THE SUPREME COURT
Record No. 100/93 
Hamilton C.J.,
O’Flaherty J
Lynch J.

Between/:
MICHAEL FAGAN
Plaintiff/Appellant
and

GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION PLC
Defendant/Respondent

JUDGMENT DELIVERED 14th DAY OF OCTOBER, 1998 BY LYNCH, J. [Nem. Diss.]

-2-

This is an appeal by the Plaintiff/Appellant from a Judgment and Order of the High Court (Murphy, J.) delivered and made on the 19th February, 1993 whereby the Appellant’s claim against the Respondents for the sum of £46,585.00 was dismissed. The Appellant claimed that the said sum was due on foot of a policy of insurance entered into by the Appellant with the Respondents in May 1987 in respect of the contents of the Appellant’s dwellinghouse and premises known as Mountain View situate at Kilkerley, Co. Louth a few miles from the town of Dundalk.  He further claimed that the said contents were destroyed, damaged and/or stolen in the course of a burglary and malicious fire on the night of the 11th-l2th March, 1989.

THE FACTUAL BACKGROUND

The Appellant was born in Ireland about 1935. He emigrated to New Zealand in 1957 and lived there until 1978.  He married in New Zealand in 1958 and had six children, three boys and three girls. He returned to Ireland in 1978 and within a couple of years he bought the house and premises known as Mountain View aforesaid. This purchase was financed with advances by the Irish Permanent Building Society who arranged appropriate insurance in respect of the buildings and no issue arose between the parties as to that policy.

-3-

The Appellant’s wife died on the 8th May, 1984. The contents of the house were first insured in May, 1987 and the Appellant sought to arrange this through the Building Society.  It came to the knowledge of the Respondents only during the trial in the High Court that a proposal was first prepared by the Appellant with the assistance of his daughter Eileen in which the contents were valued at over £130,000.  When this was submitted to the Building Society and the premium calculated by them the Appellant decided that he could not afford that level of insurance and accordingly with the assistance of his daughter Eileen he prepared a fresh proposal. This proposal in setting out details of the contents reduced their value to somewhere in the region of £65,000 - £75,000 but cover was sought from the Respondents only to a limit of £40,000 contents and £6,585.00 all risks cover the total of which two sums comes to the amount claimed by the Appellant in this action.

By the year 1987 the Appellant’s family were growing into adults and his three daughters had left home, the eldest daughter Eileen marrying a Mr. Clinton on the 8th June, 1987, and all three daughters had gone to live in nearby Dundalk.  Only two sons remained in Mountain View and in November 1987 the Appellant agreed to sell the premises the sale not to be completed until the 30th September, 1988.  The Appellant was at that time contemplating remarriage which in fact took place with the present Mrs. Sylvia Fagan on the

-4-

3rd September, 1988 shortly before the intended completion of the sale and vacation of Mountain View.
In the meantime the Appellant had purchased a house at Warrenpoint where he planned to live with his new wife on completion of the sale of Mountain View.  Problems arose about the completion of that sale and hence the Appellant and his new wife Sylvia Fagan were still in occupation in March, 1989.  They had however gone to Dublin for the weekend on which the fire occurred and the Appellant’s two sons who were living with him had gone to stay with their married sister Eileen Clinton in Dundalk and so the house was unoccupied during that weekend.

Following the fire, the Respondents engaged Messrs. Scully Tyrrell and Co. Chartered Loss Adjusters to investigate the claim on their behalf.  The Appellant engaged Messrs. Balcombes Public Loss Assessors to assist in presenting his claim under the policy. Four meetings took place between these parties as follows:-

On the 14th March, 1989, Mr. Joseph Tyrrell of Scully Tyrrell and Co. met with the Appellant at Mountain View.

On the 30th March, 1989 Mr. Tyrrell and his assistant Mr. Feely met with the Appellant and Mr. Owen J. O’Connor of Balcombes at Mr. Tyrrell’s office.

-5-

On the 11th and 19th April, 1989 Mr. Tyrrell and Mr. Feely met with the Appellant and Mr. O’Connor at Mountain View.

On the 3rd April, 1989 Mr. O’Connor sent to Mr. Tyrrell a detailed list of items in respect of which the Appellant was claiming compensation under the policy. This list ran to many hundreds of categories of items making a total of over 1,000 individual items with total valuation stated to be £102,481.59 (although the claim was of course limited to the insured amount) and this list was discussed at the meetings of the 11th and 19th April, 1989.  On the 24th April, 1989 Mr. Tyrrell wrote to Mr. O’Connor asking in respect of each item of the claim particulars of:-.

“(a) The date of purchase or acquisition. If it is not possible to state the precise date, the month and year should be stated to the best of the insured’s knowledge.

(b) Where purchased or from whom acquired. The shop, store, individual or bodies/group should be identified if possible.

(c) The price paid, specifying the currency If received as gift, award or prize, particulars are required as to the basis of valuation and the identity of parties from whom information is sought to assist in arriving at the valuation”.

-6-

Undoubtedly this was a burdensome request in view of the number of items in the list of the 3rd April, 1989. On the other hand there was no independent corroboration in the form of receipts, Bank Statements with cheque stubs, credit card statements or of any nature whatever to enable the Respondents to satisfy themselves as to the value of the various items or as to the existence of items which were alleged to have been stolen or completely consumed in the fire.  It was in that context that Mr. Tyrrell included in his letter of the 24th April, 1989 the following paragraph:-

“You will recall that, during the course of our meeting at Mountain View on the 11th April, Mr Fagan stated that a number of the articles listed had been purchased in Northern Ireland. In reply to a question by the writer, he confirmed that he had paid import duties on the dutiable goods and had completed the relevant customs forms.  Please let us know what evidence is available or can be obtained by the insured to support this statement.  Please also let us know, in each case, the location of the customs post or office where the insured made the declaration and paid the duty.  You should regard this requirement as applying not only to goods imported from Northern Ireland but also to imports from the UK e.g. dutiable articles of jewellery which Mr Fagan purchased in the UK as presents for his late wife.”

-7-

It seems obvious that if the Appellant could get corroboration from customs records of the importation of items of a stated value with a stated duty paid that would establish the claim in respect of such items conclusively and by inference help to establish the bona fides of the claim in general. However on the 8th May, 1989 Mr. O’Connor sent a revised list of items and replied to Mr. Tyrrell’s request for customs documentation as follows:-

“On the matter of importations, Mr Fagan has been to the customs authority in an effort to reconstruct details of duty paid on goods imported from Northern Ireland but he has been told that there are no records at Carrickarnon going back as far as 1987. Most of the other items purchased overseas were bought in the course of the family ‘s travels to and from New Zealand, when Mr Fagan himself was at sea

On the 9th May, 1989 Mr. Tyrrell replied to Mr. O’Connor as follows:-

“Thank you for your letter of 8th May with enclosures, which are receiving our attention. Meanwhile, you do not appear to mention item ‘I’ on page 7 of your original claim i.e. JVC Video Recorder valued at £550.00. You will recall that, during the course of our visit on 11th April, we were informed by Mr. Fagan that this was only about four months old, having been purchased and imported from Northern Ireland. We trust that the customs records go back this far and shall be obliged,

-8-

therefore, if you will let us have a response to the query raised in our letter of 24th April insofar as this particular item is concerned”.

What was being asked for at this stage by Mr. Tyrrell was customs corroboration relating to one single item which he has been informed was recently purchased and imported from Northern Ireland and if such corroboration was forthcoming it would obviously establish the claim in relation to that item and as I have already said as a matter of probability assist in relation to the claim generally.  Unfortunately Mr. O’Connor’s letter of reply of 11th May, 1989 completely ignored this request which was never replied to or complied with. The letter of the 11th May deals with a matter that was never really in issue - the existence of the policy. What was in issue was whether liability on foot of the policy would be accepted or rejected by the Respondents. The Appellant’s Solicitors Messrs. Terence V. Grant & Co. then came on record with a letter of the 18th May, 1989 repeating the query put in Mr. O’Connor’s letter of the 11th May, 1989 as to whether a valid contract existed or not and a further letter of the 30th May, 1989 threatening proceedings.

On the 7th June, 1989 the Respondent’s Solicitors Messrs. Good and Murray Smith and Co. wrote to the Appellant as follows:-

-9-

“We act on behalf of the General Accident Fire and Life Assurance Corporation plc (the General Accident).

We are informed by the General Accident that you have submitted a claim in respect of the loss and damage allegedly suffered by you arising out of a fire which occurred to your dwellinghouse at Mountain View, Dunaghmore, Kilkerly, Dundalk, Co. Louth on the 12th March, 1989. The General Accident as a result of the reports received by them from the loss adjusters are satisfied that you have been in breach of general condition 6 of the policy. In the circumstances the General Accident are avoiding and/or repudiating the policy and all liability thereunder by reason of the aforesaid breach and all benefit under the policy is forfeited”.

The Appellant’s Solicitors replied on the 9th June, 1989 as follows:-

“We refer to your letter of the 7th June addressed to Mr Fagan in connection with the above mentioned claim reference no. 043 H 89/201776 B.

Our clients (sic) absolutely deny that he is in breach of clause 6 of the General Conditions.  Please specify the breaches as alleged by your clients.

-10-

We have instructions to issue proceedings against your clients.  Please confirm that you will accept service of proceedings”.

On the 10th October, 1989 Messrs. Good and Murray Smith & Co. replied to Messrs. Terence V. Grant and Co. as follows:-

“We refer to your letter of the 9th June.  The claim submitted by Michael Fagan (the insured) on his behalf is grossly exaggerated and the values set out in the claim, in respect of the individual items, are in many case grossly inflated.  The explanations given by the insured in respect of the existence and the value of many items have been wholly unsatisfactory and in many cases totally contradictory.  The insured has changed his explanation in relation to various items on a number of occasions.  In addition claims have been submitted for items which have subsequently been withdrawn and are now admitted not to have been damaged or to have already been claimed under different headings.

We set out hereunder the major breaches of General Condition 6 but we reserve the right to advance further breaches should the same prove necessary.

-11-

(1) The insured has made different claims at different times in respect of the number of items which were allegedly missing as a result of the incident The insured told the loss adjusters on the 14th March that certain items seemed to have been stolen.  These were a television set, cardboard cartons in which household goods and wedding presents had been packed, at least two and possibly three radios, a wallet containing £300.00 Irish, £10.00 sterling and $560 US, Mrs. Fagan's jewellery box, Mrs. Fagan’s mink coat and some goods which were stored in the upper part of the wardrobe.  Subsequently a claim was submitted in the sum of £27,812.59 claimed under the heading ‘missing items’ in respect of a far larger number of items than originally notified.  Subsequently when going through the claim the loss adjusters were informed by the insured that numerous items included elsewhere by his own loss adjusters in the claim were in fact missing, presumed stolen, rather than destroyed/damaged by fire. These items amounted to a further sum of £6,858.00. The total amount now claimed as stolen property amounts to £34,670.59.

(2) The claim submitted for items of jewellery includes a number of valuable items contained in page 23 of the claim, under sub-paragraphs (c) (d) (e) (f) and (k) which were not notified to the General Accident on the

-12-

proposal form dated 1st May, 1987 despite the fact that other items of jewellery were specfied in that proposal form.  The insured is now maintaining that at the time he completed the proposal form he did in fact own the above items even though they were not notified in the proposal forms.

(3) Mr. Fagan has claimed the sum of £1,200.00 for a JVC stereo compact disc with speakers which he says he purchased in Northern Ireland.  The total replacement costs of these items even at Republic of Ireland prices does not exceed £700.00.

(4) The insured has made a claim in respect of a brass chandelier with matching wall lights in the sum of £550.00.  The maximum replacement cost of these items amounts to £134.00.

(5) Under items 6 (i) and 6(j) the sums of £400.00 and £600.00 respectively were claimed for rugs. These were identified as being floor rugs Indian/Singaporian (£400.00) and 3 Indian tapestry rugs (£600.00). The insured informed the loss adjusters that item (i) related to a single rug measuring 10ft by 10ft.  He says item (j) related to 2 small rugs or tapestries. Subsequently on the 19th April the insured told the loss

-13-

adjusters that since the last visit he had discussed the matter with his eldest daughter and he has now ascertained that there were 4 Persian type rugs in the house. These did not include the 2 small rugs which he had earlier identified. The loss adjusters estimate that these 2 small rugs had a maximum value for £40.00 for the two.

(6) A claim was made under item 9(f) for 4 wardrobe mirrors at £80.00 each amounting to £320.00. Initially the insured said that the mirrors were screwed to the inside of the wardrobe doors. When the insured was told, after investigation by the loss adjusters, that this was not so, he stated that the mirrors had not in fact been screwed to the doors but had been stuck on with double adhesive.  He alleged that a mirror had been stuck on to one of the doors in the wardrobe in the master bedroom. This was untrue.

(7) A sum of £250.00 was claimed in respect of the electronic organ (model) bontempi and stand item 9 (n). This was bought for sterling £89.95.

(8) The insured under item 10 (c) claimed 8 sheepskin rugs at £50.00 each making a total of £400.00.  The maximum cost of the replacement value of these rugs would be £232.00.

-14-

(9) Under item 11(a) the sum of £1,000.00 was claimed for a wall clock and again the maximum replacement value of this clock is less than £200.00.

(10) The sum of £700.00 was claimed in respect of freezer contents.  When this claim was queried the insured pointed to a badly damaged Phillips refrigerator with a small freezer compartment valued in the claim at £160.00. He then admitted that his deep freeze was not in the house at the time of the fire having been removed for repairs. He then said that he had transferred the contents to the small Phillips fridge.  Some of these contents were still identifiable and when the loss adjusters stated that £20.00 would cover the value of the contents of the fridge, the insured said he would not disagree with this.  He then went on to say that in putting forward the claim for £700.00 he was thinking in terms of the overall value of his deep freeze, plus the Phillips refrigerator and contents.  This could not have been the case because the deep freeze was
not even in the house according to the insured.

(11) A claim under item 13 (f) for the sum of £1,200.00 was made in respect of a dining table and six chairs. The maximum replacement value of these items comes to £380.00.

-15-

(12) Under item 13 (n) the insured has claimed £500.00 for a clock which has a maximum value of £100.00.

(13) Under item 13 (o) the insured has claimed the sum of £4,500.00 for carpeting to the house. Again the maximum replacement cost of the carpeting is less than £3,000.00.

(14) A grossly exaggerated claim has been made for ladies clothing.

(15) In addition following various queries in relation to the claim a large number of items were deleted by the insured. In some cases no explanation was offered as to why they had been claimed in the first place. In others it was admitted that the claim had been duplicated elsewhere.

(16) In the circumstances it is clear that the insured has been in breach of his duty of good faith owed to the General Accident and also has been in breach of General Condition 6.”

-16-

Conditions 6 and 9 of the policy provide as follows:-

6. “If any claim under this policy shall be in any respect fraudulent, or if any fraudulent means or devices are used by the policy holder or anyone acting on his behalf to obtain any benefit under this policy all benefit hereunder shall be forfeited.

9. The due observance and fulfilment of the terms, provisions, conditions and endorsements of this policy insofar as they relate to anything to be done or complied with by the policy holder and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability of the corporation to make any payment under this policy.”

This action was commenced by the issue of a plenary summons on the 4th May, 1990.  The Statement of Claim was delivered on the 20th August, 1990 and as in the case of the lists of the 3rd April and 8th May, 1989 the Statement of Claim contains hundreds of items and categories of items and monetary figures.  The defence was delivered on the 9th November, 1990. In addition to general traverses, the defence pleads breaches of conditions 6 and 9 of the policy and of an implied duty of good faith owed by the Appellant to the

-17-

Respondents and it particularises the alleged breaches by reference to the letter of the 10th October, 1989.

THE SUBMISSIONS.

Mr. Geraghty S.C. and Mr. O’Neill S.C. submitted on behalf of the Appellant:-

1. While the value of the contents destroyed damaged or stolen was measured in the list of 3rd April, 1989 at £102,482.00 the claim was always limited to the sums insured namely £40,000.00 for household contents and £6,585.00 all risks cover.  As the policy did not contain a general average clause, the Respondents in the course of the trial conceded that the Appellant’s loss equalled or exceeded the sums insured and confined their defence to the question of liability.

2. The Respondents were in breach of constitutional justice and fair procedures in not giving to the Appellant prior notice of their intention to repudiate and their reasons for such. Counsel referred to the case of Superwood Holdings plc and Ors. v. Sun Alliance and London Insurance plc and Ors. [1995] 3 IR 303 at page 360.

-18-

3. The Respondents sought to amplify the grounds of repudiation after their letter of repudiation of the 7th June, 1989 and ought not to have been allowed to do so.

4. There was no express finding by the learned trial Judge of a fraudulent intention on the part of the Appellant. If the learned trial Judge inferred a fraudulent intention it was not open to him to do so as the Appellant was never claiming more than the limit of the sums insured.

Mr. Gallagher S.C. submitted on behalf of the Respondents:-

1. The Respondents never conceded that the Appellant’s true loss equalled or exceeded the limit of the sums insured.  We say that the claim was fraudulent and therefore that the Respondents should pay nothing. The claimed contents were valued at £102,482.00 although the limit of the sums insured was £46,585.00.  The Appellant dishonestly hoped thereby to induce the Respondents to concede that the amount of the loss equalled or exceeded the sum insured and to forego any detailed investigation of the claim.

2. The Appellant never replied to the letter of the 10th October, 1989 which was always open to him to do even though the Respondents had

-19-

repudiated liability.  It was impossible for the Respondents to decide what was in the house Mountain View and what was not.  Therefore the Respondents picked out just a few of the myriad items which were alleged to have been destroyed damaged or stolen for detailed investigation.

3. The learned trial Judge set out the law correctly at the commencement of his Judgment and furthermore at page 41 and 42 he correctly accepted that mere exaggeration was not conclusive evidence of fraud. In requiring the Respondents to make their case first and to proceed as Plaintiffs he correctly imposed the burden of proof on the Respondents and applied the correct standard of proof which they had to establish.

4. The principles of fair procedures have evolved in the area of administrative law and have no application in what is essentially a matter of private contract. The Respondents were entitled to amplify and provide full details of the allegation of fraud to ground their repudiation and they did so in the letter of the 10th October, 1989.  There was no obligation on the Respondents to canvass the views of the Plaintiff in relation to any proposed repudiation.  Counsel referred to Carna Foods Ltd. and Ors. v. Eagle Star Insurance Co. [1995] 2 ILRM 474 at 478 and [1997] 2 ILRM 499.

-20-

CONCLUSIONS

I shall deal first with the Appellant’s submissions relating to constitutional justice and fair procedures.  The Appellant relied on a passage from the Judgment of Denham, J. in the Superwood Holdings Case at page 360 which is as follows:-

“It is true that the Contract of Insurance does not formally require that such notice be given. However, it is a fundamental tenet of Constitutional Law and Fair Procedures that if a person’s position is to be detrimentally affected he should be placed on notice. Consequently the Plaintiffs would succeed on this ground alone in the absence of such notice.”

It must first be remembered that this was said in the context of condition 4 of the policy in that case which related to the giving of notice by the insured and details of the loss to the insurer and not to fraud.  In the present case the Appellant complains that the Respondents did not give him a fair opportunity of dealing with their objections as they ought to have done. In this context it is relevant to refer again to the letters of the 24th April, 8th May, 9th May and

-21-

11th May, 1989 which I have quoted or summarised above. In that correspondence Mr. Tyrrell asked for independent verification which might be expected to be obtainable.  His last request in the letter of 9th May, 1989 was ignored. Mr. O’Connor in giving evidence at transcript 12 of the 24th November, 1992 at question 474 said:-

“Well I went back to the policy holder and I told him that I had got this request for further particulars and what further particulars could he provide. The further particulars I felt I could provide was the second list that came from Sylvia Fagan at this stage to me, the list of stolen items that had gone to the Gardaí.  So I went through the original listing on the 3rd April and extrapolated the items which - and I am not saying it was very precise - but the major items that were on that I took some of the items on the document of 3rd April and I put them into a category which I called ‘all risks’ and I sent that information again to Mr Tyrrell. I want to make a point here, that was what I was asked to do. I was not asked and I don’t want to be contentious, but I wasn‘t asked for receipts or invoices or bank statements or credit card slips, or anything like that I was asked for further particulars and I did my best to provide them.”

The concluding sentence in that answer is unsustainable especially in the light of the evidence given by earlier witnesses, Mr. O’Connor being the last

-22-

substantial witness with only two very short and very minor witnesses coming after him.  No attempt was made by the Appellant or by Mr. O’Connor to get from the Appellant’s Bank copy statements of account and original or copy paid cheques. Such documentation might assist in regard to value and also in relation to items stolen or consumed in the fire, in regard to their existence and possession by the Appellant before the fire.  Certainly an insurer must treat his insured fairly and with respect in accordance with the mutual obligations of good faith but the insurer can hardly be expected to spoon feed an insured as to whose honesty and reliability the insurer has doubts. Insofar as the Appellant relies on the Superwood case it seems to me that it does not extend that far.  It is for the parties to make their own contract and the Courts must be careful not to impose on parties terms which they would never have accepted if such terms were suggested in the pre contract bargaining.

On this item of the JVC video recorder (which is not actually one of the items mentioned in the letter of 10th October, 1989) it is interesting to note some of the evidence which was given at the trial. Mr. Tyrrell emphasised its importance in his opinion at transcript 1 questions 46-50 as giving an opportunity to the Appellant to substantiate items and that this was not done. At transcript 2 Q. 474 he refers again to this matter and at transcript 3 Q. 2 he says that Mr. O’Connor’s attitude on the telephone to him was absurd and at

-23-

Q. 132 he says that he never before had a case where there was absolutely no substantiation produced. The Appellant at transcript 5 Q.29 says he got a quotation for this item for £549.00 and £85.00 duty from Messrs. Toners but at transcript 7 Qs. 252-261 it appears that he may well have been confusing the JVC video recorder with a JVC music player.  Mrs. Sylvia Fagan said at transcript 11 of the 19th November, 1992 at Qs. 588-596 that she bought the video recorder about February or March, 1988 and brought it to Mountain View about the end of October, 1988 but she did not say if she paid customs duty on it or not. No useful clarification emerged from Mr. O’Connor’s evidence although he touched on the video recorder at transcript 13 of the 25th November, 1992 at Q. 371-385.

In regard to Mr. O’Connor’s protestation at Q.474 of transcript 12 that he was never asked for substantiating documentation, it is worth recalling some of the evidence of witnesses who gave evidence before him. Mr. Tyrrell at transcript 2 Q.5 said:-

“Well I approached the matter My Lord by going through the claim starting with the front page and working through it. It was a claim of 23 pages and I think over 500 items so I was very conscious of the fact that I was not going to be able to discuss every item in any great depth so I concentrated on picking out items that I felt should be looked into some

-24-

categories of items and general discussion with Mr. Fagan and Mr O’Connor as we went through. I had asked if there was any documentation of any kind to back up the claim and I was told that there was nothing, there was nothing at all, whatever documentation he had was in the filing cabinet in the kitchen and had been destroyed in the fire so there was no back up documentation of any kind”.

And then at Q.7 he was asked if there were any bank accounts or credit card statements or anything like that ever produced to which he replied “No, nothing at all”.  At transcript 4 Mr. Jim McCormick Claims Superintendent of the Respondents who had thirty-one years experience of the insurance industry said at Q.8

“Well My Lord on the basis that the information furnished by the Loss Adjuster it seemed to me that there was not sufficient evidence produced to us to enable us to pay this claim. Frequently claims are presented in different ways and frequently when there is severe damage it is fairly difficult for a policy holder to prove a number of items but I do not think I can recall any case in which no proof of loss was supplied in respect of the value of a number of these items and accordingly we came to the conclusion that it would be impossible to meet this claim.”

-25-

At Q.15 he said:-

“We did obviously think it was a serious matter. In thirty-one years of dealing with claims I have never previously been involved in a case where this type of allegations were made and we took legal advice before making the decision.”

At Q.25 he said:-

“Well we always start off on the basis that the claims are for payment, for assessment. Generally we find that the standard of presentation by policy holders varies but generally you will find that with the claim form you will get a considerable amount of documentation, receipts, bank statements, credit card statements or alternative means of proving the loss. In this particular instance I do not think we were furnished with any documentation in support of any particular item of the claim and it is also a very substantial claim which is unusually high and an unusually large claim My Lord and there was a large number of items and I would have thought that in those circumstances at least some of the items would have been supported by documentation.”

At Q.31 he was asked:-

-26-

“What relevance do you think has the fact that the sum insured in this case was approximately £40, 000 and contents of a little over £6, 000 for the all risks and that the claim exceeded that by a very substantial amount, did you attach any importance or relevance to that in assessing the claim?

A. Well clearly it indicated that there was substantial under insurance. What the significance of that was difficult to say without knowing whether the man had got a great deal more property before the date he effected his insurance but this did indicate gross under insurance.”

At Q.89 he was asked:-

“I suggest to you that in terms of asking for information for 600 items was a mammoth task?

A. It would have been a very substantial task but I think the reality of it is that if a reasonable reply had been received it would have put the matter in a different context My Lord”.

In the light of the foregoing evidence by Mr. Tyrrell and Mr. McCormick who said they never before had a claim without any substantiation whatever it is incomprehensible that Mr. O’Connor should have formed the views which he expressed in the answer at Q.474 of transcript 12 which I have quoted above.

-27-

It was never challenged during Mr. Tyrrell’s evidence that the JVC video recorder was bought and imported from the North of Ireland about four months before the fire.  There is no reason to doubt Mrs. Sylvia Fagan’s evidence that she bought the video recorder in the North of Ireland about one year before the fire and imported it about four months before the fire.  It was not clarified whether customs duty was paid by her or not on its importation but even if not and therefore no useful evidence would have been available from the Customs Authorities the complete ignoring of Mr. Tyrrell’s request is difficult to understand and must have inevitably raised suspicions in the minds of Mr. Tyrrell and the Respondents.

Having regard to the foregoing circumstances including the ignoring of requests for some documentary corroboration there was no obligation on the Respondents to conduct a kind of trial or hearing before repudiating liability under the policy.  In some cases, contracts can create relationships which may entitle a party to some form of hearing before the contract may be repudiated or terminated. The most common examples are contracts of employment.  See Glover v. BLN Ltd. [1973] IR 388.  The Contract of Insurance is a commercial contract and the Courts should be slow to impose terms on either party which have not been expressly agreed by them.  Carna Foods Ltd. and Anor. v. Eagle Star Insurance Company (Ireland) Ltd. [1977] 2 ILRM 499.

-28-

Freedom of contract especially in the commercial field is a valuable right of the citizen. The Contract of Insurance undoubtedly involves mutual obligations of good faith but that does not mean that the insurer cannot (provided that he is acting bona fide) disclaim liability without first conducting some form of trial. The trial comes afterwards in the Courts if the insured contends that the disclaimer of liability by the insurer is unwarranted and in breach of contract.

In the present case I am satisfied that there was no breach of constitutional justice or fair procedures, and accordingly this ground of appeal based on such alleged breach fails and is refused.

The Judgment of the High Court in this case was delivered on the 19th February, 1993 that is to say over two years before the Judgment of the Supreme Court in the Superwood Case. If the learned trial Judge had had the benefit of the Judgments of the Supreme Court in the Superwood case he might have expressed himself more positively in certain respects than he did. Nevertheless his meaning is quite clear to me.

The learned trial Judge set out correctly the principles of law applicable to this case at pages 1 - 4 of his Judgment and also the correct approach to exaggeration at pages 41 and 42. He did not overlook the fact that the

-29-

presentation of the contents claim was made significantly more difficult for the Appellant by the loss of his first wife in 1984. She was the housewife during the twenty years in New Zealand and the six years thereafter in Ireland when household goods and furniture were being accumulated and if she had lived she would have been the person most qualified to recollect these contents their provenance and their value.  A further difficulty was the fact that the contents of a filing cabinet containing personal and financial records which would have been of assistance in preparing the claim had been destroyed in the fire. Nevertheless the Appellant had his children and especially his daughters to assist him in the preparation of the claim and of course his second wife Mrs. Sylvia Fagan was available to deal with property brought by her to the house. Furthermore the Appellant and his eldest daughter Eileen had less than two years before the fire made an inventory and valuation of the contents of the house when the Appellant was completing the proposal form for the contents policy at the end of April and the beginning of May, 1987 and this proposal was then discarded and the amounts reduced by approximately one half when it was discovered how much the premium would be to cover items valued at over £130,000.00.

One of the primary tasks of the learned trial Judge and especially so in this sort of case was to assess the credibility of the witnesses and to find the

-30-

facts accordingly. The action was at hearing for some fifteen days before the learned trial Judge and he therefore had ample opportunity to assess the witnesses.

At page 16 of his Judgment the learned trial Judge says:-

“At the meeting on the 11th April, 1989 Mr Tyrrell queried a number of items and the nature of his queries and the responses given by Mr Fagan were a matter of controversy. In this and in other respects therefore it is necessary to assess the credibility of the material witnesses.

Mr Tyrrell impressed me as a man of complete integrity and competence who gave his evidence fairly and carefully. If necessary I would have little difficulty in relying on his credibility.  As it happened the more controversial evidence given by Mr Tyrrell was verified to an extraordinary extent by documentation produced in evidence and made available to the Company for the first time in the course of the hearing and subsequent to the evidence of Mr Tyrrell. In my view his credibility was established beyond question.”

At pages 17, 18 and 19 of his Judgment the learned trial Judge said:-

-31-

“As Mr. Fagan appeared to give his evidence with a combination of innocence and sincerity I was reluctant to draw the conclusion that he was not telling the truth. However towards the conclusion of his evidence under cross-examination, he gave an account of his affairs arising out of his dealings with the Irish Permanent Building Society which his Counsel subsequently on his behalf necessarily admitted was wholly untrue.

In the context of a significant expenditure on luxury items the insured was cross-examined about the extent of his liability to the IPBS in 1987. He did admit that he was indebted to the Building Society and explained that there was an arrangement that his indebtedness would be cleared off by the completion of the sale of Mountain View in September 1988. It was then put to him that he was in arrears with current payments in 1987 before he entered into the contract for the sale of his house.  This he disputed. He denied that proceedings were brought by the Building Society to recover possession of his premises and he seemed to me to be genuinely amazed by the series of letters from the 14th October, 1986 to the completion of the sale in 1988 drawing attention to his failure to meet his mortgage repayments. It seemed incredible that Mr. Fagan could have overlooked such letters. What was even more surprising was

-32-

that he thought that these letters might be explained on the basis that they related to a different Michael Fagan. It was only with difficulty that he was convinced that they all related to him and his account with the IPBS. He then offered the explanation that due to pressure of business he had put some of his domestic matters in the hands of an Accountant who was looking after his affairs.  That explanation seemed inconsistent with the fact that such payments as were made appeared to have been made by cheques enclosed with letters written in manuscript either by Mr Fagan or his daughter.  When Mr Fagan insisted that such arrears as existed did not indicate that he had any financial problems his attention was drawn to the fact that a cheque for £258.59 drawn in favour of the IPBS on the 25th March, 1988 was returned marked ‘refer to drawer’. Mr Fagan thought that this might be due to the fact that he changed his account from the Allied Irish Bank on which the cheque was drawn. That explanation seemed inconsistent with the fact that he asked the Budding Society to represent the cheque. This unhappy chapter concluded with the reference to a letter from the Building Society to Mr Fagan dated the 16th September, 1988 in which the Building Society indicated that the Abbey National Building Society sought information with regard to his account but that they were unwilling to give such information without his authority. They did however express their view

-33-

in their letter to Mr Fagan that his account had been unsatisfactory from May 1986 as a result of business problems encountered by him. When the letter requesting information from the Abbey National to the Irish Permanent Building Society was produced in evidence it appeared that the Mr Fagan in question was identified as Michael William Fagan. Mr Fagan denied that William formed part of his name or that he had any dealings with the Abbey National.  When Counsel on behalf of the Company drew the attention of Mr Fagan to the fact that the proposal form was headed ‘Michael William Fagan’ I warned the witness of the seriousness of his position and adjourned the matter giving his Counsel permission to advise him in relation to his situation. In explaining that Mr Fagan’s evidence as to his name and his dealings with the Abbey National was untrue, Counsel drew attention to his client’s health, the pressure of the case and the length of the cross-examination.  Even making allowance for these factors, one must conclude that Mr Fagan is an unreliable witness to put it at its mildest.”

At pages 20, 21 and 22 the learned trial Judge said:-

“In addition to the annotated lists and the preliminary lists, Mrs. Clinton produced a document consisting of 23 foolscap pages in her own writing entitled ‘please note’ and dated 15th April, 1989. In essence this was a

-34-

list of the contents of the house which had been damaged or stolen and the prices attributed to those items. The first page of the document summarised the items under different headings and in certain respects the document would appear to be an attempt to reconcile the claim of the insured with the figures set out in the actual or revised proposal for the contents insurance.  However in assessing the credibility of Mrs. Clinton as a witness the most important fact concerns the date or dates on this document.

The first page was as I say dated the 15th April, 1989 and a number of subsequent pages were dated the 15th March, 1989. Thereafter the dates move on up to and including the 13th April, 1989. Understandably Mrs. Clinton was cross-examined carefully and in my view fairly as to the purpose of this document and the manner in which it was compiled.  Clearly it was material to establish whether this document pre-dated the April list or whether it formed the basis of the May list. It seemed to me that the answering of the witness in this regard was very unsatisfactory indeed. Certainly I found it difficult to understand whether it was her contention that the pages were dated before or after the items were described or their values inserted and whether the list of items on any given page was completed before the next pages started. In particular I was unconvinced by the explanation given by Mrs. Clinton as to how she came to erase the date originally put

-35-

on the front of the document and substitute therefor the 15th April, 1989. These matters were explored at some length but the one matter which most assuredly was not suggested by Mrs. Clinton was the explanation given by her Counsel the following day namely that all of the dates had been written in from memory not in 1989 but some two or three weeks before the trial that is to say more than 2 1/2  years after the event and for that reason errors might have occurred

The evidence of Mrs. Clinton in that regard must be considered in conjunction with what she said about another document also in her handwriting entitled ‘replies made to questions asked by Mr Joe Tyrrell at final meeting and inspection of contents of house’.

That document is dated 29th October, 1992 and Mrs. Clinton says it represented the transcription by her of a manuscript letter written by her father to queries raised by Mr Tyrrell. It was the evidence of Mrs. Clinton that she did not direct her mind to the contents of this document. That seemed improbable in any event but in the context that she was preparing or reviewing other notes at the same time is quite unbelievable. Not only is there nothing wrong with the witnesses reviewing the evidence in anticipation of the trial I would have thought it

-36-

was entirely proper that they should do so. What is far more unlikely is that a person who was to be an important witness in the case could transcribe a letter or other document which was crucial to the case some weeks before the trial without directing her mind to the contents thereof Regretfully, I must conclude that Mrs. Clinton was not a reliable witness either”.

The learned trial Judge also expressed reservations regarding the reliability of the evidence given by the Plaintiff’s wife Mrs. Sylvia Fagan although not in as positive terms as in relation to the Appellant or his daughter.

The learned trial Judge went through the items set out in the letter of the 10th October, 1989 and arrived at the following conclusions:-

1. Carpeting

“In these circumstances it seems to me to have been demonstrated clearly the claim made in April was manifestly excessive and the explanation given for the correction inadequate.”

2. Curtains

“Having regard to the terms in which the claim was made and the absence of any reference to the house in Warrenpoint I find it very hard

-37-

to accept that the claim for £2, 000.00 was intended to relate to anything other than curtains in the Dundalk house and I am driven to the conclusion that the insured has endeavoured to justify what was a grossly excessive valuation on the basis of an account which is untrue.”

3. The Clocks.

“I am again forced to the conclusion that the figures given in the April and May lists in respect of this clock were to the knowledge of Mr Fagan grossly in excess of the cost or value of the articles.”

4. The Persian Rugs.

“It seems to me that the available evidence, no matter how it is interpreted, makes it clear that the claim for £1, 000.00 is grossly excessive and must have been known by Mr Fagan to be such.”

5. The additional jewellery.

“In relation to this item, therefore, it seems to me that a real doubt was cast upon either the existence or the value of the jewellery in question. It should have been within the competence of the insured to resolve this doubt. So far from doing so his numerous and somewhat conflicting explanations tend to confirm the misgivings of the Company.”

-38-

6. JVC Stereo.

“As matters stand I am convinced that the particular equipment was not worth more than £700.00 and that Mr Fagan did not pay more than that for it. Accordingly this claim too is grossly exaggerated”.

7. Brass Chandelier and matching Wall Lights.

This item was not established to the satisfaction of the learned trial Judge.

8. The Wardrobe mirrors.

Again this item appears not to have been established to the satisfaction of the learned trial Judge.

9. The Bontempi Electric Organ.

“I am satisfied that the figure of £250. 00 was a grossly excessive valuation and certainly not the cost paid for this article.”

10. The Sheepskin Rugs.

This item was not established to the satisfaction of the learned trial Judge.

11. Freezer contents.

“Undoubtedly Mrs. Clinton recognised that she did have regard to the proposal documents in preparing the claims list but it seems to me that in

-39-

this and in other respects that figures were taken from the proposal documentation without any regard whatsoever for the actual cost or value of the goods in question.”

12. The Diningroom Table and Chairs.

“In relation to this item it seems to me that not only is the claim grossly inflated but that successive and unconvincing efforts were made to justify the date of the purchase and the amount paid.”

13. The Lady’s clothing.

“I do not believe that the claim put forward by the insured in this regard was either fraudulent or mala fide.”

14. The quantity of goods stolen.

“Even allowing for the state of shock in which the Plaintiff must have been at the time it is extraordinary that he did not at his first meeting with Mr. Tyrrell advert to the fact that sixteen packing cases of goods were missing from the house.”

This is not a finding of fraud or mala fides.

-40-

At No. 13 above the learned trial Judge is explicit in finding that the particular claim was neither fraudulent nor mala fide. This makes clear that his other findings to the effect that “the claim for £1,000 is grossly excessive and must have been known by Mr Fagan to be such”,  and similar though not identical wording constitute a definite finding of fraud and/or mala fides. There was ample evidence to support these findings and this Court cannot therefore and will not interfere with them.

In these circumstances the Respondents were entitled to repudiate liability under the policy and this appeal must be dismissed.