The difficulties in relation to proof lie in the applicants’ camp

07 December 2023

An application was dismissed as a result of the applicants’ failure to call evidence to establish on the civil standard that a particular vehicle was affected by a defect as alleged, and caused a fire.

In issue

  • The insurer, through the policyholders (the applicants), commenced subrogation proceedings against the seller and manufacturer, Australian Automotive Group Pty Ltd (AAG) and Ateco Automotive Pty Ltd (collectively, the respondents), claiming damages for breach of the acceptable quality consumer guarantee provided for by s54(2) and the fitness for purpose consumer guarantee provided for by s55(2) of the Australian Consumer Law (ACL) and in negligence, and also alleging that the vehicle had a safety defect within the meaning of s9 of the ACL.

The background

During the early hours of 24 January 2018, a fire ignited in the garage of Mr and Mrs Peck, damaging their home and contents. The insurer alleged that the fire evolved from a defect in Mrs Peck’s Fiat 500 C two door soft top convertible car which was parked in the garage attached to the home. The parties led evidence on the live issues, being:

  • whether there was, at the time of manufacturer or supply, a defect in the Fiat, namely a live signal wire in the steering column that was, or could become pinched, resulting in electrical arcing; and if so,
  • whether the defect caused the ignition of a fire in the Fiat and thereafter the house.

The applicants engaged Ms Jones, certified fire investigator, who concluded that an electrical fault in the wiring around the dashboard of the Fiat was the source of the ignition, although she acknowledged that she was unable to state what caused the fault. Ms Jones also eliminated the possibility that the ignition source could be the result of household wiring, including the ESP (Electrical Service Panel) or the roller door motor, without any direct evidence. The applicants also engaged Mr Alessi, fire investigator and mechanic, who identified, in his opinion, an arc bead on a wire resting near the steering column of the vehicle.

For the respondents, Dr Casey, mechanical engineer and academic, reported that there were no indications of damaged automotive arc wiring and that any arcing could be the result of the fire rather than an indication of being the cause of the fire. He opined that it was more likely than not that arc damaged household electrical wires fell onto or into the soft topped convertible Fiat, causing a fire in and around the Fiat, which then spread and set fire to the house. While the applicants’ experts were not briefed with a copy of the Pecks’ affidavits, Dr Casey heavily relied on the account of Mr Peck at the time of the fire to reason that the fire evolved from events in the house.

The applicants contended that the Court should draw the inference that the fire started as a result of a wiring defect in the Fiat rather than the competing hypotheses advanced by the respondents as to other possible causes of the fire. In contrast, the respondents submitted that the applicants’ reliance on inferential reasoning was flawed in that they did not establish that their alleged cause rose above being only one of a number of possibilities and that the applicants’ case on causation ignored key evidence as to the sequence of events as outlined in the Pecks’ own evidence.

The decision at trial

With regard to the civil standard, Cheeseman J, of the Federal Court of Australia, referred to Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, where Dixon, Williams, Webb, Fullagar and Kitto JJ explained (at 5):

  • …In questions of this sort where direct proof is not available it is enough [if] the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture … But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise…

In this context, Cheeseman J opined that while the inability to show precisely how the fire started would not of itself be fatal to the case, 'in the absence of an actual persuasion, a mere mechanical comparison of probabilities will not suffice absent a belief in its reality'.

Having considered all of the evidence and the extent to which the applicants’ expert findings were rooted in speculation, the applicants had not discharged their onus. Relevantly, the Court took issue with the way the applicants presented their evidence, including:

  • the applicants did not call evidence from an electrician or electrical engineer to comment on the electrical wiring, whether in automobiles or in houses, notwithstanding that arcing in the Fiat’s wiring was the crux of their case;
  • the evidence relating to the degradation and contamination of the Fiat over a period of time, as well as the immediate effects of the fire event including the structural collapse, the make good works and the excavation;
  • the omission of the Peck’s own evidence during the proceedings by way of giving evidence and by failing to provide their affidavits to their experts; and
  • Mr Alessi’s evolving case theory throughout the hearing and Ms Jones’ lack of expertise and unreliability by her own admissions during cross-examination.

Also, to the extent that the applicants submitted that Dr Casey was at a forensic disadvantage given that he first inspected the vehicle some three years later, Cheeseman J held that this disadvantage lay entirely at the feet of the insurer who acquired the Fiat pursuant to its right of subrogation. Nonetheless, that fact did not detract from the other causes which affected the quality of evidence and that the difficulties in relation to proof were ultimately that of applicants. As a result, the claim was dismissed.

Implications for you

Applicants should carefully consider whether their evidence has the potential to meet the requisite civil standard as the Court will not be persuaded by inexact proofs, indefinite testimony or indirect inferences. Where possible, insurers should preserve evidence which they intend to rely on with a view to its value in satisfying the burden of proof when bringing subrogation proceedings.

This case also serves as a reminder that in considering all of the evidence, the Court will note evidence which is withheld or omitted. In this case the Court was hampered by the dearth of evidence from an electrician or electrical engineer and deprived of Mr Peck’s evidence in reconciling factual disputes and key issues between the experts, allowing for the inference that Mr Peck was unlikely to assist the applicants’ claim.

This case serves as an important reminder that the civil standard of proof should not be taken lightly – a court may not draw inferences based on evidence which shows no more than a possibility of the occurrence of a sequence of events.

Peck v Australian Automotive Group Pty Ltd [2023] FCA 1413

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