Insurance claim rejected

The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Geoffrey Valenzia and Mr Justice Giannino Caruana Demajo, on May 25, 2012, in the case “Data Express Ltd vs Atlas Insurance Agency Ltd in its own name and as agents for and on behalf of Axa Insurance plc”, held, among other things that, unless the assured could prove to its satisfaction that there was in fact a forcible and violent entry to its premises, it had no basis to claim under the policy. The fact alone that the padlocks were removed was not sufficient.

The facts in this case were as follows:

Despite the conclusion of the inquiring magistrate, there was no evidence of a violent break-in

Data Express Ltd purchased an insurance policy covering the risk of theft, insofar as there was a forcible and violent entry, under a Perils Property Damage Insurance Policy issued by Atlas Insurance Agency Limited as agents and representatives of the foreign company AXA Insurance plc.

It resulted that the company made a claim for reimbursement of losses suffered as a result of a robbery on or around April 4, 2002. It reported the theft of a significant amount of stock from its premises in Kappara, San Ġwann.

The insurance company, however, rejected its claim.

Faced with this situation Data Express proceeded by filing legal proceedings against both Atlas Insurance PCC Ltd (formerly Atlas Insurance Agency Ltd) in its own name as well as agents of the foreign company AXA Insurance plc.

It requested the court:

• To declare that the policy covered such losses; and

• To liquidate the damages and to condemn the insurance company to pay it compensation from the date of the claim.

In their reply, AXA Insurance plc as represented by Atlas Insurance PCC contested the claim. It was stated that the losses were not covered under the insurance policy and that there were no grounds for re-imbursement, since there was “no forcible and violent entry”.

Atlas Insurance PCC pleaded, on the other hand, that it should be freed from the proceedings, as it had no legal relations with Data Express Ltd. It acted as agent of the foreign company AXA Insurance plc which was included as defendant in the proceedings.

On April 20, 2009 the First Hall of the Civil Court ordered the insurance company as agents of AXA Insurance plc to pay Data Express €70,232.

It freed Atlas Insurance PCC Ltd from the proceedings. The court refused, however, to impose interest from the date of the claim.

In the policy it was stated that: “in consideration of the payment of the premium for this extension to the policy the company will, by payment or as option by reinstatement or repair, indemnify the insured against damage if... while within the premises, property shall be lost or damaged by theft involving entry into the premises by forcible and violent means...”

At issue was whether the robbers broke in “by forcible and violent means”.

The morning after the robbery, the door of the company’s premises was found ajar, and the two padlocks, which were used to lock the door, were missing. There were no signs of a violent entry.

The police also reported no traces of a forcible or violent entry into the premises.

The First Hall of the Civil Court made reference, however, to the proċess verbal of the inquiring magistrate. It felt that it should rely on the proċess verbal, where the conclusion was that there was a forcible entry.

The fact that there were no signs of forced entry did not mean that there could not have been a forcible entry. Otherwise this would lead to a situation where an insurance company would not be obliged to pay if the thieves could cover up all traces. In addition it was not beyond a “professional” thief to carry out such type of robbery.

The First Hall of the Civil Court said it was sufficient if a thief managed to breakin by breaching the locks, impeding free access. It was not necessary, it said, for there to be traces of violence on the door or premises.

Reference was made to articles 263 and 264 of the Criminal Code:

263. “Theft is aggravated by ‘means’ (a) when it is committed with internal or external breaking, with false keys, or by scaling; (b) when the thief makes use of any painting, mask, or other covering of the face, or any other disguise of garment or appearance, or when, in order to commit the theft, he takes the designation or puts on the dress of any civil or military officer, or alleges a fictitious order purporting to be issued by any public authority, even though such devices shall not have ultimately contributed to facilitate the theft, or to conceal the perpetrator thereof”.

264. (1) “‘Breaking’ shall include the throwing down, breaking, demolishing, burning, wrenching, twisting, or forcing of any wall, not being a rubble wall enclosing a field, roof, bolt, padlock, door, or other similar contrivances intended to prevent entrance into any dwelling-house or other place or enclosure, or to lock up or secure wares or other articles in boxes, trunks, cupboards, or other receptacles, and the breaking of any box, trunk, or other receptacle even though such breaking may not have taken place on the spot where the theft is committed.”

In the opinion of the court, the purpose of the policy was to exclude negligence of the assured. As the company’s door was locked in the circumstances, the court felt that it should accept Data Express’s claims for payment. No interest should be imposed, it said, however, since its claims were da liquidarsi.

Aggrieved by the decision of the first court, Atlas Insurance as agent entered an appeal, asking the court to confirm that part where it was liberated from the proceedings and to revoke the remaining part of the judgement.

Data Express Ltd filed an incidental appeal where it asked the court:

• To hold Atlas Insurance PCC jointly responsible;

• To exempt it from paying judicial costs; and

• To impose interest, as the sum for payment could have been easily liquidated.

The insurance company, in reply, disputed the company’s incidental appeal.

On May 25, 2012 the Court of Appeal gave judgement by accepting the insurance company’s appeal and by revoking the decision of the court of first instance, save for the part which freed Atlas Insurance Agency from the proceedings. The court also dismissed the incidental appeal instituted by Data Express.

The following reasons were given for the court’s decision:

The entry into the company’s premises, even if forcible, was not violent. The burden of proof rested with the company. The court noted that the police did not find any traces of a “forcible and violent break-in”.

In the circumstances, the court was not satisfied that the company established that the break-in was by forcible and violent means.

Despite the conclusion of the inquiring magistrate, there was no evidence of a violent break-in. In any case, the proċess verbal only indicated the possibility of a commission of a crime. It did not constitute a conclusive determination of what happened. It only formed part of the investigative process on the commission of a crime. The use of false keys was not a forcible and violent entry.

The company was condemned to pay all judicial costs.

Dr Grech Orr is a partner at Ganado & Associates.