Fraudulent claims

The decision of the Privy Council in Stemson v AMP General Insurance (NZ) Ltd [2006] UKPC 30 raised two very short points on fraudulent claims.

Stemson: the facts

The assured’s building, a historic villa in Coromandel, near Auckland, New Zealand, was damaged by fire in May 1992.The insurers refused indemnity on the basis that the fire had been deliberately started (which was not contested) and that the assured had been responsible. Proceedings were commenced against the insurers, in which the defences were: (a) arson by the assured; and (b) a fraudulent claim by the assured, in that the assured had told the insurers’ claims investigator that he had never had an intention of selling the villa when he had made surreptitious abortive attempts to do so due to his straitened financial position shortly before the fire. That statement had been corrected before the insurers decided to reject the claim. The trial judge upheld both defences, a decision confirmed by the Court of Appeal. The assured appealed to the Privy Council. The appeal was rejected.