IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 48 of 2008L

BETWEEN:

G.P.REDDY & COMPANY LIMITED a limited liability company having its registered office at Lautoka
Plaintiff

AND:

NEW INDIA ASSURANCE COMPANY LIMITED a foreign company duly incorporated under the laws of India and having its place of business in Fiji at Suva and carrying on business in Fiji as an insurance underwriter.
Defendant

FINAL JUDGMENT

Judgment of: Ms. Dias Wickramasinghe J.
Counsel: Mr. V. M. Mishra for the Plaintiff
 : Mr. A.K. Narayan for the Defendant
Solicitors: Mishra Prakash & Associates for the Plaintiff
 A.K. Lawyers for the Defendant

Date of Judgment : 31 October 2011
	
Keywords: Insurance; principal and agent relationship; arson; fraud in civil proceeding; effect of admissions in statement of defence; expert evidence in civil proceedings; requirement of disclosure of expert reports; section 14 and 15 of Civil Evidence Act, 2002; credibility of a witness; Arbitration Act s.5; Fair Trading Decree;	

INTRODUCTION

[1]	The plaintiff seeks judgment against the defendant-insurance company to recover inter alia a sum of $320,000.00 under a fire insurance policy general damages, and compensation. 

[2]	The defendant (New India) refutes the claim on four grounds, principally on the basis that the cause of the fire was arson, committed on behalf of the plaintiff. 

BACKGROUND

[3]	The plaintiff carried on business as a general timber merchant, manufacturer and retailer of furniture and hardware at Lot 5, Royal Palm Road, Navutu, Lautoka (premises) and a sawmilling business in Lomolomo. The business has been in operation since 1984, although the plaintiff-company was legally formed only in 1987.

[4]	On 5 May 2003, a fire destroyed the showroom along with the furniture and machinery. It is common ground that a valid insurance policy was in effect when the fire broke out and that the fire destroyed the insured property. The defendant also admits that the plaintiff duly lodged the claim on 31 May 2003. The parties are not at dispute that the plaintiff requested the insured sum to be reduced and amend the perils covered in all the policies including the fire policy in November 2002. The parties are however at variance on the extent of the sum covered under the fire policy. 

[5]	The defendant annually insured the plaintiff’s business since 1992 and the plaintiff had several policies including a fire policy. The annual fire policy, which expired on 15 May 2002, was renewed from 15 May 2002 to 15 May 2003, under the Policy of Insurance number 922622/1112/12000/97 (insurance policy) for a sum of $320,000.00. 

[6]	The plaintiff’s cause of action is based on breach of implied conditions or in the alternative, breach of the provisions in Fair Trading Decree. Plaintiff also alleges that it suffered loss and damage due to the inaction or delayed action of the defendant and claims the sum insured under the fire insurance policy, in addition to general damages, interest and costs. 

[7]	The statement of defence sets out the following four (4) defences: 

(i)	The plaintiff or persons acting on its behalf deliberately set fire on 5 May 2003, as set out in paragraph 7(b);

(ii) The Plaintiff made false statements as set out in paragraph 8(b);

(iii) The plaintiff failed to deliver the particulars of accounts as set out in paragraph 9; and

(iv)The claim had to be referred to arbitration and the plaintiff’s failure to do so tantamount to a waiver and abandonment of the right of claim by the plaintiff as set out in paragraph 10. 

[8]	The defendant also submitted a counter claim for the expenses incurred by it to investigate the plaintiff’s claim. 

HEARING

[9]	At the hearing, the plaintiff led evidence of four witnesses; (1) PW1- Rokosiana Uru Qoro, (alias Rocky), (2) PW2- Ganapathy Reddy, (3) PW3; Sathendra Prasad (security guard of the plaintiff), (4) PW4- Jay Lal, (Accountant of the plaintiff). The defendant led evidence of seven witnesses; (1) DW1-Robert Cohen (accountant) (2) DW2- Rupesh Chandra (Staff of Credit Corporation) (3) DW3-Albert Raj (the sales officer of the plaintiff) (4) DW4-Umesh Kumar (Alias Pillu the Operations Manager of MYT Transport) (5) DW5- Ms. Mohini Ali (defendant staff) (6) DW6- D. S. Naidu (insurance agent) (7) DW7- Garry John Luff (fire investigator). Both parties tendered 18 documents in the agreed bundle of documents. Additionally, the plaintiff tendered documents marked P 1 to P3 and P (A) and the defendant documents D1 to D33. As ordered by court under O.38 r.2 of the High Court Rules, 1988, the parties filed examination-in-chief of the witnesses by affidavit except PW1, Rocky. At the conclusion of the trial, parties also filed written submissions in addition to the oral submissions. 

[10]	Both parties also filed sketches of the premises, which greatly assisted me to understand the scene of the fire. These sketches were prepared by Mr. Luff and Mr. Reddy and were produced marked Exhibit D1 and P1 respectively. Apart from the plaintiff’s business, MYT Transport Company also carried out its business in the same premises as a tenant. 

[11]	Let me now briefly explain the manner in which the buildings are set out in the premises. As one stands looking into the premises from the only entrance facing the road, a row of buildings can be found on the left side of the land, which accommodates a residential unit, the plaintiff’s office, the furniture factory and the workshop. The showroom that caught fire stands on the opposite side, i.e. on right side of the premises as one enters the land. Next to the showroom was an open area where the timber was stored. The showroom was 20 meters in length and 15 meters in width. (Approximately 301 square meters). The structure was a single storey building made mainly out of wood with large glass panels in the front. The showroom was partitioned within, making space for a tearoom, storage area for plant and machinery and a sales office. An access road, within the premises, separated the showroom with the row of buildings on the opposite side. 

PLAINTIFF’S CASE

[12]	Briefly, the plaintiff’s case is that the fire broke out around 5.20 pm on 5 May 2003, and Rocky, the security guard of MYT Transport, first saw the fire and alerted Umesh Kumar (Pillu) and the security guard of the plaintiff, Sathendra Prasad. Just before the fire the sales manager of the plaintiff, Albert Raj had as usual locked up the showroom around 5pm or so, hanged the key in the office and had left the premises soon thereafter. Sathendra Prasad had then closed the gate around 5pm. Mr. Reddy, the alleged perpetrator of the fire, is the principle figure behind the business and the managing director of the plaintiff company. On the day of the fire, Mr. Reddy had left for Lautoka around 5.15pm or so. Whilst shopping he had been informed by Mr. Pillu of MYT Transport of the fire. The fire brigade was called, but the fire gutted the showroom to ashes. The plaintiff says it is unaware of the origin of the fire. The police carried out an investigation, but criminal action had not been filed against any of the staff of the plaintiff. These facts are not in dispute. 

DEFENCE CASE 

[13]	Upon receiving the claim, the defendant appointed Mr. Luff, a fire investigator to carry out an investigation of the fire and KPMG to advise on the financial status of the plaintiff. Mr. Luff interviewed and audio-recorded most of the lay witnesses that gave evidence in this case, except Mr. Sathendra Prasad. The audio records and their transcripts were also produced in court without objection. Two and a half years after the fire, on 18 January 2006, the defendant sent a letter of declinature inter alia alleging fraud. Mr. Luff says that he is of the opinion that the fire was not accidental but deliberately ignited by Mr. Reddy, who admittedly had possession to the key to the showroom. 

[14]	Both Mr. Luff and KPMG submitted their respective reports. The defendant claimed privilege on both reports but later produced the KPMG report with the agreed bundle of documents. Despite the defendant’s application to consider Mr. Luff’s testimony as expert evidence, Mr. Luff’s expert report was not produced in court or handed over to the plaintiff. The defendant’s allegation of arson appears to be based on opinions of Mr. Luff, the fire investigator and the financial report of KPMG. Mr. Luff opined that it was Mr. Reddy who set fire to the showroom. Mr. Robert Cohen who prepared the KPMG report opined that the plaintiff was in financial difficulties. It appears that the two reports led the defendant to conclude that the plaintiff who was in financial difficulties, deliberately set fire to the showroom to fraudulently reap the benefits of the insurance policy. 

LEGAL MATRIX

[15]	The defendant, by letter of 18 January 2006, (Document 3 of agreed bundle of documents) declined to pay the insurance claim on the grounds that: (1) the claim is fraudulent;(2) breach of the terms of insurance policy and common law; (3) claim was supported with false statements; (4) failure to fully co-operate with the investigator; and (5) failure to submit documents on time. In the first paragraph of the aforesaid letter, the defendant admitted that the premises ‘suffered extensive damage’ in a fire on 5 May 2003. The parties are, therefore, at variance only on the cause of the fire. 

[16]	Mr. Mishra, on behalf of the plaintiff submits that there are several shortfalls in the letter of declinature declining to indemnify the plaintiff. Although the primary reason for the declinature is fraud, the defendant failed to give particulars of the alleged fraud or particulars of the alleged breach of the terms of insurance policy and common law. I agree with Mr. Mishra that it was mandatory for the defendant to give details and particulars of the fraud and the other issues stated in its letter of 18 January 2002, enabling the plaintiff to determine further action or meet its case. 

[17]	The Pre-trial minutes (PTC) reveals 15 issues agreed to by the parties. However having considered the evidence and the issues in the PTC, I am of the opinion that this case could be fully determined with the consideration of the following issues. 

(i)	What is the extent of the fire insurance policy? 

(ii)	Did Mr. Reddy deliberately ignite the fire?

(iii)	Did Mr. Reddy make false statements to Mr. Luff?

(iv)	Did Mr. Reddy fail to cooperate with Mr. Luff?

(v)	Does the failure on the part of the plaintiff to refer the dispute to arbitration within one year, amount to a waiver of its right of claim? 

[18]	I shall now consider the evidence vis-a-vis each of the above issues. 

Issue No 1- What is the extent of the insurance policy? 

[19]	It is common ground that at the time of the fire, a valid insurance fire policy was in force. The evidence of Ms. Mohini Ali, Mr. Naidu and Mr. Reddy on this point is relevant. Mr. Reddy says that he had requested the insurance agent, Mr. Naidu to reduce the policy as he found it difficult to pay the prevalent premium. Documents D 28, 29, 30, 31, and 32 corroborate this testimony. Mr. Reddy also said he issued twenty new cheques for $1000 each to pay for the amended premium. Mr. Naidu says the reduction gave the plaintiff a credit of $8010.00. Mr. Naidu also said that he informed New India of his client’s request. Ms. Ali said while preparing for the case she checked the computer records and found that the premium was in fact reduced. The fire policy was produced marked D7 by the defendant. 

[20]	The defendant admits that New India did not issue an endorsement after the premium was reduced. However, the defendant contends that no sooner his insurance agent Mr. Naidu accepted the reduction, the defendant. i.e New India is bound by the acts of his agent. 

[21]	Let me therefore determine the effect of the authority given by New India as principal to his agent, Mr. Naidu, as the principal of agency generally binds the principal for his agent’s act.

[22]	Lord Herschel observed in the case of Kennedy v De Trafford [1897] AC 180, as quoted by Dixson CJ in the case of Colonial Mutual Life Assurance Society Ltd v Producers and Citizen Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 said “no word is more commonly and constantly abused than the word ‘agent’. A person may be spoken of as an ‘agent’ and no doubt in the popular sense of the word may properly be said to be an ‘agent’, although when it attempted to suggest that he is an ‘agent’ under such circumstances as to create the legal obligations attaching to agency that use of the word is misleading”. 

[23]	In most of the insurance matters, the insurer usually permits the agent to receive proposals for insurance, issue temporary receipts, and then transmit the documentation to the insurer to issue the policy. It is the policy of insurance that creates a binding contract between the insured and the insurer, governing their respective rights and obligations. After creating contractual relationships between the parties, the insurance agent no longer plays a part in that relationship. Therefore, the parties have autonomy and freedom to act independently and the contractual parties have the right to end or amend their contractual obligations and liabilities. The insured is entitled to lodge claims directly with the insurer for indemnity and payments of claims, although in practice sometimes the agent assists the insured by handing over claim forms and assisting with filling such forms. It is the insurer and not the insured that remunerates the agent with an agency commission. The agent is merely a facilitator in the process. In this context, the principal is not bound by the agent’s acts.

[24]	If the insurer anticipated the agent to bind it with its actions beyond merely facilitating the insurance process, such authority must be expressed. The insurer must demonstrate that the agent was given specific authority, by which he was authorised to instantly bind the insurer apart from obtaining proposals and premiums. The insured must have knowledge that the principal has specifically put the agent in that place for that purpose. 

[25]	Let me now examine the evidence relating to the relationship and authority given by the defendant insurer to Mr. Naidu, the agent in the case in hand. Mr. Naidu in his evidence-in-chief, at paragraph 2 says as follows:

 ‘In the course of my agency and dealings with clients I would receive proposals for insurance and issue cover notes.  I would also note the changes that are requested from time to time by clients and would have those noted by New India.  Once a proposal is accepted by New India a policy would issue direct from it.  New India would forward the policy to me as agent for me to release it to the insured.  During the currency of a policy if any variations to a cover are required, I would attend to that on approach from the client.  As the agent, I would on instructions from the client write out the terms of the variation in the form of an endorsement.  This I would then forward to New India who would in due course note their records and forward a formal notification of the endorsement to the client and me’ (emphasis added)

[26]	In cross-examination, Mr. Naidu said that New India accepts the policy as conveyed by him. He however, admitted that New India has the right to refuse a policy and that it is New India that gives endorsements or cancellations and not him. He also confirmed that it was New India who renewed the policy when it was cancelled and not him (vide document G letter in P3). He also said when the fire erupted Mr. Reddy lodged the claim directly with New India. I also note that it was New India who in fact issued all the letters relating to the policy and the claim and not Mr. Naidu. 

[27]	It is evident from the above that Mr. Naidu only acted as an intermediary, akin to a broker between the plaintiff and the defendant. It was the defendant who took the final decisions and it appears Mr. Naidu only had authority to accept the policy and premiums and nothing more. After New India finalized the policy, the policy endorsement is returned to Mr. Naidu to be handed over to the client. Therefore, I have no doubt that the relationship between Mr. Naidu and New India required New India to accept and endorse the amendment after Mr. Reddy made a request for a reduction in premium and did not automatically amend the policy and reduce the premium as submitted by Mr. Narayan. 

[28]	There is no evidence before me to conclude that Mr. Reddy was aware of any ostensible or apparent authority given to Mr. Naidu by New India to issue an endorsement on the policy. Mr. Naidu himself admits that it is New India, which could accept or reject the policy. Therefore, I do not accept that the defendant was bound as principal, when Mr. Naidu accepted the request made by Mr. Reddy to reduce the premium.

[29]	On the same issue, Mr. Mishra also argues that the defendant did not plead this issue in the pleadings and in fact admitted the policy and the extent of cover in the statement of defence. He submits the admission now estopped the defendant taking up the issue and draws the attention of court to O.18 r.12 of the High Court Rules, 1988. 

Effect of admissions in the statement of defence 

[30]	I have reproduced below the admissions agreed by the parties at the pre-trial conference, (PTC):

1.1 Plaintiff had insured a commercial building situated at Lot 5, Royal Palm Road, Navutu, Lautoka (hereinafter referred to as “the said building”).

 1.2 The Defendant is a foreign company duly incorporated under the laws of India and having its place of business in Fiji at Suva and carrying on business in Fiji as an insurance underwriter.

 1.3 By a Policy of Insurance no 922622/1112/12000/97 (hereinafter referred to as (“Insurance Policy”) made between the Plaintiff and the Defendant and in consideration of the premium paid by Plaintiff and upon the terms. mentioned therein the defendant agreed to insure the plaintiff’s said building, furniture and machineries situated at Lot 5, Royal Palm Road, Navutu, Lautoka against risks inter alia of fire for the sum of $320,000.00 (Three hundred Twenty thousand dollars (“insured sum”).

 1.4 The Insurance Policy was initially for the period 15th May 2001 to 15th May 2002 and thereafter was renewed for the period 15th May 2002 to 15th May 2003.

 1.5 On the 5th day of May 2003 at the time of the loss and damage the plaintiff was interested in the said building, furniture and machineries. 

 1.6 On the 5th day of May 2003 plaintiff’s said building, furniture and some machineries (sic) subject to the Insurance Policy was damaged in a fire.

 1.7 The said building was utilized by the plaintiff for its business.

 1.8 On 5th May 2003 the said Insurance Policy was in force for all intent and purposes.

 1.9 On or about 31st May 2003 plaintiff lodged its claim with the defendant as Insurers.

 1.10 The defendant after carrying out investigation and inspection of damages done to plaintiff’s property declined the claims under the policy.

[31]	The parties also raised 15 issues at the PTC and none of the issues required this court to determine the insured sum or the extent of the cover. Neither did the defendant plead this matter in the statement of defence nor move for amendment to incorporate it as a fact in issue to be determined by Court.

[32]	The plaintiff objects to this issue being tried in this case. Mr. Mishra states that O 18. R 12 (2) which is a deeming provision requires an allegation of fact in a pleading to be specifically traversed, if not such fact is deemed to be admitted. Order 18 r. 12 (3) of the High Court Rules, 1988 stipulates that a general denial of an allegation or a general statement of non-admission is not a sufficient traverse of an allegation of the fact. In this case, instead of traversing the pleading, the defendant has specifically admitted the insurance policy and the insured sum. 

[33]	Mr. Mishra relied on Pacific Insurance Company Limited –v- Dip Narayan FCA, Civil Appeal No. ABU 026 of 1979 and S.L Shankar –v- Fiji Foods Ltd Fiji Court of Appeal No. 113 of 1985 in support of his objection. The court in both these cases held that trying of new issues in the appellate court for the first time without raising it in the original court would result in a substantial miscarriage of justice to the opposing party, since such party could not anticipate or expect to meet the issue. I find that the principle underlying these two judgments are applicable to the case at hand, although the new issues that were attempted to raise were at appellate stage. The principle against the prejudice and unfairness caused to a party by raising of new issues belatedly, without giving that party adequate time and notice to prepare and meet the allegation, is applicable even when it occurs within the same proceedings in the original court itself. 

[34]	 The defendant specifically admitted that the policy and the sum insured to be $320,000.00. In the circumstances, I agree with Mr. Mishra’s objection that the defendant is now estopped from arguing that the policy has been reduced. 

[35]	Furthermore, the following evidence before me clearly demonstrate that New India has in fact not accepted the reduction or heeded to Mr. Reddy’s request to reduce the policy. 

[36]	It is common ground that the request for the reduction of the premium was made on 18 November 2002; an endorsement for a lesser cover was not given to the plaintiff; the post-dated cheques handed over to New India for the original amount of premium, were never returned to the plaintiff. At the hearing, Mr. Reddy said even as at that date, the defendant had not returned the post dated cheques. 

[37]	Immediately after the day of fire on the 6 May 2003, Mr. Reddy was informed by New India that they are not in a position to renew the plaintiff’s policies. (Vide Annexure ‘G’ of the affidavit of Mr. Reddy-P3). The letter disclosed the six policies that were in operation as at 6 May 2003 and their expiry dates. The expiry dates are different for each policy and it included the motor vehicle policy. Mr. Naidu in his evidence states that the indemnity for individual insurance covers after the reduction as requested by Mr. Reddy stood as follows. (vide paragraph 15 of the affidavit):

•	The sum insured for the buildings at Navutu Industrial Sub-Division, Lautoka (excluding showroom) was reduced by $100,000 from $200,000 to $100,000.

•	The sum insured for plant and machinery was reduced by $100,000 from $200,000 to $100,000;

•	The sum insured for stock was reduced by $50,000 from $80,000 to $30,000.

•	The sum insured for the furniture showroom was reduced by $120,000 from $200,000 to $80,000;

•	The sum insured for the stock in the furniture showroom was reduced by $90,000 from $120,000 to $30,000.

[38]	I have carefully examined the letter written by Mr. Ilango on 15 January 2003 addressed to Mr. Reddy. (D 12). The said letter describes the outstanding policies as at 15 January 2003. The perils stated in the said letter are same as the perils covered under the original policy at D7. The letter records an outstanding payment on the premium to the value of $27,811.80. After the request of reduction of the premiums. Mr. Reddy was required to pay only $22,801.80 and the subsequent cheques issued by him only amounted to $22,801.80 and not $27,811.80 as stated by Mr. Illango in his letter. This disparity confirms that the defendant as at 15 January 2003 had not heeded to the request for the reduction. Mr. Reddy then by his letter of 17 January 2003 (D 13) reminds Mr. Naidu regarding the discussion he had with him on the reduction of the policy and requests him to adjust the amounts as advised by him. This clearly demonstrates that even as at 17 January 2003 Mr. Reddy’s request for reduction made on 18 November 2002 had not been heeded. Thereafter on 18 February 2003, all the policies were cancelled for non-payment of the premiums. Thereafter the policies were again re-instated by letter of 10 March 2003 (D 15).The said letter does not disclose the perils covered under the policy but informs Mr. Reddy to pay the balance sums. Even this letter does not refer to the request for the reduction, the irresistible inference being that as at 10 March 2003 the defendant has not considered the request. 

[39]	There is undisputed evidence thereafter that Mr. Reddy had seen Mr. Ilango and the same policies were reinstated and the letter of 6 of May 2003 sent by the defendant (D15) is proof thereof. I also note that D12, the letter of New India dated 15 January 2003 also written by Mr. Ilango refers to the same six policies. Mr. Reddy requested to cancel the motor vehicle policy. However all three letters written by the defendant, i.e. D14, D12 and attachment G to P3 (D15) disclose that even as at 6 May 2003, i.e the date of fire, all the old policies existed despite Mr. Reddy’s request for a reduction of the premium. When Mr. Illango clearly sets out the existing policies as at 6 May 2003, I am not inclined to accept the evidence of Ms. Mohini Ali before court now, that the policies were amended as depicted in the computer records. The computer records does not disclose the date when it was amended. I am therefore convinced that if the policy was amended it was done after the fire and the plaintiff was never informed of it. Ms. Mohini Ali also said the defendant’s policy file was missing and she believed that it was destroyed as the defendant only retained files for seven years. The claim was rejected on 18 January 2006 and the plaintiff initiated action on 19 March 2008. In between, there had been correspondence and I am unable to accept that in the midst of all these correspondence, the defendant destroyed the file. Had the defendant in fact destroyed the file, then it would be the defendant who would have to bear its consequences and not the plaintiff.

[40]	In the circumstances, I conclude that the extent of the cover is $320,000.00. It is clear from the evidence that Mr. Reddy has to pay an outstanding balance of $8010.00 as payment for premium. Accordingly, I conclude that Mr. Reddy must pay the balance sum of $8010.00 as outstanding premium. In arriving at this decision, I have considered the following two cases which were brought to my attention by Mr. Mishra:

(1) Dominion Insurance Ltd v Westpac Banking Corporation Fiji Court of Appeal Civil Appeal No. ABU 0005 1997, page 4 that held:

‘The law on this aspect has been summarized in the following extract from MacGillivary and Partington on Insurance Law (7th edn.) para 861:

“There is no rule of law to the effect that there cannot be a completed contract of insurance concluded until the premium is paid, and it has been held in several jurisdictions that the courts will not imply a condition that the insurance is not to attach until payment. It would seem to follow that, if credit has been given for the premium, the insurer is liable to pay in the event of a loss before payment…”
………………..
In awarding costs on a common fund basis, His Lordship took the view that the Company’s refusal to pay out on the policy brought it into the category of a litigant whose conduct was reprehensible that it should be liable for more generous award of costs than those usually awarded on a party–and–party basis.”

(2) In the case of Hilias & Co –v- Arcos Ltd [1932] All E.R 494 at Page 499 where the House of Lords (Lord Tomlin) said as follows:

“….. the problem for a Court of construction must always be so to balance matters that, without the violation of essential principle, the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains.”

[41]	 Let me now turn to determine the second issue, the cause of the fire.

Issue No. 2- Did Mr. Reddy deliberately light the fire?
 
[42]	There is no direct evidence to prove who lit the fire and the defence therefore relies on circumstantial evidence in support of their case. The defendant contends that the facts in this case clearly establish what is commonly referred to as an ‘arson triangle’ i.e. the fire was deliberately lit by Mr. Reddy, as it was he who had the opportunity and motive to cause the fire. I will consider the evidence on these three aspects separately.

Opportunity

[43]	The showroom only had one entrance. Admittedly, the plaintiff had one set of the keys to the showroom in his vehicle. It is not in dispute that Mr. Albert Raj locked the showroom around 5 pm on the day of the fire and hanged the keys at the office of the plaintiff. The evidence does not reveal that anyone else entered the showroom after it was locked. I have no doubt that Mr. Reddy had access to the keys to enter the showroom after it was locked by Mr. Albert Raj. However, it appears that anyone else also could have had access to them as the keys were simply hung in the office. In the circumstances, I am unable to conclude that Mr. Reddy was the only person who exclusively had access to the key to the showroom. 

 Motive 

[44]	It is the defence case that the plaintiff was in financial crisis in addition to having a non-marketable showroom without a completion certificate, which motivated Mr. Reddy to perpetrate the fire to fraudulently gain benefits from the fire insurance policy. To support this position, the defence led the evidence of Mr. Cohen who prepared the KPMG report to prove probable motive. The plaintiff led the evidence of Mr. Jay Lal to counter the evidence of Mr. Cohen. 

[45]	It is pertinent to mention at the outset that motive is not a compulsory element to prove arson in civil cases. The issue of arson would not fail merely because the defendant was unable to prove the motive. Mr. Narayan cites Transport Industries Insurance Co Ltd v Longmuir (1997) 1 VR 125 at 136 where Tadgell JA said;

“In my opinion there is no compelling piece of evidence which clearly points to a motive as there are in some arson cases. The absence of a clear motive is not fatal to the defendant's case. In other words the defendant does not need to establish a motive in order that the onus of proof is discharged. At times there may be difficulties in identifying a specific motive. 

"The operations of the mind being invisible and intangible, there may be motives, which no human being but the party can divine: Wills, Principles of Circumstantial Evidence 7th Edition (1937) page 65."

[46]	Admittedly, KPMG provided financial services to the plaintiff company before Jay Lal and Associates took over the work in 1990. The plaintiff objects to the acceptance of the KPMG report in evidence on the basis that the report was prepared by KPMG using confidential data they had acquired as a consequence of their professional relationship in providing financial services to the plaintiff. Mr. Cohen, in cross-examination, admitted that KPMG had in fact worked previously for the plaintiff, but he neither disclosed that fact to New India nor obtained the consent of the plaintiff before preparing the report. In my judgment, professionalism requires impartiality and therefore professional ethics requires disclosure of details to demonstrate such impartiality. KPMG being a reputable professional body with global presence, I am of the opinion that Mr. Cohen should have disclosed to both parties of a possible conflict of interest before undertaking the services. A simple short letter could have averted the lengthy objections that were taken at the hearing. 

[47]	Let me now assess the merits of the objection. At the hearing, the plaintiff did not disclose the particulars of the prejudice caused or would be caused to the plaintiff by admitting the KPMG report, which had been prepared using such confidential information. Nor did the plaintiff produce any confidentiality agreement between itself and KPMG. In fact, the KPMG report was produced in court as an agreed bundle of documents without any objection. Furthermore, KPMG carried out work before 1990 and the report relates to statement of accounts of 2001 onwards almost after a decade. Mr. Cohen was not cross-examined to demonstrate that he in fact used any confidential information obtained pursuant to the previous professional relationship when preparing the report. I therefore admit the KPMG report that was produced marked document 8 in the agreed bundle of documents and conclude that the plaintiff has not demonstrated any prejudice that has been caused or would be caused by KPMG’s failure to disclose information relating to its previous professional relationship with the plaintiff. I also wish to place on record that the non-disclosure by KPMG of this fact had not made any impact on my assessment of the evidence of Mr. Cohen in anyway. 

[48]	Both Mr. Cohen and Mr. Jay Lal provided detailed reasoning to support their respective opinions. PW4- Jay Lal, (Accountant), submitted his evidence-in-chief by affidavit marked P6. He states that since 1990, his company carried out the accounting work of the plaintiff company when they took over the work from KPMG. According to him, when the fire broke out the statements of accounts for 2002 and the 2003 first quarter were prepared on chequebooks and bank statements as the fire had destroyed all documents. He also admitted that he had studied the KPMG report that was submitted in the agreed bundle of documents marked document 8 (document 8) and made his observations on the KPMG report which he had attached marked annexure A to his affidavit at P6. 

[49]	Mr. Robert Cohen, in his evidence-in-chief by affidavit marked D19 said, KPMG was retained by New India to carry out an analysis of the financial strength of the plaintiff company. This witness along with his staff had prepared the report that was produced marked document 8 in the agreed bundle of documents in August 2005. Mr. Cohen said that document 8 (KPMG report) was prepared from the financial statements he received from the defendant for the years 2002, 2003 and a comparative statement for 2001, which is in the 2002 statement. He also said that when he prepared the report, he was not provided with document 5 schedule 3, 4, 4/1, i.e. he only considered the financial statement for the year ended 31 December 2002 minus the schedules at pages 1 to 6 which related to financial status for 2000 and 2001. Mr. Cohen was present in court without objection, when Mr. Jay Lal, the plaintiff’s accountant gave evidence and said his views remain same even after hearing Mr. Jay Lal’s evidence. In cross-examination, he admitted that his report is not signed, and has only 16 pages although the report states that it contained 18 pages. He also admitted that neither the plaintiff nor his accountant, Mr. Jay Lal was consulted or interviewed by him or his staff, before preparing the KPMG report, and the report was purely based on the statement of accounts handed over to him by the defendant. Mr. Cohen explained in detail in the KPMG report that the plaintiff company was experiencing financial difficulties due to declining sales, incurred losses, inadequate financial resources to comfortably meet loan repayments, increasing level of debts and poor liquidity rendering it to be bankrupt. 

[50]	Needless to say, both witnesses are learned and experienced men in the field of accountancy. Therefore when assessing their evidence, I guide myself with the principles enunciated in the decision of the British Columbia Court of Appeal, case of Faryna -v- Chorny [1952] 2 D.L.R where it was held at page 356 as follows:

 "If a trial judge's finding of credibility (and I would add reliability) is to depend solely on which person he thinks made the better appearance of sincerity in the witness box, we are left with a purely arbitrary finding and justice would then depend upon the best actors in the witness box. On reflection, it becomes almost axiomatic that the appearance of telling the truth is but one of the elements that enter into the credibility of the evidence of a witness. Opportunities for knowledge, powers of observation, judgment and memory, ability to describe clearly what he has seen and heard, as well as other factors, combine to produce what is called credibility. _ _ _

 _ _ _The test must necessarily subject his story to an examination of its consistency with the probabilities that surround the currently existing condition."

[51]	I am thankful to both witnesses for their assistance given to me to analyse this extensive evidence by assisting me whenever I requested clarifications. The report was broadly based on five areas of topic, i.e. (1) declining sales, (2) incurring losses, (3) inadequate financial resources to comfortably meet loan repayments, (4) increasing level of debts and (5) poor liquidity. The gist of the evidence of both witness, Mr. Jay Lal and Cohen, was same, in terms of the conclusion, namely that the plaintiff was in financial difficulty in and around the years 2002/2003. Both gave detailed explanations for their opinions; Mr. Jay Lal explained the cause for such financial difficulty but said that the plaintiff was not in a crisis. Mr. Cohen was of the view that the financial difficulty was in fact a crisis, which could render the plaintiff company to bankruptcy. I do not wish to set out the detail reasoning given by the two witnesses as both made similar conclusions and only varied on the degree of the financial status of the plaintiff. I would therefore only deal with the relevant evidence required to determine the credibility of the two witnesses. 

[52]	Mr. Cohen gave evidence before court as an expert. He professed as a ‘forensic’ accountant with expertise to investigate fraudulent accounts. Clearly, Mr. Cohen and his team did not carry out any investigative analysis of the accounts but opined strictly on the financial statements prepared by Mr. Jay Lal. Mr. Narayan contends for the defendant, that the plaintiff’s accounts do not properly reflect the true events, such as commencement date and completion dates of the furniture business and the construction of the showroom. According to Mr. Reddy the furniture business commenced in 2001 and the construction of the showroom around October 2001. The fire policy was issued in January 2002 and Mr. Naidu says he inspected the building in January 2002 before the fire policy was issued and found it to be completed. Mr. Narayan therefore submits that a considerable amount of expenses and trading should be reflected in the 2001 accounts but the statement of accounts prepared by Mr. Jay Lal reflects these expenses in 2002. Mr. Jay Lal in cross-examination admitted that if the construction was completed in 2001, it would have a significant impact on the accounts. No evidence was adduced before me to demonstrate the significance of the impact, such as whether the impact was positive or negative when the expenses should have been less if the showroom was completed and the furniture was not being manufactured in 2002. Mr. Narayan submits that therefore the accounts are incorrect and unreliable. He submits that as such, the evidence of Mr. Cohen would have greater creditability than those of Mr. Jay Lal. 

[53]	I have difficulty in accepting Mr. Narayan’s argument. Mr. Cohen said the opinions expressed in the report are based on the financial statements prepared by Mr. Jay Lal. Although he claims to have expertise to investigate fraudulent accounts, admittedly, he did not speak with Mr. Jay Lal or Mr. Reddy to ascertain the manner in which the accounts were prepared after the fire destroyed all the documents. If Mr. Jay Lal’s accounts are incorrect and unreliable then any opinion expressed based on such incorrect accounts must necessarily be incorrect. If I accept the defence argument, I have no option but to conclude that the opinion expressed by Mr. Cohen before this court pursuant to incorrect accounts cannot be accepted as credible evidence.

[54]	Independent of the above observation, I have difficulty in accepting Mr. Cohen’s evidence, as he admitted at the hearing he did not have the entirety of the financial statements before him when he expressed his opinion. No doubt, this is no fault of Mr. Cohen, as he expressed the opinions on the documents made available to him. However, I am unable to accept an opinion expressed by an expert witness who has not had the benefit of perusing the entire set of financial accounts relating to the subject on which he has expressed his opinion. 

[55]	Even if I am to disregard both opinions, ample independent documentary evidence has been placed before me, which demonstrate that the plaintiff’s company was in financial difficulty in 2002 and in early part of 2003. The documentary evidence such as bank statements, credit corporation statements and similar communications clearly disclose that many cheques written by the plaintiff during that period was dishonoured, he fell behind honouring monthly commitments to insurance, Credit Corporations and the bank etc. Mr. Reddy in his evidence in court and at the interview with Mr. Luff also admitted that he had some financial difficulty but it was under control.

[56]	It appears that this situation had arisen due to many factors. Although the plaintiff is a limited liability, the key figure behind scenes of this family business was Mr. Reddy. It appears to me that he ran his family business without any strategic planning or financial acumen. Mr. Reddy has formal education up to Form 7. The only professional body employed by the company was the accountants to prepare the financial statements. In late 2001 and 2002 he had commenced three new projects, (i) furniture manufacturing business, (ii) constructing a showroom and (iii) his residence, which he referred to in his evidence as his mansion. All these three projects had been commenced around the same time. The projects had been financed through personal funds and the monies borrowed from Bank of Baroda and Credit Corporation. His business was an ongoing rolling business where the income was mainly generated from the sawmill business and sale of hardware items. Mr. Albert Raj, the defence witness confirmed that he used to bank $2000 to $5000 every 2 to 3 days. His income has not been constant and money therefore did not flow daily. In 2002, the plaintiff had also lost a contract with Fiji Sugar Corporation (FSC), but had again secured it in April 2003. The bad weather conditions that had prevailed during 2002 had also affected the timber and logging business adding further burden on the plaintiff’s financial situation. In fact as stated in document 14 in the agreed bundle, having considered the bad weather conditions, Bank of Boroda had offered a grace period to regularize the plaintiff’s accounts. Indeed the same letter discloses that despite the fire, the plaintiff had fully paid and up dated loan instalments as at 25 August 2004. A close examination of the bank statement and the Credit Corporation statements evince payments had been made to all institutions belatedly which resulted in those institutions dishonouring the cheques. However, it appears to me that the plaintiff had been meeting his commitments despite his irregular income. The culmination of factors, i.e. building a house, showroom, venturing into new furniture business with bad weather conditions and not having a steady flow of income had undoubtedly led the plaintiff into financial difficulties. 

[57]	Therefore, I accept that Mr. Reddy was in financial difficulty when the fire broke out. However, what is at issue here is whether the financial situation was as such, that motivated Mr Reddy to set fire to his own showroom. 

[58]	It is clear from an examination of the bank statements, insurance premiums and Credit Corporation accounts that the plaintiff had paid up in full all these accounts by 2005, despite not being indemnified under the fire policy. This permits me to safely infer that the income from the sawmill although not regular was sufficient for him to make ends meet, which he demonstrated by honouring all the payments to most of the creditors. In this context, it is also clear that the forecast of Mr. Cohen that the plaintiff company was unable to meet its debts and liabilities and was on the verge of bankruptcy has no merit. The furniture business would in any event take time to generate income, as he would first have to manufacture the goods and maintain a reasonable stock before commencing marketing and sales. Mr. Reddy said that the wood required for the furniture business came from the sawmill, thereby minimizing his expenditure in purchasing wood and ancillary items required for furniture making were marginal. 

[59]	I also note that a cheque payment made on 5 May 2003, on the day of the fire for $1000 by Mr. Reddy was dishonoured. Ms. Mohini Ali confirmed that Mr. Reddy called her in the morning of the fire and sent cash, which is also confirmed by document D4 (1). Just two months prior to the fire, Mr. Illango of New India had reinstated the policies on 10 March 2003, which had earlier been cancelled. Admittedly, the plaintiff was severely warned before the reinstatement of the policies relating to his payments. Had Mr. Reddy planned to commit arson in order to benefit under the fire policy, he would, in all probability, have at least ensured that his fire policy was paid up to date and not tendered a cheque that would be dishonoured on the very day he planned to commit the arson and risk cancellation of the policy. Furthermore, Mr. Reddy had secured a new contract with FSC in April 2003 to supply logs. Over 65% of his stock was also destroyed by fire where the plaintiff had to meet the contract in hand. In the absence of compelling evidence, I find that Mr. Reddy’s prior conduct is not consistent with that of a person intending to act as an arsonist as alleged by the defendant. 

[60]	Having carefully considered the evidence before me, I am not persuaded that Mr. Reddy was motivated to commit arson because of his financial difficulty. 

Arson 

[61]	The fact that there was a fire is not disputed. The defendant alleges that the fire was deliberately caused by the plaintiff or persons acting on its behalf. The plaintiff is a company. Therefore, the actus reus of arson must necessary be committed by one of its employees. 

[62]	It is trite law that onus of proof of arson rests on the party alleging it. The standard of proof of proving arson in a civil case is on a balance of probability but it requires a greater preponderance of probabilities than in the normal civil standard, and is less exacting than in criminal standard. Briginshaw v Briginshaw 60 CLR 336; Bater v Bater [1950] 2 ALL E R 458 as approved by the Court of Appeal in Hosnar v Narberger Products (1957) 1 QB 247 at p. 258, 264 (at p.266); Refjek & Anor v McElroy & Anor 112 CLR 517; Chinsamy Gounder v the National Insurance Co. Ltd HBC 00337 of 1994L2.

[63]	In Hornal v Neuberger Products [1957] 1 QB 247 Denning LJ said at 258 said:

”The more serious the allegation the higher the degree of probability that is required; but it need not, in a civil case, reach the very high standard required by the criminal law”.

[64]	Briginshaw v Briginshaw, et al (1938) 60 CLR 336 Dixon J said at 361:

“The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality but reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters `reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences”.

[65]	There are no eyewitnesses to prove the allegation of arson and the defendant relies on circumstantial evidence to prove this issue. The standard of proof in the application of circumstantial evidence in a civil action is different to a criminal action which was dealt by Lord Robinson in the case of Richard Evans & Co v Astley (1911) A.C. 674 where his Lordship said:

 ‘Of course as far as logical consistency goes many hypotheses may be put which the evidence does not excludes positivity. But this is a civil and not a criminal case. We are concerned with probabilities, and not with possibilities. The difference between the criminal standard of proof in the application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistence with innocence, while in the latter you need only circumstances raising a more probable inference in the favour of what is alleged. In question of this sought, where direct proof is not available, it is enough if the circumstances appearing in the evidence give rise to reasonable and definite inference: they must do more than give rise to conflicting interests of equal decrees of probability so that the choice between them is mere matter of conjecture’. 

[66]	It is also well-settled law that if the claim is fraudulent the insurer is entitled to forfeit the claim, even if the policy of insurance does not contain specific provisions dealing with fraudulent claims. The principle is based on uberrima fides principles; where both parties must observe the utmost good faith when dealing with each other. In Britton v Royal Insurance Co Ltd (1866), 4F & F. 905 at p 909 which was followed in Davies v Monarch Insurance Co of NZ Ltd (1977) 1 NZLR 373, Wills J held:

‘The contract of insurance is one of perfect good faith on both sides, and it is most important that such good faith should be maintained. It is the common practice to insert in fire policies conditions that they shall be void in the event of fraudulent claim, and there was such a condition in the present case. But a condition is only in accordance with legal principle and sound policy if there is a wilful falsehood or fraud in the claim, the insured forfeits all claim whatever upon the policy.’

[67]	In the instant case, the defendant relies on clause 7 of the policy, to define arson as fraud. Clause 7 reads:

‘If the claim be in respect of fraudulent or if any fraudulent means or devices be used by the insured or any one acting on his behalf to obtain any benefit under this Policy or if any destruction or damage be occasioned by the wilful act or with the connivance of the insured, all benefit under this Policy shall be forfeited.’

Credibility of the witnesses 

[68]	The issue of arson is a question of fact, which requires me to determine on the circumstantial evidence led before me. Both parties, in total, led evidence of eleven witnesses and I am required to determine the credibility of these eleven witnesses. In doing so, I am mindful that, sometimes with the passage of time the memory of witnesses fades, the narration of the evidence could vary, as human judgment is fallible and human knowledge is limited. Therefore as a trial judge exercising original jurisdiction, I cannot ignore such human errors when considering the credibility of witnesses. Although at times, cross-examination of skilful lawyers assist court to some extent to overcome these shortfalls and difficulties, the court must consider the overall evidence of the witnesses to determine credibility. If the errors in evidence appears to be innocent and does not affect the overall testimony, a trial judge may apply the principle of divisibility and disregard such portion of the evidence and accept the rest. However, where there is conflict between the evidence of the witnesses, then the court must carefully consider the demeanour, conduct, integrity, ethics and honesty of the witness in court, in assessing the credibility. I have considered the evidence in this case within these common parameters. 

[69]	The defendant contends that Mr. Reddy originated the fire. It is common grounds that the fire was first seen around 5.20pm on 5 May 2003. At the time of the fire the premises was fully fenced and two security guards were on duty. The fire was first seen by Mr. Rocky (PW1) who then alerted Pillu (Umesh Kumar, the operations manager of MYT Transport) and the plaintiff’s security guard, Sathendra Prasad (PW3). Mr. Albert Raj (DW 3) an employee of the plaintiff since November 2002 as usual locked up the showroom around 5pm on the date of the fire and left the premises shortly thereafter after hanging the key in the office. Both Mr. Sathendra Prasad and Mr. Pillu had witnessed the fire emitting through the facia board. Both had also witnessed the fire inside the showroom through the glass panels, emanating from the left rear corner of the building looking from the frontage.

[70]	Mr. Reddy and Mr. Albert Raj confirmed that they had not noticed any electrical problem in the showroom. Mr. Albert Raj says there was a power point in the storeroom near the corner where the tyres were placed with a hand belt sander plugged in, but he switched it off before leaving. He said he switched on the florescent lights in the show room before leaving and did not notice anything untoward when he left and, according to him, everything was ‘okay’. Although Mr. Raj was the last person who was seen leaving the showroom on the date of the fire, the defence excludes Mr. Raj as the possible perpetrator of the fire.

[71]	 Mr. Prasad also said as the fire grew, it emanated lot of cinders (embers/sparks). He also confirmed that he noticed that the flames had reached the electrical wire supplying power to the building, which had started to burn and had fallen down. He said he did not see any electrical sparking, any electrical shortening to the electrical wire that was supplying the power and had witnessed flames from the corner of the building where the wire burnt. He confirmed Mr. Raj leaving the showroom soon after 5 pm and Mr. Reddy after he had poured some buckets of water to wash his vehicle. 

[72]	Mr. Reddy says he was not present in the premises when Mr. Pillu alerted him of the fire, as he left around 5.15pm to Lautoka after getting Mr. Prasad to wash his vehicle by pouring a few buckets of water. He also says that on the morning of the fire, the Minister of Forests had visited his showroom with his officials and had a meeting with him as the government was giving some assistance for furniture export businesses.

[73]	The above facts are not in dispute. 

[74]	Mr. Narayan in his submissions moved court to treat the evidence of the witness Rokoseana Uruqoro (alias Rocky) with caution. Mr. Rocky said that electrical sparks started the fire and Mr. Luff in his evidence excluded the cause of fire being an electrical fault. Mr. Rocky was a watchman with form four education. He did not profess to have any knowledge or skill of electrical wiring and related matters. In the circumstances, I would not accept any evidence of Mr. Rocky on the causation of the fire, except for his evidence that he saw the fire and alerted others. At the hearing Mr. Rocky was crossed examined at length about meeting Mr. Reddy a few days before the hearing and as his evidence lacked coherence, I was compelled to warn him. However, I found that his evidence with respect to what he saw of the fire was consistent with what he stated in his interview with Mr. Luff where he said that there was smoke, fire and sparks. 

[75]	Let me now summarise the evidence of Garry John Luff-DW7 the fire investigator, who testified as an expert witness for the defence. The evidence-in-chief of this witness was produced by affidavit dated 15 October 2010 marked D 33. In summarising this evidence, I have at most times attempted to reproduce the evidence as narrated by him in his affidavit.

[76]	Mr. Luff at paragraphs 1 to 13 of his affidavit sets out his experience as a fire investigator. He states that he functions as an investigator, specializing in fire cause and origin matters. He has 17 years of work experience with the New South Wales Police Force, in the Criminal Investigation Branch, out of which he had spent four years with the Arson Squad. Thereafter, from time to time, he had carried out fire investigations for many insurance companies both locally and overseas either as an employee or whilst being self-employed. He says there are no tertiary educational courses to obtain professional qualifications as a Forensic Fire Investigator. As a whole he has 26 years hands on experience in the field of arson, and had attended many seminars on the subject, had examined in excess of 2300 fire scenes including over 250 scenes during the past two years. 

[77]	Mr. Luff says he was retained by New India to carry out a full investigation with forensic examination of the fire scene. He also said his instructions later transferred from New India to AK Lawyers. Mr. Luff first arrived at the scene of the fire on 9 May 2003, just four days after the incident. He had observed that the scene was intact therefore; his scene examinations were not prejudiced. However, I must point out that the evidence before me revealed that the fire brigade was present at the scene to defuse the fire. His observations of the scene had revealed that all of the contents, predominantly consisting of timber furniture, had been reduced to a white dust residue. He interviewed staff both of the plaintiff and of MYT Transport, present at the time of the fire.

[78]	Both PW1- Mr. Rocky (security guard of the plaintiff) and DW5- Pillu (Operations manager MYT Transport) in their evidence said that they saw the fire emanating from the back of the building at the left hand corner through the facia board. Mr. Luff’s investigations corroborate the evidence of these two witnesses. According to Mr. Luff, the heaviest extent of heat damage and deformation to the metal sheeting of the roofing was at the north-eastern quarter of the building, where the two witnesses first observed the fire. He therefore said that it could be established that the fire commenced at the north-eastern corner of the building, which comprised of a small storage area and office.

[79]	The storage area, inter alia had some vehicle tyres, a lawnmower and a container with about 1-2 litres of two stroke petrol. On the same side, a refrigerator was also connected to an electrical outlet and another electrical outlet had a hand belt sander connected to it, which was switched off. 

[80]	Mr. Luff excluded the electrical sander as being the origin of the fire. According to him, since it was switched off it could not have operated, as electrical current was not passing through the sander to allow it to operate. He also confirmed examining the refrigerator that was placed in the storeroom and said that although it had suffered substantial fire damage, he was able to examine high voltage cables that terminated at the motor and said he did not find evidence of electrical arching or kneeling to suggest that the fire was caused by an electrical fault of the refrigerator.

[81]	According to Mr. Luff, the electrical system supplied power to the showroom through a lead wire from the building in the opposite side. The lead wire was connected to the main switch box through a single fuse, a phase and neutral cable and there was no separate switchboard to the showroom. The electricity power energized fluorescent lighting and two general power outlets in the showroom. Mr. Luff says his findings did not suggest that the wiring system and the conductors associated with the building, to be associated with the ignition of the fire.

[82]	Mr. Albert Raj in his evidence also said that he switched on the fluorescent tubes before leaving. Mr. Luff said that although the ballast/starter systems of fluorescent lighting have been responsible for fires, he ruled out such ignition in the showroom. He said such fires are typical of normal electrical fires, which commence by gradually pyrolising combustible material and in doing so produce large volumes of smoke during the early stages. He opines that fires under natural progression generally commence with high volumes of smoke and as flame volume increases, the smoke (carbon) is consumed and the flame becomes more prevalent than the smoke.

[83]	Mr Luff, states that although the container of petrol and the rubber tyres, which were in the storeroom, would have assisted the fire's progress, an electrical spark most definitely would not have ignited the tyres, as they would have required a considerable heat source before ignition of those tyres would have occurred therefore these items would not have easily combusted. Accordingly, he opined that the fire was not the result of an electrically induced flame. 

[84]	Mr. Luff said that he noticed that the fuse had blown, which was consistent with low resistance. He believed that this was as a result of the fire in progress, which would have caused damage to cabling and breakdown of insulation of the cable. His observations of the brass connectors from electrical switch and fittings which had survived the fire confirms that there was no evidence of electrical arching which would suggest of any electrical fault. He opined that if the fire was caused through an electrical fault such as a break in the cable, the build up of fire to any surrounding material would take considerable time, in fact two or more hours or sometimes days, preceded by a large volume of smoke until the flames consume the smoke.

[85]	Mr. Luff’s findings of the flames and smoke of the fire appears to be based on the opinions expressed by lay eyewitness, i.e Umesh Kumar, Sathendra Prasad and Rocky. They opined that there was little by way of smoke when they saw the fire and they saw a heavy concentration of flames when it was first discovered. According to Mr. Luff, this tends to suggest that the fire has been accelerated by an unnatural fire loading, such as by using a liquid accelerant. He also opined if the fire originated with a spark igniting a tyre, florescent blaster or a similar combatant, then it would have taken a long time to engulf and would have produced a lot of smoke before engulfing the surrounding material in heavy flames. His evidence concludes that if the showroom was closed around 5pm and the fire was seen around 5.15pm it could have engulfed the structure only if it was deliberately lit with an accelerant and nothing else. He therefore opines that there must have been an introduction of an accelerant to cause the fire to have advanced quickly, as seen by the witnesses. 

[86]	Mr. Luff at the trial admitted that he is of the view that Mr. Albert Raj did not deliberately light the fire, notwithstanding that he was the last person seen at the scene. Although several other staff of the plaintiff and of MYT Transport were present when the fire broke out, Mr. Luff seemed to have excluded all other staff as possible perpetrators of the fire. He did not explain the reasons for such exclusion but firmly opined that Mr. Reddy was the arsonist who perpetrated the arson. Mr. Luff says that after speaking with Mr. Reddy and the other witnesses, it was clear to him that after Mr. Albert Raj secured the building with a padlock at around 5pm, Mr. Reddy did not leave the premises until around 5.15pm. Mr. Luff states that it gave Mr. Reddy at least a 10-minute period to set the fire, as the only person who had access to the key for the padlock that secures the entry door. Admittedly, there was petrol, a strong accelerant in the storeroom where the fire started. His evidence did not explain the possibility of the petrol to have accelerated the fire if originated from an accidental cause and thereafter emitting high flames and engulfing the building. 

[87]	The defence moves court to take judicial notice that a shortening that occurs in many homes does not just end up in an immediate well-advanced fire. I am unable to do so as a simple Google search on the internet suggests otherwise. I am reluctant to take judicial notice on such issues and could make my inferences only on credible evidence. 

[88]	 In cross-examination, Mr. Luff admitted that he did not have any expertise in electrical work; he did not speak with the electrical contractor who carried out the electrical work in the showroom; did not collect debris for forensic testing as he thought it was unnecessary; and was uncertain whether he spoke to the Fire Authority or the Fiji Police on the issue. Mr. Luff said he had handed over a report to A.K Narayan Law firm. However, the report was not submitted to court or to the plaintiff. 

Expert evidence

[89]	The ultimate responsibility of admitting the evidence and drawing inferences is the responsibility of the judge. It is well-established law that witnesses must state facts and not opinions. However, at times the judges are not necessarily equipped to draw inferences from facts as those facts may require specialized knowledge for purposes of complete and accurate assessment. The law therefore recognizes that opinions of a witnesses possessing specialized knowledge and skills in a given area or on a subject can be admitted in evidence, provided the witness is an expert in the particular field. 

[90]	The functions of the expert was elaborated by Lord President Cooper in the case of Davie v Edinbourgh Magistrates (1953) S.C. 34 at 40:

‘Their duty is to furnish the judge or the jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence’

[91]	At the outset let me state that I found Mr. Luff to be a neutral witness and his findings were independent. I am convinced that he was not partisan towards the defendant, despite being remunerated for his services by the defendant. Understandably, he had extensive experience as a court witness for several insurance companies, in many jurisdictions including Fiji. 

[92]	Mr. Mishra who appeared for the plaintiff objected to Mr. Luff’s evidence being lead as an expert for want of disclosure. I am therefore required to first determine whether the defence is entitled to lead evidence Mr Luff’s evidence as an expert, in the light of the plaintiff’s objection; and second, can the opinions expressed by Mr. Luff be admitted as expert evidence.

Disclosure of expert reports

[93]	Admittedly, the plaintiff or the court was not given a copy of the expert report. Mr. Mishra objected to Mr. Luff’s evidence being adduced as an expert at the hearing, due to lack of adequate notice or failure to disclose the expert report. Mr. Narayan informed court that he is not submitting an expert report and Mr. Luff will only be giving oral evidence and that he will address the issue of expert evidence in his written submissions. Nor did Mr. Narayan seek leave of court to lead expert evidence as required under section 14 of the Civil Evidence Act. I must state that when Mr. Mishra objected to Mr. Luff giving expert evidence, I was under the belief that Mr. Luff’s evidence was led as a lay witness who investigated the scene and nothing more. However, upon reading the written submissions of both parties, I requested both counsel to make further oral submissions to clarify the position. Mr. Narayan said Mr. Luff’s evidence contained both expert and investigative findings and Mr. Mishra confirmed he was cross-examined on the same basis subject to his objections. I recall Mr. Mishra objecting to Mr. Luff’s evidence on several instances during trial when he attempted to give expert opinions and where I disallowed such evidence. 

[94]	Part IV of the Civil Evidence Act 2002, (Act) contains provisions relating to expert and opinion evidence. Section 15(1) of the Act contains provision to admit expert opinions in evidence in civil proceedings. Section 14(5) of the Act, specifies that an expert report should be confined to a report compiled by a person who deals wholly or mainly with matters on which such expert is “qualified to give expert evidence”. Section 14(1) of the Act, permits the court to make directions relating to disclosure of expert reports by a specific date, in terms of ‘rules of court’. Section 14(2) of the Act permits parties to lead oral expert evidence, subject to conditions as set out in ‘rules of court’. Section 23 of the Act provides for making of ‘rules of court’.

[95]	Hitherto, the ‘rules of court’ have not been promulgated to complement the provisions of the Act. Even in the absence of the ‘rules of court’, as the defendant did not make an application to court in advance to admit expert evidence, the court was unable to issue an appropriate and reasonable direction with respect to notice and disclosure at the appropriate stage of the proceedings. Hence, I am now required to analyse these issues belatedly and to determine their impact on the proceedings. 

[96]	Mr. Narayan submits that in the absence of ‘rules of court’, he is unable and not required to either give notice before leading expert evidence or disclose expert reports. It appears that, although the Act provides the legislative basis as to admissibility of expert evidence, the procedural provisions for admission were intended to be included in the ‘rules of court’. The substantive evidentiary provisions in sections 14(1) and 14(2) require disclosure of expert reports before leading expert evidence. As documented in Volume 6 No. 24 (August 2002) in the Library, Research, Information and Advisory Services, Parliament of Fiji, the brief prepared for general distribution to members of the Senate and House of Representative when the bill was introduced in the Parliament, identifies the key feature relating to expert opinion, which has been stated as follows. 

 “expert reports used, as evidence must be disclosed to the court and to the other party or parties involved’. 

[97]	Nonetheless, Mr. Narayan states that in the absence of ‘rules of law’ governing procedural aspect of leading expert opinions, there is no legal impediment to lead oral expert evidence at a trial without producing an expert report. He also states that although the procedural law for civil trials are set out in the High Court Rules, 1988, the notice or disclosure requirements stipulated in O. 38, O34 and O. 25 r. 8 of the High Court Rules, 1988 do not apply to the present case. He admits that 10 weeks’ notice must be given for expert reports tendered under O 25 r.8(1) but, strongly argues that the rule is limited to personal injury action.

[98]	Mr. Mishra states that in the absence of ‘rules of court’ a party attempting to lead expert evidence must give notice under the High Court Rules 1988, and made lengthy submissions of the applicability of O. 25 r. 8 in this regard. Referring to the Supreme Court Rules (The White Book), Mr. Mishra said that the applicability of this rule to personal injury case had been falsely understood and applied. He contends that O 25 r 8 applies to any expert report. 

[99]	Let me first set out Order 25 rule 8 of the High Court Rules which reads:

Automatic directions in personal injury actions (O.25, r.8)

8.-(1) When the pleadings in any action to which this rule applies are deemed to be closed the following directions shall take effect automatically:

(a) there shall be discovery of documents within 14 days in accordance with Order 24, rule 2, and inspection within seven days thereafter, save that where liability is admitted, or where the action arises out of a road accident, discovery shall be limited to disclosure by the plaintiff of any documents relating to special damages;

(b) subject to paragraph (2), where any party intends to place reliance at the trial on expert evidence, he shall, within l0 weeks, disclose the substance of that evidence to the other parties in the form of a written report, which shall be agreed if possible;

(c) unless such reports are agreed, the parties shall be at liberty to call as expert witnesses those witnesses the substance of whose evidence has been disclosed in accordance with the preceding sub-paragraph, except that the number of expert witnesses shall be limited in any case to two medical experts and one expert of any other kind;

(d) photographs, a sketch plan and the contents of any police accident report book shall be receivable in evidence at the trial, and shall be agreed if possible.

(2) Where paragraph 1(b) applies to more than one party the reports shall be disclosed by mutual exchange, medical for medical and non-medical for non-medical, within the time provided or as soon thereafter as the reports on each side are available.

(3) Nothing in paragraph (1) shall prevent any party to an action to which this rule applies from applying to the Court for such further or different directions or orders as may, in the circumstances, be appropriate.

(4) For the purposes of this rule-

"a road accident" means an accident on land due to a collision or apprehended collision involving a vehicle; and "documents relating to special damages" include documents relating to any industrial injury, industrial disablement or sickness benefit rights.

(5) This rule applies to any action for personal injuries except any action where the pleadings contain an allegation of a negligent act or omission in the course of medical treatment. [Emphasis added]

[100]	Mr. Narayan submits that the heading of the O 25 r 8 clearly states ‘Automatic directions in personal injury actions’ and any interpretation of this rule must therefore be confined only to personal injury actions. He also supported the issue of considering the ‘heading’ of orders and rules for interpretation at length in his written submissions with several authorities but I find that for the reasons stated below I do not have to consider them any further.

[101]	I find that 0.25 r.8(1)(b) of the High Court Rules, provides for automatic directions of expert reports in personal injury actions which results in the discovery of documents for special damages. The parties are required to disclose the substance of the expert evidence with notice. If the parties disagree on the expert report, they are at liberty to call their respective experts up to a maximum of two medical experts and one expert of any other kind. Provisions are also available for parties to apply to court to vary those directions as stipulated in O.25 r.8 (3).

[102]	However, I find that O 25 r 8(5) specifically sets out the parameters of the rule by stipulating that the rule would apply to personal injury cases with certain exclusions. Rule 8 (1) to r. 8 (4) applies to situations and events relating to personal injury cases. It therefore appears to me O.25 r.8, is limited to personal injury cases. I agree with Mr. Narayan’s submission that inclusion of specific Rules in England to distinguish personal injuries cases from the Rules in O. 25 was a conscious act and not by some accident caused by any footnote of the authors of the Supreme Court Practice (The White Book) in the English Rules as submitted by Mr. Mishra. It appears that the different treatment of personal injury cases were by a specific amendment to the English Rules under O. 25 r. 1(2) (i) in 1980. 

[103]	Moreover, High Court Rules were established in 1988. If O.25 r.8 was applicable to all expert evidence, I am unable to foresee the reasons in the Civil Evidence Act which was established in 2002 to provide for ‘rules of court’ to be made, to deal with the procedural aspects of leading expert evidence, especially when the High Court Rules deals with procedural laws. When provisions were specially made to codify the admissibility of expert evidence as stipulated in s.15 of the Civil Evidence Act 2002, it appears to me the lacuna in the High Court Rules in this regard was identified and special provisions were included to make ‘rules of court’ to address this void. 

[104]	In the absence of procedural laws setting out the manner in which expert evidence should be led either in the High Court Rules or in the absence of ‘rules of court’, I am however unable to accept that a party in a civil action could lead expert evidence without notice or disclosure as submitted by Mr. Narayan. 

[105]	As said earlier, clearly section 14 (1) (a) of the Civil Evidence Act 2002, requires disclosure before leading expert evidence and failure of such notice, the court is empowered to disallow leading expert evidence unless with leave of court. It is a well-established principle when the law has a lacuna then the courts must look into common law, which takes precedence. 

[106]	The purpose of disclosure of expert evidence and reports are two folds. Firstly, due to the specialised nature of the expert opinion, the legal practitioners need to obtain proper instructions to discredit the expert evidence. Secondly, an opposing party should also be given the opportunity to obtain expert evidence to counter other expert evidence. Therefore, common law requires reasonable notice to be given and the court to make directions relating to disclosure and conditions. Most jurisdictions have now codified these common law principles for clarity and convenience.

[107]	 Therefore, in my mind, any party attempting to lead expert evidence must necessarily disclose such fact to the opposing party by handing over a copy of the expert’s report or a summary of the report with sufficient particulars for the opposing party to prepare for the case. It is also trite law that a party should not be ‘ambushed’ at a trial. The parties must have adequate time for preparation of their respective cases and meet the issues. It is for these reasons that the High Court Rules specially provide for discovery and inspection of documents in O 24. If not, it would cause prejudice and even amount a serious miscarriage of justice to the party facing to defend the issue.

[108]	At the discovery stage, Mr. Narayan disclosed Mr. Luff’s report as privileged. It was thus reasonable for the plaintiff to have assumed that the defence would not lead expert evidence at the trial. Therefore, I am of the opinion that Mr. Narayan should have disclosed Mr Luff’s report at discovery stage or moved court for directions under O. 34 r. 6 of the High Court Rules when he decided to lead Mr. Luff’s evidence. This I especially state as I gave direction under O.38 r.2 requesting parties to file evidence-in-chief by affidavit. At that time, had the defence moved court for suitable directions to lead expert evidence, then I could have made directions permitting to lead expert evidence in the absence of ‘rules of court’. I am also mindful of the observations made by Justice Winter in the case of Wati v Kumar (2004) FJHC 358 26 March 2004 where His Lordship deliberated in detail on the revision of the rules of evidence which brought about the introduction of the Civil Evidence Act 2002. His Lordship says that the admission of expert evidence should be under the complete control of the court through the exercise of the courts case management powers at the pre-trial state. His Lordship also states that ‘in a country like Fiji with limited ability to allocate scares Court resources must inevitably design a system that encourage efficiency and even handedness in civil litigation. Constructing and arguing cases by ambush and winning them by virtue of economic power alone should no longer acceptable’.

[109]	Mr. Narayan submits that although the plaintiff was aware that a fire investigator was appointed and the letter of declinature dated 18 January 2006 made it clear that the investigations into the fire had been completed, the plaintiff’s summons for directions dated 1 August 2008, did not seek an application to inspect the report of Mr. Luff. He also said that the plaintiff agreed to tender the interview recorded by Mr. Luff of Mr. Reddy in the agreed bundle. I am unable to accept this submission. I do not think that the plaintiff in hindsight could have assumed the existence of a report of Mr. Luff as in August 2008. The defendant disclosed the existence of both reports, i.e the fire investigators report and the financial report, for the first time only in the affidavit verifying the defendant’s list of documents dated 14 October 2008. (Schedule 1 part 2, item 2 refers to the Fire Investigators report to A K Lawyers and item 3 refers to the Financial Report commissioned by A K Lawyers). The affidavit verifying the defendant’s list of documents further deposes that the defendant objects to the production of both the above reports on the ground that they are privileged confidential documents. With that deposition, the defendant cannot now point a finger at the plaintiff and say it should have asked for the expert report. Clearly matters within ones knowledge should be disclosed by the party who possesses such knowledge and I am not inclined to accept that the plaintiff could have assumed that the defendant, after claiming privilege, will rely on the expert reports or call expert witnesses on the reports at the hearing. In my mind, the defendant ambushed the plaintiff and took the plaintiff by surprise at the hearing; did not offer an opportunity to call its own experts thereby prevented the plaintiff to justly meet its issues. In the absence of the expert report before court for its examination, want of disclosure and adequate notice, I am reluctant to admit Mr. Luff’s oral testimony as expert evidence under section 15(1) of the Civil Evidence Act 2002.

[110]	In any event, on detail examination of Mr. Luff’s evidence, I am unable to accept his opinions given at the hearing for the reasons stated below. 

Who is an expert?

[111]	Mr. Narayan states that Mr. Luff’s experience and training as set out in paragraphs 1 to 13 and the affidavit adduced before court is sufficient to recognise his expertise in his field as a specialist fire investigator. Mr. Luff does not possess tertiary qualifications. Mr. Narayan submits that it is not necessary for an expert to have tertiary qualification. In support he cites R v Bunnis (1964) 50 WWR, 422 (Canadian Court of Appeal) where it was held:

“The test of expertness, so far as the law of evidence is concerned, is skill, and skill alone, in the field of which it is sought to have the witnesses opinion…I adopt as a working definition of the term ‘skilled person’, one who has by dint of training and practice acquired a good knowledge of science or art concerning which his opinion is sought… It is not necessary, for a person to give opinion evidence of a question of human physiology, that he be a doctor of medicine”

The above accords with the established view held in England where Russell CJ in R v Silverlock (1894) 2 QB 766:

 “It is true that the witness who is called upon to give evidence must be peritus; he must be skilled in doing so; but we cannot say he must have become peritus in the way of business or in any definite way. The question is, is he peritus? Is he skilled? Has he an adequate knowledge? Looking at the matter practically, if a witness is not skilled the judge will tell the jury to disregard his evidence”.

[112]	In the aforesaid judgment it was also held that ‘by Tyrwhitt- Drake CCJ that: 

 “The test of expertness, so far as the law of evidence is concerned, is skill and skill alone, in the field in which it is sought to have the witness’s opinion. If the court is satisfied that the witness is sufficiently skilled in this respect for his opinion to be received, then his opinion is admissible. The crux of the matter is the meaning to be attached to the word “skilled”. The Shorter Oxford Dictionary defines a skilled person as “one having practical ability having a good knowledge of the subject”; Partridge, in his etymological dictionary, Origins, defines skill as the “ability to use one’s judgment, especially in a particular art or science;” and Fowler, in Modern English Usage, ascribes to the classifying adjective skilled the meaning having had the requisite training or practice”.

These definitions are somewhat loose and inexact, perhaps. It is significant that the courts for the most part in the past have had recourse to the exactitude of Latin and used the word peritus. But the rigidities of classical languages ought, I think, to be avoided in a branch of the law which must retain a certain fluidity if it is to apply to conditions as they obtain from time to time. I adopt, as a working definition of the term skilled person, one who has, by dint of training and practice, acquired a good knowledge of the science or art concerning which his opinion is sought, and the practical ability to use his judgment in that science.

[113]	Mr. Luff said there are no tertiary courses leading to a professional qualification as a fire investigator. Mr. Narayan draws an analogy of Mr. Luff’s training to one of a ‘pilot’ and says there are no tertiary courses as such leading to a degree for Pilots who learn by the hours they put in together with reading manuals and an instructor who assists. However, the experience they obtain in terms of flying hours does qualify them as experts in their fields. In the circumstances, Mr. Narayan says that Mr. Luff’s hands on experience can be accepted to treat him an expert on cause and origin of the fire.

[114]	At the outset, I must state that I agree either with Mr. Narayan’s submission that experts derive their expertise professionally or in the absence of professional qualifications with experience. An expert does not necessarily needs a professional qualification to be an expert in a given field. Extensive hands on experience could make a person an expert in a given field. Skill is an elastic term and would cover even the experience of a person who may not fall into the category of a first rate expert, yet their expertise could be credible and reliable.

[115]	It is pertinent to mention that the skills of the witness relates to the weight that could be given by court to such evidence. It necessarily does not matter on admissibility. When giving weight to the evidence of an expert, court must satisfy itself of the skills and knowledge of that expert. In doing so, the court must be satisfied of the methodology used by the expert, whether their experiments are relevant, and their conclusions logical and fact based. The question of a person’s skill is a question of fact and the opinion of the expert is also a question of fact. 

[116]	If an expert posses a professional qualification, then the court could safely infer the credentials of the expert, level of training and knowledge in the given field. If not, it would be incumbent upon the expert to prove the competency and the manner in which he acquired the skills in the field in which the ‘opinion is expressed’. I am well prepared to accept Mr. Luff’s experience in the field would qualify him to be an expert without professional qualifications. However, I must first be satisfied that his skills and knowledge make him an expert to offer the opinion he had expressed in this case. It is the court’s duty and it is the duty of court alone to satisfy itself before accepting any specialist skills of an expert. 

[117]	In the instant case, Mr. Luff opined that an electrical fault could not have accidently originated the fire. He did not opine on any other possible accidental causes that could have originated the fire. In the absence of professional qualifications, I am of the opinion that Mr. Luff must demonstrate by evidence that he is peritus in the field of ‘electrical matters’, to exclude electrical fault as the cause of fire.

[118]	I have carefully considered Mr. Luff’s affidavit evidence where he sets out his experience and his replies in cross-examination. Mr. Luff states he has examined over 2300 fire incidents, which includes examination of over 250 fire incidents during the past two years. Evidence was not produced before court to assess the accuracy of data or the type of fires or the significance of those fires he had examined or his experience surrounding such fires. Mr Narayan moved court to draw an analogy of Mr Luff’s expertise with one of a Pilot. He points out a Pilot is required to maintain a logbook with flying hours, which reveals their experiences. In the absence of tertiary education to support ones expertise, I am of the opinion that it is necessary to have some supporting evidence to prove the experience, skill, and training.

[119]	Mr. Luff admits that he does not have any tertiary education on ‘electrical work’. Nor does he disclose how he received hands on training and expertise in the field of electrical work. For example, did he under-study with an electrical expert or follow any training under an electrician? Did he carryout electrical wiring work either in his private capacity or commercially? Needless to state that there are ample courses in the electrical field but Mr. Luff admitted that he had not followed any such courses. I have no evidence to conclude that Mr. Luff had sufficient skill or knowledge to opine that the fire did not originate from an electrical fault. Nor does Mr. Luff have forensic reports or independent reports from an electrical engineer to support his opinion in the instant case. 

[120]	The defence has attached cases where Mr. Luff’s evidence had been accepted in several courts as an expert. I am aware that in this jurisdiction the courts have placed much reliance on Mr. Luff’s expertise as a fire investigator. In fact, the usefulness of his evidence has been recognized in many cases. In the case of Chinsamy Gounder v The National Insurance Co Ltd, civil action HBC337.94L dated 22 January 1998, the Court accepted him being “an experienced investigator whose main (if not sole field) of specialty was fire investigations….. I accept his credentials which exhibit a long-gained specialist expertise in this field.” I also find that in almost in all these cases, the reports prepared by Mr. Luff were submitted to court and the judges had an opportunity to assess the methodology and the manner in which he had carried out the investigations. 

[121]	However, in the present case I am unable to make a similar assessment, as his report is not before court. At the hearing, he did not give evidence whether he prepared any contemporaneous notes when he investigated the fire. I do not know the methodology used by him at the time he carried out the investigations and draw inferences whether his examination was indicative, and his conclusions are logical and fact based. I must state that I am bound to assess the facts relevant to this case on the evidence adduced before me. A court cannot take judicial notice of an expert. The expertise of an expert must be assessed on the facts in hand. Each case is unique and must be proved with credible evidence in support of that case. The defence had a duty to prove its defences with adequate evidence and satisfy court that the investigations were carried out in accordance with acceptable skills, and the opinions were formed based on the facts on the matter in issue. 

[122]	Mr. Luff said he did not carry out a forensic analysis of the debris. Therefore, I can rule out that his opinion is not based upon the findings of any scientific examination. He said he is unable to recall whether he spoke with the personnel of the Fire Authority and the Police Department who carried out investigations of the fire. His evidence on this point permits me to safely infer that he had not made contemporaneous notes whist carrying out the investigations. It would also be safe for me to infer that Mr. Luff did not make notes of the findings of Police or Fire Department in his report, which he claimed he gave A K Narayan Lawyers as I presume he would have at some point gone through his report when preparing to give evidence in this case. 

[123]	To me just oral evidence of Mr. Luff stating that he has hands on experience with over 2300 investigation will not suffice to determine whether he in fact possessed sufficient skills and knowledge to have excluded ‘electrical fault’ as a possible cause of the fire. His pertinacity that he is an expert to determine origin of fires does not qualify him automatically to be an expert on ‘electrical’ causes. Nor has Mr. Luff supported his conclusions with acceptable evidence. The fact that Mr Luff is an expert by itself does not make his evidence reliable on the specific subject. Even if court accepts a witness as an expert, the expert is still required to substantiate his findings, by demonstrating the methodology followed, the evidence supporting his conclusions etc. Mr. Luff has failed to substantiate his findings before court. In the circumstances, I conclude that Mr. Luff had not submitted adequate evidence before this court to determine his skills and knowledge as an expert to express an opinion that the fire did not originate from an electrical fault. 

[124]	Mr. Luff at the hearing confirmed that he handed over the report to Mr. Narayan’s office. The defendant did not handover a copy to the plaintiff. I am of the view that it is safe for me to infer that the report contained material that was adverse to the defendant’s case or favourable to the plaintiff and therefore the defendant did not produce it in court. 

Non- Expert Opinion on Matters Calling For Expertise– Section 15 (2) Of the Civil Evidence Act, 2002

[125]	I have already concluded that I am unable to accept Mr. Luff’s evidence as an expert. Let me therefore consider whether his opinion could be admitted under section 15(2) of the Civil Evidence Act 2002. This section reads:

 (2) Where a person is called as a witness in any civil proceedings, a statement of opinion by the person on any relevant matter on which he or she is not qualified to give expert evidence, if made as a way of conveying relevant facts personally perceived by the person, is admissible as evidence of what he or she perceived.

[126]	An opinion to be admissible as a perceived fact within the ambit of this section, the non-expert must personally perceive the relevant facts. The underlying principles under this section require the non-expert to tie down the perceived theories by linking them firmly to the facts. As held in the case of R v Loake (1911), 7 Cr App. Rep. 71, the statements of opinion of such a witness must be a ‘compendious mode of summarizing a sequence of inferences based upon perceived facts for a court to admit such opinion’. 

[127]	I have discussed at length the opinion of Mr. Luff where he excluded the origin of the fire as electrical fault. Therefore, I will not dwell on those facts again. Suffice it to say that Mr. Luff’s opinion was based on the opinion expressed by lay witnesses who opined the flames to be big and that the fire spread rapidly and it had more flames and less smoke. When he questioned these lay witnesses, he did not show them any photographs or videos to determine the sizes of the flames or fire. A careful consideration of the interview notes reveals that the witnesses seemed to have a picture in their mind and I am unable to ascertain whether those pictures tallied in the minds of the witnesses and Mr. Luff. When these witnesses gave evidence before me, they applied the same style in reference to the fire. They said it was big, had smoke, had cinders, sparks etc. Nothing was produced to draw an analogy even in court. I find that Mr. Luff’s opinion of fire is not perceived by him personally but totally relied on the opinion of others as to the size of the fire, smoke, and cinders without validation. I am therefore unable to consider the admissibility of Mr. Luff’s evidence on this point even under section 15 (2) of the Civil Evidence Act 2002.

[128]	Let me now turn to determine the second opinion express by Mr. Luff that Mr. Reddy set fire to the premises. Mr. Luff says that after speaking with Mr. Reddy and the other witnesses, it was clear to him that Mr. Reddy did not leave the premises until around 5.15 pm. Mr. Albert Raj secured the building with a padlock at around 5pm and left the building soon thereafter. Mr. Luff states that it gave Mr. Reddy at least a 10-minute period to set the fire, as the only person who had access to the key for the padlock that secured the entry door before he left the scene. 

[129]	This conclusion amounts to a statement, boarding an inference, unsubstantiated by facts. It cannot be considered as an opinion formed as a non-expert from facts personally perceived by him. I must emphasize the difference between opinion and inference. Whilst experts can express opinions, it is only judges or jury that can form inference based on those opinions. By concluding that Mr. Reddy set fire, I am of the view that Mr. Luff had usurped the role of the judge. I conclude that the statement made by Mr. Luff that Mr. Reddy was the arsonist is an inference and not an opinion, which is inadmissible under section 15 of the Civil Evidence Act of 2002.

Circumstantial evidence surrounding arson

[130]	Let me now consider whether the circumstantial evidence before this court permits me to conclude that Mr. Reddy in fact ignited the fire. Mr. Reddy, Albert Raj and security guard Sathendra Prasad and some staff of MYT Transport were present at the premises just before the fire. The premises is secured with a barbed wire fence and the entrance is secured with a security post. The showroom only had one entrance, which was pad-locked by Albert Raj around 5 pm. The defence especially excludes Albert Raj setting the fire. 

[131]	In my mind, the unchallenged evidence of Mr. Sathendra Prasad, the security guard of the plaintiff is important to determine the probability of Mr. Reddy to be the arsonist. In his evidence, Mr. Prasad said he saw Albert Raj locking the showroom and leaving the premises soon after 5 pm or so. Mr. Reddy then asked him to wash his vehicle and he saw Mr. Reddy standing on the veranda until he poured 2 or 3 buckets of water on the vehicle. Mr. Reddy had then left the premises. I do not have any reason to disbelieve the evidence of Sathendra Prasad, as I am convinced of his credibility.

[132]	Had Mr. Reddy ignited the showroom, then it must necessary have to be a planned plot and could not have been a spur of the moment sudden decision. If Mr. Reddy plotted the plan I am unable to accept that he would have left a gap of about 10 minutes to sneak into the showroom without being spotted by security guards and the other staff that were working in the premises, unlock the showroom, then ignite the fire, once again lock up the showroom and leave without being noticed, request the car to be washed and standing in the veranda until it was washed and then leave. In my mind, these items of circumstantial evidence are unlikely occurrences for me to infer Mr. Reddy carried out all of the above acts within 10 minutes. 

[133]	I have considered the evidence of the all the witnesses at length, especially of Mr Luff. I have set out my reasons as to why I cannot accept the opinion of Mr Luff as an expert witness or even as a non-expert witness under section 15(2) of the Civil Evidence Act, 2002. Independent to Mr Luff’s opinion, I considered the circumstantial evidence adduced before me and concluded that the circumstantial evidence do not permit me to determine Mr. Reddy to be the arsonist. I am not persuaded that the defendant had proved on a balance of probabilities that Mr. Reddy committed arson. Accordingly, I conclude that Mr. Reddy did not cause the fire and dismiss this issue. 

Issue No. 3- False statements

[134]	This issue relates to false statements given at the investigation stage to the defendant by the plaintiff. 

[135]	Mr. Narayan submits that the standard of proof in the case of making false statements in support of an insurance claim is less exacting then in the case of arson. The standard is the ordinary civil standard as held by Willes J in his in Britton Vs. Royal Insurance Co. 4F&F 905 where his Lordship said:

‘ fire insurance, he said is a contract of indemnity; that is, it is a contract to indemnify the assured against consequences of a fire, provided it is not wilful. Of course, if the assured sets fire to his house, he could not recover. That is clear. But it is not less clear that, even supposing it were not wilful, yet as it is a contract [969] of indemnity only, that is, a contract to recoup the insured the value of the property destroyed by fire, if the claim is fraudulent, it is defeated altogether. That is, suppose the insured made a claim for twice the amount insured and lost, thus seeking to put the office off its guard, and in the result to recover more than he is entitled to, that would be a wilful fraud, and the consequence is that he could not recover anything. This is a defence quite different from that of wilful arson. It gives the go-bye to the origin of the fire, and it amounts to this that the assured took advantage of the fire to make a fraudulent claim.

 .... And if there is wilful falsehood and fraud in the claim, the insured forfeits all claim whatever upon the policy. This, therefore, was an independent defence, quite distinct from that of arson, and not at all mixed up with it; 

 ......If the assured makes a claim where he has suffered for a loss which he hiMs.elf caused, insurers do not need to rely on any condition relating to fraudulent claim, but in practice, where the circumstances are suspicious, it may be much easier to show that the assured has made a fraudulent statement in the advancement of his claim than it is to show that he wilfully destroyed his own property. The clause thus enables the insurer to assume a lesser burden and still defeat the claim. This approach had the full support of, at any rate,’ 

[136]	In the case of Lek v Mathews (1927) 28 LI.L. Rep. 141 (Vol 29 No 6 dated 8 December 1927) it was held that the false statement must have some relation to the claim itself, and the statement must not be unsubstantial as to make the maxim of de minimis applicable.

[137]	 In Ronald Engel v The South British Ins Co Ltd (1982) 2 ANZ Ins Cases 60-516 it was held that:

 “the false statement should be designed to conceal from the defendant an element of possible motive for the plaintiff setting fire to his own property.” 

[138]	 The defendant relied on the following two false statements set out at paragraph 8(b) of the Statement of defence in support of their argument:

 (i) The plaintiff was in a strong financial position as at the date of the fire.

 (ii) Credit Corporation (Fiji) Limited had not ever put pressure or written to its directors or to it to bring the loan repayments into order.

[139]	Let me assess the two statements separately. 

(i) The plaintiff was in a strong financial position as at the date of the fire

[140]	The defendant states that the above false statement was made by Mr. Reddy (PW2) in his interview with Gary Luff (DW7) where the following question was falsely answered.

Q: As at the date of the fire, would you describe the company as being in a strong financial position?
A: Yeah, the company was dealing with Bank of Baroda and our arrangement is there for certain limits…. Plus long term loan so that was not a problem with the company.”

[141]	The defendant alleges that the above statement is false, based on the financial statements, Bank of Baroda statements, Bank letter ABOD document 14, Credit Corporations statements, report of KPMG, admissions in evidence made by PW2 that the company was in financial difficulties, cheques being dishonoured and the insurance premiums being in arrears, all of which being indicators that the plaintiff was making losses.

[142]	I have already concluded that I am convinced that the plaintiff was in some financial difficulty. However, I am unable to accept that the above answer can be considered to be a false statement. The question is subjective and the answer is equally subjective. I understand Mr. Reddy’s answer to Mr. Luff’s question to be a statement to the effect that when he was in arrears he liaised with the Bank of Baroda and that certain financial facilities were made available to him by the bank and hence the financial matters were under control. I do not find any element of falsehood in the statement and I am unable to consider Mr. Reddy’s answer to be a false statement. 

(ii) Credit Corporation (Fiji) Limited had not ever put pressure or written to its directors or to it to bring the loan repayments into order

[143]	The second false statement as alleged by the defendant once again relates to statement made by Mr. Reddy (PW2) in his interview with Gary Luff (DW7). The question and the answer reflect below. 

 Q: So has Credit Corporation ever written to you or put pressure on you to bring a loan into order?
 A: No, in fact we normally talk………. Like that’s what I am saying if any the loan difference I make it up one month on.”

[144]	The defendant submits that even the second statement was false. Mr. Reddy made the following admission to Court:

“CT: Did Credit Corp Fiji make demands?
 GP: They wrote letters but we paid them.”

[145]	Mr. Narayan submits that the evidence of Mr. Rupesh Chandra Senior Lending Officer of CCF (DW2) provides uncontroverted evidence that 6 cheques were dishonoured between October 2002 to December 2003 and according to Credit Corporation of Fiji Limited (CCF) records, it had on seven occasions made calls requesting the plaintiff to bring its account to order. The plaintiff had accumulated arrears of repayment in the sum of $19,042.50 from October 2002 to 5 May 2003. Mr. Rupesh Chandra’s evidence revealed that the plaintiff was given a loan of $100,000.00 in October 2002 as working capital for rain tree furniture project. The plaintiff was required to pay $3715.00 per month. He also said that the company was in continuous arrears of payment of the loan account. The witness also attached two statements of accounts marked A and B. Statement A reveals the payments made between October 2002 to 5 May 2005, and B reflects the payments made since May 2005 to 27 October 2006. These two statements of accounts reveal that from October to February 2002, the plaintiff has paid up its monthly commitment regularly but from 21 February 2003 to 30 April 2003 (before the fire on 5 May 2003) three company cheques had been dishonoured. The balance cheques were dishonoured after the fire between July 2003 to May 2005. The statement at attachment B reveals that in May 2005, the loan had been rescheduled and the payments had been thereafter cleared and fully satisfied by 27 October 2006.

[146]	The evidence clearly reflects that the plaintiff was indeed in arrears of payment of three cheques to the CCF, which does not seem to be contested by the plaintiff. However, the issue as to if Mr. Reddy made a false statement as alleged by the defence, turns not on the fact that the plaintiff was in arrears of payment, but on the fact in issue as to if CCF exerted pressure on the plaintiff to settle the said arrears. Mr. Narayan appears to argue that the seven calls made by the CCF to the plaintiff to settle the arrears amount to CCF pressuring on the plaintiff to bring the account to order. The parties have not tendered any letters written by CCF to the plaintiff in evidence. As such, I have to determine if making seven calls amount to an exertion of pressure. Mr. Rupesh in his evidence only said seven calls were made. I am unaware of the proximity or the contents of those calls. i.e. if only one call was made every time a cheque was dishonoured then it would not amount to be pressurised. In the absence of evidence of other communication between CCF and the plaintiff on the subject, I am unable to make a determination. 

[147]	 I find that the spontaneous answer of Mr. Reddy to Mr. Luff’s question to be a statement to the effect that Mr. Reddy had discussed and sorted the matter whenever there was an issue of arrears of payment with CCF. I am thus unable to find any false element in the answer. I do not find his statement to have been made with the motive of concealing that the CCF communicated with him with respect to arrears, either. Accordingly, I dismiss this defence.

[148]	I found Mr. Reddy as a witness to be honest and truthful. I did not find any attempt on his part to concoct false evidence. He readily answered questions as best he could. I observed that whilst Mr. Reddy understood English, he had a limited vocabulary in English like most other lay witnesses who gave evidence in this case. I observed at times that he had difficulty in expressing what he intended to say, i.e. he struggled to find the correct words to express in English. At times, I sought clarifications from the witness to fully understand his evidence, which he readily provided. His testimony was consistent and his demeanour and the manner in which he testified amply indicated the reliability and truthfulness of his evidence, I find Mr. Reddy (PW-2) to be a credible witness.

Issue No. 4- Failure to Provide Assistance

[149]	The defendant alleges that the plaintiff failed to assist Mr. Gary Luff, the fire investigator, as required under clause 6 of the conditions of policy, which it claims, is a condition precedent to the right to recovery. Clause 6 reads:

 “give such proofs and information with respect to the claim as may be reasonably required together …….No claim under the policy shall be payable unless the terms of this condition have been complied with.”

[150]	I admit with Mr. Narayan’s submission that the plaintiff was required to provide assistance under clause 6. The defendant alleges that Mr. Luff, by its letter of 20 May 2003 (D4 doc 8), requested various documents including the “sales and purchase documents associated with the furniture manufacture and sales.” Thereafter the defendant by letter of 23 September 2003 (D4 doc 9) requested Mr. Reddy to authorise Bank of Baroda to give relevant information to Mr. Luff, which he admitted in evidence. The said letter also informed that Mr. Reddy had not submitted two documents i.e the financial statements as of 31 December 2002 and up to April 2003. The court could therefore safely infer as at 23 September 2003 the plaintiff had submitted all other documentation requested by Mr. Luff, excluding the two financial statements stated above. 

[151]	Mr. Reddy in his evidence admitted there was some delay in submitting the financial statements as Jay Lal and Co had to prepare them after the supporting documents were destroyed in the fire. There are also correspondence between the plaintiff and defendant admitted into evidence to disclose that Mr. Reddy had on 13 October 2003, requested for an advance from the defendant to pay the accountants $4000.00, which they were requesting as their fee to prepare the financial statements. The defendant by letter of 3 November 2003 has responded that they are able to consider reimbursement only when they accept liability. It is common knowledge as admitted by counsel for both parties at the hearing that in many companies the financial statements are prepared after several years.

[152]	On 30 August 2004, the plaintiff had submitted the financial statements along with VAT returns for March and April 2003 to the defendant. (D4 doc 18).

[153]	Three months thereafter, by letter of 6 December 2004, Mr. Reddy queried the position of his claim from the defendant. (D4 doc 19). The defendant in reply to the said letter once again requested for the documents. Mr. Reddy by his letter dated 21 January 2005, informed the defendant that they had already submitted all the documents with a covering letter on 30 May 2003 and 23 July 2003 but again submitted them.

[154]	Careful consideration of the above correspondence demonstrate that Mr. Reddy had provided the necessary assistance to Mr. Luff. The documents that were requested by Mr. Luff had been forwarded latest by 23 July 2003 and the statement of accounts by 30 August 2004. In fact, it appears that it was New India who had failed to submit the documents to Mr. Luff when they were sent to the defendant by the plaintiff. 

[155]	The defendant asserts that Mr. Reddy had not itemized in the accounts the ‘minor purchases’ of his furniture business. The defendant also contends that although plaintiff mentioned that he had sold $7000 worth of furniture it did not take any steps to forward supporting documents. Mr. Reddy agreed in his cross-examination that he could have obtained documents from his suppliers, as the purchasers would keep records and statements. The defendant alleges he had not made any effort to obtain these documents.

[156]	I am unable to foresee why the defendant required receipts of the furniture that were sold by the plaintiff, as admittedly they were not in the showroom when the fire broke out. In fact, I asked Mr. Narayan, counsel for the defendant for reasons during oral submissions but did not receive a reply. Clause 6 of the policy permits the defendant to request from the plaintiff documents that are ‘reasonably required’ to be produced. In my mind, requesting for documents that were not in the showroom at the time of the fire is outside the scope of this condition and the defendant’s request for it was unreasonable. 

[157]	I find that the plaintiff provided assistance in compliance of clause 6 of the policy and accordingly I dismiss this defence. 

Issue No. 5- Does the failure on the part of the plaintiff to refer the dispute to arbitration within one year, amount to a waiver of its right of claim? 

[158]	The defendant alleged that clause 12 of the policy contained a limitation period, which required the defendant to refer the matter for arbitration within one year. It further stated that the exclusion clause at clause 12 read with section 26(1)(b) of the Insurance Law Reform Act, discharges the defendant’s liability if the plaintiff does not refer its claim to arbitration within a year from the destruction or damage. The plaintiff denies the defence on several grounds and submits that clause 12 of the policy does not oust the jurisdiction of the court to deal with the matter. 

[159]	As stated hereinabove, the fire occurred on 5 May 2003, the defendant denied the claim on 18 January 2006. The plaintiff initiated this action on 19 March 2008. 

[160]	Clause 12 of the policy reads thus:

‘All differences arising out of this policy shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator, to the decision of two Arbitrators, one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or, in case the Arbitrators do not agree, of an Umpire appointed in writing by the Arbitrators before entering upon the reference.  The Umpire shall sit with the Arbitrators and preside at their meetings.  The making of an award shall, subject to any relevant statutory provisions to the contrary, be a condition precedent to any right of action against the insurers, but if such action be not commenced within one year of the making of an award, the right of action shall be deemed to be abandoned and released.  After the expiration of one year after any destruction or damage the insurers shall not be liable in respect of any claim therefore unless such claim shall in the meantime have been referred to arbitration’.( emphasis added)

[161]	I find that clause 12 has three limbs, i.e.: 

(a)	The parties had agreed to resolve all their differences arising out of the policy by arbitration. 

(b)	Any right of action against an insurer is based on an arbitral award and such action not initiated within one year should be deemed as abandoned or released. 

(c)	The insurer is discharged of its liability on the policy unless the claim is referred to arbitration within one year from the date of damage or destruction. 

[162]	When parties agreed to refer matters to arbitration, the arbitration is then governed by the Arbitration Act. (Cap 38). The Arbitration Tribunal will thereafter make and award, which is binding on the parties. An arbitral award is not subject to appeal. An aggrieved party could move court to set-aside an arbitral award, subject to the criteria stipulated in section 12 of the Arbitration Act or the successful party could apply for enforcement of the award to the court. During the proceedings of the arbitration, the parties are free to move court for orders for procedural compliance, such as appointment of arbitrators, summons to compel attendance of witness before arbitration tribunals, stay proceeding, etc. 

[163]	Let me now examine clause 12. In applying the rules of construction in the interpretation of clause 12 of the policy, I have examined the clause in the backdrop of the above comments set out in the preceding paragraph.
 
[164]	The first limb of clause 12 at (a) above, is straightforward. The phrase clearly states that the party’s intend to resolve all matters by submission to arbitration. 

[165]	The second limb of clause 12 at (b) above is more complex and its interpretation must be considered in the light of the rights of the parties. This limb permits the parties to invoke the jurisdiction of the court after the arbitral tribunal makes an award. There are only two possible instances where the parties can invoke the jurisdiction of the court after the award is made by the tribunal. i.e. either for enforcement of the awards or otherwise to set aside the award. The phrase in the second limb provides that if the parties do not take action to enforce or set aside the arbitration award, it is deemed that the insured had abandoned or released its right to initiate court action. In other words, a party to an action cannot initiate a court action for enforcement or to set aside an award after the laps of one year. 

[166]	The third limb at clause 12 (c) above, is an exclusion clause which attempts to discharge the insurer from its liabilities, if the matter is not referred to arbitration within one year from the date of damage or destruction. In my mind, there is no nexus between this phrase and the other two phrases found in this clause. The phrase found in the third limb simply absolves an insurer its obligation, if the insurer fails to take a decision within one year. Fundamentally, arbitration could be initiated only if there is a dispute or difference between the parties. If there is no dispute, then parties cannot refer a matter for arbitration. The clause however attempts to release the insurer of its liability within one year from the destruction or damage even if the parties do not have a dispute by that time. In my mind, a requirement that the insured has to refer a matter to arbitration within one year, even where the insurer has not conveyed a decision one way or another with respect to the insurance claim, that is to say, where there is no apparent dispute between the party for arbitration is illogical, unsound and contrary to the pragmatic business practices found in commercial contracts.

[167]	Needless to say, a dispute can arise only when the insurer makes a decision. It is for the insurer to decide whether it would be honouring the claim and the insured would have to await for the decision to be conveyed in order to determine its next course of action. Any different interpretation of this clause would be contrary to all known norms of justice, fairness and the spirit of arbitration. 

[168]	Clearly, the clause is ambiguous. As held by O’Conner J in the case of Western Australia Bank v Royal Insurance Company (1908) 5CLR 566 under the contra proferentem rule of interpretation the ambiguity has to be construed against the party who prepared it. When there is an obscure condition of the policy, the court would necessary have to hold against the insurer. 

[169]	I therefore determine the words ‘After the expiration of one year after any destruction or damage the insurers shall not be liable in respect of any claim therefore unless such claim shall in the meantime have been referred to arbitration’ is obscure, and therefore unenforceable and should be severed from clause 12. 

[170]	In any event, when the plaintiff filed the instant action, if the defendant intended to rely on the limitation period of one year, it was incumbent upon the defendant to make an application under section 5 of the Arbitration Act to stay the proceedings.

[171]	Section 5 of the Arbitration Act stipulates: 

If any party to a submission, or any person claiming through under him, commences any legal proceedings in any court against any other party to the submission, or any other person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings, and that court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings. (Emphasis added) 

[172]	It is clear from the above that when the plaintiff filed his writ of summons then the defendant had to file an application to stay the proceedings before delivering the pleading no sooner the service of the writ was effected. This is important as a party could at any time waive its right to take any defence on limitation either in writing or by their conduct. 
 
[173]	The writ of summons was filed on 19 March 2008. The defendant acknowledged the service on 10 April 2008 and filed same in court on 11 April 2008. The statement of defence was thereafter filed on the 28 April 2008. The statement of defence does not move court to stay the proceedings as required under section 5 of the Arbitration Act. It merely contains a reference to arbitration in paragraph 10. Nor had the defendant sought to strike out the writ of summons under O 18 of the High Court Rules, 1988 if it intended to rely on the arbitration clause or the limitation stated therein. The plaintiff in the defence to the counter claim pleads estoppel. 

[174]	It appears to me from the reading of the pleadings, that both parties had misconceived the nature and effect of clause 12 of the policy. 

[175]	The defendant should have made an application at the outset seeking to stay the proceedings under section 5 of the Arbitration Act, before filing its pleadings as required therein. The court must then consider the application and first determine whether the matter should be referred to arbitration. Therefore, the issue on arbitration should have been determined by the court before the defendant filed its statement of defence. It is now too late in the day for the defendant to take up this objection on limitation of time. It had failed to move for a stay in the statement of defence. Accordingly, I hold that the defendant has waived its right to take this objection by its conduct. Therefore, the defendant is now estopped of taking this objection. I therefore dismiss this defence. 

[176]	Mr. Mishra had objected to this defence on several other grounds. However, I have not considered them as I have already concluded that the defence is estopped from taking this defence. In view of my conclusion, defence cannot overcome the legal difficulty even under section 26(1)(b) of the Insurance Law Reform Act. 

[177]	I have dismissed all the defences taken by the defence and found them in favour of the plaintiff. I do not see any merit in the counter claim and accordingly dismiss the counter claim too. 

Plaintiff’s causes of action 

[178]	Needless to say that although I have dismissed all five issues, the plaintiff must still prove its case. 

[179]	Mr. Mishra submits that the defendant was obliged under the policy to swiftly process the claim or to have systems in place to allow, swift processing of the claim to minimise the damages caused to the plaintiff by the fire. The plaintiff states that the defendant did not process the claim within a reasonable time therefore the defendant is in breach of an implied term of the insurance policy or in the alternatively, the defendant has engaged in misleading and deceptive conduct under the Fair Trading Decree. 

[180]	Let me now determine whether there is a breach of the implied conditions of the insurance policy and the Fair Trading Decree as alleged by the plaintiff. 

[181]	Admittedly, the plaintiff logged the claim on 31 May 2003. I have already set out in detail my reasoning in issue no. 3 and 4, that defendant took one and a half years to process the claim after all document were handed over to the defendant on 30 August 2004.

[182]	Although the policy does not contain a provision limiting the time period for the insurer to conclude its investigations and indemnify the insured, the principles of fairness imposes an insurer with the fundamental duty to either decline the claim or indemnify the insured within a reasonable time. This position has been accepted in many cases including FAI Insurance (Fiji) Limited v Prasad’d Nationwide Transport Express Courier Limited [2008] FJCA 101; Frank Eggers v Blueshield (insurance) Limited, H C Lautoka No 94 of 1997; President of India v Lips Maritime Corporation [1988] 1 AC 395 at 424; Apostolos Konstantine Ventouris v Trevor Rex Mountain (The "Italia Express" No. 2 [1992] 2 Lloyd's Rep 281; Sprung v Royal Insurance (UK) Ltd [1999] Lloyd's Rep IR 111; and Normanhurst Ltd & Ors v Dornoch & Ors [2004] 1 Lloyd's Rep IR 27. 

[183]	Let me now determine whether the defendant made its decision within a reasonable time. In the instant case, the defendant engaged the services of two experts, i.e Mr. Luff to opine on the cause of fire and KPMG to opine on the financial status of the plaintiff. Mr. Luff who is only a fire investigator on origin and causes, insisted on receiving the financial statements. As his report is not before me, I am unable to ascertain whether his opinion was based on those financial statements. I am of the view that Mr. Luff's expert inquiry should be confined to a physical examination of the scene of the fire, preferably supported by a forensic examination of the results. I see no reason why an investigator of causes of fire would require consideration of the financial statements of the plaintiff. While financial statements could assist in the determination of the possible motive behind specific acts, in this case motive to commit arson as alleged by the defendant in my view is not required for the task assigned to Mr. Luff. He confirmed in his evidence that he was retained to provide an opinion of the cause of fire based on an investigation of the scene. Whilst motive would be a relevant factor for the defendant's consideration before making a final decision, it should not be a basis for Mr. Luff to make his opinion on the cause of the fire. In fact, the defendant commissioned KPMG to opine on the financial status of the plaintiff just for that reason.
 
[184]	Therefore, I do not see a basis for Mr. Luff's insistence on perusing the financial records to arrive at his opinions. In fact, the financial statements were handed over to KPMG by the defendant and not by Mr. Luff. The appointment of KPMG was independent to Mr. Luff's appointment and his investigations. The defendant should have liaised with Mr. Luff soon after the scene investigations and taken a decision to either accept or reject the claim. As I said earlier, the financial statements were only relevant to determine probable motive, which is not a mandatory element to determine arson. 

[185]	All necessary documents were submitted to the defendants by 30 August 2004. (D4 doc 18). The defendant must make a finding within a reasonable time from that date. The defendant had included an exclusion clause in clause 12 of the policy stating that it would not be liable for any claims after one year of the damage or destruction. If so, on its own volition the defendant considered one year as a reasonable time period for resolution of claims. I am of the view that reasonable time period would differ from case to case. Whilst in some cases even though one year may be reasonable, it may not be in others. However, in this case, I am of the opinion that the defendant should have processed the policy at least within two months since receiving all documents on 30 August 2004. The delay of two and a half years from the date of fire and one and a half years from the date of furnishing the documents is wholly unreasonable. 

[186]	I therefore conclude that the defendant did not process the claim swiftly and consequently the defendant's conduct deprived the plaintiff of the financial benefits it is entitled to under the policy. I accordingly determine that the defendant is in breach of an implied condition under the policy by failing to swiftly evaluate the claim within a reasonable time. 

Quantum of damages 

[187]	As envisaged in section 4 and section 11 of the Insurance Law Reform Act, the plaintiff and the defendant have to act towards each other in respect of any matter relating to the contract with utmost good faith at all times. 

[188]	In the statement of claim, the plaintiff alleges that he had suffered loss and damage in a sum of $344,340.58, which is comprised as follows. 

(a) Insured sum for the building - $ 200,000.00

(b) Value for machineries and furniture - $ 144,540.58

[189]	A party in a civil suit can only seek the value of the amount claimed in the statement of claim. The plaintiff seeks $344,340.58 in the statement of claim whilst in the written submissions, the amount is recoded as $349,340.58. The plaintiff has further limited his claim to $320,000.00, which is the total sum, insured with the defendant. Therefore I consider the base figure for this issue as $320,000 .00. 

[190]	As held in the case of Roumeli Food Stores NSW Pty Ltd v The New India Assurance Co Ltd (1972) 1 NSWRL 227 at 237 the defendant's maximum liability under the policy is limited to the sum insured based on the actual loss. When considering actual loss in insurance claims. the courts have considered the market value of the property and goods to calculate actual loss. Lucas v New Zealand Insurance Co Ltd (1983) 2 ANZ Ins Cases 60-506 and also Leppard v Excess Insurance Co Ltd (1979) 2 ALL ER 668.

[191]	 In Leppards Case, the loss suffered was the total destruction of a cottage; the Court of Appeal held that the policy only entitled the plaintiff to recover his actual loss. The loss in that case was the market value of the cottage as opposed to the reinstatement cost. Megaw L.J said:

"Ever since the decision of this Court in CASTELLAIN v PRESTON, the general principle has been beyond dispute. Indeed, I think it was beyond dispute long before CASTELLAIN v PRESTON. The insured may recover his actual loss, subject, of course, to any provision in the policy as to the maximum amount recoverable. The insured may not recover more than his actual loss." As it was put by Brett L.J in CASTELLAIN v PRESTON at page 673:

"In order to give my opinion upon this case, I feel obliged to revert to the very foundation of every rule which has been promulgated and acted on by the Courts with regard to insurance law. The very foundation in my opinion, of every rule which has been applied to insurance law is this, namely that the contract of insurance contained in a marine or fire policy is a contract of indemnity, and of indemnity only, and that this contract means that the assured, because of a loss against which the policy has been made, shall be fully indemnified but shall never be more than fully indemnified. That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say which either will prevent the assured from obtaining a full indemnity, or which will give to the assured more than a full indemnity, that proposition must certainly be wrong."

[192]	The contract of insurance of the plaintiff's policy (agreed bundle of documents 1) on the first page at the penultimate and ultimate paragraphs states:

"At any time before 4 o'clock in the afternoon of the last day of the period named in the said Schedule or of any subsequent period in respect of which the insured shall have paid and the Company shall have accepted the premium required for the renewal of this policy, the Company will pay to the insured the value of the property at the time of the happening of its destruction or the amount of such damage or at its option re-instate or replace such property or any part thereof. 

Provided that the liability of the company shall in no case exceed in respect of each item the sum expressed in the schedule to be insured thereon or in the whole the total sum insured hereby ….."

[193]	The plaintiff claimed that the value of the building was $200,000.00. Admittedly, Mr. Naidu, the insurance agent is not skilled to value buildings and had included the value in the application as told to him by Mr. Reddy. Much time was spent at the hearing to reveal the value of the building, the manner in which the value of the building was assessed when the building plan was submitted to the Lautoka city Council, the manner in which the building was constructed, the number of workers that were involved in the construction and their wages. Mr. Reddy was also cross-examined at length on the commencement and completion dates of the building. I am of the view that all this evidence has no relevance to determine the actual loss of the building. In the case of Asfar & Co v Blundel [1896] 1 QB 123 at pg 129 Lord Esher M.R said:

 '.... the assured is bound to disclose every material fact which is within his knowledge and which is not to be taken as being within the knowledge of the underwriters. If he fails to do so, he is guilty of what is called in insurance law concealment, which may in fact be either material fact; assuming that there is a material fact which he is bound to disclose, the rule is satisfied if he discloses sufficient to call the attention of the underwriters in such a manner that they can see that if they require further information they ought to ask for it. 

[194]	In Becker v Marshall (1922) 12 Li.L.R. pg 144, Scrutton L J said:

 'every circumstances is material which would influence the judgement of a prudent insurer in fixing the premium or determining whether he will risk'

[195]	As much as it is the obligation of the insured to disclose all material facts, the insurer must also put themselves on inquiry for material details before accepting the risk. And if the insurer forbears to ask questions then the insurer is held to waive their rights to more complete and precise information. 

[196]	I have no doubt that New India upon receipt of the application for the insurance policy of the plaintiff would have or ought to have satisfied itself of the market value of the building before undertaking the risk and determining the premium. If New India had any doubt of the market value of the building; especially that the insurer had over valued the building it is New India's obligation to call for a valuation report or asked for further particulars before fixing the premium and undertaking the risk. If New India refrained questioning the plaintiff before undertaking the risk then it waives its rights to question same at the hearing. Moreover, in the absence of any evidence to the contrary, I infer that New India was fully satisfied of the market value of the building disclosed by the plaintiff before it accepted the risk. 

[197]	I therefore accept the market value of the building as $200,000.00. 

[198]	The next task is to determine whether the plaintiff is entitled to the entire sum of $200,000.00 as claimed for the building. The answer to that question is simple. All witnesses who were present at the scene, including the defence witness Mr. Luff, the fire investigator confirmed that the building was completely destroyed by the fire. The letter of declinature written by the defendant denying liability also confirmed that the showroom was destroyed by fire. I have no doubt that the building was fully destroyed. Accordingly, I concluded that the plaintiff is entitled to be indemnified on the full market value of the building i.e., the sum insured and I award $200,000.00 on this claim on the building.

Machinery and furniture 

[199]	Let me know turn to determine the insured sum claimed for machineries and furniture which is claimed at $144,540.58 in the statement of claim. 

[200]	According to Mr. Reddy, the furniture manufacturing was a new venture that the company had undertaken and the rain tree timber for the furniture manufacturing business had been used from his own logging business. He therefore says this new venture did not have major purchases and sales. The minor purchases according to him have been outlined in the statement of accounts. The unchallenged evidence revealed that the furniture was last produced in 2001. Mr. Reddy states that he manufactured the furniture for the export market and therefore it was expensive and exclusive. Several photographs of the furniture were also produced in evidence. Admittedly, since around November 2002, no item of furniture had been sold. Mr. Luff the fire investigator appointed by the defendant said the showroom was 'predominantly of timber furniture' and that he was able to collect the steel fittings of the furniture and found nothing to suggest the stored items were moved out of the building. I could therefore safely infer that the evidence before me confirms that the furniture was in the showroom when it was destroyed by fire.

[201]	The plaintiff also submits that the other items are typical of what would have been in such a showroom where stock and machinery was kept for instance the refrigerator, certain furniture making machines, office table, tyres, fans, wood glue, and nails. There was also hardware stock and this is shown from items such as PVC fittings, rubber tiles, assorted grinding disc, copper fittings etc from items 105 to 116 in document 2 of the agreed bundle of documents.

[202]	Mr. Reddy in his evidence said Mr. Albert Raj the defence witness assisted him in compiling the stock details in the claim form (document 2 in the agreed bundle of documents). Admittedly, Mr. Albert Raj was the sales person of the plaintiff and had full knowledge of the items that would have been in the showroom. Mr. Reddy also says he had not added a profit margin to the stock of furniture, which was burnt but simply the cost of the timber involved and the cost of producing the same. The defendant relied on Mr. Albert Raj as a truthful witness. I also do not see any reason to disbelieve his testimony. I therefore accept the stock details prepared by Mr. Albert Raj to be accurate considering the circumstances on which it was prepared. 

[203]	 The defendant since 1990 insured the plaintiff's business annually. On 5 May 2002, the policies were up for renewal. In January 2002, the plaintiff requested the inclusion of the showroom and the machinery to the policy. I believe, Mr. Naidu, the insurance agent, would not have had knowledge to assess the value of the stocks. However, New India accepted to undertake the risk of the perils and admitted without further inquiry the market value of the stock of furniture and machinery as $120,000.00. The defendant calculated the premium on this market value. The same reasoning I have enunciated above with respect to the valuation of the building also applies to the assessment of the market value of the stocks included in the claim.

[204]	During oral submissions, I specially asked both counsel whether I could use the figures in the statement of accounts to assess damages. Mr. Narayan informed me that the statements were produced in court as documents forming part of the agreed bundle of documents and therefore it could be used. 

[205]	The insured is entitled only to the actual loss under the policy and nothing more. I would therefore accept that the market value of the furniture and machinery, when it was insured was $120,000.00. According to the financial statement, the value of the stocks was $98,357.00. Mr. Reddy says that he sold three pieces of furniture for $7000.00. The showroom also consisted of both furniture and hardware items Mr. Albert Raj prepared the list of items in the showroom. The statement of accounts reflects the actual loss of the items that were destroyed by the fire to be $98,357.00. Mr. Mishra says the machinery that was in the showroom were old. The depreciated value of the old machinery is $36,425.00. Since the furniture is new, there is no depreciation for the furniture. Having considered the overall depreciation of the stocks, I agree with Mr. Mishra that the actual loss suffered by the plaintiff for furniture and machinery under the second heading would be $61,932. i.e., $98357.00 less $36,425.00.

General damages 

[206]	I have already determined that the defendant breached its obligations under the policy. The plaintiff is therefore entitled for damages. 

[207]	The plaintiff moves for $20,000.00 as damages. Mr. Mishra states that the evidence indicates that the defendant was not going to honour the claim; it did not appoint a loss assessor to assess the loss. The policy of insurance was a commercial transaction between the parties. I have already determined that the defendant had not acted swiftly and delayed the processing of the claim. 

[208]	The general principle is to award the aggrieved party a sum of money to compensate him for the financial loss he suffered and would suffer as a result of the defendants' breach.

[209]	Lord Reid in the case of British Transport Commission v. Gourley 1955 (3) AII E.R. Page 796 at page 808 said:

"The general principle on which damages are assessed is not in doubt. A successful Plaintiff is entitled to have awarded to him such a sum as will, so far as possible, make good to him the financial loss which he has suffered, and will probably suffer, as a result of the wrong done to him for which the Defendant is responsible. It is sometimes said that he is entitled to restitutio in integrum, ….."

[210]	In the case of Koufos v C. Czarnikow Ltd, The Law Reports, 1969, Volume 1, A.C, page 350 Privy Council held that:

'the sole rule as to the measure of damages of any kind of breach of any kind of contract was that the contract breaker is responsible for result of damage which he ought to have foreseen or contemplated when the contract was made or being not likely, or liable to result from his breach, or of which there was a serious possibility or real danger'. 

[211]	Halsbury, 4th Edition, Vol 12, page 462, paragraph 1174 defines measure of damages in contract as follows:

Contract: the degree of likelihood. In cases of breach of contract the contract beaker is responsible and responsible only for resultant damage which he ought to have foreseen or contemplated when the contact was made as being not unlikely, or liable to result from his breach, or of which there was a serious possibility or real danger. The requisite degree of likelihood is in general higher than in tort, since the parties may make their own bargain,"

[212]	In support of the damages claim, Mr. Mishra cites Frank R Eggers Junior v Blue Shield (Pacific) Insurance Ltd [2002] FJHC 314; HBC0094.1997L (30 September 2002) where Justice Gates (he was then) determined:

"A medical evacuation policy is brought in order to purchase peace of mind. A customer is worried about obtaining quality medical procedures and operations speedily. He seeks swift remedies if urgent medical problems. were to raise. He or she hopes they will never happen. But a person buys a medical policy to lessen his or her anxieties….

However the mental stress suffered by the Plaintiff in this case was far more serious than the loss of a house, or a home, or the frustration of a lost or ruined holiday. The stress here, besides the delay in treatment and the physical pain endured, related to the prospect of dialysis, the losing of a kidney, being permanently handicapped, or even to the losing o one's life. Accordingly I award $20,000.00 as damages for the mental stress which the Plaintiff suffered."

[213]	Mr. Mishra contends that the defendant is an insurance company providing fire insurance and that there is a strong element of aggravation when one considers the deprivation of an insured of the very benefit of what it has contracted for when it concerns its financial health in the event of a disaster. I agree with Mr. Mishra on this point. The plaintiff was kept at bay for two and half years which finally led the plaintiff to sell his business and to migrate overseas. I am satisfied that the damage of $20,000.00 moved by the plaintiff to be reasonable. I accordingly award the defendant $20,000.00 as damages for breach of contract for failing to swiftly process the claim. 

Compensation under the Fair Trading Act

[214]	The plaintiff also claims $10,000.00 as compensation under the Fair Trading Decree for the defendants misleading and deceptive conduct and cites Frank R Eggers Junior v Blue Shield (Pacific) Insurance Ltd (Supra) in support. 

[215]	I have already concluded that the plaintiff was in breach of contract. However, a breach of contract does not necessarily infer misleading and deceptive conduct on the part of the contractual party. My finding of the breach was based on inaction of the defendant, and its failure to resolve the claim one away or another within a reasonable period of time. There is no evidence before me to demonstrate deceptive or misleading conduct on the part of the defendant. The facts of this case is clearly distinguishable from the facts of the Frank R Eggers Junior (supra) case where the court found on evidence that the agent in fact made specific misleading statements. I therefore dismiss the plaintiff's claim under this heading. 

Costs 

[216]	The trial lasted six days and the parties filed two sets of written submissions and conducted oral submission over two days. Given the highly contested nature of this litigation and the extensive advocacy efforts of counsel, I summarily asses cost at $9,500.00. 

Interest 

[217]	The plaintiff moves court to calculate damages from 1 October 2005. Although I am of the view that the defendant should have considered the claim much earlier, I will award interest from the date requested by the plaintiff. Accordingly, I award interest from 1 October 2005 to date of judgment at the rate of 10% to be paid by the defendant on the total sum $ 282,932 awarded on the fire policy and damages. 

[218]	I have already concluded that the plaintiff must pay $8010.00 as arrears of premium, which it ought to have paid when the policy was renewed on 5 May 2002. The plaintiff must therefore pay interest from 5 May 2002, to the date of judgment at the rate of 10% to the defendant on the total sum $ 8010.00 awarded.

Conclusion

[219]	This is a heavily contested matter. The plaintiff claimed a sum of $320,000.00 being the amount covered under the policy apart from general damages and compensation. The defendant submitted four defences and upon examining the issues and analysing the evidence, I dismissed all four defences. Based on the evidence, I determine that the plaintiff has established his case on a balance of probability. Accordingly, I determined that the plaintiff is entitled for judgement to receive the full-insured sum on the building of $200,000 plus $ 61,932.00 for machinery and furniture thereby totalling a sum of $261,932.00. I also awarded $20,000.00 to the plaintiff as damages for breach of contract by the defendant. The defendant must also pay interest and costs to the plaintiff as ordered hereinabove. Accordingly, the defendant must pay a total sum of $281,932.00 excluding interest at 10% to the plaintiff. I have however determined that the plaintiff has to pay a sum of $8010.00 to the defendant as balance premium payment due on the insurance policy, which I order that, the sum of $8010.00 to be set off against the total sum payable to the plaintiff. 

[220]	I thank and appreciate the unstinted assistance given to me by both learned counsel in this case.

Orders 

1.	Judgment entered in favour of the plaintiff. 

2.	The defendant to pay the plaintiff $261,932 being the amount covered under the fire policy for building, machinery and furniture. 

3.	The defendant to pay the plaintiff $20,000.00 as general damages. 

4.	The defendant to pay the plaintiff interest on $281,932.00 at 10% p.a. from 1 October 2005 to the date of judgement. 

5.	The defendant to pay the plaintiff $9,500.00 as Costs. 

6.	The plaintiff to pay the defendant $8010.00 and 10% interest calculated from 5 May 2002 to the date of judgement.

7.	The defendant to pay the plaintiff the total sum of $281,932.00 at 10% p.a. from 1 October 2005 to the date of judgement after setting off the sum of $ $8010.00 and 10% interest calculated from 5 May 2002 to the date of judgement. 

8.	All above moneys to be paid by the defendant on or before 30 November 2011. If the defendant fails to pay the full sum by 30 November 2011, the defendant to pay the plaintiff interest at the rate of 10% until the date the payment is made in full. 

D Dias Wickramasinghe
Judge