McCarthy v NRMA Insurance [2002] NSWSC 1011

New South Wales Supreme Court

CITATION : McCarthy v NRMA Insurance [2002] NSWSC 1011 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 11755 of 2002 HEARING DATE(S) : 18 October 2002 JUDGMENT DATE : 29 October 2002

Kylie McCarthy (Plaintiff) PARTIES : v NRMA Insurance Limited (Defendant) JUDGMENT OF : Master Malpass

LOWER COURT Local Court JURISDICTION : LOWER COURT 1558/2001 Burwood Local Court FILE NUMBER(S) : LOWER COURT M Price LCM JUDICIAL OFFICER :

COUNSEL : Mr B DeBuse (Plaintiff) Mr P Renehan (Defendant) SOLICITORS : Craddock Murray Neumann (Plaintiff) Abbott Tout (Defendant) CATCHWORDS : Appeal - adequacy of reasons - error of law - bias. LEGISLATION CITED : Justices Act 1902, s 104 (1) (b). CASES CITED : N/A DECISION : See Paragraph 30.

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Master Malpass

Tuesday 29 October 2002

11755 of 2002 Kylie McCarthy v NRMA Insurance Limited

JUDGMENT 1 Master: The proceedings were commenced by Summons filed on 25 June 2002. The plaintiff seeks inter alia leave to appeal pursuant to s 104 (1) (b) of the Justices Act 1902. The leave is sought in respect of a judgment given by a magistrate in the Local Court (Mr Price LCM) on 31 May 2002. It is further sought to have the judgment set aside. 2 The matter appears to have a lengthy and unfortunate history. At all relevant times, the plaintiff was the owner of a motor vehicle (registered number AAY96N). The vehicle was insured with the defendant. The plaintiff says that the vehicle was stolen on 15 August 1996. She made a claim under the policy. The defendant declined to indemnify the plaintiff. 3 The plaintiff commenced proceedings in the Local Court. The proceedings were defended. A defence of fraud was raised by the defendant. The defendant's case was a circumstantial one. 4 The proceedings were heard by the learned Magistrate in February 2000. Judgment was delivered on 7 July 2000. A verdict was found in favour of the defendant. 5 An application for leave to appeal was made in this Court. It was heard by Young CJ in Eq. His Honour granted leave to appeal and allowed the appeal. He then remitted the matter to the learned Magistrate to be determined according to law. 6 The matter came before the learned Magistrate. He rejected applications that he disqualify himself from hearing the matter. The matter was reheard by the learned Magistrate. The rehearing took the course of a rehearing of submissions. This took place in December 2001. Again, he found in favour of the defendant. The judgment was delivered on 31 May 2002. 7 Section 104 (1) (b) has application where the ground of appeal involves questions of mixed law and fact. It such a case, an appeal is available only with the leave of the court. 8 The grounds of appeal may be found in the Summons. There are a number of them. Largely, they are presented as errors of law. I shall return to the grounds in due course. 9 I should digress to say that the amount involved in this dispute is said to be less than the sum of $14,000 (this being the agreed sum payable under the policy). It is a pity that so much in legal costs has been expended in relation to the modest amount in dispute. The costs are of an order that is now grossly disproportionate to that amount. The court has been informed that the plaintiff is pursuing the matter because a finding of fraud has been made against her. 10 At least a primary reason for the allowing of the appeal by Young CJ in Eq was the view that he took that there had been a failure to give proper reasons. His Honour was in some doubt as to whether or not that was a question of law. Accordingly, he formally gave leave to appeal on a mixed question of law and fact. His Honour also referred to aspects of the judgment where the learned Magistrate appeared to simply leap over gaps in the evidence. 11 The grounds argued in this appeal include error in failing to disqualify himself and failure to give adequate reasons. 12 I shall first turn to the complaint as to the adequacy of the expression of reasoning process. This is a question to be determined in the light of the particular circumstances of the case before the court. It is convenient to deal with it together with certain of the alleged errors of law. 13 This was a case in which the credibility of the plaintiff was a crucial matter. Her evidence was that there was a theft and that she was not involved in it. 14 I should start by mentioning certain of the material that appears in the judgment. The learned Magistrate repeated what had been said in the earlier judgment about certain candid responses given by the plaintiff. He made this further observation:- " The court must accept the Plaintiffs (sic) account that she set the alarm of the vehicle and electronically secured her car, steering and doors. Despite this, it was driven from Bankstown to Kurrajong." 15 Elsewhere in the judgment, specific adverse observations as to aspects of her evidence appear. He found it difficult to accept her explanation that she simply got the dates wrong in the claim form and in her statement to the investigator. Her explanation as to why she no longer required the vehicle was said not to withstand scrutiny. The learned Magistrate did not accept her explanation that no calls were made on her mobile phone to her boyfriend (Mr Crestani) on the night that her vehicle went missing. 16 His decision on the plaintiff's case is expressed in the following paragraph:- " As indicated at or near the beginning of this decision the Plaintiff initially has an evidentiary onus so far as the circumstances of the theft of her vehicle are concerned. It is a lesser onus than that borne by the Defendant in what it alleges. In so far as the Plaintiffs (sic) case or evidence is concerned, the court is not of the view that she meets her evidentiary onus, specifically, the court cannot accept that the theft of the vehicle occurred in the manner in which she claims, specifically against the acknowledged factual background of acquisition, monotonously plummeting offers or invitations to sell or dispose, inconsistencies in claims for loss and consequential transport recoupment more specifically when analysed with where she was living and the employment she had. Additionally the non calling of an available witness could not go to the plaintiff's credit. On the Claim itself there will be a VERDICT IN FAVOUR OF THE DEFENDANT." 17 The learned Magistrate then moved to the question of the Defence of the defendant. He did this, even though in the light of his decision on the plaintiff's case it was unnecessary to do so. His decision on the matter was expressed in the following paragraph:- " The onus in this respect is upon the Defendant. The onus quite obviously is significantly higher than that borne by the Plaintiff herself in what I shall term her claim. The concessions made, the highly implausible circumstances and explanations lead this court to conclude that the claimant herself was privy to the theft of her own motor vehicle in fraudulent circumstances and there will be a VERDICT IN FAVOUR OF THE DEFENDANT." 18 As pointed out by Young CJ in Eq, the plaintiff had to discharge an onus of proof. It was on the balance of probabilities. It was not merely an evidentiary onus. This error has been repeated in the second judgment. It was also erroneous to take the view that the onus borne by the defendant was significantly higher. The learned Magistrate seems to have been under misconception as to the Briginshaw standard. However, that latter error can be put aside for present purposes. 19 In dealing with the question of the proof of her case, he does observe that her case or evidence did not meet the onus. There may be doubt as to what was intended by such an observation. In the light of the earlier specific findings on aspects of the plaintiff's credibility it is difficult to read this as a rejection of aspects of her evidence on the question of theft of the vehicle. There was a finding that the court could not accept that the theft of the vehicle occurred "in the manner in which she claims". This was a matter on which she did not claim to have knowledge. Again, such a finding throws up doubt as to what was intended. It appears to misconceive the issue on which she had to discharge the onus. There appears to be confusion with matters relevant to the defence of fraud. The plaintiff was required to prove that the vehicle had been stolen. It remains unclear as to whether he did make a finding on the theft issue. Further, whilst what follows in the judgment is far from clear, it seems that the finding was expressly founded on specific regard being had to circumstantial matters (including "the acknowledged factual background"). It is difficult to read this material as a rejection of aspects of her evidence on the question of the theft. In my view, the disclosure of the reasoning process was inadequate. It does not disclose the reasons which led him to decide that she had not discharged the onus. 20 In dealing with the defence of fraud, he reached the conclusion that the plaintiff herself was privy to the theft of her own motor vehicle in fraudulent circumstances. Likewise, the expression of the reasoning process for this conclusion was referable to specified matters (concessions made and highly implausible circumstances and explanations). It does not aid the understanding of earlier observations in the judgment. 21 The Defence raised a serious question of fraud. Her case relied on her evidence as to the alleged theft (her honesty was involved). The question of her credibility on this aspect of her evidence should have been expressly dealt with and the reasons for the view taken on such question should have been disclosed. Unfortunately, it does not seem to have been dealt with at all. It seems to me that this is one of those cases in which it can be said that justice cannot be seen to have been done. 22 I should also refer to the other matter referred to by the learned Magistrate in rejecting her case. Competing submissions had been made as to the drawing of a Jones v Dunkel inference. Whether or not one was drawn by the learned Magistrate is far from clear. He observed that "Additionally the non calling of an available witness could not go to the plaintiff's credit." Minds may differ as to what was intended by these observations. It would not seem that they were directed to any question of credibility. If it was intended to express the drawing of an inference, there was a misconception as to the application of what is described as the rule in Jones v Dunkel. 23 The available witness was Mr Crestani. There was evidence inter alia to the effect that he and the plaintiff had fallen out. In my view, the court did not have before it circumstances in which the inference was available to be drawn. If he had been a person that the plaintiff might be expected to call, it could have only led to the learned Magistrate drawing the inference that his evidence would not have assisted the plaintiff's case. 24 However, the matter of the non-calling of the available witness appears to have been regarded as an additional matter only which gave support to the earlier finding that the onus had not been discharged. 25 In reaching the decisions adverse to the plaintiff, the learned Magistrate had regard to a body of material of circumstantial nature. It was the totality of the material referred to by him which led him to his decisions. It was said by the defendant to have a cumulative effect. The plaintiff contends that many of the findings as to these circumstantial matters were flawed (inter alia they were either founded on no evidence or were contrary to the evidence). There has been lengthy debate on these matters. In the light of what has already been said, it is unnecessary to pursue them. However, I should say that there appeared to be substance to certain of them. This must lead to unsoundness in the decisions upon which the cumulative effect is founded. 26 Also, some considerable time was concerned with argument on the question of bias. It was said that the Magistrate should have declined to rehear the matter. This was said to arise from the fact that he had made errors and had expressed conclusions in the earlier judgment. Again, I do not need to determine this question. However, it can be said that the plaintiff's arguments were short on being persuasive. In my view, in a case such as this, there were persuasive arguments supporting the course taken by the learned Magistrate (particularly in view of the fact that a modest sum was involved and the parties would have been put to the expense of a fresh hearing). 27 In the circumstances of this case, with the greatest reluctance, the court is once again led to the view that there have been errors of law which justify a disturbing of his decision. 28 The question of whether or not leave to appeal is required was not argued. It seemed to be common ground that failure to give adequate reasons, was an error of law. For the purposes of removing any potential uncertainty, I also formally grant leave to appeal. 29 There was limited inconclusive debate as to what should happen if the appeal was upheld. It seems to me that the best course is to remit the matter back to the Local Court. I consider it is appropriate for that court to determine how the matter should proceed in its jurisdiction. 30 Although it will put the parties to a further hearing, the court really has no alternative but to allow the appeal. The orders of the court are as follows:- 1. The plaintiff is to have leave to appeal; 2. The appeal is allowed; 3. The matter is remitted to the Local Court to be determined according to law; 4. The judgment of the learned Magistrate is set aside; 5. The defendant is to pay the costs of this appeal; 6. All costs in the Local Court are to be determined by that court; 7. The question of whether or not there is any entitlement to a Certificate under the Suitors' Fund Act 1951 is reserved. **********