaged. It said if it had known the correct address it would have charged 50% more premium. The appellant conceded the misrepresentation but denied it had been made fraudulently. His Honour concluded that the misrepresentation could not have been found to have been made fraudulently. Even if he was wrong in that conclusion he said he would have exercised the discretion available under s 31 of the Insurance Contracts Act to disregard the avoidance on the basis that there was no evidence of prejudice. I discern no error in his Honour's reasons in this respect. 11 The appellant also challenged the period for which interest was allowed. It was obliged to pay interest in accordance with s 57(2) of the Insurance Contracts Act which provides: "The period in respect of which interest is payable is the period commencing on the day as from which it was unreasonable for the insurer to have withheld payment of the amount and ending on whichever is the earlier of the following days: (a) the day on which the payment is made; (b) the day on which the payment is sent by post to the person to whom it is payable." 12 His Honour's view about the period for which interest should run was a matter for the exercise of his discretion. I am not satisfied that he erred in the exercise of that discretion. 13 The appellant has informed us that if it otherwise fails in this appeal we do not need to consider ground 5 which related to costs. I do not therefore consider that ground of appeal. 14 I would dismiss the appeal with costs. 15 HANDLEY JA: I agree. 16 PALMER J: I also agree. 17 HANDLEY JA: The orders of the Court will be as pronounced by McColl JA. ********** Last Modified: 07/15/2003 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.