Zeait v Insurance Australia Limited t/as NRMA Insurance

1. [1]

   HER HONOUR: This is an appeal from the decision of his Honour Local Court Magistrate Brown dated 30 July 2015. On 1 August 2013, at the roundabout at the intersection of Chetwynd Road and Morris Street, Guildford the plaintiff was involved in a collision resulting in substantial damage to her vehicle. In the Local Court proceedings, the plaintiff sued the defendant Insurance Australia Limited t/as NRMA Insurance because it denied an insurance payout to her for a claim made with respect to damage to her vehicle resulting from the collision.

2. [2]

   By amended summons filed 10 September 2015, the plaintiff seeks firstly, that the appeal be allowed; secondly, an order that the judgment of his Honour Magistrate Brown dated 30 July 2015 be set aside; thirdly, that there be judgment for the plaintiff; and fourthly, in the alternative, that the matter be remitted to the Local Court for rehearing.

3. [3]

   The plaintiff in these proceedings is Nini Zeait (“Ms Zeait”), who was the plaintiff in the Local Court proceedings. The defendant is Insurance Australia Limited t/as NRMA Insurance (“NRMA”), who was the defendant in the Local Court proceedings. The parties relied on the material contained in the court book filed 26 February 2016.

The appeal

1. [4]

   Section 39 of the Local Court Act 2007 (NSW) provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law.

2. [5]

   Section 41 of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or (d) by dismissing the appeal.

Factual background

1. [6]

   Ms Zeait is the owner of a Mercedes CLK 240 convertible (“the vehicle”). The vehicle was purchased in 2008 at a cost of approximately $55,000 after purchase price, auction fees and registration.

2. [7]

   After the vehicle was registered, Ms Zeait obtained a comprehensive insurance policy from NRMA. The agreed value of the vehicle under the policy was $60,500 (S/C [6]; D [3(a)]).

3. [8]

   On 1 August 2013, the vehicle was involved in a collision with another vehicle at a roundabout in Merrylands, New South Wales. The vehicle was being driven at the time by Ms Zeait. Mr Zeait, the plaintiff’s husband, was a passenger. The other vehicle was being driven by Mr Baalbaki.

4. [9]

   Following the collision, Ms Zeait lodged a claim with NRMA under her policy of comprehensive motor vehicle insurance. NRMA refused to indemnify Ms Zeait.

The Local Court proceedings

1. [10]

   By statement of claim filed in the Local Court on 8 April 2014 the plaintiff sued the defendant for payment of the agreed sum of $60,500 under the comprehensive insurance policy.

2. [11]

   By defence dated 14 Mar 2014 and filed in the Local Court, the defendant pleaded that the plaintiff was not involved in an accident as alleged or at all, that she or someone acting with her knowledge and consent caused deliberate damage to the vehicle, that the plaintiff failed to prove that the damage claimed was caused by an event covered by the policy and that she failed to prove that there was an accidental collision that gave rise to a loss that is claimable pursuant to the insurance policy (Defence [4] & [5]). The other matters pleaded in the defence were not addressed by either party during the two days of hearing and the Magistrate considered them abandoned (J [3]).

Hearing in the Local Court

1. [12]

   The proceedings were heard in the Local Court at Parramatta on 17 March 2015 and 22 June 2015.

2. [13]

   At the trial it was common ground as to the ownership of the vehicle, the existence of a comprehensive insurance policy, that the damage was caused to the plaintiff’s vehicle by a collision with another motor vehicle and the agreed value of the quantum of damages (J [1]).

3. [14]

   In dispute was whether the damage caused to the plaintiff’s vehicle was accidental or not and therefore whether it was covered by the policy of insurance. The plaintiff’s case was that the damage was caused accidentally and was covered by the policy of insurance. The defendant’s case was that the damage was not accidental and therefore was not covered by Ms Zeait’s comprehensive insurance policy with NRMA.

4. [15]

   The plaintiff relied on her statement and that of her husband, both filed 8 August 2014, and the statement of Mr Baalbaki, filed 6 November 2014. The defendant relied on the affidavit of Suzanne Pankiw, who witnessed the accident, dated 25 September 2014 and the traffic accident investigation report of a crash investigator, Mr George, dated 12 Stepember 2014. All of these witnesses gave evidence and were cross examined.

Evidence of the collision

1. [16]

   At the hearing the witnesses gave differing accounts of what occurred during the collision.

2. [17]

   Ms Zeait’s version of events is that on 1 August 2013 she was driving her vehicle along Chetwynd Road with her husband, Salim Zeait, as passenger. After she entered the roundabout at Morris Street, a vehicle struck her vehicle on the side at the passenger door and the rear quarter panel. Ms Zeait stopped her vehicle and the other vehicle was leaning against hers in the area in which it had struck. The driver of the other vehicle, Mr Baalbaki, was an old man who was unknown to Ms Zeait. He got out of his vehicle and had a brief exchange with Ms Zeait. He then got back into his car. Ms Zeait said that when he attempted to reverse, his car went forward and struck Ms Zeait’s vehicle a second time, this time in the rear corner, breaking the rear tail light. Once both vehicles had cleared from the road, Ms Zeait went over to Mr Baalbaki and they exchanged details (Statement, 7/8/2014, [13]-[24]). In cross examination, Ms Zeait’s evidence was that Mr Baalbaki’s vehicle reversed approximately six or eight inches before moving forward and colliding with Ms Zeait’s vehicle a second time (T20.32-40 17/3/2015).

3. [18]

   Mr Zeait said he witnessed Mr Baalbaki’s vehicle impact Ms Zeait’s vehicle twice. He said he recognised Mr Baalbaki as a parishioner from his church, although he had not spoken to him before (Statement, 7/8/2014, [10]-[19]). In cross examination, Mr Zeait was asked whether the vehicle he was a passenger in continued to travel after it was hit. His evidence was that the vehicle travelled forward “maybe 3 metres, maybe 2 metres, maybe 4 metres”, however he could not remember (T54.38-9 17/3/2015). This was contrary to Ms Zeait’s version, who in cross examination said she stopped her vehicle immediately when it was hit (T16.27 17/3/2015).

4. [19]

   Mr Baalbaki admitted he collided with another vehicle and exchanged details with the female driver (Statement, 5/11/2014, [7]-[8]). Mr Baalbaki said he later saw Mr Zeait at the church he attended ([25]). Mr Baalbaki underwent an interview with crash investigator Deon Giampietro as part of the NRMA’s investigation of Mr Zeait’s claim. In that record of interview, Mr Giampietro asked Mr Baalbaki how many times his vehicle impacted with Ms Zeait’s car. Mr Baalbaki’s evidence was he only hit the vehicle once (Record of Interview, 1/11/2013, Q324). He then said that the other vehicle rotated and impacted with the side of his car (Record of Interview, 1/11/2013, Q325-6). That evidence also indicates that there were two impacts with the plaintiff’s vehicle.

5. [20]

   For completeness, Ms Pankiw’s version is that she witnessed Mr Baalbaki’s vehicle collide with Ms Zeait’s car twice. After the first impact, Mr Baalbaki’s reversed “maybe several feet back” before it drove into Ms Zeait’s car in the roundabout again. Ms Pankiw estimated that the second collision happened “2 or 3 minutes after the first collision”. Ms Pankiw did not see the drivers, who she thought were both males, exchange details (Pankiw Aff, 25/9/14, [4]-[6], [8]-[16]). The Magistrate reproduced portions of Ms Pankiw’s statement (reproduced later in this judgment). He did not refer to the following statements contained in her record of interview with crash investigator Mr Giampietro on 30 October 2013:

6. [21]

   In other words, she was saying that it was a staged accident. All of the witnesses say that there were two impacts, although their versions as to how they occurred differed.

7. [22]

   Finally in his traffic accident investigation report dated 12 September 2014 Mr George said the following:

8. [23]

   Mr George then lists the areas of concern and inconsistency, including internal inconsistencies in Ms Zeait’s statement and inconsistencies between the accounts and his observations of the vehicle and the site of the collision. In cross examination, Mr George said he did not have access to Ms Pankiw’s statement and that it would have been relevant to his conclusions (T24.40-46 22/6/2015). The Magistrate considered Mr George’s report to be of limited value (J [5]).

The decision of the Magistrate

1. [24]

   On 30 July 2015, the Magistrate handed down his written reasons for his decision. The Magistrate entered judgment in favour of the defendant. The written reasons for his decision are as follows:

Grounds of appeal

1. [25]

   The plaintiff appealed from the whole of the decision of Magistrate Brown dated 30 July 2015. There are ten grounds of appeal that fall into two main topics. The first topic is that the Magistrate failed to give any or adequate reasons for his decision (Grounds 2, 4 and 9). The second topic is that the Magistrate’s decision was contrary to the evidence before him (Grounds 1, 3, 5, 6, 7, 8 and 10). I will deal with the first topic and then, if necessary, I will deal with the second one.

Failure to give reasons

1. [26]

   Counsel for the plaintiff submitted that the Magistrate failed to provide any or sufficient reasons for his decision. It was submitted that the judgment is lacking in evidence that the Magistrate engaged in any reasoning process to come to his conclusion that the plaintiff was unsuccessful and how his conclusions mean that the policy of insurance should not respond. Counsel further submitted that the Magistrate did not address the inconsistencies in the plaintiff’s evidence or give reasons as to why those inconsistencies would affect a claim under a comprehensive policy of insurance. Finally, counsel submitted that the Magistrate failed to give any reasons as to why the evidence is so tellingly against the plaintiff’s claim and in doing so, fundamentally misapprehended the nature of the proceedings brought in the Local Court. Therefore the findings should not stand.

2. [27]

   Counsel for the defendant submitted that the Magistrate’s reasons disclose the process of reasoning which the Magistrate relied upon, the basis upon which he preferred one witness over another and the reasons for that finding. Counsel further submitted that the Magistrate’s reasons for finding that the collision was not covered by the policy of insurance were implicit in his reasons. The Magistrate referred to the policy exclusions pleaded in the defence at the beginning of his reasons and he premised his reasoning on fitting the claim within the bounds of the policy. Counsel for the defendant conceded that the Magistrate did not expressly say that the policy did not cover the collision; however, his ultimate finding was that the evidence of the plaintiff was not credible and therefore the plaintiff failed to demonstrate that the claim fell within the insuring clause of the policy.

3. [28]

   It is trite law that if a court fails to give sufficient reasons for its decision it constitutes an error of law: see Wang v Yamamoto [2015] NSWSC 942; and Jung v Son [1998] NSWCA 120.

4. [29]

   In Wang v Yamamoto at [35]-[38], I stated:

5. [30]

   In Jung v Son, Stein JA stated (at 6):

6. [31]

   Central to the dispute was whether the collision was covered by the plaintiff’s insurance policy with the defendant. It was common ground that the plaintiff had a policy of comprehensive motor insurance with the defendant and the collision occurred during the currency of this policy. The policy of insurance was governed by the product disclosure statement (“PDS”). It is necessary to set out the relevant terms of the PDS.

7. [32]

   According to the PDS, a comprehensive policy of insurance covered accidental damage to the vehicle (PDS 4). The defendant, the insurer, agreed to cover loss or damage caused by an accident, including a collision (PDS 7). The insurer could decide whether to repair the vehicle, pay to the insured the cost of repairing the vehicle, or pay to the insured the agreed or market value (PDS 7). Not covered under the policy is “loss or damage caused intentionally by you, or a person acting with your express or implied consent” (PDS 23).

8. [33]

   Therefore, pursuant to the policy of insurance the defendant was entitled to refuse to pay the plaintiff’s claim if the collision was caused intentionally by the plaintiff or someone acting with her express or implied consent (D [4]).

Consideration

1. [34]

   The issue in dispute between the parties in the Local Court was whether the plaintiff had breached the terms of the policy of insurance so as to justify the insurer refusing to indemnify the plaintiff. The defendant alleged that the plaintiff, or someone acting with the plaintiff’s knowledge and consent, caused deliberate damage to the vehicle, the plaintiff’s claim was not covered by the policy and the plaintiff had failed to prove an accidental collision took place that was claimable under the insurance policy (D [5]).

2. [35]

   Therefore the Magistrate’s task, after determining a collision occurred, was to determine whether the claim was one which fell within the policy of insurance. The onus was upon the plaintiff to demonstrate that the damage was caused accidentally, not intentionally. There was no dispute that Mr Baalbaki’s vehicle collided with Ms Zeait’s vehicle at least once. All the witnesses called by both sides gave evidence that there was a second impact, but the witnesses’ accounts as to how the second one occurred differed. The Magistrate considered that the plaintiff’s evidence, by itself, would be sufficient to establish the plaintiff’s claim on the balance of probabilities, as it would establish the facts disputed in the defence (J [4]).

3. [36]

   However, the Magistrate stated the evidence of Ms Pankiw was critical, as it demonstrated that the two impacts could not have occurred in quick succession and that Mr Baalbaki’s vehicle reversed several feet before driving into Ms Zeait’s vehicle a second time. This was at odds with the plaintiff’s witnesses’ accounts, which the Magistrate considered “vague, inconsistent both internally and relatively and, in my view, not credible.” (J [10].)

4. [37]

   After the Magistrate accepted Ms Pankiw’s evidence and found the plaintiff’s witnesses not credible, although he did not explain why this was so, he did not explain whether his decision was based upon a finding that the plaintiff’s claim was not covered by the policy of insurance because the accident had been staged by Ms Zeait or upon some other basis. His Honour also did not reveal how his finding that Ms Pankiw’s evidence was credible led him to find that the plaintiff was not entitled to payment under the policy of insurance.

Conclusion

1. [38]

   Contrary to the defendant’s submission, in my view it was not implicit in the Magistrate’s decision that he found the plaintiff’s claim was not covered by the policy of insurance. The Magistrate was obliged to set out why the plaintiff was not entitled to be indemnified by reference to the terms of the insurance policy. He did not do so. Without giving reasons on this topic, the parties and this Court are not able to gain a proper understanding of the basis for the verdict in favour of the defendant. In my view, the Magistrate has made an error of law as his Honour gave insufficient reasons and his decision should be set aside. Hence, it is unnecessary to consider the remaining grounds of appeal.

2. [39]

   The result is that the appeal is allowed. The Magistrate’s decision should be set aside. The matter should be remitted to the Local Court to be determined according to law.

Costs

1. [40]

   Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff’s costs.