National Transport Insurance Ltd v Cottell
[1999] QDC 226
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- Unreported Judgment
- National Transport Insurance Ltd v Cottell[1999] QDC 226
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National Transport Insurance Ltd v Cottell[1999] QDC 226
National Transport Insurance Ltd v Cottell[1999] QDC 226
DISTRICT COURT | No 2270 of 1992 |
CIVIL JURISDICTION
JUDGE McGILL SC
NATIONAL TRANSPORT INSURANCE LTD | Plaintiff |
and
DARRYL ARTHUR COTTELL and TONYA ANN COTTELL | First Defendants |
and
AUSTRALIAN GUARANTEE CORPORATION LIMITED | Second Defendant |
and
ESANDA FINANCE CORPORATION LIMITED | Third Defendant |
BRISBANE
DATE 15/10/99
JUDGMENT
HIS HONOUR: In this matter there will be judgment that the first defendants pay the plaintiff $122,164 which includes $34,904 by way of interest. I publish my reasons.
With regard to costs, the plaintiff succeeded on one basis of the claim but failed on another basis which was apparently the major basis for the claim in the course of the action. I think that to some extent the trial was extended because of the other basis which alleged that the second defendants had been involved in the theft of the vehicle which was perhaps the major claim pursued and the major focus of the action and in that respect the plaintiff was unsuccessful. I think that the plaintiff's failure on that issue should be reflected to some extent on the question of costs even though most of the witnesses probably would have had to give evidence anyway. There is the consideration that if that claim had not been advanced against the first defendants, it may be that the action might have been easier to resolve.
I think in all the circumstances an appropriate order for costs is that the second defendants pay the plaintiff's costs of the proceeding, including reserved costs if any, to be assessed but limited so as not to exceed the costs of a trial lasting two days.
DISTRICT COURT OF QUEENSLAND |
REGISTRY: BRISBANE
NUMBER: 2270 OF 1992
NATIONAL TRANSPORT INSURANCE LTD | Plaintiff: |
AND
DARRYL ARTHUR COTTELL and TONYA ANN COTTELL | First Defendants: |
AND
AUSTRALIAN GUARANTEE CORPORATION LIMITED | Second Defendant: |
AND
ESANDA FINANCE CORPORATION LIMITED | Third Defendant: |
JUDGMENT - McGILL D.C.J.
Judgment Delivered: 3 September 1999
Catchwords:
INSURANCE - motor vehicles - claim for loss by theft - whether insured party to the theft - whether claim fraudulent - whether amount paid recoverable
INSURANCE - motor vehicles - claim for theft - vehicle left unlocked with key in ignition - whether insurer entitled to refuse to pay
Devco Holder Ltd v. Legal & General Assurance Society Ltd [1993] 2 Lloyds Rep. 567 - followed
Counsel for the plaintiff: | P.E. Smith |
Counsel for the first defendants: | N.J. Thompson |
Solicitors for the plaintiff: | Cranston & McEachern |
Solicitors for the first defendants: | Suthers & Taylor |
Date of Hearing | 17-20 May 1999 |
DISTRICT COURT OF QUEENSLAND |
REGISTRY: BRISBANE
NUMBER: 2270 OF 1992
NATIONAL TRANSPORT INSURANCE LTD | Plaintiff: |
AND
DARRYL ARTHUR COTTELL and TONYA ANN COTTELL | First Defendants: |
AND
AUSTRALIAN GUARANTEE CORPORATION LIMITED | Second Defendant: |
AND
ESANDA FINANCE CORPORATION LIMITED | Third Defendant: |
JUDGMENT - McGILL D.C.J.
Delivered the 3rd day of September 1999
On the night of 23-24 February 1991, a semitrailer was parked outside the first defendants' premises in Townsville. The prime mover was owned by the third defendant and in possession of the first defendants as grantors under a Bill of Sale: Exhibit 43. The trailer was owned by the second defendant, and leased to the first defendants. Both were insured under a policy issued by for plaintiff: Exhibits 2, 3. During the night, the semi-trailer was driven away and some time later, and separately, the prime mover and trailer were destroyed by fire. The prime mover was destroyed on 15 June 1991 near Meandarra, and the trailer on 4 May 1991 at Lightning Ridge in New South Wales: ``````````````````4 and see Exhibit 17. It was common ground that the truck was taken by one James Darryl Hearn. Mr. Hearn, on 18 November 1991, pleaded guilty in the District Court at Roma to a charge of unlawful possession of the prime mover on 10 June 1991 at Tara in the State of Queensland: p. 13, Exhibit 4.
On 26 February 1991, the first defendants signed a claim form (Exhibit 5) which had been prepared by their insurance broker (Exhibit 37) and was submitted to the plaintiffs: p. 13. The claim was in due course paid (p. 25) by cheques in the sums of $73,480.35 to the second defendant, and $90,840 to the third defendant; in addition, $5,179.65 in unpaid premiums was reimbursed to the plaintiff: Exhibits 15, 16. However by a plaint filed on 14 July 1992, the plaintiff claimed against the first defendants damages for deceit or in the alternative, to recover as money had and received the money paid out under the policy. Claims were also made against the second and third defendants to recover the monies paid to them, but those claims have now been settled (p. 2) with the action proceeding to trial only against the first defendants.
The case against the first defendants was advanced on two alternative bases: that they were a party to the theft of the semi-trailer, so that the claim made by them was fraudulent, and that false statements were knowingly made in support of the claim, entitling the defendant to recover the amounts paid. The statements were particularised at p. 6. The first defendants deny that they were a party to the theft of the vehicle; they admit that they made a statement in support of the claim which they knew was false, but allege that because of a subsequent representation made to them on behalf of the plaintiff, the plaintiff is estopped from relying on that false statement to recover the monies paid.
The relevant events happened a long time ago. Part of the reason for the delay is that the male first defendant was, in June 1994, tried in the District Court at Townsville on charges of false pretences, stealing and making a false statement on oath in connection with the circumstances of this matter: Exhibit 29. The stealing charge related not to the semi-trailer but to a number of items of property belonging to two other people which were in the cabin of the prime mover at the time it was driven off. The plaintiff was acquitted of the first two charges, but convicted of making a false statement on oath. No doubt that trial had to take place first, but even so it seems to have taken this matter a long time to come on.
The Semi-Trailer
The first defendants obtained the prime mover, a Ford LTL 9000, from a dealer, Brown and Hurley, in April 1989, for $56,500 plus the trade in of a 1982 model Scania P 82, which I assume was also a prime mover: Exhibit 45. The purchase was financed by a loan from the third defendant secured by the Bill of Sale (Exhibit 43) over the truck and a trailer (not the relevant trailer), although at the same time money was borrowed to pay out an existing loan with Esanda: Exhibits 42, 44. The earlier contract apparently financed the acquisition of the Scania prime mover and a Fruehauf trailer: Exhibit 39. Monthly payments off the loan of $5,007.97 were due on the 5th of each month: Exhibit 42. Copies of photographs of the prime mover are in Exhibit 19.
On 2 April 1990, the second defendant entered into a finance lease for a period of five years with the first defendants and a Mr. and Mrs. White, all trading as Alice River Transport, for a maxi-cube refrigerated van: Exhibit 46. The van had apparently been acquired for $76,000, and under the lease monthly payments of $1,821.25 were to be made. Apparently some time in late 1990 Alice River Transport split up (p. 171) when Mr. and Mrs. White and the first defendants took their respective vehicles, and the leased maxi-cube van was treated, by both parties (Exhibit 46) as being solely leased by the first defendants. In September 1990, there was some delay in making the payments due under the lease (Exhibit 47), but this may have had something to do with the difficulties attending the break up of Alice River Transport (see Exhibit 39): from November 1990 until 18 February 1991, five monthly payments were made on the account (Exhibit 48) so that when the trailer was taken the account was either right up to date or almost up to date, depending on when the first payment of the lease was due.
The semi-trailer was regularly used on a run to Melbourne and back (p. 40), being operated by Ms. Parrish and Mr. Ross who worked as a team: p. 59. They had been doing this for about 12 months: p. 74. The prime mover was fitted with a sleeper cab. This was a regular run, and was evidently a fairly lucrative one. According to Mr. Cottell, the run was actually “owned” by Mr. White, and Mr. Cottell operated it on a sub-contract basis with his truck driven by Ms. Parrish and Mr. Ross: p. 219. Mr. Cottell said that he made about $30,000 per month gross from the run (p. 172) from which he said he was netting about $6,000 or $7,000 per month: p. 188. These figures are not independently verified, but they were not challenged in cross-examination. Apart from the trip between Townsville and Melbourne, the truck would also be used at times to go north to deliver or collect cargo. Ms. Parrish and Mr. Ross did not drive the truck on that part of the journey (p. 75), and that use was not as regular. At the relevant time the first defendants also had two other trucks, Volvo's, which were used on a different regular run, for the right to obtain which the first defendants had paid $100,000: p. 173. This amount was treated as goodwill in the first defendants' accounts: Exhibit 23. It was, I gather, part of the amount financed by the earlier loan from Esanda, which explains why the amount borrowed from that company and secured on the prime mover (and a different van) was much greater than the value of the vehicle. The defendants had to pay out the balance owing, about $75,000 over 3 years: p. 189 and see Exhibit 39. Mr. Cottell said in the taped conversation on 6 June 1992 (Exhibit 26) that as a result of his truck being stolen Mr. Hearn took on the run to Melbourne, which that vehicle had been used on (this being arranged by Mr. White: p. 220), and this was how Ms. Parrish and Mr. Ross came to get a job with Mr. Hearn.
Saturday 23 February 1991
Ms. Parrish and Mr. Ross brought the semi-trailer into Townsville from Melbourne on the evening of Saturday 22 February or early in the morning of 23 February 1991: p. 174. That morning Mr. Ross and Mr. Cottell took the semi-trailer to Turners' Welding Works (p. 146, p. 175) to have a crack in the turntable repaired. While they were there they were joined by Mr. Hearn and his brother, and after the work was done, the four of them went to a nearby hotel, Bohle Barn (p. 146); they were later joined there by Ms. Parrish and Mrs. Cottell, and a number of other people: p. 41. Ms. Parrish had only a couple of alcoholic drinks (p. 42), and remained effectively sober, but the party stayed there until closing time, by which time the men at least had had quite a lot to drink. Mr. Cottell's evidence emphasised the quantity he and Mr. Hearn had consumed. He claimed to have drunk four rum and cokes per hour while he was at the hotel (p. 175) and he said that Mr. Hearn was very drunk (p. 177 and see Exhibit 25), to the point where he became boisterous. Both Ms. Parrish and Mr. Ross said that in the course of the visit to the hotel there were occasions when Mr. Cottell and Mr. Hearn were speaking together: p. 42, p. 146. There was no evidence as to the content of their conversation during these periods.
While at the hotel the first defendants invited Mr. Ross, Ms. Parrish and the Hearn brothers out fishing on their boat, and an arrangement to do that was made. At closing time the party returned to the Cottell residence. Mr. Cottell wanted to leave the semi-trailer at the hotel, but Ms. Parrish was unhappy about that; so much is common ground: p. 42, p. 176. According to Mr. Cottell, Ms. Parrish was complaining because she did not want Mr. White to use the truck the next day: p. 176. He said that he knew why she had this attitude, but I was not informed of the reason, possibly because the point had not been raised with Ms. Parrish in cross-examination. Ms. Parrish said that she did not know Mr. White was to use the truck the next day (p. 74), and did not want the truck left at the hotel because of the property which she and Mr. Ross had in it: p. 42. She said the van was empty at this stage (p. 75), and when it was empty it usually did not go north until Tuesday: p. 76. Until then it would be kept at the Cottells' place. She drove the truck back to the first defendants' property, accompanied by Mr. Cottell. Mr. Ross went with Mrs. Cottell: p. 147. On arrival, the truck was parked beside the road near the property.
According to Mr. Cottell, he was going to leave the semi-trailer at the hotel, but he also said that he had spoken to Russell White and had arranged for him to get the truck the next day from his place where the keys would have been in it: p. 176-7. Such an arrangement seems inconsistent with his initial desire to leave the truck at the hotel which he abandoned only in the face of objections from Ms. Parrish.
There was some dispute as to just where it was parked. The area is shown in a number of photographs, most of which are Exhibit 35. Beside the house, there is a shed which is partly open, and there is a large area of vacant land near the shed, with some trees growing on it. The rough sketch of the area, prepared by Ms. Parrish, is Exhibit 20. It seems to me to be generally consistent with the photographs. Ms. Parrish said that she parked the truck on the opposite side of the shed to the house, beside the road, and behind another vehicle. She spoke of parking it on the footpath, and at one stage suggested that the truck had straddled the front boundary of the defendants' property, but it is clear from the photographs there was no obvious dividing line between the road and the footpath, or indeed the footpath and the property, in the area where the truck was parked, so I suspect that the only thing that is clear is that the vehicle was parked out of the line of traffic. Ms. Parrish marked the position on Exhibit 20, and on one of the photographs in Exhibit 21, but because of the angle of that photograph, I doubt if her marking is other than a very general indication of the position. One of the photographs in Exhibit 35 is also marked. That photograph was an exhibit in the criminal trial, and I suspect that it was marked by Ms. Parrish during that trial, but unfortunately it was not produced before me until after Ms. Parrish had given her evidence and returned to Townsville, so that mark on that photograph is not the subject of evidence before me. One thing both Ms. Parrish and Mr. Cottell agreed on; the truck was not parked in the shed. Indeed, the dimensions of the shed were such that it would not have been possible to get both the prime mover and the van into it (p. 65), but if the prime mover had been parked in the shed, part of the van would have been also, and it appears from the photographs, particularly those in Exhibit 21 which do show a different semi-trailer parked in front of the shed, that if this truck had been parked in that position, it would have been well clear of the road. All that matters is that it was in fact parked on the side of the road rather than in the shed.
It is common ground that the truck was not locked, and the keys were left in the ignition: p. 44. Ms. Parrish said that she left it on the footpath in response to an instruction from Mr. Cottell, and that he subsequently told her to leave the keys in it. She asked him to get out so she could lock up, because they had a lot of valuables in the truck, and he said to leave the keys in it: p. 43. She said she knew there was not going to be anyone at the house for a couple of nights. Mr. Cottell denied that there was any such instruction (p. 177; although he had admitted doing so in answers to interrogatories Exhibit 31), and said that it was usual for the keys to be left in the ignition. Ms. Parrish agreed that it was not uncommon to leave the keys in the truck (p. 68) and Mr. Ross agreed that this was common, although he qualified it by saying that it applied when Mr. Cottell as there, that is at the house, which would no doubt have been the ususal situation: p. 153, 156.
Ms. Parrish then went to collect a mobile phone from Mr. White, a friend of Mr. Cottell, because he wanted to have one on the boat with them (p. 45) and then Mr. Hearn, who had also been away for a short time, said that he was not going on the trip but was going to Brisbane to see his daughter: p. 45, p. 177. He left in the direction of his house, while the rest of the party went to purchase some supplies and then went to the marina where they arrived about midnight and spent the night on the boat: p. 178. The next morning they went out on the boat, where they remained until late in the day when Mr. Cottell was telephoned on the mobile by Mr. White who told him the truck was not where it was supposed to be: p. 47, p. 148. Mr. Cottell called some other people to check this at about 8 p.m. (Exhibit 25), and then headed back into Townsville: p. 47. Ms. Parrish said that on the way back to Mr. Cottell's place they drove past a truck yard because there was some talk about Mr. Hearn's truck having been repossessed, but did not see anything of significance: p. 48. Mr. Cottell said that it was his truck that they were looking for, which seems more plausible: p. 179. Under cross-examination he agreed with the proposition that it was Mr. Hearn's truck they were looking for (p. 208) but this may have been a slip: p. 213. At Mr. Cottell's house there was a screen off a window at the back of the house, but nothing was missing except for the semi-trailer: p. 180.
The following day Ms. Parrish and Mr. Ross went back to Mr. Cottell's house to see if they had found out anything. While there she telephoned a friend in Mackay, who told her that he had seen the truck near Mackay: p. 50. She passed this news on to Mr. Cottell, but he did not seem to take it seriously; he said that if someone was going to pinch the truck they would have taken it north. Mr. Cottell said he had had reports of its being seen in Cairns, Mareeba and Mt. Isa: p. 183.
In fact, it is quite possible that the friend did see the truck heading south, as Mr. Hearn took it to Roma. He had previously spoken to a Mr. Broughton whom he had known for a long time (p. 99) to arrange the use of a shed in Roma, and on 25 February 1991 he was in Roma with the semi-trailer, which was put into a shed owned by a company controlled by a Mr. Reardon, with whom Mr. Broughton had made an arrangement: p. 89, p. 100. This was the semi-trailer that had been stolen. Mr. Hearn removed the registration plates and some other things from the semi-trailer, and it was left in the shed while he departed for Brisbane. It was obvious to Mr. Broughton that it had been stolen: p. 107. Mr. Hearn flew from Roma to Brisbane on 25 February 1991 on a flight that left Roma at 10.55 a.m.: p. 130, Exhibit 27. Some time later the semi-trailer was seen in the shed by Mr. Reardon, who was paid by Mr. Hearn: p. 90.
Later Ms. Parrish and Mr. Ross did some driving for Mr. Hearn. On 1 May 1991 they had driven his semi-trailer to Sydney where they went to the Comet depot to pick up a load for Townsville: p. 54. While they were there they saw the Western Star prime mover which Mr. Hearn drove with the van which had been stolen attached to it: p. 55. Early the next morning this semi-trailer left: p. 56. Later that morning Mr. Ross rang Mr. Cottell and told him what he had seen, and was told that it would be sorted out when they returned to Townsville: p. 150. Mr. Cottell said that in this conversation he told Mr. Ross to make sure it was the van and call the police: p. 184. On the day they arrived in Townsville Mr. Hearn was not at his house; they dropped off the truck, and the following day spoke to Mr. Cottell who went to see Mr. Hearn, and said that Mr. Hearn denied having the truck: p. 184. They subsequently went to see Mr. Hearn who denied that it was that van. As a result Ms. Parrish and Mr. Ross spoke to the police: p. 57, p. 151. As mentioned earlier, on 4 May the trailer was burnt out at Lightning Ridge in New South Wales: p. 14.
In early May 1991, Mr. Hearn took the prime mover to an address at Springwood in Brisbane owned by Mr. Stenzel: Exhibit 7. By that time it had been painted in undercoat grey, and it had been brought there for the purpose of finishing the repainting. The truck was there for a couple of weeks, but police came to the premises and had a look at it. Mr. Stenzel told Mr. Hearn that this had occurred, whereupon Mr. Hearn promptly removed it.
On 10 June 1991 the prime mover was seen by Sergeant Taylor and Constable Asnicar on an undeveloped block at Bennett Road, Tara, with Mr. Hearn present: p. 126,137. The prime mover had been repainted in undercoat grey, and carried an interstate vehicle number plate QXO-OJY: p. 127. The keys were in the ignition which appeared to be undamaged: p. 127, 138. Later, the prime mover was moved to an old truck stop on the road between Meandarra and Surat, where Mr. Broughton set fire to it (p. 103) at the request of Mr. Hearn: p. 102.
On 17 June 1991 Sergeant Taylor found the burnt out remains of the prime mover, and saw chisel marks on the left hand side of the engine block: p. 138. The remains were subsequently brought to Brisbane where they were inspected by Mr. Simpson from the plaintiff company on 4 July 1991 who found some numbers which confirmed that the vehicle was the relevant prime mover, although the engine number had been removed: Exhibit 18. As mentioned earlier, on 20 November 1991 Mr. Hearn pleaded guilty to a charge of unlawful possession of the vehicle in the District Court at Roma: Exhibit 4. There had apparently previously been committal proceedings, and Mr. Cottell went to Roma on each occasion: p. 185. He said that on one of these occasions Mr. Hearn came to his motel and said that he was pleading guilty, but that was about the extent of the conversation: p. 186. He could not recall which occasion this was, but it must have been the second one. Ms. Parrish also went to the Roma Courthouse for what was to be the trial, and said that she saw Mr. Cottell, Mr. Hearn and Russell White outside the courthouse talking and laughing: p. 58. Mr. Ross gave similar evidence; he suggested that they acted as though they were having a good time: p. 152. Mr. Cottell said there was an incident outside the court when he was with these people and some others, when someone broke wind and everyone started laughing, but that was all it was: p. 186.
Mr. Broughton also recalled having seen Mr. Cottell in Roma prior to the second court case; he said that he was with Mr. Cottell and Mr. Hearn at Mr. Hearn's mother's residence, where they were having a drink together, when Mr. Cottell said something to the effect that if anyone came to shelf Jimmy he would have them taken care of (p. 103), and that they would get their kneecaps blown off: p. 104. He said this was the day before the court case, and that while they were there Mr. Hearn told him that he was going to plead guilty to the charge: p. 104. If this was just before Mr. Hearn's appearance in the District Court at Roma, it would have been in mid-November 1991: Exhibit 4. He said that Mr. Cottell was not present when that was said, as he was on the verandah of the house; the effect of this is that he was at the house, but not part of the conversation. Mr. Broughton had made a statement to police in July 1992 (Exhibit 24) in which he said that Mr. Cottell “was present” when Mr. Hearn said that he was going to plead guilty to the charge (p. 113), and also gave evidence at the trial of Mr. Cottell in Townsville in June 1994 when he said Mr. Cottell was not present when Mr. Hearn had said he was pleading guilty: p. 114. Faced with this material, Mr. Broughton conceded that he was not really sure about the matter (p. 115), although it does occur to me that the explanation may simply be that Mr. Cottell was present at the house at the time the statement was made, but was not actually part of the conversation in which it was made. There were some things that Mr. Broughton was obviously unsure about - he freely conceded that he was not good with dates: p. 111 - but he was quite definite that there was some such conversation involving Mr. Cottell prior to the court appearance of Mr. Hearn, and indeed under cross-examination he referred to an additional aspect of it, a proposal that the truck they were coming in be ambushed with a shotgun and the windscreen shot out: p. 117. He was not sure however whether this was said by Mr. Cottell or Mr. Hearn. Mr. Cottell denied any such conversation, or even having ever met Mr. Broughton: p. 187.
Claim On The Insurance
The first defendant signed a claim form on 26 February 1991 and this was lodged with the plaintiff: p. 19. The plaintiff's claims manager, Mr. Simpson, opened two files (one for the prime mover and one for the trailer) and on 1 March 1993 appointed an assessor, Robins MBS Australia Pty Ltd, to investigate: p. 19, Exhibit 22. The manager of that company appointed Mr. Gnezdiloff to investigate the matter and he rang Mr. Cottell to arrange to meet him the following day, 5 March, at about 1.30 p.m.: p. 93. Ms. Parrish was also present. Mr. Cottell gave an account of the evening, and Ms. Parrish said that when she drove the prime mover into the shed she turned off the engine, locked the cab and placed the key on a piece of fencing wire which is near one of the support posts at the rear of the shed: Exhibit 8. They went into the shed and she and Mr. Cottell pointed out to Mr. Gnezdiloff where the key was placed: p. 94. It appears from Exhibit 8 that Ms. Parrish's statement was confirmed by Mr. Cottell, and he admitted as much in his evidence, at least as to the presence of the keys on the wire in the shed: p. 181. Since the justification for the use of the wire was that the truck was in the shed (Exhibit 8) this impliedly confirmed that the truck was in the shed at the relevant time.
Ms. Parrish said that she was asked by Mr. Cottell to give this version to the assessor: p. 51. She did this because Mr. Cottell had promised her that when he got the insurance payout he would buy another truck for her and Mr. Ross to drive. She had said much the same in June 1992: Exhibit 28. Mr. Cottell admitted that he asked Ms. Parrish to say that the keys were on the wire in the shed (p. 180 contrary to his denial in answer to interrogatories: Exhibit 31) saying that this idea had been suggested to him by the police officer who investigated the loss of the truck. In the course of the transcribed conversation on 6 June 1992, Mr. Cottell, when challenged about his statement that the truck was in the shed at the time it was taken, said that he told the policeman, John Newman, who was investigating the matter, that the truck was outside, but Newman said that he would not get his insurance if it was outside the yard, and that for that reason he put that the truck was in the yard in the statement, although he did not assert in this conversation that the suggestion came from Mr. Newman. Indeed, at p. 22 of the transcript, Mr. Cottell specifically denied that Newman advised him to put this in the statement. He said that he told Newman this when he was making the statement and expressed some surprise that it was not in the statement. The statement, Exhibit 6, was not made until 20 June 1991, although in it he says that he spoke to police on 4 March 1991, the day before he spoke to the assessor. However he did say that the statement was signed weeks after it had originally been made. The statement was witnessed by Ms. Marlow, a property officer at the Townsville Police Station: p. 37.
The information provided to Mr. Gnezdiloff was included in the report from the assessors prepared by him and forwarded to Mr. Simpson: Exhibit 8. Mr. Gnezdiloff's report effectively recommended acceptance of the claims, and in response Mr. Simpson authorised him to obtain discharges from the defendants for the relevant amounts, less excesses and overdue premiums: Exhibit 9. In response to these instructions an offer to settle the claims in this way was sent to the first defendants dated 10 April 1991: Exhibit 11. The discharge in respect of the prime mover was signed by the first defendants on 15 April 1991 and by the third defendant on 15 May 1991 (Exhibit 13) and forwarded to the plaintiff. The discharge in respect of the trailer was signed by both the first and second defendants on 15 April 1991 and forwarded to the plaintiff the same day: Exhibit 14. I have already referred to the mechanics of payment.
Mr. Simpson said that if he had been told that the vehicle had been left outside the premises with the keys in the ignition while the first defendants had gone away for the weekend, he would not have authorised payment of the claim, because in these circumstances the first defendants would not have been acting prudently in relation to the property: p. 25. It seems that the important consideration here was the fact that the vehicle was left unlocked with the keys in it: p. 32. I take it that this is a reference to clause 4(i) of the exclusions for the policy which states that the policy does not cover “any loss damage or liability the occurrence of which could have been avoided by the exercise of reasonable care on the part of the insured or any persons acting on his behalf whether or not such occurrence was actually foreseen by the insured or the persons acting on the insured's behalf”: Exhibit 2.
According to Mr. Cottell, not long afterwards he became concerned about what he had done, and discussed the matter with a Mr. Terry Brown of Ward Thomas and Associates, who were insurance brokers: p. 182. According to Mr. Cottell, Mr. Brown said that he would ring someone about the matter, and later the same day or a couple of days later, Mr. Brown told him he had contacted Barry Kearney and that it did not seem to matter in the circumstances: p. 183. Mr. Cottell took this as an indication that he need not be concerned further about the matter.
Mr. Brown was called and said that at the time he was part of Ward Thomas and Associates who were finance and insurance brokers in Townsville: p. 230. He had known the first defendant since about 1985: p. 232. In 1991 he was arranging insurance for them, which included assisting with claims: p. 233. He assisted in the policy which the plaintiff had issued in respect of these vehicles, and also helped to fill in the claim forms: p. 235. Mr. Brown said that Mr. Cottell approached him in late March 1991 concerned about a statement made to Mr. Gnezdiloff. According to Mr. Brown, this was after Mr. Cottell had made two statements to the CIB and to the loss adjustors, and he asked whether that would affect the claim: p. 236, Mr. Brown said he would ring Barry Kearney, and did so and thought he would have relayed the fact that the keys were in the truck. He expressed the view that if you leave a motor vehicle with the keys in it and it gets stolen, that you have got no cover, but thought that the position was different under a truck policy, and he said he was sure that Mr. Kearney agreed with him that there was no problem about the claim because of this: p. 237. He said he relayed this back to Mr. Cottell: p. 238. Mr. Brown made no contemporaneous notes about this, although he said that sometime later when the plaintiff was facing trial he did make some notes which he put on his file. Such notes obviously do not carry the significance of some contemporaneous diary note.
Mr. Kearney was called; he is now the Brisbane manager of the plaintiff company, but he worked for it in Townsville from August 1990 to about July 1992: p. 162. Mr. Kearney said that he had no authority in relation to claims in 1991: p. 163. He recalled receiving notification of the first defendants' claim from Mr. Brown and passing it on to the Brisbane office: p. 164. He was not involved in the settlement of the claim. He said he had no recollection of a conversation where he told Mr. Brown that leaving the keys in the truck did not matter to the claim, and there was no note of such a conversation on his Townsville office file: p. 164. Indeed, he said he would not say something like that to Mr. Brown, and recalled a situation while he was in Brisbane when another claim had been declined because keys had been left in the vehicle: p. 164. Under cross-examination he conceded that the first time he had been required to think about whether he had had such a conversation was in June 1994: p. 167.
On 20 June 1991, Mr. Cottell signed a statement to the police concerning this matter: Exhibit 6, p. 191. In that statement Mr. Cottell said nothing about whether the vehicle was locked, but said that the semi-trailer was “parked inside the shed at my place”. Two paragraphs later he said that when he returned to his home on the Sunday evening, the semi-trailer was not “in the shed where it was left on the Saturday night”. Mr. Cottell admitted he lied in that statement: p. 191. The statement also said that “It wasn't until the 4th of March 1991 that police actually got back to me”. Mr. Cottell said in that statement that he had spoken to Russell White who had spoken to the police, so the matter had been reported to the police on 24 February 1991, but the statement suggests that Mr. Cottell did not personally speak to the police until 4 March 1991. Mr. Cottell spoke to Mr. Gnezdiloff the following day: p. 93.
In May 1992, Mr. Sexton, a private inquiry agent received instructions to investigate the matter, and on 16 May 1992 spoke to Mr. Cottell and Mrs Cottell in relation to the matter: p. 120. That conversation was tape recorded and a transcript became Exhibit 25. That interview did not deal directly with the question of whether the vehicle was locked or where the truck was left, apart from a reference to Mr. Cottell's having said to Russell White when he telephoned while they were on the boat that “it's in the yard”.
There was a further conversation between Mr. Sexton and a Mr. Arnold, on behalf of the plaintiff, and the first defendants, on 6 June 1992, which was also recorded and transcribed: Exhibit 26.
During this conversation he maintained that the keys were left in the truck because one of Russell White's drivers was to take the truck to Cairns the following day, but that it was the usual practice to leave keys in the truck at the weekend. His statements however were essentially to the effect that the keys would have been left in it anyway, even if there was no intention to use it, because that was what was always done. He also spoke about the incident when Eric Ross had reported seeing the truck in Sydney, and said that he told Mr. Ross “go up, make sure and I said ring the police”. He did not hear anymore about it until they got back to Townsville when Mr. Ross said they had not rung the police “otherwise if he got away it'd go back into hiding”. Mr. Cottell asserted that he had asked Mr. Hearn several times whether he had the truck but Mr. Hearn had always denied it, and indeed denied it even after he said he was pleading guilty. Indeed, Mr. Cottell maintained in that conversation that he did not believe Mr. Hearn had actually taken the truck from Townsville, relying on the sighting attributed to a Mr. Mashman of the truck being driven by someone who was quite young at 9 o'clock on Sunday morning.
On 8 July 1992, Mr. Cottell signed a statement and declaration for the police concerning the matter (Exhibit 24) in which he again said that the semi-trailer was left “parked inside the shed at my place”. This was curious, in view of the conversation on 6 June 1992 (Exhibit 26) when he had admitted that such a claim was false. Mr. Cottell admitted that this statement was false, but did not offer any explanation: p. 192.
Credibility of Witnesses
There are some conflicts of evidence and it is necessary that I arrive at a conclusion as to credibility of witnesses, particularly as between Mr. Cottell and the various witnesses for the plaintiff, where there are a number of conflicts of evidence. The only witness whose demeanour in the witness box left me with an impression of being doubtful as to his honesty was Mr. Brown, the insurance broker who was, I think, not an impressive witness. Mr. Cottell I thought gave his evidence clearly and naturally, as did the witnesses for the plaintiff. An attack was made on the reliability of the evidence of Mr. Broughton, and there were aspects of his evidence where he admitted some uncertainty, but he stuck to his basic story during cross-examination, and notwithstanding that Mr. Cottell was seated at the end of the bar table, only a few feet from the witness box. If Mr. Broughton was lying, he was a good actor, and there is the further consideration that no explanation has been offered as to why he should want to lie about Mr. Cottell in the interest of the insurance company. Interestingly, when Mr. White was mentioned to him he appeared to be able to recall spontaneously a description of him: p. 117. He did not seem to be confusing Mr. White and Mr. Cottell, but it is possible that there was some such confusion.
I have referred to a number of inconsistencies in the evidence of Mr. Cottell, or other difficulties I find with it, in the course of my discussion of the facts. He has admitted to making a false statement to the insurance adjustor, and in statements to the police. He gave a version of the conversation with Mr. Ross on the morning after Mr. Ross and Ms. Parrish had seen the stolen van in Sydney which is, I think, a little curious; Mr. Hearn had left with the van before that conversation, and in those circumstances there was no point in telling Mr. Ross to go and make sure that it was the truck: p. 184. Mr. Ross' version (p. 150) I think fits better with the facts, unless of course Mr. Ross and Ms. Parrish are lying about whether Mr. Hearn had already left at the time of this telephone call.
Some inconsistencies are not necessarily inconsistent with honest and reliable evidence, but it is necessary to consider the combined effect of all of the factors to which I have referred. On the whole, I am not prepared to regard Mr. Cottell as an honest and reliable witness, and in general where there is a conflict of evidence I will prefer the evidence of the other witness.
Was Mr. Cottell A Party To The Theft?
There is no direct evidence of this, but the plaintiff relies on a circumstantial case. A number of particular primary facts were put forward and relied on for this purpose. The first is that Mr. Cottell and Mr. Hearn were friends, and I am prepared to find to that effect. It was also submitted that conversations had occurred in private between them on 23 February 1991 at the hotel. So far as it goes I am prepared to find that that occurred, but I do not think that this is particularly significant. Certainly there was some pre-planning by Mr. Hearn as evidenced by the arrangements made with Mr. Broughton in Roma, and if Mr. Cottell was part of this, this would have been an opportunity for final arrangements to be made. But I think it provides little more than that. It would have been possible for Mr. Hearn to pretend that he was drunker than he really was, although what he said to Mr. Broughton on the subject in Exhibit 24 is not evidence of the truth of that statement as against the first defendants. I am also prepared to find that Mr. Cottell instructed Ms. Parrish to leave the semi-trailer unlocked with the keys in the ignition. Whether it was parked outside or in the shed I think does not matter very much; if Mr. Hearn had the keys he could have easily extracted the truck from the shed. Ms. Parrish parked the truck where it was usually parked (Exhibit 28 where she did not say that Mr. Cottell told her not to put it in the shed). This again is consistent with there being an arrangement between Mr. Cottell and Mr. Hearn, but it is also consistent with the proposition that the truck was to be taken north by another driver the following day or that the usual practice was being followed. If there was not going to be anyone at the house, the keys would have to be left in the truck, or with someone else, for that purpose. Mr. Ross appeared to concede that it might have been the case that the truck was to go to Cairns the following night: p. 153. Furthermore, it was apparently not Mr. White personally who was going to drive the truck north, but a driver working for him: Exhibit 26. It would therefore have not necessarily been helpful for the truck to be locked and the keys taken by Mr. Ross and Ms. Parrish when they went to collect the mobile phone from Mr. White later in the evening. She and Mr. Ross admitted that it was the usual practice to leave the keys in the trucks, and there is no evidence to contradict that proposition which has been consistently asserted by Mr. Cottell. If the truck was to be taken north by someone else the following day, while everyone else was out on the boat trip, following the usual practice in this regard may well have presented itself as a sensible thing to do, particularly to someone whose judgment was impaired by alcohol.
There was also the circumstance that Mr. White did ring while Mr. Cottell was out on the boat. The obvious explanation for his having done so is that his driver had been wanting to take the truck north but could not find it, and so had contacted him. If there was no arrangement for the truck to go north for Mr. White on the Sunday, there was no reason why he should have been concerned to look for the truck and no reason for him to be telephoning Mr. Cottell. It also appears that he telephoned the police at that stage. If there was no such arrangement for the use of the truck, either this was a coincidence or it was part of the plan. It is possible that Mr. White was involved in the plan, but if so it is not immediately obvious what advantage there was in drawing attention on the Sunday evening to the fact that the truck had gone. The truck had to be taken to Roma, and obviously it would have been better for that journey to be completed and the truck safely locked away in the shed there before the police were notified. Coming back early from the boat trip to “discover” that the truck was missing does not obviously assist that process. Possibly there was no arrangement for the truck to be taken north but Mr. White happened to discover that the truck was not where it ought to have been and became concerned, and Mr. Cottell then felt that he had to become concerned as well, or possibly there was an arrangement for Mr. White to take the truck north but this was used to provide an excuse for the keys to be left in the truck so as to make it easier for Mr. Hearn to take it. But I think that Mr. White's actions suggest that there was an arrangement for one of his drivers to take the truck north and that does provide an innocent explanation for Mr. Cottell's being concerned that night for the truck to be accessible to someone on Sunday.
What is a little more difficult to understand however is the initial desire to leave the truck at the hotel, particularly if there had already been an arrangement made for Mr. White or his driver to pick it up at the house the following day. On the other hand, if there were a plan with Mr. Hearn, leaving the truck at the hotel would seem to increase the risk of someone's spotting Mr. Hearn when he came and collected it, and would, I think, make it more difficult to justify leaving it unlocked with the key in the ignition. Indeed, one would think in those circumstances there would have to be some risk that the plan would be frustrated by someone else getting in first. This feature is odd, but it is difficult to regard it as particularly incriminating.
It was submitted on behalf of the plaintiff that it would have been merely a remotely possible coincidence if the truck had been left outside on the footpath with the keys in it on the same night that Mr. Hearn stole it in a pre-planned theft. But if it were the usual practice to leave keys in trucks around the first defendant's place, and Mr. Hearn knew this, it would have been simply a matter of choosing a suitable opportunity when everyone was away and the disappearance of a particular truck was unlikely to be missed for some time. Mr. Hearn was present at the time when the arrangement was made for the fishing tip, and that would have presented itself as a suitable opportunity for carrying out his plan. There was nothing in the evidence about pre-planning to suggest that there was any prior intention to steal the truck on this particular weekend, and apparently Mr. Broughton was not aware that the shed was immediately required until Mr. Hearn had actually arrived in Roma on the Monday. That is consistent with the theft having been opportunistic in response to the arrangement of the fishing party. Once Mr. Hearn knew about this, he could have put into effect his plan by pretending to be drunker than he was so as to give himself an excuse for pulling out at the last minute, at which point he also gave himself an excuse for being away from Townsville for a time. Initially agreeing to be part of the fishing party gave him the opportunity to keep an eye on it and ensure that that plan was not changed, something he would not have had to worry about if he had been planning this with Mr. Cottell.
The next circumstance that was relied on was the proposition that Mr. Cottell instructed Ms. Parrish to lie to the insurance assessor, Mr. Gnezdiloff. I am prepared to find that this occurred, but there is a much more obvious explanation for this than Mr. Cottell's possible involvement in the theft; Mr. Cottell's desire to avoid the loss of the insurance cover because the vehicle was left unlocked with the key in it. Mr. Cottell may have been told this by a policeman, or may have worked it out for himself, but a desire to prevent the insurance cover from being lost provides him with ample motive for lying in these circumstances. The same applies to his lies to Mr. Gnezdiloff and the police. It was submitted that a further circumstance is that nothing was done by Mr. Cottell in relation to the apparent sighting of the rig near Mackay when this was passed on to him from Ms. Parrish. The difficulty with this is that Mr. Cottell has given a plausible explanation for this, that there were other inconsistent reports of the whereabouts of the truck, which has not been shown to be false. Although I am wary about Mr. Cottell's evidence, I am not prepared to find positively that he was lying about this. This is something he has said consistently, and even identified a particular person to the insurance investigator as someone else who had seen the truck.
The next matter relied on is the fact that Mr. Hearn suddenly decided to go to Brisbane on the evening of 23 February 1991. That is true, but I think as consistent with his having decided independently to steal the truck as his having decided to do so in conjunction with Mr. Cottell.
The next matter relied on is that Mr. Cottell arranged for Mr. Ross and Ms. Parrish to work for Mr. Hearn. The evidence however was that Mr. White made this arrangement, and even if Mr. Cottell was involved, it does not seem to me to be in any way incriminating.
The next matter relied on was that a couple of days after Mr. Cottell was told by Mr. Ross of the sighting of the van, it was burnt at Lightning Ridge in New South Wales. This is certainly a cause for suspicion, but the alternative explanation, that Mr. Hearn had realised that he had or may have been spotted by Mr. Ross and Ms. Parrish, is, I think, also plausible. Certainly Mr. Hearn did not leave Sydney in response to a tip off from Mr. Cottell, but he may have left Sydney early as a result of noticing that the van had been seen, or that it would have been seen later in the morning.
The next matter was that Mr. Cottell had failed to inform anyone of the sighting of the van at the Comet depot. But if the version given by Mr. Ross of the phone call is correct, it is not particularly surprising that Mr. Cottell did not immediately report the matter to the police. Mr. Cottell may have been reluctant to believe ill of Mr. Hearn, and may have been reluctant to report to the police a sighting which he could not personally verify. Once Mr. Ross and Ms. Parrish returned to Townsville, they reported the matter to the police promptly and Mr. Cottell would have expected this.
The next matter relied on was Mr. Cottell's conversation referred to in the evidence of Mr. Broughton. This however is not consistent only with there having been a plan to steal the semi-trailer; it may have been simply part of a desire on Mr. Cottell's part for Mr. Hearn not to go to prison or to be seen to be standing up for his mate. Indeed, the whole conversation has more of an air of providing enthusiastic support to a mate than any sort of serious threat. Apart from anything else, Mr. Cottell was well aware of the people responsible for identifying Mr. Hearn as being involved in the theft of the semi-trailer, by identifying his possession of the trailer, while his being in possession of the prime mover was verified by the police who had seen him with it. I do not think that these comments by Mr. Cottell, and the subsequent friendliness displayed to Mr. Hearn outside the Roma Courthouse (which I find was a lot more extensive than Mr. Cottell was prepared to admit to) is particularly incriminating, its main significance being that it tends to support the proposition that Mr. Cottell and Mr. Hearn were good friends.
Finally, it was submitted that the fact that Mr. Hearn had introduced Mr. Broughton to Mr. Cottell in Townsville shortly after the prime mover was destroyed (p. 103) was very suspicious, because of the risk of Mr. Broughton's saying something which would tip off Mr. Cottell as to what had occurred. But by this time Mr. Cottell had been tipped off about the possible involvement of Mr. Hearn anyway, and there is no suggestion that at the introduction they sat down and had a long talk about things. It may have been simply that Mr. Broughton was with Mr. Hearn at a time when they came upon Mr. Cottell, and Mr. Hearn spoke to Mr. Cottell because they were friends, and introduced Mr. Broughton because Mr. Broughton was with him. Mr. Broughton was not brought to Townsville in order to meet Mr. Cottell: Exhibit 24.
It is important to bear in mind that what matters is the combined effect of these various circumstances, some of which are suspicious, even if, seen individually, they may be susceptible of explanations. The standard of satisfaction is on the balance of probabilities, whether the circumstances raise a more probable inference in favour of what is alleged rather than another reasonable hypothesis - Thiess v. TCN Channel 9 Pty Ltd No. 5) 1994 1 Qd.R. 156 at 174 - although the fact that what is being alleged against that Mr. Cottell is fraud and involvement in a criminal act is a circumstance which should properly be borne in mind when considering whether I really am satisfied on that standard: Rejfek v. McElroy (1965) 112 CLR 517 at 521; AMP Fire and General Insurance Co Ltd v. Collie (1991) 6 ANZ Insur. Cas. 77, 279. The fact that I do not regard Mr. Cottell as a reliable witness does nothing in itself to strengthen the case against him. Overall, I am not persuaded that these circumstances taken together lead to a conclusion that the more probable inference is that Mr. Cottell was a party to the theft. It seems to me that the alternative explanation, that Mr. Hearn exploited his friendship with Mr. Cottell and the knowledge it gave him to steal the truck, and later to deny to Mr. Cottell that he had taken it (if that in fact occurred) is a more obvious explanation for the circumstances, and is not really inconsistent with either any of the individual facts relied on, or their combined effect.
There are two matters which I mentioned during the trial as of some relevance to this question. The first is that to some extent the behaviour of Mr. Hearn was odd, particularly in destroying both the prime mover and the semi-trailer. It did strike me that this would be consistent with ensuring that neither could be recovered, so as to prevent any risk that Mr. Cottell might have to give back the money from the insurance company. However, it may be that Mr. Hearn did think that this was a sensible way of attempting to cover his tracks. Mr. Hearn certainly put the van to use, and was apparently arranging to have the prime mover repainted, presumably so that he could use it or sell it. It is not as though he just took the truck, drove it deep into the bush and burned it, which would have been enough to give Mr. Cottell the basis of a claim on his insurance if that were the object of the exercise. I still think Mr. Hearn's actions suspicious but do not think that I should draw any inference against the first defendants as a result of that.
The other factor is that there is no particularly obvious motive for the first defendants to behave in this way. What they were paid by the insurance company was apparently consistent with or within market valuation of the prime mover and the trailer (Exhibit 8) so they are not obviously better off than if they had simply sold the vehicles and paid out the finance companies, so far as they could. There was no evidence that Mr. Cottell had been trying to sell the semi-trailer and been unable to find a buyer. In addition, they lost the benefit of a lucrative arrangement under which the truck was used. Mr. White had an incentive to bring this arrangement to an end, but it is not obvious that Mr. Cottell had any such incentive. The only motive ultimately relied on by the plaintiff was a desire to assist Mr. Hearn who was apparently in some financial difficulties, but that circumstance also provides a motive for Mr. Hearn's wanting to steal the truck without Mr. Cottell's involvement. I think the absence of any obvious advantage to the first defendants in what was done here is something of a weakness in the plaintiff's case. I recognise that proof of motive, although useful, is not a necessary part of a fraud case: AMP v. Collie (supra) at p. 77, 282. It is possible of course that their motive was just not exposed by the evidence, but I cannot assume against them any such motive.
Insofar as the plaintiff's case relies on the proposition that the first defendants, or at least the male first defendant, was a party to the theft of the truck, the case fails.
Counsel for the plaintiff submitted that statements made by Mr. Hearn in furtherance of the common purpose were admissible against the defendant, relying on Sheldon v. Sun Allianace Limited (1988) 50 SASR 236 and Tripoli v. R (1961) 104 CLR 1. I do not think that the case of the existence of a common purpose between Mr. Cottell and Mr. Hearn is sufficiently clearly established by other evidence to make Mr. Hearn's statements admissible against Mr. Cottell on this basis, and in any case I do not think that they are deserving of any significant weight. Mr. Hearn's statements to Mr. Broughton could easily have been an attempt by the former to play down his own criminality. Indeed, the proposition that was advanced (at p. 4 of Exhibit 24) that Mr. Cottell was in trouble with the truck and wanted the insurance is not supported by any other evidence; so far as any other evidence in the matter goes, Mr. Cottell's position was financially sound and there was no benefit to him from ending the use to which the vehicle was being put.
Alternative Claim
I am satisfied that, in support of the claim under the policy, Mr. Cottell made statements to Mr. Gnezdiloff that the semi-trailer had been left in the shed at the Cottell's premises locked and with the key hanging on a piece of wire in the shed, when in fact it was parked beside the road, unlocked with the key in the ignition. The significant aspect of this for the purposes of insurance is that it was unlocked with the key in the ignition. Mr. Cottell knew that this was false and made the statement deliberately in order to secure payment under the insurance policy. Leaving the vehicle unlocked with the key in the ignition was, in my opinion, a breach of clause 4(i) of the exclusions to the policy, and the similar provision in Condition 7. This requires more than mere negligence in caring for the property: MacGillivray on Insurance Law (9th ed., 1997) p. 752. But leaving the truck unlocked with the key in it for an extended period when no one would be around to keep an eye on it, including at night, was, I think, inviting theft: c.f. Devco Holder Ltd v. General Assurance Society Ltd [1993] 2 L1. Rep. 567. In addition, Condition 2 provided that no false declaration or statement shall be made in support of any claim under this policy. The plaintiff therefore in fact was entitled to refuse to pay under the policy - Gugliotti v. Commercial Union Assurance Co of Australia (1992) 7 ANZ Insur. Cas. 77, 447 - but did pay. It follows that the claim was made fraudulently in that Mr. Cottell knew that these statements were in this respect false and made them in order to obtain payment of a benefit to which the plaintiff was not entitled.
The claim being fraudulent, prima facie the plaintiff is entitled to recover the amount paid out as damages for deceit, subject to any defence and subject to any amounts already recovered from the other defendants: London Assurance Co v. Clare (1937) 57 L1.L.R. 254. The money may also be recoverable on the alternative basis alleged, as money had and received. In response the first defendants allege that the relevant facts were disclosed to Mr. Brown in late March 1991, and that, prior to the claim being paid, Mr. Brown made contact with Mr. Kearney on behalf of the plaintiff, and was told that this did not matter, and passed on that assurance to Mr. Cottell. It does not appear that this came to the attention of any of the people in fact involved in processing the claim and making the payment to the second and third defendants, and it was not argued that this had the effect of breaking the chain of causation between the first defendants' fraud and the payment out. The submission was rather that the plaintiff was bound by this representation made by Mr. Brown, and that the plaintiff was therefore estopped from now relying on this circumstance as the basis for recovery of the amount paid as damages for deceit. On the former point, reference was made to the agency agreement, Exhibit 33, as showing that Mr. Brown was an agent of the plaintiff for the purposes of the Insurance (Agents and Brokers) Act 1984, with the consequence that, notwithstanding any actual limitation of the authority of Mr. Brown or his company in relation to claims made by persons such as the first defendants, pursuit to s. 11 of that Act, the plaintiff was responsible as against the first defendants for the conduct including representations of Mr. Brown. What is relevant therefore was what Mr. Brown said to Mr. Cottell, regardless of what had been said by Mr. Kearney, although if Mr. Brown were simply passing on what had been said by Mr. Kearney, this may not matter because presumable Mr. Kearney had authority to make representations binding on the plaintiff.
The first question therefore is whether such a representation was made. It was submitted on behalf of the plaintiff that I should not be satisfied that such a thing had ever occurred. Although both Mr. Cottell and Mr. Brown said that there was such a statement, for reasons given earlier, I am wary about the evidence of both of them. In addition, Mr. Brown made a statement to police in August 1993 (Exhibit 37) in which he said that once the claim form had been forwarded to the plaintiff he had nothing further to do with the matter; if his evidence in court were correct, that statement was false. It is, of course, possible that there was no reference to the later statements because that was not regarded by the police as relevant to their inquiries, but the alternative explanation is that there was, in fact, no later contact. There were no contemporaneous notes of it. In addition, Mr. Brown's evidence was to the effect that his own view was that leaving the keys in the vehicle, would not make any difference under the policy (p. 237-8), although he said that it would be different “with a motor vehicle” without providing any particular justification for the position being different under this policy. I thought this aspect of his evidence was unsatisfactory and unconvincing. Mr. Brown was evidently also a friend of Mr. Cottell; he gave character evidence in favour of Mr. Cottell at his trial: p. 243.
In addition, it seems strange that Mr. Cottell would persist in making false statements to police on oath, if he had been told in effect that it would not adversely affect his insurance claim if he told the truth to the police about where the vehicle was; the police statement does not actually say that the vehicle was left locked rather than unlocked. Mr. Cottell could have had the statement changed before he signed it in June 1991, and could have changed the later statement that he signed (Exhibit 34). In addition, this was not disclosed in the conversation with Mr. Sexton on 16 May 1992, and there was one thing said which was inconsistent with the truth. The matter was not raised with any person investigating the claim until after Mr. Arnold, on 6 June 1992, made it clear that they had been told that the earlier statement was false. Even then Mr. Cottell did not refer to Mr. Brown, which I think would have been a natural thing to do had such a conversation actually occurred.
I also think it unlikely that Mr. Kearney would say that it did not make any difference that the truck was unlocked with the keys in the ignition, since his evidence (p. 164) and that of Mr. Simpson (p. 25), which was the only evidence touching on the matter apart from that of Mr. Brown, is that this would be regarded as a serious matter for the purposes of an insurance claim under this policy and would prevent payment. It is possible that Mr. Kearney has simply forgotten such a conversation, and that at the time he was willing to overlook the matter in the interests of maintaining a good relationship with Mr. Cottell, who had been responsible, directly or indirectly, for quite a bit of business in Townsville, although it would have required quite a lot of business to offset the loss suffered when they paid out this claim. On the whole, I think it unlikely that Mr. Kearney was telephoned and made the statements attributed to him by Mr. Brown, and that is a further matter going against my acceptance of Mr. Brown's evidence.
In all the circumstances I am not prepared to accept the evidence of Mr. Cottell and Mr. Brown that there was any such conversation in which the true situation about the position and condition of the vehicle at the time was disclosed, and Mr. Cottell was told that it would not make any difference. Since such a conversation is the foundation of the first defendants' claim of estoppel, that must fail. It is therefore, I think, really unnecessary for me to consider that claim further, although it seems to me that, even if there had been such a statement and it could be treated as a representation binding on the plaintiff, it is not obvious how this could give rise to an estoppel, since it does not appear that the first defendants have suffered any material disadvantage through relying on the representation. Two matters were particularly relied on amounting to detriment. The first was that the first defendants had lost the opportunity to withdraw the false statements made to the assessor before the claim was paid, so as to turn the claim into one which was not fraudulent. Leaving aside the question of whether the making of a fraudulent claim is something which can be cured in this way, if it can be the first defendants still face the difficulty that on the true facts the plaintiff would have been entitled to, and on the evidence, would have refused to pay the claim. Perhaps they refrained from correcting the false statements made earlier to the assessor. Mr. Cottell's evidence on this point at p. 183 was very vague; he said that he did not know what he would have done if there had been a different response. The claim was paid, but that is not a disadvantage, nor is the obligation to repay the claim, since that simply puts them in the same position as they would have been in if they had not relied on the estoppel, but had disclosed the falsity of the earlier statement before payment of the claim. I am satisfied that if they had done so then the claim would not have been paid.
The other matter relied on was the fact that the leases were paid out and a truck was bought so that the first defendants incurred obligations on the basis that the payment out had been made. There was no evidence of any change of position in reliance on the payment of the claim; the money received was used to pay out to the relevant extent the finance obligations, of which the balance was refinanced and paid out, but this represented money which would have been paid out anyway. The truck was not immediately replaced. This particular run was taken out of the hands of the first defendants and any truck bought later must have been bought for other reasons than as a direct replacement for the vehicle that was stolen; in any case, the evidence does not establish to the contrary. There was no evidence of any particular steps taken in reliance on the representation other than failing to correct the matter at the time. There was simply no evidence about their having done anything in particular on the basis that the claim would be paid or the money paid would not be recovered. It is clear that there must be some significant detriment to support an estoppel; it is not enough that expectation soar or that social habits change: Salamon Nominees Pty Ltd v. Moneywood Pty Ltd (Queensland Court of Appeal, appeal 4852/98, 22.12.98, unreported). See also Hawker Pacific Pty Ltd v. Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 307 per Handley JA. In my opinion, the evidence in the present case is not sufficient to sustain an estoppel, even if there had been a representation.
It follows that the defence fails and the plaintiff is entitled to recover the amount paid out less the amount already recovered from other sources.
As a result of the claim, the plaintiff paid $73,480.35 to the second defendant, $90,480 to the third defendant, and allowed the first defendants $5,179.65 as a credit to unpaid premiums: Exhibits 15, 16. This totals $169,500. The plaintiff has, however, recovered part of this as a result of a settlement of the claims against the second and third defendants. After deducting the amounts paid by way of costs, the second defendant paid $37,240 and the third defendant paid $45,000. This totals $82,240, and when deducted it leaves a balance of $87,260 outstanding. This is the amount claimed in amendments made on the third day of the trial by leave: p. 169. The plaintiff is therefore entitled to judgment in this amount.
Interest is also claimed. As I mentioned earlier, it seems to me that this matter has taken an unduly long time to come to trial. As presently advised, there is no obvious reason why it could not have been tried promptly after the conclusion of the criminal proceedings in July 1994. My present view is that the plaintiff should be confined to four years interest on this amount pursuant to s. 47 of the Supreme Court Act 1991, but this aspect of the matter has not yet been the subject of full argument, and I am prepared to hear the parties further if either party wishes to submit to the contrary. Subject to argument again, I think the appropriate interest rate would be 10% per annum. I am also prepared to hear submissions in relation to costs, if either party wishes to argue for an order other than that the first defendants pay the plaintiff's costs of the proceeding to be assessed.
Counsel for the plaintiff: | P. Smith |
Counsel for the first defendant: | N.J. Thompson |
Solicitors for the plaintiff: | Cranston and McEachern |
Solicitors for the first defendant: | Suthers and Taylor |
Dates of hearing: | 17-20 May 1999 |