Homern Lee v Insurance Australia Ltd [2004] NSWSC 1088

New South Wales Supreme Court

CITATION : Homern Lee v Insurance Australia Ltd [2004] NSWSC 1088 HEARING DATE(S) : 17 November 2004, 16 December 2004 JUDGMENT DATE : 17 December 2004 JURISDICTION: Common Law Division JUDGMENT OF : Master Malpass at 1 DECISION : The summons is dismissed; the plaintiff is to pay the costs of the summons.

CATCHWORDS : Appeal from Local Court - claim against insurer for refusal of indemnity - grounds of appeal - findings on questions of theft and fraud - standard of proof - sufficiency of reasons - alleged need for separate reasons and alleged errors in one decision infecting another. CASES CITED : Briginshaw v Briginshaw 60 CLR 336 PARTIES : Homern Lee (Plaintiff) Insurance Australia Ltd (Defendant) FILE NUMBER(S) : SC 12726 of 2004 COUNSEL : Mr J V Agius SC & Mr M Macrossan (Plaintiff) Mr W Fitzsimmons & Mr B Kasep (Defendant) SOLICITORS : James Lee Solicitors (Plaintiff) Abbott Tout (Defendant)

LOWER COURT Local Court JURISDICTION : LOWER COURT 32 of 2004 FILE NUMBER(S) : LOWER COURT Dillon LCM JUDICIAL OFFICER :

- 9 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Master Malpass

17 December 2004

12726 of 2004 Homern Lee v Insurance Australia Ltd

JUDGMENT 1 Master: The plaintiff was the owner of a Land Rover Freelander (the vehicle). On 8 January 2003, his brother in law (Mr Sony Lim), reported to the police that the vehicle had been stolen. It was said to have been stolen by a number of men of Middle Eastern appearance from outside a caryard in Granville (which was operated by Messrs Lim and Davidson). 2 The defendant was the insurer of the motor vehicle (the policy provided for an agreed value). It was given notice of the alleged theft on the same day. 3 Later, on that day, the vehicle was found by police partially stripped and burning at a nearby street corner (the corner of Inkerman and Railway Streets, Granville). The fire was extinguished by the fire brigade. The vehicle's condition was then described as being completely burnt out. 4 The defendant refused to indemnify the plaintiff. The plaintiff brought proceedings in the Local Court. The proceedings were defended. 5 A hearing took place before Dillon LCM (on 5 March and 31 May 2004). The plaintiff called three witnesses (himself and Messrs Lim and Davidson). The defendant relied on evidence from two forensic locksmiths. 6 The issues before the magistrate were whether or not the car was stolen and whether or not the claim made by the plaintiff was fraudulent. 7 The magistrate correctly took the view that the plaintiff had the onus to establish that the vehicle had been stolen and that the defendant had the onus to establish fraud (paragraph 35 of the judgment). 8 The magistrate found that the plaintiff had failed to discharge the onus borne by him and that the defendant had discharged the onus of establishing fraud (paragraph 36 of the judgment). He entered judgment for the defendant. The plaintiff was ordered to pay the costs of the proceedings. 9 The plaintiff has brought proceedings in this court challenging that decision. The proceedings were fixed for hearing to take place on 17 November 2004. 10 At the commencement of the hearing, the process relied on was a "Further amended summons for appeal and leave to appeal" filed in court on 5 November 2004. It set forth the grounds then relied on by the plaintiff. A reading of the grounds gave the clear impression that the thrust of the plaintiff's case was one of error in relation to the finding of fraud only. 11 The plaintiff had prepared an outline of written submissions. These submissions presented as a challenge to the finding of fraud only. The defendant's written submissions identified the problem thereby thrown up and correctly expressed the view that in these circumstances the appeal was doomed to failure. 12 After the commencement of the hearing, despite the restriction imposed by the grounds of appeal, the plaintiff sought to present an appeal which also involved a challenge to the finding made on the question of theft. Objection was taken by the defendant and the plaintiff subsequently sought to amend the grounds of appeal by the addition of the following grounds:- 1A The Magistrate erred in not providing any separate reasons for his conclusion that he was not satisfied that the car was stolen, as distinct from any reasons as to why he was satisfied that the plaintiff was knowingly responsible for the destruction of the car. 1B The Magistrate's decision that he was not satisfied that the car was stolen was infected by the errors made in concluding that the plaintiff or his agent or both were knowingly responsible for the destruction of the car, as particularised in grounds 1-11. 13 The application to amend was not opposed so long as the defendant was afforded the opportunity of seeing the submissions to be made in support of the amended grounds and reasonable time to consider those submissions before responding thereto. 14 As a consequence, leave to amend was granted and the hearing was stood over part heard to a date to be fixed. Counsel for the parties provided written supplementary submissions. The hearing resumed on 16 December 2004. On that day, further argument took place and the hearing concluded. 15 Before proceeding further, it is convenient at this stage to refer to certain of the evidence that was before the magistrate. Some of it may be found in a statement of facts prepared by the parties. 16 The vehicle had been acquired in 1998. It was fitted with an engine immobiliser system. There were two manufacturer's keys. 17 The plaintiff had lent the vehicle to Mr Lim on 5 January 2003. Mr Lim had been using the vehicle from that time until the alleged theft. At the time of the alleged theft, it had been parked outside the caryard in a position where it was not visible from Mr Lim's office. 18 Late in the afternoon on the day of the alleged theft, a number of people (either two or four) visited the caryard. At the time, Mr Lim was the only other person present at the caryard. He has given conflicting versions of what happened. Despite the conflict, there were common features. 19 The persons expressed interest in the vehicle. They were told it was not for sale (indeed, there was a "No Sale" sign inside of it). However, they were allowed to inspect the vehicle and were told they could make an offer to purchase it. 20 Mr Lim had a practice in relation to vehicle keys. The keys were kept on a board in his office. It was his case that he had followed that practice in relation to the keys to the vehicle. What he had was a keyring with a key, a remote control device and a key code tag. 21 One of the visitors asked to use the toilet. It was in the office area. He was then shown to the toilet by Mr Lim who then returned to the vehicle. The visitor returned to the vehicle and then all of them left the caryard in another vehicle. 22 Subsequently, there was a phone call to the yard, which was made either by one of the visitors or a father of one of them. Thereafter, Mr Lim noticed that the vehicle was missing. He then notified both his partner (Mr Davidson) and the police. There are conflicting versions as to when he says that he ascertained that it had been stolen. 23 Subsequently, a further phone call was received from someone connected with the visitors. There is also conflicting evidence as to this call. Further contact was then made with the police and the police came to the caryard. 24 About five hours elapsed between the first reporting of the alleged theft and the finding of the burnt-out vehicle. 25 There was no evidence of forced entry. A key was found in the ignition of the burnt-out vehicle. It was a key that has been described as being correct for the vehicle. There was evidence to suggest that it was likely to have been a spare key. There was evidence that there had been damage to wafers in the ignition lock and that this may have been done before insertion of the correct key. 26 One aspect of the plaintiff's case was that there may have been a swap of keys on the key board. The plaintiff, at the request of the defendant to supply it with keys had to the vehicle, gave it two sets of keys. One was a correct set. The other was not. The latter had attached to it a code tag suggesting that it was a correct key for the vehicle. These keys, together with the key found in the vehicle, were examined by the locksmiths. 27 Prior to the alleged theft, the plaintiff had made unsuccessful attempts to sell the vehicle. He had no need for the vehicle. There was evidence that it had a value less than the agreed value. 28 I shall first address the additional grounds. I have carefully considered the submissions made on behalf of the plaintiff in support of them. I do not consider that these grounds assist the plaintiff in this case. 29 In dealing with these grounds it is helpful to have regard to the structure of the judgment itself. At the outset, the magistrate identified the issues. He then addressed the evidence (this part of the judgment was subdivided into "The Plaintiff's Case" and "The Defendant's Case"). This was followed by his findings of fact and conclusions (paragraphs 35-36 of the judgment). 30 In paragraph 35 he correctly identified the onus borne by the respective parties. In paragraph 36, he expressed his conclusions. 31 The magistrate first concluded that the plaintiff had failed to discharge the onus borne by him. He then concluded that the defendant had discharged the onus borne by it. These were separate and distinct conclusions. 32 Paragraphs 38-51 set out the reasoning process that led him to each of the conclusions. The disclosure of the process involved, inter alia, an evaluation of the evidence. The same factual material had relevance to each of the conclusions. He addressed the cases presented by each party (the said paragraphs contain a number of references to "the plaintiff's case" and there is reference to "the defence case"). 33 In my view, the magistrate separately dealt with the two issues before him. What is said in paragraph 36 makes it clear that his conclusion that the plaintiff had failed to discharge the onus borne by him was founded on his evaluation of the evidence led on behalf of the plaintiff. He took the view that it was unreliable. I will later return to this matter. His evaluation of the cases presented by the parties brought him to the view that he preferred what had been put forward on behalf of the defendant. He came to the view that the known facts were explained far more rationally by the defence case. This led to his conclusion of comfortable satisfaction on the issue of fraud. 34 I do not consider that he was obliged to separate the disclosure of his reasoning process into two distinct compartments. 35 The relevant question is whether or not the reasoning process of the magistrate has been sufficiently disclosed. In considering this question I should observe that it seems to me that the reference to "plaintiff's evidence" that appears in paragraph 36 was intended to have application to all of the evidence adduced on behalf of the plaintiff (not just to the oral evidence of the plaintiff himself). 36 The magistrate described the evidence of Messrs Lim and Davidson as not only implausible but probably untruthful. He described certain of the evidence given by the latter as bizarre. He did not accept the plaintiff as a witness of truth. The magistrate took the view that the plaintiff's case was "honeycombed with improbability and implausibility". It is inter alia implicit from the findings made by him as to how he came to these views. 37 What needs to be disclosed by way of reasoning process has to be dealt with on a case by case basis. Perhaps it may be said that the expression of reasoning process on matters could have been more expansive. Be that as it may, in my view, it was sufficient in the circumstances of this case. 38 The structure of the judgment confirms that after the reaching of his decision on the issue of whether or not the vehicle had been stolen, the magistrate then proceeded to give his decision on the other issue (had the defendant demonstrated fraud). It was unnecessary for him to decide the latter issue. It was dealt with as a matter of completeness. 39 In my view, it is untenable to contend that he came to the former decision in some manner by reason of how he came to reach the latter. It follows that I do not consider that the decision on the first issue could be said to be infected by any errors that were made in deciding the second issue. In my view, ground 1B is bereft of merit. 40 I consider that both of the amended grounds were tenuous. It seems to me that both came into being in a last ditch endeavour to deal with the shortcomings of the summons and the problems confronting any challenge to the first conclusion. 41 In reaching the first conclusion, the magistrate had determined a question of fact. It was a determination which was supported by evidence. It was reached after findings had been made on credibility issues. Even if there was error in the fact finding process, such error would not enable the findings of fact to be disturbed in this case. In my view, no basis has been shown for disturbing it. 42 It seems to me that these matters are determinative of the appeal. No question of law is raised in respect of the question of the stealing of the vehicle. There is no mixed question of fact or law that can be the subject of an application for leave. 43 For reasons of completeness, I shall add that, in my view, the decision on the question of the stealing of the vehicle was reasonably open to the magistrate on the evidence that was before him. 44 Whilst there is now no need to do so, as the matters have been the subject of extensive submissions, I shall briefly refer to what was litigated in respect of the finding as to fraud. 45 The magistrate observed that he was comfortably satisfied, on the balance of probabilities, that the plaintiff or his agent or both were knowingly responsible for the destruction of the vehicle. The challenge to this finding involved the propounding of eleven grounds of appeal. 46 It is unnecessary to expressly refer to each of the particular grounds. I shall briefly refer to some of them. 47 Many of the grounds are purely directed to challenging findings of fact made by the magistrate. They were the subject of extensive submission. It is unnecessary to address them individually. In my view, none of them assist the plaintiff in this appeal. 48 Two of the grounds relate to what has been said in Briginshaw v Briginshaw 60 CLR 336 and what has been said on the question of circumstantial evidence. Apart from observing that what was said in Briginshaw does not bring about a different standard of proof, there is no need to elaborate on these matters. In my view, the alleged grounds are misconceived and show no error on the part of the magistrate. 49 It was said that there was no evidence to support findings as to the plaintiff's knowledge and involvement. I do not accept that submission. In my view, there was evidence to support the findings that were made. 50 It is said that the magistrate erred in not giving reasons to support the findings made in paragraphs 36 and 51 of the judgment (that much of the plaintiff's evidence was unreliable and that he could not accept the plaintiff as a witness of truth). I have earlier addressed this matter. It suffices to say that I do not accept the submission. 51 If there be a need to do so, I express the view that the challenge made to the finding as to fraud also fails. 52 The plaintiff bears the burden of demonstrating error that justifies the disturbing of the decision of the Local Court. In my view, that burden has not been discharged. 53 The summons is dismissed. The plaintiff is to pay the costs of the summons. **********