Karan v National Insurance Company of Fiji Ltd [2002] FJHC 216; HBC0137J.1997L (24 July 2002)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0137 OF 1997

Between:

RAM KARAN
f/n Budhu Prasad trading as
RAM KARAN TYRES AND AUTO PANEL
Plaintiff

and

THE NATIONAL INSURANCE COMPANY OF FIJI LIMITED
Defendant

Mr. A.K. Narayan for the Plaintiff
Mr. R. Smith for the Defendant

JUDGMENT

The Plaintiff Ram Karan (>RK=) claims against the Defendant Tower Insurance (Fiji) Limited (the >Company=) the sum of $52438.87 under a policy of insurance dated 28 April 1994 (as subsequently renewed) (the >policy=) against loss or damage by fire, over stock in trade of tyres, tubes and general motor parts and accessories (the >stock=) situate in Bhamji Building, Main Street, Kings Road at Ba.

On 16 April 1996 during the evening the stock was destroyed by fire by reason whereof RK suffered loss and damage to the stock amounting to the sum of $52,438.87. Although the loss was notified to the Company it has not paid RK the said sum.

By Writ of Summons issued in the High Court at Lautoka on 14 May 1997 the Plaintiff claims from the Company judgment for the said sum, damages, interest and costs.

Although this action commenced at Lautoka High Court, because of unavailability of judges there, it fell on me, as a Suva-based judge to hear it. The hearing took place at Lautoka between 24 to 26 August 1999; continuation dates could not be given earlier than 26 February 2001 to 1 March 2001 because of my heavy commitment in a murder trial as Judge Advocate in a Court Martial. The last of the written submissions as ordered were not filed until 10 April 2001. Again because of my heavy commitments in Suva as a Civil Judge having to look after Labasa as well it was not possible to deliver judgment any earlier.

The pleadings and issues for determination

Amended Statement of Defence and Counterclaim

1. (a) The first defence is denial of the claim. Apart from admitting that the company insured RK under a policy of insurance subject to certain terms, conditions, exceptions and obligations it denies paragraphs 1,2 & 3 of the Statement of Claim.
   

(b) Although RK notified the Company of a fire, the company denies paragraph 4 of the Statement of Claim and says that it has no obligation to make any payment to RK.

2. The second defence is that the insured property was (i) deliberately lit; or (ii) set by or on behalf of the plaintiff. Therefore, the company says that it is not obliged to indemnify RK for his loss or any part of it.
   
3. The third defence is that in breach of the duty not to make any false statements in support of any claim under the policy of insurance, RK made false statements in support of his claim.
   
4. By way of Counterclaim the company seeks: (a) judgment for investigation costs in an amount to be fixed before trial; (b) interest and (c) costs on a solicitor client basis.
   

Reply to Defence and Counterclaim

(e) RK joins issues with the Company upon its Defence save in so far as the same consists of admissions.

(f) RK denies making any false statements or that particulars stated by the Company currently reflect the answers given by R.K. to Gary Luff who had questioned him and in the alternative if RK made any false statement as alleged, RK denies that the same entitles the Company to refuse to pay the claim.

(g) As for the Counterclaim, RK denies its contents and denies that the Company has a reasonable cause of action or that it is entitled to the reliefs claimed.

Pre-trial conference under Or. 34 r.2

On 3 April 1994, Lyons J (who has since left Fiji) made an Order dispensing the holding of a Pre-trial Conference under Order 34 r.2 of the High Court Rules 1988.

Plaintiff=s evidence

The policy was effective from 27 April 1995 to 27 April 1996. The sum insured was $60,000.00. RK operated the business under the style and name of >Ram Karan Tyres & Auto Panel= as the sole proprietor thereof from shop premises in Main Street, King=s Road, Ba in Bhamji Building leased from one Mohammed Bhamji at a rental of $300.00 per month.

As stated in the Statement of Claim, RK owned the business and the stock which was insured suffered damage in the fire. Notification of the fire and the claim was given to the Company by his solicitors on 18 April 1996; a formal claim was lodged for the loss on or about 23 April 1996.

The loss was assessed by Mr. Norman Pamberton of Topliss Harding (SP) Limited on behalf of the Company. One of the Company=s officers Vimal Goundar visited the shop after the fire on 18 April 1996 and submitted a report together with some photographs.

Because the Company did not pay the claim the present proceedings were instituted on 14 May 1997.

The plaintiff (PW1) was the principal witness who testified, inter alia, that he started his present business in 1994 assisted by his son. He took overdraft from Westpac Banking Corporation to run the business. He said that there was a fire on 16 April 1996 in the ground floor of the property which he was renting as a shop. The PW1 described how the property was secured, among other things, with a security door. He closed for business at 5 p.m. on 16.4.96 (day of fire) and closed the back door himself; padlock was put on the grille door; the front door was padlocked.

At 6.15 pm he went to Tavua to his brother-in-law Gyan Chand=s place; he had dinner there and some drinks. He said that his sister said that when he gets back to Ba to ring her to say if he has reached home safely and this he did from his shop and spoke to his brother-in-law for about 2 to 3 minutes. When he got home he guessed it was 9.30 pm or 9.40 pm and went off to sleep.

The plaintiff said that he did not find anything wrong in the shop when he went there to phone but he did not go to the rear of the shop. He was woken up by his son at about 11.30 pm. He went to the shop where he saw Police and lot of other people. The fire had already been put out but smoke was there. Police took him to the Police Station and obtained his statement. Later insurance people came and police were with them. The PW1 found the >screen ripped=, burglar bars pulled, and several louvre blades missing, rear door was open and the grille was also open.

The PW1 said that he told Mr. Luff that his business was doing well and he was making good profit. He denied that either he or someone on his behalf set fire to the property. He said that no fingerprint was taken from him by the Police and that he has not been charged for any criminal offence.

The PW2 (Dharmendra Singh) a Bank Officer at Westpac testified that the plaintiff=s account with the Bank was >satisfactory=.

The PW3 (Waisea Kadawa) the investigating Officer with many years of experience since 1975 said that he had done many investigations and that it is easy to open padlocks and put them back.

The PW4 (Gyan Chand) who is the plaintiff=s brother-in-law corroborated the testimony of PW1 that he visited him. He said that he left his home at between 9 and 10.00 pm.

The last witness for the plaintiff was PW5 (Anil Kumar) an accountant, who testified as to the state of PW1's accounts.

Defendant=s evidence

It is the defence contention that the plaintiff (RK) deliberately destroyed the premises and its contents containing his business at Ba because the business was failing. Additionally, it raises the affirmative defence of >false statements= in that RK deliberately lied to it in the course of the investigation into the fire.

Therefore, the learned counsel for the Company states that each of these defences provides independent grounds and stands alone on which the Company is entitled to decline indemnity.

The first witness for the Company was Robert John Pole (DW1) a civil Engineer who testified that he visited the property after five o=clock in February 2000 with the object of looking at the >tower bolts= of the inner side of the two doors viz. the main door and the grille door. He said that there was a tower bolt a little above the centre and a >Yale= type night latch (key used from outside) and a tower bolt towards the bottom. He produced 11 photographs and described what they depicted.

The witness said that his second visit was on 22 February 2001. As instructed he prepared a Plan with measurement of the rear of the property. This was tendered as Exhibit D2. He described how a padlock works. In cross-examination he said that he could check the >top tower bolt= but he did not check if >yale lock= was working. He did not see the bottom bolt through the window. He said that he had no idea what it was like on the day of the fire.

The DW2 Malakai Raseva, a police officer said that he went to the property on 16 April 1996. When he went to the rear of the property he found a padlock open and hanging on tower bolt frame. He said that he could not see any sign of forcible entry at the >back=.

The DW3 Viliame Mataika the Billing Controller with Telecom Fiji, testified that a call was made from the telephone at the shop on 16 April 1996 at 10.24 pm to telephone No. 680153 for 58 seconds. This telephone belongs to the said Gyan Chand.

A fire Officer for 31 years Samuela Kaimaca (DW4) Station Officer testified that when he went to the scene of the fire at 8.00 am he saw some police officers there including the said Dharmendra and Corporal Arun. He said he went there to ascertain the possible cause of fire and to report to police for investigation and this he did. The photographs and his Report he took are exhibits. He said that the fire would have been burning for 30 minutes before firemen arrived at 11.22 pm.

The witness Acting Inspector Arun Kumar (PW5) testified that on the night of the fire he was called to the scene at after 11.00 pm and then again in the morning with two police officers. The purpose of going to the scene was to investigate the cause of fire, how it started and to see the extent of damage. The night before he found the back door open but he does not recall any padlock on the door. He did not find any >forceful entry= the next morning after closer inspection. He said that he found containers containing inflammable liquid in the shop. He interviewed the Plaintiff who denied the allegations. There was no evidence against anyone so the case was filed away and no action was taken.

The DW6 Abraham Pickering, a fireman, found the backdoor open. He found only >one fire - no sign of burning in other parts=.

The DW7 Dharmendra Nath, the fire Officer was in charge in respect of this fire. He said that he did not inspect the door at the back. He could not recall if there was a padlock on the grille door. He could not even recall if the louvres from the window were missing nor whether the >fly screen= was ripped out of the window. Also he could not recall if the burglar bars in the window were interfered with or not.

The last witness for the defendant was Gary John Luff (DW8) an Insurance Investigator. Upon instructions he interviewed the plaintiff at great length on the fire in the premises. His interview is an exhibit (Exhibit D9) in this case. Mr. Smith pointed out to Court a number of answers to questions which the plaintiff gave when questioned by Luff endeavouring to prove that he made >false statements=.

Consideration of the issues

I have before me for my consideration useful and comprehensive written submissions from both counsel in what was a lengthy trial with a large number of witnesses. Counsel are to be commended for the amount of research and thought they have given to put their case before the Court.

Onus and standard of proof

The burden of proof rests upon the defendant (the company) to establish its defences. The defendant has to prove as stated by Mr. Smith either: that the fire was deliberately lit by the Plaintiff; or that the plaintiff has deliberately lied to the defendant in any matter relating to the claim; or that the plaintiff made statements to the defendant and was reckless as to whether they were correct or incorrect before the defendant will be entitled to decline indemnity.

It is accepted by the defendant that the standard of proof is higher than the civil standard, but not of the criminal level. The company accepts that it must prove arson and/or false statements with >clear and convincing= evidence.

The guiding principles on the standard of proof have been well set out in the following passage from the judgment of Robertson J in Luscombe v QBE Group (Investments) Ltd. No DC Civ-96-463 (1998) (District Court of South Australia):

AIt is common ground that if I find that the plaintiff lit the fire then the plaintiff=s claim must fail. It is accepted by the defendant that whilst the standard of proof required to discharge the onus is on the balance of probabilities, the degree of satisfaction which is required to meet the standard of proof must take into account the gravity of the allegations made by the defendant against the plaintiff. The defendant alleges that the plaintiff has committed arson.

In Sheldon v Sun Alliance Australia Limited (1988-1990) 53 SASR at 133-134 the Full Court commented on the standard of proof in the following terms:-

AThe standard of proof imposed on the respondent is proof on the balance of probabilities. In considering whether that standard has been met the court must, when a crime or quasi-criminal conduct is suggested, remember and take into account the gravity of the offence. There is no doubt about that. In my respectful opinion it has never been stated than it was by Walters J in Lemmer v Bertram (1971) 2 SASR 397-400. Walter J said:

ABefore canvassing the evidence, I propose to deal with the burden which the plaintiff must accept in proving a claim in a case such as this, where the facts alleged involve an element of criminal or quasi-criminal conduct on the part of the defendant. Although conduct of such kind is really in direct issue on the pleadings, it seems to me that I am bound by authority to hold that the ordinary civil rule as to sufficiency of proof is the proper rule to apply, namely, that the plaintiff must prove his case to my satisfaction on the balance of probabilities; cf Helton v Rllen [1940] HCA 20; (1940) 63 CLR 691; Rejfek v Mcelroy [1965] HCA 46; (1965) 112 CLR 517. Nevertheless, the standard of proof required to tilt the scales in favour of the plaintiff >may vary according to the gravity of the fact to be proved@. This matter was discussed by Dixon J (as he then was) in Briginshaw v Bringinshaw [1938] HCA 34; (1938) 60 CLR 336 at 362, where the learned judge said: (emphasis added)

ABut reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.@ (emphasis added)

I add a reference to the observations of Denning LJ (as he then was) in Bater v Bater [1951] P 35, at 37, where his Lordship said:

AIn civil cases, the case may be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject-matter. A civil court, when considering a charge of fraud, will naturally require for itself a higher degree of probability than that which it would require when asking if negligence is established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of a criminal nature; but still it does require a degree of probability which is commensurate with the occasion=.

Whilst the authorities make it plain that the rule to be applied in a case such as the present one is that a court should require proof of the plaintiff=s case merely on the balance of probabilities, the sufficiency of proof may well be affected by the presumption of innocence. As one of the probabilities of the case, the >ordinary presumption of innocence= cannot be excluded: cf Doe D Devine v Wilson (1855) 10 Moo 502 at 531; [1855] EngR 708; 14 ER 581 at 592; Motchall v Massoud [1926] ArgusLawRp 22; [1926] VLR 273. I think, therefore, that even in a civil proceeding, the standard of proof cannot be disassociated from the subject-matter of the action and the nature of the allegations upon which it is based, particularly where, as here, the crime of assault is clearly charged on the pleadings. It seems to me that the unlikelihood of the defendant committing such a crime forms one of the elements which might be weighed. On the other hand, the presumption of innocence cannot shut out findings of fact which can and ought to be properly made on the evidence, or the inferences which can and ought to be drawn upon those findings.@

Indemnity policy

The claim is upon a Policy of Insurance which was current at the time of the fire. The Plaintiff was entitled to make the claim. It was an indemnity policy and the maximum liability of the defendant under the Policy was the sum insured, namely $60,000.00.

On the law on the subject of indemnity, the following quotation from the judgment of Megaw L.J. in Leppard v Excess Insurance Co., Ltd (1979) 2 All E.R. 668 at 673 is apt:

AEver since the decision of this Court in Castellain v Preston, [1883] UKLawRpKQB 69; (1883 11 QBD 380) the general principle has been beyond dispute. Indeed, I think it was beyond dispute long before Castellain v Preston. The insured may recover his actual loss, subject, of course, to any provision in the policy as to the maximum amount recoverable. The insured may not recover more than his actual loss.@

As put by Brett L.J in Castellain v Preston:

AIn order to give my opinion upon this case, I feel obliged to revert to the very foundation of every rule which has been promulgated and acted on by the Courts with regard to insurance law. The very foundation in my opinion, of every rule which has been applied to insurance law is this, namely that the contract of insurance contained in a marine or fire policy is a contract of indemnity, and of indemnity only, and that this contract means that the assured, because of a loss against which the policy has been made, shall be fully indemnified but shall never be more than fully indemnified. That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say which either will prevent the assured from obtaining a full indemnity, or which will give to the assured more than a full indemnity, that proposition must certainly be wrong.@ (emphasis added)

It is not in dispute that RK=s said rented premises (hereafter referred to as the Aproperty@) caught fire and damage was caused to the stock which RK says amounts to $52,438.87. There was a Fire Policy in force at the time of the fire. The plaintiff now wants to be indemnified under the Policy for the loss suffered by him.

In this very lengthy case where voluminous evidence was adduced by both sides, a careful analysis of the whole of the evidence was required. The facts relating to the circumstances which resulted in the fire can be ascertained from the brief outline of the evidence already stated hereabove. Hence it is not intended to reiterate the facts except to point out the salient features of the evidence to ascertain as to, inter alia, how the property caught fire.

Through the evidence adduced by the Company, it attempts to prove that RK (the plaintiff) himself destroyed the premises and its contents because his business was failing. It further raises the defence that the plaintiff lied to it during the investigation into the fire. It says that both these defences are independent grounds and they stand alone. Hence the Company says that RK will not be entitled to indemnity if it (the Company) can prove either that the: (a) fire was deliberately lit by RK; or (b) that RK deliberately lied to the Company in any manner related to the claim; or that RK made statements to the Company and was reckless as to whether they were correct or incorrect.

This case does raise the question of credibility of the plaintiff who denies lighting the fire. Mr. Smith, the learned counsel for the company, has urged the Court to take into account RK=s conduct in the course of this case to decide whether he is an honest and credible witness. Counsel referred to RK=s evidence when he denied that there was ever a second tower bolt on the rear door.

However, as Mr. Narayan says, the company must still discharge the onus of proof despite a lie, which is denied, told by RK or non-acceptance of his testimony is not proof of arson.

Arson

The defences in arson can be considered under three separate headings, called the arson triangle, such as: >deliberate fire=, >opportunity= and >motive=
[Mc Quade v Sun Alliance Insurance (1992)] 7 ANZ Insurance Cases 61-136 at p.77, 699.

(1) Opportunity

It is the Company=s contention that RK had the opportunity to light the fire because of the physical presence of the plaintiff at the shop close to the time when the fire is alleged to have started and he had the custody of the keys to the premises.

It is the defence contention that the fire was deliberately lit for if it was not RK then it was someone else who did it going by what RK said that it was possibly a competitor who did that.

Although RK says that he was at the building at 9.25 pm (going by his estimation of the time he saw on his brother-in-law=s wall clock) a telephone call was proved to have been made from the premises at 10.25 pm. thus placing the RK at the scene of the fire at this time.

Based on this alone there is no doubt that RK had the opportunity to light the fire at this time. But is that enough to implicate him in any way to the lighting of the fire? Looking at all the other evidence in this case I find that it would be too dangerous to do that in the absence of any other concrete evidence in this connection.

(ii) Keys to the premises

As far as the >keys to premises= is concerned, RK=s evidence is to be accepted that after 5 pm on 16 April 1996 he himself locked the premises. It is also not in dispute that there were only two entrances to the premises being the front door and the rear. The further fact which is not in dispute is that RK kept the keys himself.

I have already stated hereabove how and when RK came to the premises from his brother-in-law=s place in Tavua in the evening of the fire. It has been proved that a telephone call was made from the shop at 10.25 pm by RK to his sister in Tavua after he returned from her place. He had no telephone at his house.

The plaintiff has been truthful in these two respects and I find these as facts. The fact that he was there before the fire is not ample proof that he was the one who lit it. There have to be strong evidence in this regard to put the blame on RK. There is no other evidence whatsoever to suggest that someone else may have set fire. If someone else may have done this then the question arises how was it that no culprit was found particularly when there are so many other people residing in the building and in the vicinity where the fire was. It does not appear to be an isolated area. If the premises were forced open someone=s attention would certainly have been drawn by the noise. The evidence that the iron rod which were stated to be one foot apart in the back window beside the grille door and that the louvres from the windows were removed thus giving easy access to the tower bolt or bolts on the door, are strong evidence to suggest that the back door was easily opened in that manner to give free access to the interior of the premises.

Although finger prints were found on the >Chrome Wheel Caps= and containers containing >accelerants=, according to defence witness Corporal Arun Kumar (DW5), there is no evidence that they were the plaintiff=s otherwise he would have been charged by Police for an offence. According to the Fire Officer (DW4) the fire may have started after 10.50 pm when the plaintiff was not in the premises.

All in all on the whole of the evidence and the police investigation there is no indication that the plaintiff had a direct or indirect connection with the lighting of the fire. It was not even ascertained by Police as to whose finger prints were they. If the evidence was strong enough, Police would certainly have charged someone. In these circumstances mere opportunity and alleged motive because the business was alleged to be failing are not in themselves sufficient to put the blame on the plaintiff.

With the evidence before the Court it cannot be said that the onus of proof has been discharged by the defendant Company.

(iii) Motive

That leaves me to a consideration of the >motive=.

Mr. Smith has gone to a considerable length in submitting that there was an obvious financial motive in this case. He said that the business was steadily declining and producing minimal income and he has demonstrated this by >columnar graphs= in his written submission.

Mr. Narayan on the other hand submits that in the light of the fact that there is evidence of a forcible entry (screen ripped back, missing louvre blades and burglar bars being forced to make them 1 foot apart when seen by Vimal Goundar) a strong motive would have to be shown to conclude that the plaintiff was responsible. Mr. Narayan refuted Mr. Smith=s claims regarding decline in business as he ignored the >plaintiff=s background, the size of his operation, the recent commencement of the business and the trends in rural set up in Ba=. As to accounts he said that although there was a decline in turnover between 1994 and 1995, there was an increase in the gross profit margin of 2.46%. The plaintiffs accounts were prepared by the reputable firm of accountants (C.K. Nanda & Company). Mr. Narayan submitted that there was no evidence that the plaintiff was in dire straits financially as evidenced, inter alia, by the fact that the Banks were not dishonouring his cheques or calling in his security. To the contrary, evidence of Dhamendra Singh (PW2) from Westpac Banking Corporation was that his account was >satisfactory=.

In the circumstances stated hereabove I am not satisfied applying the civil standard of proof i.e. the balance of probabilities on the authorities referred to hereabove that the above facts establish a motive for the plaintiff to destroy his recently established business which employed both him and his son.

However, although a strong motive goes to a large extent towards satisfying the onus of proof, lack of inconclusive evidence is not fatal to the discharge of such onus. In the light of the facts here I conclude with the following passage from the judgment in Luscombe (supra) per Robertson J which I consider apt except that in the case before me there is no compelling piece of evidence pin-pointing to the plaintiff as the culprit.

AIn my opinion there is no compelling piece of evidence which clearly points to a motive as there are in some arson cases. The absence of a clear motive is not fatal to the defendant=s case. In other words the defendant does not need to establish a motive in order that the onus of proof is discharged. At times there may be difficulties in identifying a specific motive. As Tadgell JA said in Transport Industries Insurance Co. Ltd v Longmuir (1997) 1VR 125 at 136:-

AThe operations of the mind being invisible and intangible, there may be motives, which no human being but the party can divine: Wills, Principles of Circumstantial Evidence 7th Edition (1937) page 65.@

There is evidence in my view that the financial position of the business was slowly deteriorating. I have found that the plaintiff must have been aware of that. This slow deterioration was despite the huge contribution in time the plaintiff was giving to the business. There is no doubt, as Mr. Pickhaver said, that the plaintiff had shown a remarkable degree of resourcefulness in his operation of the business. However, it is clear that the business was not allowing him to enjoy a productive social life with Helen Young. On the other hand it is acknowledged that the burning of the premises may have led to only a short respite whilst the defendant reinstated the damage caused by the fire. Other than replacement of plant and stock by the defendant, if the plaintiff=s claim had been accepted by the defendant, the only other compensation would have been payment for loss of profits for the period during which reinstatement took place. There is no apparent financial gain to the plaintiff other than that which I have just described. In the end, in my opinion, all that can be said is that there is some evidence of a possible motive.

(iv) False statements

The defence relied to a large extent on a number of alleged false statements to Mr. Luff when RK was interviewed by him during investigations. They were refuted by the plaintiff stating that the statements were not false or reckless as to whether they were correct or incorrect.

Mr. Narayan explained to Court why certain statements referred to as >false statements= in the interview were made. I agree that one has to look at the plaintiff=s answers to questions put to him by Mr. Luff bearing in mind that the interview was by a former Australian Federal Police Officer residing in New Zealand whereas the plaintiff only has limited education who said he understood English >a little bit=. At one stage the plaintiff needed Mr. Ram Singh as interpreter /translator.

In considering the matter of alleged >false statements= one has to bear in mind certain legal principles in this regard which has been appropriately referred to Court by Mr. Narayan. The Company relies on clause 12 of the General Conditions of the Policy which provides as follows:

AIf the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under this policy ... all benefit under this Policy shall be forfeited.@

The said clause 12 does reflect the common law position as enunciated in Britton v Royal Insurance Co. (1866) 4F & F905 by Willes J at 909 when his Lordship said:

AThe contract of insurance is one of perfect good faith on both sides, and it is most important that such good faith should be maintained. It is the common practice to insert in fire policies conditions that they shall be void in the event of fraudulent claim, and there was such a condition in the present case. But a condition is only in accordance with legal principle and sound policy if there is a wilful falsehood or fraud in the claim, the insured forfeits all claim whatever upon the policy.@

AOf course, if the assured set fire to his house, he could not recover. That is clear. But it is not less clear that, even supposing it were not wilful, yet as it is a contract of indemnity only, that is, a contract to recoup the insured the value of the property insured by fire, if the claim is fraudulent, it is defeated altogether. That is, suppose the insured made a claim for twice the amount insured and lost, thus seeking to put the office off its guard, and in the result to recover more than he is entitled to, that would be a wilful fraud, and the consequence is that he could not recover anything. This is a defence quite different from that of wilful arson. It gives the go-by to the origin of the fire, and it amounts to this - that the assured took advantage of the fire to make a fraudulent claim. The law upon such a case is in accordance with justice, and also with sound policy. The law is, that a person who has made such a fraudulent claim could not be permitted to recover at all.@

I have carefully analysed the whole of the evidence in this regard and I am satisfied on a balance of probabilities that the plaintiff=s alleged false statements are not such as to affect the facts relating to the issue before me for my determination.

In other words there is too fragile a base on allegations of false statements to find that the plaintiff forfeits all benefit under the Policy.

Security of the wooden rear door

As stated by Mr. Smith security of the rear wooden door became a major factual issue. A lot of time has been spent in adducting evidence on this aspect and witnesses were cross-examined at great lengths. A number of exhibits, particularly photographs, were produced. I should therefore make some findings on this aspect.

The issue was whether there were two tower bolts on the inside of the back wooden door or one. It is common ground that there was a >yale lock= in the centre of this door. It is also common ground that there was a >tower bolt= near the top of the inside of the door.

Mr. Smith has forcefully submitted that whoever opened the doors at the rear and left them open must have had the key and therefore that person must be the plaintiff as he was the only person who had the keys.

On the other hand Mr. Narayan through his witness Inspector Waisea Kadawa (PW3) adduced evidence to show that a padlock, even a good quality one may give the appearance of retaining its integrity even after having been forcefully opened. The witness who had many years of experience in Police Force said that opening padlocks was possible by levering or striking a rod inserted into the padlock loop (staple) with a hammer. He even testified that he had come across many cases where entry had been gained despite the padlocks for security. Therefore, in this case, if the padlock was found open is no full proof evidence that it had not been forced open. It is not that it can be opened by key alone. Ewen Robert Pole (DW1) a defence witness agreed that padlocks could be broken quite easily and possibly with a lever, and burglars and intruders did so quite often. The PW3 also testified that the rear door was not very secure and that because of the close proximity to the window it was possible the locks and tower bolts could be opened by hand. Mr. Pole did agree that one could reach the >yale lock= and the top tower bolt from the louvre window and for the lower tower bolt one would need long arms or a rod.

Looking at the whole of the evidence in regard to the rear doors it is possible that access could be gained from the rear door. In this regard the defendant=s own employee Vimal Goundar who visited the shop on 18 April 1996 accompanied by Corporal Narayan, the plaintiff and his son, noted in the document he prepared (document 86) that:

APlease note - screen on back window ripped and burglar bars are about one foot apart. Also there are several louvre blades missing.@

In the outcome, in the face of such evidence from both sides it cannot on a balance of probabilities be said that because the plaintiff had the keys to the property he must have opened the doors himself and gained access at this time of the night to commit this most serious crime oblivious of damage that would be caused to the residents of the property if he was successful in his scheme to burn the place down. There is no evidence with any teeth in it to suggest that the plaintiff set fire to the property.

Conclusion

To sum up, this was a hotly contested case involving a claim under a policy of insurance. Damage to the property was caused by fire and because of serious allegations about how the fire was set it was necessary for me to very carefully analyse the whole of the evidence in this case. Because it was a fire damage claim the standard and onus of proof are heavy. The law in this respect has been outlined hereabove.

On the facts and circumstances of this case I have come to the conclusion that the plaintiff was not the one who set fire to the property or that someone else on his behalf did so, notwithstanding the fact that the plaintiff was in the property in question sometime before the fire after having gone there to telephone his sister on his return from her house in the evening in question.

Upon a careful analysis of the whole of the evidence in this case and bearing in mind the authorities, I find that the defendant has not discharged the burden of proof that lay upon it to satisfy the Court that the plaintiff or anyone else on his behalf had any connection with the fire that was lit in the property.

Even the circumstantial evidence that there are, as the defendant tried to show, are not in themselves sufficiently strong to pin-point to the plaintiff as the one to be held liable for the damage himself. The defendant relies on circumstantial evidence as well as to the cause of fire. At the risk of being lengthy I would refer to the law on this subject of circumstantial evidence as so well put by His Honour Judge Robertson in Luscombe (supra) at pages 19-20 which I consider apt. He said:

Assistance may be gained in dealing with a case based upon circumstantial evidence from the observations of Tadgell JA in Transport Industries at page 141:-

AAs will be seen, I respectfully differ from the learned judge upon several of the individual conclusions of fact which he drew from the evidence and which he considered to preclude a finding that the respondent was responsible for the fire. That aside, it should be said that, to assess the evidence in a case like this by reference to various individually-pleaded particulars, as though running through items on a check list, is apt to mislead. The evidence is to be evaluated as a whole in order fairly to consider whether the party bearing the onus of proof has established what is ultimately sought to be proved. The object of the exercise of evaluation is to discover whether the evidence paints a picture reflecting real life, rather than to place a tick or a cross against paragraph after paragraph of torpid pleading. A true picture is to be derived from an accumulation of detail. The overall effect of the detailed picture can sometimes be best appreciated by standing back and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole. The overall effect of the detail is not necessarily the same as the sum total of the individual details: cf Hall (Inspector of Taxes) v Lorrimer [1992] 1 WLR 939 at 944 Sherpherd v R [1990] HCA 56; (1990) 170 CLR 573 at 579-80.

His Honour goes on to state at p20:

In a civil case like this, where there is no direct evidence of a fact that a party bearing the onus of proof seeks to prove, Ait is not possible to attain entire satisfaction as to the true state of affairs@ Girlock (Sales) Pty Ltd v Hurrell [1982] HCA 15; (1982) 149 CLR 155 at 169, per Mason J. In such a case, however, the law does not require proof to the Aentire satisfaction@ of the tribunal of fact. A definition of the sufficiency of circumstantial evidence in a civil case to support proof by inference from the directly proved facts was given by the High Court in the unreported case of Bradshaw v McEwans Pty Ltd (27 April 1951) in a passage since repeatedly adopted: e.g. Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352 at 358; Holloway v McFeeters [1956] HCA 25; (1956) 94 CLR 470 at 480-I: Jones v Dunkel at 304; Girlock=s case, at 161 and 168. The relevant passage in Bradshaw=s case is:

>Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In question of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees or probability so that the choice between them is mere matter of conjecture; see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] UKLawRpAC 47; [1911] AC 674, at p.687]. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise...@ (emphasis added).

The Claim

There is no dispute as to the quantum of loss suffered by the plaintiff in the fire which has been assessed at $52,438.87. No other figure for loss has been produced by the defendant. The plaintiff admits recovering $1300.00 from the salvage which makes his total loss at $51,138.87.

The plaintiff says that he has suffered loss of income. Mr. Narayan submits that according to plaintiff=s evidence he was making net profit in excess of $6,000.00 per annum. Hence he says that he is entitled to a sum calculated on this basis.

The plaintiff therefore claims the sum of $115,657.60 being made up as follows:

1. Loss of Stock $ 51,138.87
   
2. Interest at 13.5% from

16/4/96 to 6/4/01 $ 34,518.73

3. Loss of income from 16/4/96

to 6/4/01 at $6000.00 p.a. $ 30,000.00

$115,657.60

Having found in favour of the plaintiff (RK), he will be sufficiently compensated for by way of interest on his claim, an order which I propose to make, for having been kept out of this sum since the fire. Hence he is not entitled to claim loss of profits. On interest as was said by Court of Appeal in Jovilisi Kamea and the Attorney-General v Mateo Raisalawake FCA ABU0049 of 1999:

AInterest is awarded to a Plaintiff for being kept out of money which ought to have been paid to him. See Jefford v. Gee [1970] EWCA Civ 8; [1970] 2 QB 130, 146. The expression Abeing kept out of money that ought to have been paid@ is not used to pejoratively. It simply expresses the concept that the plaintiff was entitled to the amount of the judgment as from a certain date but in fact, as events occurred, the money was not available to the plaintiff, but remained with the opposite party, Afructifying in the wrong pocket@ as was said in the course of argument in Newton v. Grand Junction Railway Co [1846] EngR 1049; [1846] 16 M & W 139, 141.@

Again since the judgment will be entered in favour of the plaintiff, an order on the defendant=s Counterclaim cannot be made. The Counterclaim is therefore dismissed.

Order

In the outcome the plaintiff succeeds in his claim. There is no breach of any condition of the policy by the plaintiff as alleged by the defendant. The plaintiff is entitled to be indemnified for the loss suffered by him in the amount claimed. It is therefore ordered as follows:

1. that judgment be entered for the plaintiff in the sum of $51,138.87
   
2. that interest be paid on the said judgment at the rate of 8.00 % per

annum from the date of fire on 16 April 1996 to date of judgment (22 July 2002)

3. That the defendant pay costs of the action which is to be taxed unless agreed.
   

D. Pathik
Judge

At Suva

24 July 2002