William Roberts acted for the insurer in the recent unreported decision in the Local Court of NSW in Abdelrazek v Insurance Australia Limited (Local Court of New South Wales, Magistrate Russell, 22 February 2017). This decision is another example of the far-reaching consequences to insureds found to have made a fraudulent claim.

Outcome

In this matter, the plaintiff failed to establish a breach of the contract by the insurer, and was subject to an adverse finding of fraud. The led to the Court to:

  1. order that the plaintiff pay the insurer's costs on an indemnity basis from the commencement of the claim.

  2. gave leave to the insurer to refer the judgment, transcripts and evidence to the appropriate authorities for prosecution.

The Dispute

On 1 August 2013, Mr Abdelrazek entered into a contract of insurance for a motor vehicle. It was alleged by the plaintiff that the insured vehicle was stolen and subsequently recovered in a burnt out state.

In rejecting the plaintiff’s claim, the insurer alleged that the claim was fraudulent within the meaning of section 56 of the Insurance Contracts Act 1984 (Cth) (the Act) and that the plaintiff had breached his implied duty of utmost good faith under section 13 of the Act.

The parties adduced joint expert evidence from a forensic locksmith and forensic fire investigator and the insurer adduced a significant amount of documentary evidence which, among other matters, demonstrated the tendency of the plaintiff to purchase vehicles and report a lower purchase value to Roads and Maritime Services (RMS) while insuring those vehicles for a markedly higher value.

The evidence against the plaintiff was so compelling that the Court went beyond simply dismissing the plaintiff’s claim to find:

The plaintiff has not discharged his onus of establishing, on the balance of probabilities, that the vehicle was stolen. That finding is sufficient to dismiss his claim but in the light of the interconnectedness of the evidence, and because of the submissions made, I intend to make a finding with respect to the assertion that the claim made on the NRMA is fraudulent.

Concluding Observations

In cases of this kind, subject to the findings of the Court, the plaintiffs are likely exposed to referrals to the Police, RMS, the ATO, Centrelink and the Australian Taxation Office.

For example under:

  1. section 69 of the Road Transport Act 2013 (NSW), it is an offence to register or renew the registration of a vehicle by false statement, any misrepresentation or other dishonest means.
  2. section 192G of the Crimes Act 1900 (NSW), the making of a dishonest or false statement with the intention of obtaining financial benefit may be punished by a maximum 5 years imprisonment.