Fraudulent claims case shows difficulties insurers face: Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262

The New South Wales Court of Appeal's judgment in Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262 emphasises the strict requirements for allegations of fraud to be clearly pleaded and properly particularised. Despite the insurer's success in denying the claim, the court was critical of the manner in which the allegations of fraud were pleaded in the insurer's defence.

First instance judge not satisfied on financial motive for fraud allegation

The appellant, Mr Sgro, was the owner of a red Ferrari 360 Modena motor vehicle which he insured with the respondent, Australian Associated Motor Insurers (AAMI). Mr Sgro alleged that his Ferrari was stolen from a suburban street and made a claim on his policy of insurance for the agreed value of the vehicle in the sum of $190,350 plus interest. AAMI refused Mr Sgro's insurance claim, alleging that the claim was fraudulent within the meaning of section 56 of the Insurance Contracts Act 1984 (Cth) (ICA).

At first instance, her Honour Olsson SC DCJ rejected Mr Sgro's claim on two bases. Firstly, her Honour was not satisfied to the requisite standard that the vehicle had been stolen. Secondly, her Honour held that AAMI was entitled to refuse the claim pursuant to section 56 of the ICA on the basis of inconsistencies in Mr Sgro's evidence as to his whereabouts and that of his vehicle on the day and time at which it was allegedly stolen.

Importantly, her Honour declined to make any finding of fraud in the absence of being satisfied that there was a financial motive for Mr Sgro to have been involved in the vehicle's disappearance. Rather, her Honour held that Mr Sgro "for whatever reason" was not honest and candid in the answers he had given to AAMI in relation to the claim.

AAMI alleges fraud but judge not satisfied on insurable event

AAMI alleged in its defence that Mr Sgro had made six false statements in relation to the insurance...