Emanuel Ciantar vs David Curmi Noe

Court of Appeal

Judges

Chief Justice Vincent Degaetano

Joseph Camilleri

Joseph A. Filletti

19 June, 2006

This case involved the refusal by an insurance company to pay plaintiff the damages suffered when his car was damaged beyond economical repair and this due to a suspicion of fraud.

The car was insured fully comprehensive for Lm14,000 with defendant company. In July 1993 plaintiff found his parked car crushed by a crane. Surveyors concluded that it was beyond economical repair. The crane driver Carmelo Debono claimed brake failure, however police investigations revealed that he was ordered to crash into the car by his employer Victor Micallef.

Debono had since been found criminally responsible and sentenced to two years probation. No proof of faulty brakes was produced. The insurance company alleged fraud by the owner, the incident not being accidental but the result of collusion between the owner and third parties.

First Hall, Civil Court

The case relied heavily upon the credibility of evidence produced. It is a fundamental juridical principle that utmost good faith as an underlying basis must exist and persist throughout the duration of a contract of insurance.

Insurance is an aleatory contract defined by Article 964 of the Civil Code as that when the advantage or loss, whether to both parties or to one of them, depends on an uncertain event. The general rule is that this alea/risk is the object of the contract of insurance and presupposes the contract and its validity, which involves the possibility of an unfavourable economic event. When such event materialises to the prejudice of the insured, the insurer pays damages.

If, however, the incident was not extraneous to the will of the insured person and it is proved that he was involved in the event, then the insurer is no longer bound by the obligations of the insurance policy and can reject the request for compensation.

Article 981(2) of the Civil Code provides that fraud cannot be presumed but must be proved. In civil cases, the intention can be established through presumptions and indicia as long as these are serious, precise and do not leave space for doubt in whoever is deciding. The decision of bad intent is a question of fact to be determined on a case-by-case basis.

Facts revealed further that

• The employer (Micallef) never negated his employee’s confession;

• Plaintiff denied ever doing business with Micallef;

• On the day of the incident, after parking, plaintiff claimed to have got a lift with a stranger to meet clients and then that he went to the bank;

• Once the facts were concretely evaluated, they could strongly indicate to a level of certainty that this was not an accident and that plaintiff was not extraneous to the event that led to the car’s destruction.

In civil cases, the criteria in the appreciation of evidence is whether explanations provided are acceptable and reliable when applied to the different and changing circumstances of the case. This is an exercise based on a balance of probability. This court did not consider plaintiff’s story genuine - the reason why he parked there, why he got a lift with a stranger etc. aroused suspicion.

The court, satisfied that the insurance company presented the necessary evidence required, stressed that the very core of an insurance contract is maximum good faith and fraud should never merit protection by the law.

Court of Appeal

Plaintiff appealed pleading an erroneous evaluation of evidence by the court. Although in civil law cases the level of proof is lower than that required in criminal cases, in cases of fraud, the person/s alleging it must provide concrete evidence and not proof based on presumptions.

The appeal was rejected. As opposed to criminal cases, our courts have always decided civil cases on a “balance of probability”. Article 981 of the Civil Code does not specify that in cases of fraud, the standard of proof must be higher.

The court stressed that witnesses are instruments in a case not to testify in favour or against any party but merely to say the truth, the whole truth and nothing but the truth.

There existed conflicts between the testimonies of Micallef and plaintiff as to whether they knew each other before the incident. Plaintiff claimed that despite this conflict, the insurance company never managed to prove anything that indicated Micallef’s interest in the incident or collusion.

However, if it were true that Debono was ordered to crash the car by Micallef, something that Debono had no interest in inventing, the alternatives were two:

• That Micallef was in agreement with Plaintiff or

• That he was not and orchestrated the incident as a bad deed against plaintiff.

The second possibility was incompatible with the evidence brought forward - why would Micallef want to harm plaintiff when the latter claimed that he never talked to or did business with Micallef?

Although the onus to prove fraud was upon defendant insurance company, it was Plaintiff who had to prove that the car suffered damages and that these fell within the terms of the policy that assured the risk. The core element of an insurance contract is maximum good faith, hence plaintiff had to prove his uberrima fides in the conduct of his affairs before the incident. He even failed to produce as witnesses the individual with whom he got a lift and a bank employee to corroborate his version of events.

The judgement of the First Hall was upheld and the appeal rejected.