Genesisuk.Net Ltd v Allianz Insurance Ltd

An insurer alleging that an insured deliberately caused a fire bears the civil burden of proving deliberate involvement on the balance of probabilities. The seriousness of the allegation informs the quality and cogency of evidence required, but does not create a separate standard of proof.

The court may draw reasonable inferences from circumstantial evidence. It need not identify a seamless chain of proof or direct evidence. Motive is relevant and persuasive but is not conclusive. A substantial and substantiated alternative explanation may prevent the insurer from discharging the burden.

Genesisuk.Net Ltd claimed under a policy issued by Allianz Insurance Ltd for losses caused by a fire at its business premises. Allianz avoided the policy on the ground that Genesis’s director, Mr Roe, had deliberately caused or procured the arson. Genesis denied involvement and suggested that a former employee or an associate was responsible.

The central issue was whether Allianz had proved, on the balance of probabilities, that Mr Roe or someone acting on his behalf deliberately caused the fire. Quantum was disputed but became unnecessary once liability was determined.

1. The claim was dismissed. Allianz proved on the balance of probabilities that Mr Roe, or someone acting on his behalf, deliberately caused the fire. The claim therefore failed and it was unnecessary to determine quantum.
2. The burden rested on Allianz to prove Mr Roe’s involvement. The applicable standard was the civil standard, although the gravity of the allegation required evidence commensurate with that gravity. The court accepted that motive was persuasive but not conclusive, and that circumstantial evidence could establish deliberate involvement without a seamless chain of proof or a smoking gun.
3. The court found that diesel had been placed on boxes and shelving before the fire. The evidence made it very likely that Mr Roe had done so, since he and Mrs Roe were the only people shown to have been in the Unit before the fire and there was no evidence of a relevant break-in. The alternative theory that the diesel had been introduced after the fire was possible but highly improbable.
4. The CCTV evidence strongly supported the conclusion that Mr Roe had paused the recording system to conceal activity. The court accepted the technical evidence that the combination of faults required to explain the gaps was unlikely. The late development of the issue and the temporary absence of the motherboard did not justify excluding the evidence, particularly as the motherboard was later found and its absence had caused no material prejudice.
5. The evidence concerning the former employee, the threatening telephone calls and the attempted use of keys did not establish a sufficiently persuasive alternative explanation. The sequence involving the keys and camera spray appeared more consistent with an attempt to frame her than with genuine evidence of her responsibility.
6. The court declined to identify the arsonist visually from the CCTV footage. However, Mr Roe’s lack of candour about the watch, the CCTV settings, materials removed from the Unit, financial circumstances and other matters materially weakened his evidence. Taken with the physical, technical and circumstantial evidence, the case against him was clearly established.