PLAINTIFFS ASK FOR DAMAGES AGAINST THE DEFENDANTS FOR DECLINING TO INDEMNIFY THE PLAINTIFFS FOR THEIR LOSS DUE TO FIRE
This is an application by the plaintiffs (Mr and Mrs Cook) against the Insurance Company, seeking a declaration that the Insurers were in breach of a policy of insurance in declining indemnity in respect of loss suffered by reason of two fires occasioning damage to certain hotel/motel premises. The insurance company contends that they denied the claim based on the allegation that the plaintiff started the fire.
Facts:
The plaintiffs commenced these proceedings, seeking damages to compensate them for the alleged breach by the Insurers of the promise to indemnify Cook Investments in relation to Cook Investments’ loss arising from the fires.
The Insurers have defended the claim on the basis that Mr Cook deliberately lit the fires and, thus, that they are entitled to rely upon the exclusion clause in the Policy or, alternatively, are otherwise entitled to deny indemnity by reason of s.13 (Bad Faith on Part of Claimant) and s.56(1) (Fraudulent Claim) of the Insurance Contracts Act.
The plaintiffs emphasise that determination of the liability issue depends upon the Insurers proving, in essence, that Mr Cook committed two serious criminal offences (arson and fraud) and they emphasise the burden of proof in this regard. It is noted that Mr Cook denies that he lit the fires. The plaintiffs submit that the overwhelming effect of the evidence is to suggest that Mr Cook did not deliberately light those fires.
In summary, the Insurers’ submissions are that Mr Cook had both the motive and opportunity to light the fires; and that it should be found that he did so. The Insurers accept that their case is circumstantial, insofar as there is no direct evidence that Mr Cook lit the fires, but point out that it is not disputed that Mr Cook was present in the Hotel at the time of the fire and they say that it is common ground that Mr Cook had the opportunity to light the fires. The Insurers say that there are compelling inferences to be drawn from the facts and circumstances surrounding the fires that lead to the conclusion that Mr Cook was indeed responsible for lighting the fires.
Issue: Is the defendant liable for the breach of the policy insurance for declining to indemnify the plaintiffs?
Law:
Analysis:
In the court’s opinion, and acutely conscious of the seriousness of the allegations here made against Mr Cook, the court considers that the matters to which the Insurers point (namely, the complexity of two fires on different levels, the impossibility of forcing the doors at the base of the staircase leading down towards the storeroom thus necessitating an outside perpetrator entering and exiting the hotel part of the building externally to light the fire in the function room, the single alarm activation outside the manager’s flat which would not have occurred had an intruder simply entered and exited via the stairwell window, the absence of evidence of forced entry to the hotel part of the building, the evidence against the stairwell window being open and the sixteen minutes during which the alarm system was switched off) inexorably point to Mr Cook lighting both fires.
The basis for the court’s conclusion that Mr Cook did so, on the balance of probabilities and having regard to the standard of proof required by application of the Briginshaw principles, is that the court can see no other plausible explanation for the events that occurred. The Insurers have foreclosed the doubts that have been raised, and might otherwise have existed, on the evidence.
Conclusion: The plaintiffs’ claim must be dismissed
