Fire insurance claim exaggerated: judge

Press, 10 December 1983, Page 14

Fire insurance claim exaggerated: judge

PA Auckland A High Court judge has found that parts of a fire insurance claim for more than $950,000 against New Zealand Insurance, Ltd, were fraudulently exaggerated by an Auckland company director. In a 206-page judgment, Mr Justice Chilwell has allowed a defence by New Zealand Insurance (now named New Zealand South British) that the claim against it was fraudulently exaggerated and that material facts over financial difficulties suffered by the claimants had not been properly disclosed. The judgment came after an 11-day court sitting in August, 1982, involving two actions in which a company director, Glen Charles Gibbs, and his company, Gleniel Plastics, Ltd, had sought insurance losses for a fire.

The fire, in October, 1979, destroyed the company buildings in East Tamaki, Auckland, while Mr Gibbs was in Australia with his family. Also destroyed were a number of vehicles, a boat, machinery, and an

amount of plastic stock in the building.

His Honour noted that Mr Gibbs had claimed on all the company’s relevant insurance policies but that in December, 1979, New Zealand Insurance had repudiated all liability on the policies. Mr Gibbs had filed writs against New Zealand Insurance in February, 1980.

New Zealand Insurance filed a number of defences to the claims, alleging in reply that insurance contracts had not been completed, premiums had not been paid, that the insured parties had failed to disclose facts about financial difficulties, that they had wilfully caused the fire and had recklessly exaggerated the insurance claims.

His Honour found against the defence of New Zealand Insurance that the contracts were unfinalised and that premiums had not been paid. He also ruled that there was nothing more than suspicion to substantiate the defence that the claimants had been responsible for the fire.

However, his Honour upheld the defence by New Zealand Insurance that claims had been exaggerated. He found that claims over film stock, plant and machinery, and the boat and vehicles in the building had been “grossly exaggerated.”

“The purpose in misrepresenting the quantity of stock and the value of the other items was to obtain more for the plaintiffs than they were entitled to receive,” he said. His Honour also ruled that Mr Gibbs , had made deliberately uritrue statements over the financial position of the company and that he had failed to disclose that he and the company were in a poor financial state, this being material to the terms on which policies would have been accepted. His Honour ruled against the claims by both Mr Gibbs and Gleniel Plastics, Ltd, finding in favour of New Zealand Insurance’s defence.

The question of costs was reserved.