The First Hall of the Civil Court, presided over by Judge Jacqueline Padovani Grima, in the case ‘Patricia Agius v Gasan Mamo Insurance Ltd’ on June 5, 2015, held, among others things, that the plaintiff’s failure to inform the defendant about her son’s medical condition and its consequences (that she had to leave her car parked outside her garage) was not a failure to disclose material facts which would lead to nullity of her insurance contract.

Plaintiff Patricia Agius filed a lawsuit against defendant Gasan Mamo Ltd to claim compensation from the defendant in terms of her policy of insurance for damages caused to her car as a result of a fire.

In her application she stated that during the night between December 12 and 13, 2005, her car caught fire. She had parked the car in front of her house because earlier on that day she had to deal with an emergency because her son was unwell.

The car was beyond economical repair. Agius contacted Gasan Mamo several times to get compensation for the damage caused to her car but the company did not grant her any compensation.

Agius requested the court to declare that Gasan Mamo must grant her compensation for the damages suffered since this type of accident was covered by her policy. The company pleaded that the plaintiff’s requests were unfounded because she failed to comply with the conditions of her policy since she left her car parked outside her garage during the night when she was not using it, despite the fact that Endorsement 8 of her policy obliged her to park her car inside.

Furthermore, the plaintiff never informed the defendant that she had a child who suffered from a medical condition, which would require her not to keep her car in a garage during the night just in case there was an emergency and, consequently, she failed to fulfil her obligation of uberrimae fides, that is, of utmost good faith.

Therefore, the plaintiff had no right to obtain compensation from the defendant in terms of her policy. The defendant also pleaded that someone burnt the car with malicious intent. So the plaintiff had to prove that the fire did not occur on account her negligence, and that she took all reasonable precautions to avoid the accident, and therefore, until such evidence was submitted, the defendant had no obligation to pay any damages.

The facts of the case were as follows. A few months before the fire the plaintiff’s son was suffering from croup which is a medical condition. When her son would have an attack, the plaintiff would take him to hospital immediately to use the nebulizer.

On December 12, 2005, the plaintiff was driving home from the health centre because her son needed to use the nebuliser. Her family GP, Victor Theuma, paid a home visit after and he advised her to take her son to the health centre immediately if his attack of croup became worse.

So Agius left her car parked outside her garage so that if her son got another attack, she would be able to drive to the health centre immediately.

However, the plaintiff’s son remained stable throughout that night so she did not have to take him to the health centre.

On that same night, between December 12 and 13, 2005, Agius was woken up by someone shouting and banging on her door at 3am. Her neighbour told her that her car was burning. Court experts concluded that someone experienced had set the car alight maliciously and the car was certified as being beyond economical repair.

The plaintiff left her car parked outside out of necessity because of her son’s serious medical condition. The court was unable to find any evidence of negligence, carelessness or malice

A few days later, she made the claim with Gasan Mamo. The defendant informed the plaintiff that it was not going to pay for the damages sustained because she left her car parked outside during the night in breach of Endorsement 8 of her policy. The plaintiff explained that on that particular night her son’s life was at stake and she decided to leave her car parked outside the garage to save time.

The court analysed the defendant’s plea that the claim made by the plaintiff was not covered by the policy because the plaintiff breached Endorsement 8. The court acknowledged that a contract of insurance is a contract based on the principle of utmost good faith between the parties because in insurance there is fortuitous risk and, therefore, an insurance company would expect to be informed about any circumstances by the insured person which may increase the element of risk.

The court quoted the judgment ‘Mambra Electronics Ltd et v Lloyds (Malta) Ltd noe (April 29, 2010)” wherein it was held that a contract of insurance is a risk for the insurer and therefore, the insured person must be honest with the insurance company and must provide it with any information which is relevant and material to the case. Reference was made to ‘Rozanes v Bowen (1928, English courts)’, wherein it was observed that:

“It has been for centuries in England the law in connection with insurance of all sorts, that as the underwriter knows nothing and the man who comes to him to ask him to insure knows everything, it is the duty of the assured, the man who desires to have a policy, to make a full disclosure to the underwriters, without being asked, of all the material circumstances… That is expressed by saying that it is a contract of the utmost good faith.”

The court also quoted the judgment ‘Middle Sea Insurance Plc v Anthony Borg’ (May 18, 2012, First Hall of the Civil Court), wherein it was held that in cases where the insured person committed fraud or failed to reveal material facts or made a misrepresentation of some material facts, or committed another breach of the duty of utmost good faith, the insurer may refuse to compensate to the insured person.

The insurance company had the burden of proving whether there was any fraud, misrepresentation or any other breach of the duty of good faith.

The plaintiff’s son suffered from croup which is a life-threatening condition. The court held that the fact that the plaintiff’s son suffered from croup and the plaintiff had to leave her car parked outside the garage when her son was having a bad attack, was not a material fact that rendered the contract null.

The court adopted this view because the defendant failed to prove that the plaintiff acted in bad faith, and that the plaintiff concealed or suppressed any evidence.

The plaintiff’s failure to inform the defendant about her son’s medical condition and the consequences of such condition (that is, that she had to leave her car parked outside the garage) was not a failure to disclose material facts which would lead to nullity of the contract. As Semin Park rightly stated in The Duty of Disclosure in Insurance Contract Law (1996) Dartmouth:

“Uberrimae fidei must not be indiscriminately used by insurers and judges as an excuse for ignoring insurance claims.”

This principle was reaffirmed by our courts which held that utmost good faith applies both to the insured person and to the insurer.

Then the court assessed whether there was a breach of the Endorsement 8 of the policy. Evidence submitted indicated that the plaintiff used to keep her car in the garage during the night when she was not using the car and that she only started parking her car outside the garage at night when her son was having bad attacks just a few months before the car was burnt.

Max Borg Bonello, a claims negotiator employed with the defendant, testified that the defendant usually imposes such condition on cars like the plaintiff’s car which do not have a solid top. The whole point of the endorsement was to protect a car with a soft/canvas top from excessive wear and tear because the car is parked outside.

The endorsement was not intended to protect the car from damages which occur as a result of arson. If the point of the endorsement was to protect cars from arson, this type of endorsement would be imposed on every car which is insured.

Agius left her car parked outside out of necessity because of her son’s serious medical condition. The court was unable to find any evidence of negligence, carelessness or malice.

Furthermore, since the child’s medical condition was serious it would not make sense for the plaintiff in such circumstances to try to destroy her only method of transport which she would use to take her son to hospital in the event that there was an emergency.

The court concluded that the defendant was obliged to pay the plaintiff for the damages she suffered in terms of the obligations imposed on the defendant by the policy. It rejected the pleas raised by the defendant and ordered it to pay the sum of €24,284 in damages to the plaintiff.

Rebecca Micallef is a lawyer at Ganado Advocates.