The plaintiff brought proceedings in the NSW Local Court after her insurer denied a claim under her motor insurance policy. Her claim relied upon the evidence of her husband who had been a passenger in the vehicle and the driver of the other vehicle who all claimed a genuine collision had occurred (although with slightly differing versions of events). The insurer relied on a witness, who saw the collision from her living room window, and a crash investigator’s report.

The plaintiff’s claim was dismissed at first instance on the basis that the insurer’s key witness was:

…entirely independent of the parties and not shaken in cross-examination, and the clarity and simplicity of her evidence was in marked contrast to the evidence of the plaintiff’s witnesses, which was in all instances vague, inconsistent both internally and relatively and, in my view, not credible.

The Supreme Court had regard to the substance of the dispute, namely whether the plaintiff’s claim for loss or damage fell within the terms of the policy.

The Court found that while the Magistrate had made a finding that the plaintiff’s witnesses were not credible, he did not explain why he had made that finding, nor did he explain whether his decision, that the plaintiff’s claim was not covered by the policy, was on the basis that the collision had been staged, or upon some other basis. The Court also noted that the Magistrate did not reveal how the credibility of the defendant’s witness led him to find that the plaintiff was not entitled to payment under the policy.

The Court was of the view that, by failing to set out why the plaintiff was not entitled to be indemnified by reference to the insurance policy, the Magistrate had made an error of law. The Court allowed the appeal, set aside the Magistrate’s judgment and remitted the matter to the Local Court to be reheard.

Zeait v Insurance Australia Limited t/as NRMA Insurance

This article was written by William Francis, Law Graduate.