I Didn’t set the fire – Arson and the Onus of Proof
A recent court decision in New South Wales looked at the issue of whose duty it is to prove whether the Insured was or was not involved in setting a fire, which was clearly deliberately lit. My colleague, Mr Peter O’Brien, Director of LMI Legal, looks at this for us below, on a subject that I for one thought was considered as settled law for as long as I can remember.
The plaintiff was the owner of a home in Orange, NSW, which was extensively damaged by fire on 27 December 2006.
The fire had doubtlessly been intentionally lit and occurred under suspicious circumstances, which gave rise to the police investigating the plaintiff, her fiancé and a friend.
Due to the unsavoury circumstances surrounding the fire, the insurer denied liability and argued that the plaintiff bore the onus of proving that the fire was not deliberately lit by her or someone who had entered the home with her consent. The relevant wording in the policy provided that:
…, we will NOT cover loss or damage as a result of fire started with the intention of causing damage by you or someone
– who lives in your home, or
– who has entered your home or site with your consent, or the consent of a person who lives in your home.”
The court of first instance, in observing that the clause was an “exception clause”, went on to find that the plaintiff not only had to prove that a “fire” had occurred but, somewhat unusually, bore the additional onus of then proving that “a fire was not started by someone who entered the property with her consent with the intention of causing damage”. Presumably, this approach was favoured by the court because of the suspicious events leading up to the fire.
Result of Appeal
In McLennan v Insurance Australia Limited  NSWCA 300 the court reversed the decision of the court of first instance and held that the burden of proving that the fire was not deliberately lit did not rest with the plaintiff, but with the insurer.
The court’s reasoning is in accordance with established principles that once an insured has established that the claim falls within the scope of the insurer’s promise, the burden then shifts to the insurer to prove that the claim is not otherwise defeated by an exception that the insurer seeks to rely upon.
In other words, if an insurer seeks to rely on an exception, the general rule is that the insurer must prove the application of the exception