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Fagan v. General Accident Fire and Life Assurance Corporation plc [1998] IESC 27 (14th October, 1998)
THE
SUPREME COURT
Record
No. 100/93
Hamilton
C.J.,
O’Flaherty
J
Lynch
J.
Between/:
MICHAEL
FAGAN
Plaintiff/Appellant
and
GENERAL
ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION PLC
Defendant/Respondent
JUDGMENT
DELIVERED 14
th
DAY OF OCTOBER, 1998 BY LYNCH, J. [Nem. Diss.]
-2-
1. This
is an appeal by the Plaintiff/Appellant from a Judgment and Order of the High
Court (Murphy, J.) delivered and made on the 19th February, 1993 whereby the
Appellant’s claim against the Respondents for the sum of £46,585.00
was dismissed. The Appellant claimed that the said sum was due on foot of a
policy of insurance entered into by the Appellant with the Respondents in May
1987 in respect of the contents of the Appellant’s dwellinghouse and
premises known as Mountain View situate at Kilkerley, Co. Louth a few miles
from the town of Dundalk. He further claimed that the said contents were
destroyed, damaged and/or stolen in the course of a burglary and malicious fire
on the night of the 11th-l2th March, 1989.
THE
FACTUAL BACKGROUND
2. The
Appellant was born in Ireland about 1935
.
He
emigrated to New Zealand in 1957 and lived there until 1978. He married in New
Zealand in 1958 and had six children, three boys and three girls. He returned
to Ireland in 1978 and within a couple of years he bought the house and
premises known as Mountain View aforesaid. This purchase was financed with
advances by the Irish Permanent Building Society who arranged appropriate
insurance in respect of the buildings and no issue arose between the parties as
to that policy.
-3-
3. The
Appellant’s wife died on the 8th May, 1984. The contents of the house
were first insured in May, 1987 and the Appellant sought to arrange this
through the Building Society. It came to the knowledge of the Respondents only
during the trial in the High Court that a proposal was first prepared by the
Appellant with the assistance of his daughter Eileen in which the contents were
valued at over £130,000. When this was submitted to the Building Society
and the premium calculated by them the Appellant decided that he could not
afford that level of insurance and accordingly with the assistance of his
daughter Eileen he prepared a fresh proposal. This proposal in setting out
details of the contents reduced their value to somewhere in the region of
£65,000
-
£75,000
but cover was sought from the Respondents only to a limit of £40,000
contents and £6,585.00
all
risks cover the total of which two sums comes to the amount claimed by the
Appellant in this action.
4. By
the year 1987 the Appellant’s family were growing into adults and his
three daughters had left home, the eldest daughter Eileen marrying a Mr.
Clinton on the 8th June, 1987, and all three daughters had gone to live in
nearby Dundalk. Only two sons remained in Mountain View and in November 1987
the Appellant agreed to sell the premises the sale not to be completed until
the 30th September, 1988. The Appellant was at that time contemplating
remarriage which in fact took place with the present Mrs. Sylvia Fagan on the
-4-
3rd
September, 1988 shortly before the intended completion of the sale and vacation
of Mountain View.
5. In
the meantime the Appellant had purchased a house at Warrenpoint where he
planned to live with his new wife on completion of the sale of Mountain View.
Problems arose about the completion of that sale and hence the Appellant and
his new wife Sylvia Fagan were still in occupation in March, 1989. They had
however gone to Dublin for the weekend on which the fire occurred and the
Appellant’s two sons who were living with him had gone to stay with their
married sister Eileen Clinton in Dundalk and so the house was unoccupied during
that weekend.
6. Following
the fire, the Respondents engaged Messrs. Scully Tyrrell and Co. Chartered Loss
Adjusters to investigate the claim on their behalf. The Appellant engaged
Messrs. Balcombes Public Loss Assessors to assist in presenting his claim under
the policy. Four meetings took place between these parties as follows:-
7. On
the 14th March, 1989, Mr. Joseph Tyrrell of Scully Tyrrell and Co. met with the
Appellant at Mountain View.
8. On
the 30th March, 1989 Mr. Tyrrell and his assistant Mr. Feely met with the
Appellant and Mr. Owen J. O’Connor of Balcombes at Mr. Tyrrell’s
office.
-5-
9. On
the 11th and 19th April, 1989 Mr. Tyrrell and Mr. Feely met with the Appellant
and Mr. O’Connor at Mountain View.
10. On
the 3rd April, 1989 Mr. O’Connor sent to Mr. Tyrrell a detailed list of
items in respect of which the Appellant was claiming compensation under the
policy. This list ran to many hundreds of categories of items making a total of
over 1,000 individual items with total valuation stated to be £102,481.59
(although the claim was of course limited to the insured amount) and this list
was discussed at the meetings of the 11th and 19th April, 1989. On the 24th
April, 1989 Mr. Tyrrell wrote to Mr. O’Connor asking in respect of each
item of the claim particulars of:-.
“(a)
The date of purchase or acquisition. If it is not possible to state the precise
date, the month and year should be stated to the best of the insured’s
knowledge.
(b)
Where purchased or from whom acquired. The shop, store, individual or
bodies/group should be identified if possible.
(c)
The price paid, specifying the currency If received as gift, award or prize,
particulars are required as to the basis of valuation and the identity of
parties from whom information is sought to assist in arriving at the
valuation”.
-6-
11. Undoubtedly
this was a burdensome request in view of the number of items in the list of the
3rd April, 1989. On the other hand there was no independent corroboration in
the form of receipts, Bank Statements with cheque stubs, credit card statements
or of any nature whatever to enable the Respondents to satisfy themselves as to
the value of the various items or as to the existence of items which were
alleged to have been stolen or completely consumed in the fire. It was in that
context that Mr. Tyrrell included in his letter of the 24th April, 1989 the
following paragraph:-
“You
will recall that, during the course of our meeting at Mountain View on the 11th
April, Mr Fagan stated that a number of the articles listed had been purchased
in Northern Ireland. In reply to a question by the writer, he confirmed that he
had paid import duties on the dutiable goods and had completed the relevant
customs forms. Please let us know what evidence is available or can be
obtained by the insured to support this statement. Please also let us know, in
each case, the location of the customs post or office where the insured made
the declaration and paid the duty. You should regard this requirement as
applying not only to goods imported from Northern Ireland but also to imports
from the UK e.g. dutiable articles of jewellery which Mr Fagan purchased in the
UK as presents for his late wife.”
-7-
12. It
seems obvious that if the Appellant could get corroboration from customs
records of the importation of items of a stated value with a stated duty paid
that would establish the claim in respect of such items conclusively and by
inference help to establish the
bona
fides
of the claim in general. However on the 8th May, 1989 Mr. O’Connor sent a
revised list of items and replied to Mr. Tyrrell’s request for customs
documentation as follows:-
“On
the matter of importations, Mr Fagan has been to the customs authority in an
effort to reconstruct details of duty paid on goods imported from Northern
Ireland but he has been told that there are no records at Carrickarnon going
back as far as 1987. Most of the other items purchased overseas were bought in
the course of the family ‘s travels to and from New Zealand, when Mr
Fagan himself was at sea
On
the 9th May, 1989 Mr. Tyrrell replied to Mr. O’Connor as follows:-
“Thank
you for your letter of 8th May with enclosures, which are receiving our
attention. Meanwhile, you do not appear to mention item ‘I’ on page
7 of your original claim i.e. JVC Video Recorder valued at £550.00. You
will recall that, during the course of our visit on 11th April, we were
informed by Mr. Fagan that this was only about four months old, having been
purchased and imported from Northern Ireland. We trust that the customs records
go back this far and shall be obliged,
-8-
therefore,
if you will let us have a response to the query raised in our letter of 24th
April insofar as this particular item is concerned”.
13. What
was being asked for at this stage by Mr. Tyrrell was customs corroboration
relating to one single item which he has been informed was recently purchased
and imported from Northern Ireland and if such corroboration was forthcoming it
would obviously establish the claim in relation to that item and as I have
already said as a matter of probability assist in relation to the claim
generally. Unfortunately Mr. O’Connor’s letter of reply of 11th
May, 1989 completely ignored this request which was never replied to or
complied with. The letter of the 11th May deals with a matter that was never
really in issue
-
the
existence of the policy. What was in issue was whether liability on foot of the
policy would be accepted or rejected by the Respondents. The Appellant’s
Solicitors Messrs. Terence V. Grant & Co. then came on record with a letter
of the 18th May, 1989 repeating the query put in Mr. O’Connor’s
letter of the 11th May, 1989 as to whether a valid contract existed or not and
a further letter of the 30th May, 1989 threatening proceedings.
14. On
the 7th June, 1989 the Respondent’s Solicitors Messrs. Good and Murray
Smith and Co. wrote to the Appellant as follows:-
-9-
“We
act on behalf of the General Accident Fire and Life Assurance Corporation plc
(the General Accident).
We
are informed by the General Accident that you have submitted a claim in respect
of the loss and damage allegedly suffered by you arising out of a fire which
occurred to your dwellinghouse at Mountain View, Dunaghmore, Kilkerly, Dundalk,
Co. Louth on the 12th March, 1989. The General Accident as a result of the
reports received by them from the loss adjusters are satisfied that you have
been in breach of general condition 6 of the policy. In the circumstances the
General Accident are avoiding and/or repudiating the policy and all liability
thereunder by reason of the aforesaid breach and all benefit under the policy
is forfeited”.
15. The
Appellant’s Solicitors replied on the 9th June, 1989 as follows:-
“We
refer to your letter of the 7th June addressed to Mr Fagan in connection with
the above mentioned claim reference no. 043 H 89/201776 B.
Our
clients (sic) absolutely deny that he is in breach of clause 6 of the General
Conditions. Please specify the breaches as alleged by your clients.
-10-
We
have instructions to issue proceedings against your clients. Please confirm
that you will accept service of proceedings”.
16. On
the 10th October, 1989 Messrs. Good and Murray Smith & Co. replied to
Messrs. Terence V. Grant and Co. as follows:-
“We
refer to your letter of the 9th June. The claim submitted by Michael Fagan
(the insured) on his behalf is grossly exaggerated and the values set out in
the claim, in respect of the individual items, are in many case grossly
inflated. The explanations given by the insured in respect of the existence
and the value of many items have been wholly unsatisfactory and in many cases
totally contradictory. The insured has changed his explanation in relation to
various items on a number of occasions. In addition claims have been submitted
for items which have subsequently been withdrawn and are now admitted not to
have been damaged or to have already been claimed under different headings.
We
set out hereunder the major breaches of General Condition 6 but we reserve the
right to advance further breaches should the same prove necessary.
-11-
(1)
The insured has made different claims at different times in respect of the
number of items which were allegedly missing as a result of the incident The
insured told the loss adjusters on the 14th March that certain items seemed to
have been stolen. These were a television set, cardboard cartons in which
household goods and wedding presents had been packed, at least two and possibly
three radios, a wallet containing £300.00 Irish, £10.00 sterling and
$560 US, Mrs. Fagan's jewellery box, Mrs. Fagan’s mink coat and some
goods which were stored in the upper part of the wardrobe. Subsequently a
claim was submitted in the sum of £27,812.59 claimed under the heading
‘missing items’ in respect of a far larger number of items than
originally notified. Subsequently when going through the claim the loss
adjusters were informed by the insured that numerous items included elsewhere
by his own loss adjusters in the claim were in fact missing, presumed stolen,
rather than destroyed/damaged by fire. These items amounted to a further sum of
£6,858.00. The total amount now claimed as stolen property amounts to
£34,670.59.
(2)
The claim submitted for items of jewellery includes a number of valuable items
contained in page 23 of the claim, under sub-paragraphs (c) (d) (e) (f) and (k)
which were not notified to the General Accident on the
-12-
proposal
form dated 1st May, 1987 despite the fact that other items of jewellery were
specfied in that proposal form. The insured is now maintaining that at the
time he completed the proposal form he did in fact own the above items even
though they were not notified in the proposal forms.
(3)
Mr. Fagan has claimed the sum of £1,200.00 for a JVC stereo compact disc
with speakers which he says he purchased in Northern Ireland. The total
replacement costs of these items even at Republic of Ireland prices does not
exceed £700.00.
(4)
The insured has made a claim in respect of a brass chandelier with matching
wall lights in the sum of £550.00. The maximum replacement cost of these
items amounts to £134.00.
(5)
Under items 6 (i) and 6(j) the sums of £400.00 and £600.00
respectively were claimed for rugs. These were identified as being floor rugs
Indian/Singaporian (£400.00) and 3 Indian tapestry rugs (£600.00).
The insured informed the loss adjusters that item (i) related to a single rug
measuring 10ft by 10ft. He says item (j) related to 2 small rugs or
tapestries. Subsequently on the 19th April the insured told the loss
-13-
adjusters
that since the last visit he had discussed the matter with his eldest daughter
and he has now ascertained that there were 4 Persian type rugs in the house.
These did not include the 2 small rugs which he had earlier identified. The
loss adjusters estimate that these 2 small rugs had a maximum value for
£40.00 for the two.
(6)
A claim was made under item 9(f) for 4 wardrobe mirrors at £80.00 each
amounting to £320.00. Initially the insured said that the mirrors were
screwed to the inside of the wardrobe doors. When the insured was told, after
investigation by the loss adjusters, that this was not so, he stated that the
mirrors had not in fact been screwed to the doors but had been stuck on with
double adhesive. He alleged that a mirror had been stuck on to one of the
doors in the wardrobe in the master bedroom. This was untrue.
(7)
A sum of £250.00 was claimed in respect of the electronic organ (model)
bontempi and stand item 9 (n). This was bought for sterling £89.95.
(8)
The insured under item 10 (c) claimed 8 sheepskin rugs at £50.00 each
making a total of £400.00. The maximum cost of the replacement value of
these rugs would be £232.00.
-14-
(9)
Under item 11(a) the sum of £1,000.00 was claimed for a wall clock and
again the maximum replacement value of this clock is less than £200.00.
(10)
The sum of £700.00 was claimed in respect of freezer contents. When this
claim was queried the insured pointed to a badly damaged Phillips refrigerator
with a small freezer compartment valued in the claim at £160.00. He then
admitted that his deep freeze was not in the house at the time of the fire
having been removed for repairs. He then said that he had transferred the
contents to the small Phillips fridge. Some of these contents were still
identifiable and when the loss adjusters stated that £20.00 would cover
the value of the contents of the fridge, the insured said he would not disagree
with this. He then went on to say that in putting forward the claim for
£700.00 he was thinking in terms of the overall value of his deep freeze,
plus the Phillips refrigerator and contents. This could not have been the case
because the deep freeze was
not
even in the house according to the insured.
(11)
A claim under item 13 (f)
for
the sum of £1,200.00 was made in respect of a dining table and six chairs.
The maximum replacement value of these items comes to £380.00.
-15-
(12)
Under item 13 (n) the insured has claimed £500.00 for a clock which has a
maximum value of £100.00.
(13)
Under item 13 (o) the insured has claimed the sum of £4,500.00 for
carpeting to the house. Again the maximum replacement cost of the carpeting is
less than £3,000.00.
(14)
A grossly exaggerated claim has been made for ladies clothing.
(15)
In addition following various queries in relation to the claim a large number
of items were deleted by the insured. In some cases no explanation was offered
as to why they had been claimed in the first place. In others it was admitted
that the claim had been duplicated elsewhere.
(16)
In the circumstances it is clear that the insured has been in breach of his
duty of good faith owed to the General Accident and also has been in breach of
General Condition 6.”
-16-
17. Conditions
6 and 9 of the policy provide as follows:-
6.
“If any claim under this policy shall be in any respect fraudulent, or if
any fraudulent means or devices are used by the policy holder or anyone acting
on his behalf to obtain any benefit under this policy all benefit hereunder
shall be forfeited.
9.
The due observance and fulfilment of the terms, provisions, conditions and
endorsements of this policy insofar as they relate to anything to be done or
complied with by the policy holder and the truth of the statements and answers
in the said proposal shall be conditions precedent to any liability of the
corporation to make any payment under this policy.”
18. This
action was commenced by the issue of a plenary summons on the 4th May, 1990.
The Statement of Claim was delivered on the 20th August, 1990 and as in the
case of the lists of the 3rd April and 8th May, 1989 the Statement of Claim
contains hundreds of items and categories of items and monetary figures. The
defence was delivered on the 9th November, 1990. In addition to general
traverses, the defence pleads breaches of conditions 6 and 9 of the policy and
of an implied duty of good faith owed by the Appellant to the
-17-
19. Respondents
and it particularises the alleged breaches by reference to the letter of the
10th October, 1989.
THE
SUBMISSIONS.
20. Mr.
Geraghty S.C. and Mr. O’Neill S.C. submitted on behalf of the Appellant:-
1.
While the value of the contents destroyed damaged or stolen was measured in the
list of 3rd April, 1989 at £102,482.00 the claim was always limited to the
sums insured namely £40,000.00 for household contents and £6,585.00
all
risks cover. As the policy did not contain a general average clause, the
Respondents in the course of the trial conceded that the Appellant’s loss
equalled or exceeded the sums insured and confined their defence to the
question of liability.
2.
The Respondents were in breach of constitutional justice and fair procedures in
not giving to the Appellant prior notice of their intention to repudiate and
their reasons for such. Counsel referred to the case of
Superwood
Holdings plc and Ors. v. Sun Alliance and London Insurance plc and Ors
.
[1995] 3 IR 303 at page 360.
-18-
3.
The Respondents sought to amplify the grounds of repudiation after their letter
of repudiation of the 7th June, 1989 and ought not to have been allowed to do so.
4.
There was no express finding by the learned trial Judge of a fraudulent
intention on the part of the Appellant. If the learned trial Judge inferred a
fraudulent intention it was not open to him to do so as the Appellant was never
claiming more than the limit of the sums insured.
21. Mr.
Gallagher S.C. submitted on behalf of the Respondents:-
1.
The Respondents never conceded that the Appellant’s true loss equalled or
exceeded the limit of the sums insured. We say that the claim was fraudulent
and therefore that the Respondents should pay nothing. The claimed contents
were valued at £102,482.00 although the limit of the sums insured was
£46,585.00. The Appellant dishonestly hoped thereby to induce the
Respondents to concede that the amount of the loss equalled or exceeded the sum
insured and to forego any detailed investigation of the claim.
2.
The Appellant never replied to the letter of the 10th October, 1989 which was
always open to him to do even though the Respondents had
-19-
repudiated
liability. It was impossible for the Respondents to decide what was in the
house Mountain View and what was not. Therefore the Respondents picked out
just a few of the myriad items which were alleged to have been destroyed
damaged or stolen for detailed investigation.
3.
The learned trial Judge set out the law correctly at the commencement of his
Judgment and furthermore at page 41 and 42 he correctly accepted that mere
exaggeration was not conclusive evidence of fraud. In requiring the Respondents
to make their case first and to proceed as Plaintiffs he correctly imposed the
burden of proof on the Respondents and applied the correct standard of proof
which they had to establish.
4.
The principles of fair procedures have evolved in the area of administrative
law and have no application in what is essentially a matter of private
contract. The Respondents were entitled to amplify and provide full details of
the allegation of fraud to ground their repudiation and they did so in the
letter of the 10th October, 1989. There was no obligation on the Respondents
to canvass the views of the Plaintiff in relation to any proposed repudiation.
Counsel referred to
Carna
Foods Ltd. and Ors. v. Eagle Star Insurance Co.
[1995] 2 ILRM 474 at 478 and [1997] 2 ILRM 499.
-20-
CONCLUSIONS
22. I
shall deal first with the Appellant’s submissions relating to
constitutional justice and fair procedures. The Appellant relied on a passage
from the Judgment of Denham, J. in the
Superwood
Holdings Case
at
page 360 which is as follows:-
“It
is true that the Contract of Insurance does not formally require that such
notice be given. However, it is a fundamental tenet of Constitutional Law and
Fair Procedures that if a person’s position is to be detrimentally
affected he should be placed on notice. Consequently the Plaintiffs would
succeed on this ground alone in the absence of such notice.”
23. It
must first be remembered that this was said in the context of condition 4 of
the policy in that case which related to the giving of notice by the insured
and details of the loss to the insurer and not to fraud. In the present case
the Appellant complains that the Respondents did not give him a fair
opportunity of dealing with their objections as they ought to have done. In
this context it is relevant to refer again to the letters of the 24th April,
8th May, 9th May and
-21-
11th
May, 1989 which I have quoted or summarised above. In that correspondence Mr.
Tyrrell asked for independent verification which might be expected to be
obtainable. His last request in the letter of 9th May, 1989 was ignored. Mr.
O’Connor in giving evidence at transcript 12 of the 24th November, 1992
at question 474 said:-
“Well
I went back to the policy holder and I told him that I had got this request for
further particulars and what further particulars could he provide. The further
particulars I felt I could provide was the second list that came from Sylvia
Fagan at this stage to me, the list of stolen items that had gone to the
Gardaí. So I went through the original listing on the 3rd April and
extrapolated the items which
-
and
I am not saying it was very precise - but the major items that were on that I
took some of the items on the document of 3rd April and I put them into a
category which I called ‘all risks’ and I sent that information
again to Mr Tyrrell. I want to make a point here, that was what I was asked to
do. I was not asked and I don’t want to be contentious, but I
wasn‘t asked for receipts or invoices or bank statements or credit card
slips, or anything like that I was asked for further particulars and I did my
best to provide them.”
24. The
concluding sentence in that answer is unsustainable especially in the light of
the evidence given by earlier witnesses, Mr. O’Connor being the last
-22-
substantial
witness with only two very short and very minor witnesses coming after him. No
attempt was made by the Appellant or by Mr. O’Connor to get from the
Appellant’s Bank copy statements of account and original or copy paid
cheques. Such documentation might assist in regard to value and also in
relation to items stolen or consumed in the fire, in regard to their existence
and possession by the Appellant before the fire. Certainly an insurer must
treat his insured fairly and with respect in accordance with the mutual
obligations of good faith but the insurer can hardly be expected to spoon feed
an insured as to whose honesty and reliability the insurer has doubts. Insofar
as the Appellant relies on the
Superwood
case it seems to me that it does not extend that far. It is for the parties to
make their own contract and the Courts must be careful not to impose on parties
terms which they would never have accepted if such terms were suggested in the
pre contract bargaining.
25. On
this item of the JVC video recorder (which is not actually one of the items
mentioned in the letter of 10th October, 1989) it is interesting to note some
of the evidence which was given at the trial. Mr. Tyrrell emphasised its
importance in his opinion at transcript 1 questions 46-50 as giving an
opportunity to the Appellant to substantiate items and that this was not done.
At transcript 2 Q.
474
he refers again to this matter and at transcript 3 Q. 2 he says that Mr.
O’Connor’s attitude on the telephone to him was absurd and at
-23-
Q.
132
he says that he never before had a case where there was absolutely no
substantiation produced. The Appellant at transcript 5
Q.29
says he got a quotation for this item for £549.00 and £85.00 duty
from Messrs. Toners but at transcript 7 Qs. 252-261 it appears that he may well
have been confusing the JVC video recorder with a JVC music player. Mrs.
Sylvia Fagan said at transcript 11 of the 19th November, 1992 at Qs. 588-596
that
she bought the video recorder about February or March, 1988 and brought it to
Mountain View about the end of October, 1988 but she did not say if she paid
customs duty on it or not. No useful clarification emerged from Mr.
O’Connor’s evidence although he touched on the video recorder at
transcript 13 of the 25th November, 1992 at Q.
371-385.
26. In
regard to Mr. O’Connor’s protestation at Q.474 of transcript 12
that he was never asked for substantiating documentation, it is worth recalling
some of the evidence of witnesses who gave evidence before him. Mr. Tyrrell at
transcript 2 Q.5
said:-
“Well
I approached the matter My Lord by going through the claim starting with the
front page and working through it. It was a claim of 23 pages and I think over
500 items so I was very conscious of the fact that I was not going to be able
to discuss every item in any great depth so I concentrated on picking out items
that I felt should be looked into some
-24-
categories
of items and general discussion with Mr. Fagan and Mr O’Connor as we went
through. I had asked if there was any documentation of any kind to back up the
claim and I was told that there was nothing, there was nothing at all, whatever
documentation he had was in the filing cabinet in the kitchen and had been
destroyed in the fire so there was no back up documentation of any kind”.
27. And
then at Q.7 he was asked if there were any bank accounts or credit card
statements or anything like that ever produced to which he replied
“No,
nothing at all”
.
At
transcript 4 Mr. Jim McCormick Claims Superintendent of the Respondents who had
thirty-one years experience of the insurance industry said at Q.8
“Well
My Lord on the basis that the information furnished by the Loss Adjuster it
seemed to me that there was not sufficient evidence produced to us to enable us
to pay this claim. Frequently claims are presented in different ways and
frequently when there is severe damage it is fairly difficult for a policy
holder to prove a number of items but I do not think I can recall any case in
which no proof of loss was supplied in respect of the value of a number of
these items and accordingly we came to the conclusion that it would be
impossible to meet this claim.”
-25-
At
Q.15 he said:-
“We
did obviously think it was a serious matter. In thirty-one years of dealing
with claims I have never previously been involved in a case where this type of
allegations were made and we took legal advice before making the decision.”
At
Q.25
he
said:-
“Well
we always start off on the basis that the claims are for payment, for
assessment. Generally we find that the standard of presentation by policy
holders varies but generally you will find that with the claim form you will
get a considerable amount of documentation, receipts, bank statements, credit
card statements or alternative means of proving the loss. In this particular
instance I do not think we were furnished with any documentation in support of
any particular item of the claim and it is also a very substantial claim which
is unusually high and an unusually large claim My Lord and there was a large
number of items and I would have thought that in those circumstances at least
some of the items would have been supported by documentation.”
28. At
Q.31 he was asked:-
-26-
“What
relevance do you think has the fact that the sum insured in this case was
approximately £40, 000 and contents of a little over £6, 000 for the
all risks and that the claim exceeded that by a very substantial amount, did
you attach any importance or relevance to that in assessing the claim?
A.
Well clearly it indicated that there was substantial under insurance. What the
significance of that was difficult to say without knowing whether the man had
got a great deal more property before the date he effected his insurance but
this did indicate gross under insurance.”
29. At
Q.89 he was asked:-
“I
suggest to you that in terms of asking for information for 600 items was a
mammoth task?
A.
It would have been a very substantial task but I think the reality of it is
that if a reasonable reply had been received it would have put the matter in a
different context My Lord”.
30. In
the light of the foregoing evidence by Mr. Tyrrell and Mr. McCormick who said
they never before had a claim without any substantiation whatever it is
incomprehensible that Mr. O’Connor should have formed the views which he
expressed in the answer at Q.474 of transcript 12 which I have quoted above.
-27-
31. It
was never challenged during Mr. Tyrrell’s evidence that the JVC video
recorder was bought and imported from the North of Ireland about four months
before the fire. There is no reason to doubt Mrs. Sylvia Fagan’s
evidence that she bought the video recorder in the North of Ireland about one
year before the fire and imported it about four months before the fire. It was
not clarified whether customs duty was paid by her or not on its importation
but even if not and therefore no useful evidence would have been available from
the Customs Authorities the complete ignoring of Mr. Tyrrell’s request is
difficult to understand and must have inevitably raised suspicions in the minds
of Mr. Tyrrell and the Respondents.
32. Having
regard to the foregoing circumstances including the ignoring of requests for
some documentary corroboration there was no obligation on the Respondents to
conduct a kind of trial or hearing before repudiating liability under the
policy. In some cases, contracts can create relationships which may entitle a
party to some form of hearing before the contract may be repudiated or
terminated. The most common examples are contracts of employment. See
Glover
v. BLN Ltd.
[1973] IR 388. The Contract of Insurance is a commercial contract and the
Courts should be slow to impose terms on either party which have not been
expressly agreed by them.
Carna
Foods Ltd. and Anor. v. Eagle Star Insurance Company (Ireland) Ltd.
[1977] 2 ILRM 499.
-28-
33. Freedom
of contract especially in the commercial field is a valuable right of the
citizen. The Contract of Insurance undoubtedly involves mutual obligations of
good faith but that does not mean that the insurer cannot (provided that he is
acting
bona
fide
)
disclaim liability without first conducting some form of trial. The trial comes
afterwards in the Courts if the insured contends that the disclaimer of
liability by the insurer is unwarranted and in breach of contract.
34. In
the present case I am satisfied that there was no breach of constitutional
justice or fair procedures, and accordingly this ground of appeal based on such
alleged breach fails and is refused.
35. The
Judgment of the High Court in this case was delivered on the 19th February,
1993 that is to say over two years before the Judgment of the Supreme Court in
the
Superwood
Case. If the learned trial Judge had had the benefit of the Judgments of the
Supreme Court in the
Superwood
case he might have expressed himself more positively in certain respects than
he did. Nevertheless his meaning is quite clear to me.
36. The
learned trial Judge set out correctly the principles of law applicable to this
case at pages 1
-
4
of his Judgment and also the correct approach to exaggeration at pages 41 and
42. He did not overlook the fact that the
-29-
presentation
of the contents claim was made significantly more difficult for the Appellant
by the loss of his first wife in 1984. She was the housewife during the twenty
years in New Zealand and the six years thereafter in Ireland when household
goods and furniture were being accumulated and if she had lived she would have
been the person most qualified to recollect these contents their provenance and
their value. A further difficulty was the fact that the contents of a filing
cabinet containing personal and financial records which would have been of
assistance in preparing the claim had been destroyed in the fire. Nevertheless
the Appellant had his children and especially his daughters to assist him in
the preparation of the claim and of course his second wife Mrs. Sylvia Fagan
was available to deal with property brought by her to the house. Furthermore
the Appellant and his eldest daughter Eileen had less than two years before the
fire made an inventory and valuation of the contents of the house when the
Appellant was completing the proposal form for the contents policy at the end
of April and the beginning of May, 1987 and this proposal was then discarded
and the amounts reduced by approximately one half when it was discovered how
much the premium would be to cover items valued at over £130,000.00.
37. One
of the primary tasks of the learned trial Judge and especially so in this sort
of case was to assess the credibility of the witnesses and to find the
-30-
facts
accordingly. The action was at hearing for some fifteen days before the learned
trial Judge and he therefore had ample opportunity to assess the witnesses.
38. At
page 16 of his Judgment the learned trial Judge says:-
“At
the meeting on the 11th April, 1989 Mr Tyrrell queried a number of items and
the nature of his queries and the responses given by Mr Fagan were a matter of
controversy. In this and in other respects therefore it is necessary to assess
the credibility of the material witnesses.
Mr
Tyrrell impressed me as a man of complete integrity and competence who gave his
evidence fairly and carefully. If necessary I would have little difficulty in
relying on his credibility. As it happened the more controversial evidence
given by Mr Tyrrell was verified to an extraordinary extent by documentation
produced in evidence and made available to the Company for the first time in
the course of the hearing and subsequent to the evidence of Mr Tyrrell. In my
view his credibility was established beyond question.”
39. At
pages 17, 18 and 19 of his Judgment the learned trial Judge said:-
-31-
“As
Mr. Fagan appeared to give his evidence with a combination of innocence and
sincerity I was reluctant to draw the conclusion that he was not telling the
truth. However towards the conclusion of his evidence under cross-examination,
he gave an account of his affairs arising out of his dealings with the Irish
Permanent Building Society which his Counsel subsequently on his behalf
necessarily admitted was wholly untrue.
In
the context of a significant expenditure on luxury items the insured was
cross-examined about the extent of his liability to the IPBS in 1987. He did
admit that he was indebted to the Building Society and explained that there was
an arrangement that his indebtedness would be cleared off by the completion of
the sale of Mountain View in September 1988. It was then put to him that he was
in arrears with current payments in 1987 before he entered into the contract
for the sale of his house. This he disputed. He denied that proceedings were
brought by the Building Society to recover possession of his premises and he
seemed to me to be genuinely amazed by the series of letters from the 14th
October, 1986 to the completion of the sale in 1988 drawing attention to his
failure to meet his mortgage repayments. It seemed incredible that Mr. Fagan
could have overlooked such letters. What was even more surprising was
-32-
that
he thought that these letters might be explained on the basis that they related
to a different Michael Fagan. It was only with difficulty that he was convinced
that they all related to him and his account with the IPBS. He then offered the
explanation that due to pressure of business he had put some of his domestic
matters in the hands of an Accountant who was looking after his affairs. That
explanation seemed inconsistent with the fact that such payments as were made
appeared to have been made by cheques enclosed with letters written in
manuscript either by Mr Fagan or his daughter. When Mr Fagan insisted that
such arrears as existed did not indicate that he had any financial problems his
attention was drawn to the fact that a cheque for £258.59 drawn in favour
of the IPBS on the 25th March, 1988 was returned marked ‘refer to
drawer’. Mr Fagan thought that this might be due to the fact that he
changed his account from the Allied Irish Bank on which the cheque was drawn.
That explanation seemed inconsistent with the fact that he asked the Budding
Society to represent the cheque. This unhappy chapter concluded with the
reference to a letter from the Building Society to Mr Fagan dated the 16th
September, 1988 in which the Building Society indicated that the Abbey National
Building Society sought information with regard to his account but that they
were unwilling to give such information without his authority. They did however
express their view
-33-
in
their letter to Mr Fagan that his account had been unsatisfactory from May 1986
as a result of business problems encountered by him. When the letter requesting
information from the Abbey National to the Irish Permanent Building Society was
produced in evidence it appeared that the Mr Fagan in question was identified
as Michael William Fagan. Mr Fagan denied that William formed part of his name
or that he had any dealings with the Abbey National. When Counsel on behalf of
the Company drew the attention of Mr Fagan to the fact that the proposal form
was headed ‘Michael William Fagan’ I warned the witness of the
seriousness of his position and adjourned the matter giving his Counsel
permission to advise him in relation to his situation. In explaining that Mr
Fagan’s evidence as to his name and his dealings with the Abbey National
was untrue, Counsel drew attention to his client’s health, the pressure
of the case and the length of the cross-examination. Even making allowance for
these factors, one must conclude that Mr Fagan is an unreliable witness to put
it at its mildest.”
40. At
pages 20, 21 and 22 the learned trial Judge said:-
“In
addition to the annotated lists and the preliminary lists, Mrs. Clinton
produced a document consisting of 23 foolscap pages in her own writing entitled
‘please note’ and dated 15th April, 1989. In essence this was a
-34-
list
of the contents of the house which had been damaged or stolen and the prices
attributed to those items. The first page of the document summarised the items
under different headings and in certain respects the document would appear to
be an attempt to reconcile the claim of the insured with the figures set out in
the actual or revised proposal for the contents insurance. However in
assessing the credibility of Mrs. Clinton as a witness the most important fact
concerns the date or dates on this document.
The
first page was as I say dated the 15th April, 1989 and a number of subsequent
pages were dated the 15th March, 1989. Thereafter the dates move on up to and
including the 13th April, 1989. Understandably Mrs. Clinton was cross-examined
carefully and in my view fairly as to the purpose of this document and the
manner in which it was compiled. Clearly it was material to establish whether
this document pre-dated the April list or whether it formed the basis of the
May list. It seemed to me that the answering of the witness in this regard was
very unsatisfactory indeed. Certainly I found it difficult to understand
whether it was her contention that the pages were dated before or after the
items were described or their values inserted and whether the list of items on
any given page was completed before the next pages started. In particular I was
unconvinced by the explanation given by Mrs. Clinton as to how she came to
erase the date originally put
-35-
on
the front of the document and substitute therefor the 15th April, 1989. These
matters were explored at some length but the one matter which most assuredly
was not suggested by Mrs. Clinton was the explanation given by her Counsel the
following day namely that all of the dates had been written in from memory not
in 1989 but some two or three weeks before the trial that is to say more than 2
1/2 years after the event and for that reason errors might have occurred
The
evidence of Mrs. Clinton in that regard must be considered in conjunction with
what she said about another document also in her handwriting entitled
‘replies made to questions asked by Mr Joe Tyrrell at final meeting and
inspection of contents of house’.
41. That
document is dated 29th October, 1992 and Mrs. Clinton says it represented the
transcription by her of a manuscript letter written by her father to queries
raised by Mr Tyrrell. It was the evidence of Mrs. Clinton that she did not
direct her mind to the contents of this document. That seemed improbable in any
event but in the context that she was preparing or reviewing other notes at the
same time is quite unbelievable. Not only is there nothing wrong with the
witnesses reviewing the evidence in anticipation of the trial I would have
thought it
-36-
was
entirely proper that they should do so. What is far more unlikely is that a
person who was to be an important witness in the case could transcribe a letter
or other document which was crucial to the case some weeks before the trial
without directing her mind to the contents thereof Regretfully, I must conclude
that Mrs. Clinton was not a reliable witness either”.
42. The
learned trial Judge also expressed reservations regarding the reliability of
the evidence given by the Plaintiff’s wife Mrs. Sylvia Fagan although not
in as positive terms as in relation to the Appellant or his daughter.
43. The
learned trial Judge went through the items set out in the letter of the 10th
October, 1989 and arrived at the following conclusions:-
1.
Carpeting
“In
these circumstances it seems to me to have been demonstrated clearly the claim
made in April was manifestly excessive and the explanation given for the
correction inadequate.”
2.
Curtains
“Having
regard to the terms in which the claim was made and the absence of any
reference to the house in Warrenpoint I find it very hard
-37-
to
accept that the claim for £2, 000.00 was intended to relate to anything
other than curtains in the Dundalk house and I am driven to the conclusion that
the insured has endeavoured to justify what was a grossly excessive valuation
on the basis of an account which is untrue.”
3.
The Clocks.
“I
am again forced to the conclusion that the figures given in the April and May
lists in respect of this clock were to the knowledge of Mr Fagan grossly in
excess of the cost or value of the articles.”
4.
The Persian Rugs.
“It
seems to me that the available evidence, no matter how it is interpreted, makes
it clear that the claim for £1, 000.00 is grossly excessive and must have
been known by Mr Fagan to be such.”
5.
The additional jewellery.
“In
relation to this item, therefore, it seems to me that a real doubt was cast
upon either the existence or the value of the jewellery in question. It should
have been within the competence of the insured to resolve this doubt. So far
from doing so his numerous and somewhat conflicting explanations tend to
confirm the misgivings of the Company.”
-38-
6.
JVC Stereo.
“As
matters stand I am convinced that the particular equipment was not worth more
than £700.00 and that Mr Fagan did not pay more than that for it.
Accordingly this claim too is grossly exaggerated”.
7.
Brass Chandelier and matching Wall Lights.
44. This
item was not established to the satisfaction of the learned trial Judge.
8.
The Wardrobe mirrors.
45. Again
this item appears not to have been established to the satisfaction of the
learned trial Judge.
9.
The Bontempi Electric Organ.
“I
am satisfied that the figure of £250. 00 was a grossly excessive valuation
and certainly not the cost paid for this article.”
10.
The Sheepskin Rugs.
46. This
item was not established to the satisfaction of the learned trial Judge.
11.
Freezer contents.
“Undoubtedly
Mrs. Clinton recognised that she did have regard to the proposal documents in
preparing the claims list but it seems to me that in
-39-
this
and in other respects that figures were taken from the proposal documentation
without any regard whatsoever for the actual cost or value of the goods in
question.”
12.
The Diningroom Table and Chairs.
“In
relation to this item it seems to me that not only is the claim grossly
inflated but that successive and unconvincing efforts were made to justify the
date of the purchase and the amount paid.”
13.
The Lady’s clothing.
“I
do not believe that the claim put forward by the insured in this regard was
either fraudulent or mala fide.”
14.
The quantity of goods stolen.
“Even
allowing for the state of shock in which the Plaintiff must have been at the
time it is extraordinary that he did not at his first meeting with Mr. Tyrrell
advert to the fact that sixteen packing cases of goods were missing from the
house.”
47. This
is not a finding of fraud or
mala
fides
.
-40-
48. At
No. 13 above the learned trial Judge is explicit in finding that the particular
claim was neither fraudulent nor
mala
fide
.
This makes clear that his other findings to the effect that
“the
claim for £1,000 is grossly excessive and must have been known by Mr Fagan
to be such”,
and
similar though not identical wording constitute a definite finding of fraud
and/or
mala
fides
.
There was ample evidence to support these findings and this Court cannot
therefore and will not interfere with them.
49. In
these circumstances the Respondents were entitled to repudiate liability under
the policy and this appeal must be dismissed.
© 1998 Irish Supreme Court
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