The recent High Court case of Devcich v AMI Insurance Limited provides an important reminder to insurers of how difficult it is to prove that the insured has caused the damage claimed.
This fire occurred shortly after Mr Devcich left home for work on a weekday morning. AMI declined the claim because it believed it had grounds to establish that Mr Devcich deliberately set the fire.
Mr and Mrs Devcich had lived in their house for several years. The house appeared to have weathertightness problems, which Mr Devcich knew were going to be time-consuming and costly to put right. Mr and Mrs Devcich had tried without success to sell the property.
AMI said that Mrs Devcich was anxious to move and that Mr Devcich was in a tight financial situation at the time of the fire. The Judge accepted that the problems with the house provided Mr Devcich with a motive for setting fire to it. He also accepted that the problems he had encountered with his neighbours provided him with further motivation to bring matters to a head.
Mr Devcich did not follow his usual route into work on the day of the fire. Instead he ran a series of errands (including going to the petrol station). Eftpos receipts provided proof of where he was at critical times.
On his way to work, Mr Devcich said he had had a near-miss when another car had pulled out in front him. He said that when he arrived at work he told his business partner about the near-miss and said he needed a whisky. They went and got a cup of coffee instead. The Judge considered it unusual that Mr Devcich had never been able to provide any details about the circumstances of the near miss at the intersection.
Mr Devcich bought five litres of petrol on the weekend before the fire. He said that he had planned to hire a hedge trimmer that weekend and had bought the petrol the previous weekend to save time. AMI called evidence from the manager of the hire centre, who said the particular hedge trimmers used two-stroke fuel, which they always mixed themselves. They did not allow hirers to supply their own fuel. Mr Devcich said that he did not want to pay the charge he would have incurred had he not taken back the tank full. The Judge thought this explanation was unsatisfactory and that this weakened his credibility.
Interestingly, the Judge found that Mr Devcich was capable of deciding that the destruction of his house by setting fire to it would provide an answer to his problems. However, he said that he could not give this factor substantial weight because it could produce an unjust result.
Possibility that neighbours lit the fire
Mr Devcich had had an ongoing dispute with his neighbours and their tenants. The Judge found that the facts available were not sufficient to establish a realistic possibility that they were responsible for starting the fire.
The respective experts disagreed on the timing of the fire. AMI's expert thought ignition occurred at approximately 7.40 - 7.45am. Mr Devcich's expert thought it started at 8.05am.
Mr Devcich had a receipt which showed he paid for petrol at 7.57am. This meant he must have left home around 7.50am. The Judge accepted that a timing device could have been used, but said there was no evidence that one had been used in this case.
In the end, the Judge preferred Mr Devcich's expert evidence. One factor which led to this result was that he thought AMI's expert had a firm belief that Mr Devcich was the only person who could have lit the fire and that this pre-judgment affected his investigation.
Whilst the Judge found that Mr Devcich had both the motive and the ability to plan and carry out such an act, he found that AMI had not managed to establish to the appropriate standard that he had in fact started the fire. This continues to be a substantial hurdle for insurers where the police decide not to charge.
It is clear that the decision turned largely on the expert evidence around timing. The Judge chose to believe the insured's expert because of both his experience and apparent impartiality. This case emphasises yet again how experts can improve their credibility by being slow to reach conclusions and by giving insureds the benefit of every doubt. An investigator who does that, and still concludes that the insured was to blame, will have a greater chance of being believed.
© DLA Phillips Fox
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