On 25 January 2016, an insured was involved in a motor vehicle collision with the appellant in Fawkner, Victoria. The appellant claimed his cost of repairs from the insured, whose insurer admitted liability and paid the cost of repairs three months after the accident. 

The appellant was a university student who used his car to attend university and for social and work purposes. In the four months after the collision and before he received payment from the insurer, the appellant hired a vehicle at a cost of $115 per day. The appellant stopped renting the vehicle almost as soon as the insurer paid him. However, by that stage, the appellant had accrued a debt of $14,030. 

The appellant sued the insured to recover that amount. The insurer admitted liability but alleged that the appellant had failed to mitigate his loss by failing to make a claim on an ‘applicable insurance policy’ in respect of his vehicle, which would have enabled him to purchase a replacement vehicle as soon as practicable.

The appellant gave evidence that his vehicle was insured but that his mother had taken out the policy and she paid the premiums. He also gave evidence that his mother would not let him make a claim on the policy because they were estranged. A bundle of policy documents was admitted into evidence. The documents made no reference to the appellant. More importantly, the documents stated that the policy commenced approximately three months after the collision. While it was apparent from the documents that there was a prior insurance policy that would have been in place at the time of the collision, there was no evidence as to what were the terms and conditions constituted of such policy.

The Magistrates’ Court found in favour of the insurer on the basis that the appellant was obliged to make enquiries through his mother which would have led to a successful claim being made. Accordingly, he would have been able to obtain a payout and use the proceeds to purchase a replacement vehicle in mitigation of his loss.

On appeal, the Supreme Court held that the Magistrate’s findings were dependent on first finding that the appellant was legally entitled to make a claim on his mother’s policy. In this case, there was no evidence of an applicable policy in respect of the appellant’s vehicle as at the date of the loss and therefore it was not arguable that the appellant had an obligation to make a claim on an insurance company. Consequently, the Supreme Court determined that the insurer failed to discharge the onus of proving the existence of an ‘applicable policy’ and the appeal was upheld. 

Rosano v Karalis

When seeking to establish the existence of an insurance policy, close enough is not good enough. The full terms of the policy, including the applicable policy schedule should be available to the Court so that a decision may be made on the evidence, rather than assumptions about what evidence might exist.