Hammoud Brothers P/L v NRMA Insurance Ltd [2004] NSWCA 1

New South Wales Court of Appeal

CITATION : Hammoud Brothers P/L v NRMA Insurance Ltd [2004] NSWCA 1 HEARING DATE(S) : 05/12/03 JUDGMENT DATE : 5 February 2004

JUDGMENT OF : Meagher JA at 1; Santow JA at 16 DECISION : Leave to appeal allowed; costs to be costs in the appeal.

CATCHWORDS : INSURANCE CLAUSES: Theft - fraud - onus of proof. Simon v NRMA Insurance Ltd (NSWCA, 22.10/1991, unrep.) CASES CITED : Anghelatos v Northern Assurance (The "Olympia") (1924) 19 LI. L. Rep. 255 Compania Naviera Vascongada v British & Foreign Marine Insurance Co ltd (The "Gloria") (1936) 54 LI. L. Rep. 35 Hammoud Brothers Pty Ltd PARTIES : v NRMA Insurance Ltd FILE NUMBER(S) : CA 41219/02 COUNSEL : A: G O'L Reynolds SC & J Foord R: R W Seton SC & Miss K Sant SOLICITORS : A: RF Bergagnin & Co R: Abbott Tout Solicitors

LOWER COURT District Court JURISDICTION : LOWER COURT 9115/02 FILE NUMBER(S) : LOWER COURT Freeman DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41219/02

MEAGHER JA SANTOW JA

Friday, 6 February 2004 HAMMOUD BROTHERS PTY LTD v NRMA INSURANCE LTD Judgment 1 MEAGHER JA: There is before the Court an application for leave to appeal from a decision of Freeman DCJ dated 29 November 2002. 2 In order to assess the strength of the rival contentions, it is necessary to set out the salient facts. 3 The applicant company, Hammoud Brothers Pty Ltd ('Hammoud Bros'), sued the opponent, NRMA Insurance Ltd ('NRMA'), in the District Court under a policy of insurance. The claim was for the sum of $54,600, being the agreed value (less excess) of a motor vehicle registered to Hammoud Bros, and allegedly stolen on 12 or 13 August 2000. 4 The relevant clause of the insurance policy provided that if the insured vehicle was stolen, and not found, NRMA would pay out the insured value of the vehicle. 5 Conversely, the exclusion clause was expressed as follows: "this policy does not cover…loss or damage intentionally caused by you or a person acting with your express or implied consent". 6 Against this background, the issues agitated before Freeman DCJ were essentially these: (a) whether Hammoud Bros had established, on the balance of probabilities, that the vehicle was stolen; viz., removed from their possession and control without their consent or connivance; and (b), on NRMA's contention, whether the claim made in respect of the putative theft of the vehicle was a fraudulent one. 7 Mr R W Seton, learned senior counsel for NRMA, contended instead, and quite correctly, in my view, that the two issues outlined above were distinct considerations. Simon v NRMA Insurance Ltd (NSWCA, 22.10.1991, unrep.). On that view, it was for Hammoud Bros to establish theft, and for NRMA to negative that assertion by their allegation of fraud, if it were capable of proof. The ability successfully to establish one necessarily rules the other out. 8 Though, as Mr Seton pointed out in his written submissions, a non-finding of fraud is not commensurate with a finding of theft, in favour of Hammoud Bros. 9 Had matters been decided on this footing, the instant controversy would not have arisen. They were not. 10 Somewhat curious were Freeman DCJ's findings of fact. As to NRMA's contention, he refrained from making a "positive" finding of "actual fraud". That notwithstanding, he made a number of findings, or surmisals, of fact distinctly adverse to Hammoud Bros. As to Hammoud Bros' claim under the policy, he found that, in the circumstances, they had not made out their claim, and entered judgment for NRMA. 11 It was submitted by Mr G O'L Reynolds, learned senior counsel for Hammoud Bros, that it was not open to his Honour to dismiss the allegation of fraud, but nonetheless enter judgment in favour of NRMA. Mr Reynolds pointed to the inconsistency between his Honour's refusing to make a positive finding of fraud, and his findings (on p.13 of the judgment) that there existed a "scheme" to effect a sham 'theft' of the car. This Mr Reynolds called a "red-blooded" finding of fraud. 12 Some mention should be made of another argument advanced by Mr Reynolds. His Honour, in reviewing the likelihood of Hammoud Bros' involvement in the fraud, said this (at p. 13): [H]as the plaintiff company [ scil . Hammoud Bros] persuaded me, on the balance of probabilities, that each [officer] of the company was completely uninvolved? I think not. 13 It was submitted that this amounted to a reversal of the onus of proof onto Hammoud Bros, and that the onus to negative consent rested on NRMA, not the former. 14 I do not propose to embark upon a consideration of the authorities drawn to the Court's attention by Mr Reynolds SC, in support of this proposition. They included Anghelatos v Northern Assurance (The "Olympia") (1924) 19 Ll. L. Rep. 255 and Compania Naviera Vascongada v British & Foreign Marine Insurance Co Ltd (The "Gloria") (1936) 54 Ll. L. Rep. 35. They belong to the so-called class of 'scuttling cases'. I refrain from expressing any view as to their utility as statements of principle, or as an analogy with the instant case. They do, however, most usefully illustrate the difficulty that attends the discharging of the onus of proof in cases of this sort, which turn upon complicated evidence and findings as to fact and credit. 15 I think that, in this case, the problem should be resolved by remitting the matter to the District Court for a new trial. As the parties have not consented to the concurrent hearing of the application for leave to appeal and the appeal itself, we have, of course, no power to make an order of this sort. It follows, therefore, that leave to appeal should be allowed, with costs to be the costs in the appeal. 16 SANTOW JA: I agree with Meagher JA.