This case concerns an insurance claim by plaintiff spouses for a car that was allegedly stolen, and eventually found burnt and destroyed. They claimed that their car was covered by an insurance policy issued by the defendant insurance companies. The insurance companies however, rebutted such claims. Fogg Limited stated that it insured cars in Malta as an agent of the other foreign defendant company. The latter company, Avon Insurance plc, contended that there was no juridical contractual relationship between itself and the plaintiffs, since the insurance policy did not cover the incident in question i.e. the car being set on fire maliciously. Both companies stated that if any sum was due to be paid to the plaintiffs, it was most definitely not such a substantial amount.

The vehicle in question was a car bought in 1995 for Lm3,421.69. On 1 July, 1995, the car was insured for Lm3,500 to cover any damage to third parties, full fire and theft. In December 1995, the car was stolen and was found completely burnt and destroyed. At this point, plaintiffs were still paying for the car by installments.

In January 1996, after the plaintiffs made their insurance claim, a surveyor was assigned to evaluate the vehicle and examine the damages. He valued the car at Lm2,200 before the incident and a mere Lm200 after the incident. The court took into consideration that fact that the car had been examined by experts after the incident took place, and that these same experts held that the car was set on fire intentionally by unknown persons.

The plaintiffs claimed that at a point before they initiated proceedings, defendants had agreed to compensate them for their loss. They told the court that the companies had informed their lawyer of their acceptance of the claim and their intention to pay compensation. However, defendant companies stated that they never bound themselves to provide compensation. When the plaintiffs were eventually informed that they were not to receive any compensation, they were allegedly not given a reason for such refusal.

Plaintiffs claimed that the companies had formerly verbally agreed to pay the plaintiffs Lm3,500. Hence, plaintiffs basically expected the insurance companies to pay them the value of the car before the incident together with interest. However, the insurance companies stated that this was impossible since the surveyor valued the car at Lm2,200.

The court stated that despite there existing great conflict in the statements made by the parties involved, the insurance companies were obliged to pay compensation for the simple reason that the incident was indeed covered by the insurance policy in question. The issue being examined according to the Court, was the amount of compensation due.

The court then made a very important observation. It referred to the legal maxim in dubio pro reo and to Article 562 of the Code of Organisation and Civil Procedure (Chapter 12 – Laws of Malta) which states:

562. Saving any other provision of the law, the burden of

proving a fact shall, in all cases, rest on the party alleging it.

The court however went on to state that the above rule does not exclude the possibility of deciding otherwise i.e. deciding in favour of the defendant despite there being a conflict. The court noted that there was no disagreement between the parties upon the facts. Reference was then made to the judgement Richard Casha vs Frans Sammut (2003) in which it was stated that it is a known principle that when, due to an incident, a car is deemed to be in a state of total loss, the owner of the same car may demand from his insurance company with which the car is insured the difference in value of the car immediately prior to the incident and after the incident as compensation for the loss suffered.

The court also considered the fact that once a car is bought brand new, its value decreases once on the road. Many court judgments have stated that the decrease in value is rather considerable. (Cecilia Attard Pirotta et vs Marianne Farrugia [2002]). This decrease in value is inevitable and independent of the care given to the vehicle by the owner. (Carlos Cordina vs Jason Zammit [2002])

The Court stated that the compensation due had to be calculated by taking into account the actual value of the car and not by assuming automatically that the amount due is the amount insured for since this calculation necessarily involves an objective rather than a subjective exercise. This principle was relevant to this case because it was clear that the plaintiffs had insured their car for a greater amount than that they had actually paid for the car upon purchase.

Plaintiffs bought the car in 1995 for Lm3,422 and insured it for Lm3,500. Plaintiffs claimed that they had added extras to the car, which increased its value. The plaintiffs had to prove that such extras were bought and fixed onto the car after its purchase. If the extras were found to have been there from the moment of purchase of the vehicle, then their value would have to be included in the original Lm3,422.

The court agreed that Fogg Limited should not have been sued since it was merely an agent. It further concluded that the incident in question was indeed covered by the insurance policy issued by Avon Insurance plc. It declared Avon Insurance plc liable to pay compensation due to the plaintiffs. The Court considered all the evidence and ultimately decided that the proper value of the car in question was Lm3,200 taking into account depreciation. The Court further reduced Lm100 as the excess in accordance with the insurance policy and Lm200 of the wreck value of the car in the event that the insurance company opted not to keep the remains of the car. Hence the amount due as compensation was deemed to be Lm2,900 in addition to interest that accrued from the day the claim was made until the date of judgement.

This case may be the subject of an appeal.