Insurance Dispute over Surfing vs. Kite Surfing Coverage, Lecture notes of Art

Download Insurance Dispute over Surfing vs. Kite Surfing Coverage and more Lecture notes Art in PDF only on Docsity! 1 Before the Arbiter for Financial Services Case 034 2020 BR (the complainant) vs Axeria Insurance Ltd. (C 55905) (the service provider/the insurer) Sitting of 15 December 2020 The Arbiter, Having seen the complaint,1 whereby the complainant submits that: On the 10 August 2018, he was standing on a beach in Mauritius observing kite surfing when a kite surfer collided into him at high speed, causing a severe laceration to his right medial knee. He was initially treated at a hospital in Mauritius but required further treatment in the UK. He made a claim with the insurer which was rejected. In essence, the claim was rejected because the insurance held that they did not cover accidents arising from participation in surfboarding and there is allegedly evidence from the hospital in Mauritius which stated that the ‘right knee laceration was caused whilst kite surfing’. The complainant insists that he was not participating in the sport of kite surfing but was just a spectator on the beach, and the medical note dated 12 August 2018, which refers to this incident, is incorrect. He initially asked the hospital to make it clear that the accident happened while he was observing kite surfing; however, this was declined on the basis that there 1 A Fol. 4, 7-9 2 was no evidence to prove that he was observing the activity rather than participating in it. This is despite the fact that there is no evidence to prove that he was participating in the activity.2 He further submits that his evidence should be enough to substantiate his version of events because he cannot prove otherwise as he was alone on holiday. He was unconscious when he arrived at the hospital and was driven by a bystander on the beach who did not speak English. He did not, at any stage, inform the medical staff that he was participating in kite surfing when the incident took place and he is not aware on what basis this assumption has been incorrectly made by hospital staff. Given that the medical note is incorrect and there is no evidence to support the position stated in the medical note, it is unreasonable for the Underwriter to reject his claim. The reference to kite surfing is not a medical diagnosis and a doctor is not qualified to give evidence on how an accident occurred. It is therefore not appropriate to rely on such statement. The complainant further states that even though the medical note refers to ‘kite surfing’ which is different from ‘surf boarding’, it is not included as one of the hazardous activities listed in the policy as being excluded. The clause appears to be exhaustive and therefore the lack of inclusion of the activity should have been taken into account by the underwriter. In addition, the policy distinguishes between different types of activities, such as, ‘all skiing (dry, snow, water jet) and motor sports (both on land and on water); ‘any form of aerial flight etc.’ For all of these activities, it is made clear what form of the activity is covered and is accompanied by the word ‘any’ or ‘all’. This is contrasted by the exclusion in respect of surf boarding, which simply states ‘surf boarding’. It does not refer to kite surfing which combines several different aspects of other sports (including windsurfing, wakeboarding and kite flying - none of which are referred to in the policy), nor does it even state ‘all’ or ‘any’ forms of surf boarding which would arguably still be ambiguous and not include kite surfing, given the different elements of the sport. 2 A Fol. 8 5 We would like to note that in the event that the accident has been caused by a third party, then a police report would have been accompanied or attached to Annex A. Such police reports would cover any witness recounts of the course of events and interrogations made to the third party who has caused the injury. Also, the client, whom in terms of insurance principle is expected to act in utmost good faith, did not provide material facts on the case from the outset. The injury caused to him by the third party were made by him later on and included only in the medical report dated 30th October 2019. This medical report was issued following our letter of 10th October 2018. On the basis of the above analysis, we feel that there are no grounds to compensate the client both on the fact that this sport is excluded and also on the fact that the evidence does not tally with the course of events as presented and as further argued in our letter. Having heard the parties Having seen all the documents submitted by the parties Considers According to Chapter 555 of the Laws of Malta, the Arbiter ‘shall determine and adjudge a complaint by reference to what, in his opinion, is fair, equitable and reasonable in the particular circumstances and substantive merits of the case’.3 In order to decide the complaint in a fair, equitable and reasonable manner, the Arbiter has to consider and evaluate the versions given by the parties, examine and analyse the documents submitted by the parties and, finally, reach his conclusions with the ultimate aim of administering justice between the parties. The Complainant’s Version The complainant testified4 that he had a terrible accident whilst in Mauritius when he suffered a knee injury as a result of which he was operated in an 3 Art. 19 (3)(b) 4 A Fol. 109 et seq 6 emergency fashion in Mauritius. He received extraneous physiotherapy and rehabilitation in order to get better and was given advice that he needed further surgery to save his right knee. He made a claim for medical expenses with his private medical insurer which was refused. They declined the claim on the basis that he was allegedly kite surfing based on a medical note from the hospital in Mauritius stating that his injury was caused whilst kite surfing. The complainant further stated that this was definitely a kite surfing accident but at no stage was he participating in the activity. What happened was that he was hit by a kite surfer in a kite surfer district in Mauritius and caused the injury to his right knee. He was hit by the board of the kite surfer that was out of control whilst the complainant was observing on the beach. The reference in the hospital’s medical note created a lot of complications for him. The medical note ‘has been retracted from the official medical report from the doctor’ and, since he did not manage to get a positive outcome from the insurance, he filed the complaint with the Arbiter. The complainant’s representative also submits that the individual who drove the complainant to the hospital had not known the complainant and reported to the doctor an incorrect version of what really had happened. Kite surfing is not included in the policy. This was an alternative defence to the other defence that the complainant was in fact not participating in kite surfing. It is finally submitted that the accident was clearly covered by the policy and the complainant insists that the claim should be upheld by the service provider. The Service Provider’s Version Claire Camilleri Gauci, on behalf of the service provider, submitted that although the complainant says that his injury was caused by a third party, the first medical records were received on the 12 and 13 August 2018 referring to an accident ‘whist kite surfing’. These certificates were the first evidence submitted with the claim. In the meantime, they had been corresponding with the complainant and his lawyers throughout the course of 2018 and 2019 in relation to this claim. 7 She cited an extract from a letter received from the complainant’s lawyers which stated: ‘We understand that our client’s claim for private medical treatment has been refused on the basis that your policy documents state that you do not cover accidents which take place during ‘surf boarding’ and there is evidence from our client’s doctor the he sustained this injury while surfing’. It did not mention that the injury was caused by third parties. The service provider refused the claim around the 10 October 2018, and it was later that the complainant mentioned the third party. The witness asked herself how can it be that no police report was filed as well? When a third party is involved in an injury there should be a police report. The evidence that was always provided by the complainant was that the accident had happened whilst surfing. With regards to kite surfing, the witness stated that it is important that one understands the nature of this sport because there is a clause in the policy which states that: ‘We do not cover treatment in participation in hazardous pursuits or in relation to professional sport’. From the research she carried out, surf boarding is surfing and boarding at the same time and is controlled by wind. Since she is not a professional, she cannot say whether surf boarding and kite surfing are the same or not. Annex C talks about injury whilst surfing. It is a combination of both. From the evidence they had, the complainant was participating in the sport. Further Considers Basically, the parties are not agreeing on two issues. 1. Whether the complainant was participating in the sport of kite surfing or whether he was a spectator and hit by a third party; 2. Whether kite surfing is excluded by the policy. As to the first contention, namely, whether the complainant was participating in the sport or not, the complainant contests the correctness of the certificate 10 submitted with the claim. However, this report started to be challenged by the complainant after the claim was refused by the service provider. The Arbiter also notes that the report of the 12 August 2018 is to some extent confirmed by the reference letter of the 13 August 2018 which refers to the complainant as a ‘surfer’ and refers to the incident as ‘a surfing accident’. As submitted by the service provider, the mentioning of a third party as causing the incident started to be mentioned much after the date of the incident. Finally, the Arbiter is of the opinion that if a third party had caused the incident, the complainant was duty bound to report the case to the police to be in a position to present to the insurer the best evidence possible. The Arbiter rests on the hospital’s medical report which was issued by medical professionals at the time of the incident and which was filed with the claim by the complainant as true evidence of the event. This report was neither objected to by the complainant’s legal representative in its communication with the service provider of the 11 November 2019.12 As a matter of fact, the complainant’s lawyer quotes the medical report issued by the hospital as follows: ‘The evidence to which you refer (a note dated 12 August 2018, copy enclosed) states that our client was “kite surfing” which is plainly a different activity to “surf boarding”.’ For the above-stated reasons, the Arbiter is not convinced with the complainant’s assertion that he was not participating in kite surfing. Whether ‘kite surfing’ is covered by the policy The hospital’s report of the 12 August 2018 refers specifically to ‘kite surfing’. Therefore, the Arbiter’s job is to evaluate whether ‘kite surfing’ is covered or excluded by the policy. 12 A Fol. 107 11 In its correspondence of the 28 August 2018 to the complainant13 the representative of the service provider refused the claim on the basis that the policy did not cover: ‘Treatment arising from participation in hazardous pursuits - abseiling, bungee- jumping … surf boarding,14 white water rafting and any sport for which you receive remuneration or any form of professional or semi-professional sport.’ The emphasis is on surf boarding.15 In its final submissions the service provider insists that they do not cover: ‘… treatment in participation in hazardous pursuits or in relation to professional sport’.16 However, the representative of the service provider herself submitted that: ‘I am not a professional to say whether surf boarding and kite surfing are the same or not’.17 The Arbiter fully understands the position taken by the representative of the service provider in this regard because from his research the Arbiter also met the same difficulty. Kite surfing and kite boarding are considered as basically the same sport: ‘Generally speaking, kite boarding and kite surfing are different names for the same water sport. From a purely statistical point-of-view, the term kite boarding is more popular in the United States, Canada, Argentina, France, and the Czech Republic, while kite surfing remains the favourite designation in Brazil, Europe, Middle East, Russia, India, and Oceania.’18 Then, kite surfing has been described as: 13 A Fol. 10 14 The service provider’s emphasis 15 Ibid. 16 A Fol. 111 17 A Fol. 112. Emphasis of the Arbiter 18 https://www.surfertoday.com/kiteboarding/what-is-the-difference-between-kiteboarding-and-kitesurfing 12 ‘a sport in which you move across water by standing on a board and holding onto the strings of a large kite (= a piece of cloth on a frame, that is moved by the wind).19 On the other hand, surf boarding has been defined as: ‘a sport in which a person stands or lies prone on a surfboard and rides the crest of a breaking wave toward the shore; surfing’.20 For the layman, like the Arbiter, these two sport activities appear to be similar though not the same. However, it seems that sport advisers make a clear distinction between kite surfing and surfing: ‘kite surfing and surfing are really very different sports, they have some points of contact only when it comes to surfing the waves, so a direct comparison is not always possible and in many cases it really makes little sense, but it can be useful to compare them to help those who would like to get closer to choosing in a more conscious way to which to orientate, or at least to start with!’ 21 This leaves the Arbiter in the same position of the service provider’s representative when she said that she was not in a position to decide whether surf boarding and kite surfing were the same sport. In the Arbiter’s opinion, this creates doubt and ambiguity about the term ‘surf boarding’ as spelled out in the policy. The exclusion clause in the policy states that: ‘treatment arising from participation in hazardous pursuits - Abseiling, bungee jumping, flying light aircraft, hang gliding, horse racing or hunting or jumping or polo, ice hockey, motor sports (both on land or on water), mountaineering and outdoor rock climbing, any form of aerial flight (except as a passenger or crew member travelling on a fully licensed standard type aircraft owned or operated by a recognised airline over an established route, 19 https://dictionary.cambridge.org/dictionary/english/kitesurfing 20 https://www.dictionary.com/browse/surfboarding 21 https://www.tabularasateam.it/en/blog/kitesurfing-vs-surfing/ 15 4. The list of hazardous activities is therefore exhaustive and only includes the hazardous activities specified in it. 5. Kite surfing, the activity in which the complainant allegedly participated, is not specifically mentioned. If the insurer did not include a particular risk, it did not intend to include it and since it drafted the contract it would only be fair and reasonable that any doubt should militate against it. This is not just the embodiment of the contra proferentem rule but is also the pronouncement of the general principle of interpreting a policy in a fair manner. An exclusion clause is limiting the liability of the insurance company and as such the insurer is considered to have taken all the necessary measures (including the appropriate legal advice) to draft the clause in a precise manner to suit its purposes. Since the scope of the clause is to limit the risk for the insurer, it is up to the insurer not to include dubious or ambiguous terms. Furthermore, the Arbiter is guided by the principles of fairness, equity and reasonableness and in his discretion, he should consider the applicable law or guidelines both on a European or local level.25 When it comes to consumer contracts, it has been widely accepted even on a European Union level, that consumer contracts have to be drafted in simple and intelligible language and whenever there is doubt as to the interpretation of a term, it should be interpreted in favour of the consumer. This principle established in the European Council Directive 93/13/EEC26 also found its route into Maltese consumer legislation. In fact, the Consumers’ Affairs Act,27 provides that: ‘47. (1) In any consumer contract, where all or some terms offered by a trader to a consumer are in writing, these terms shall be written in plain and intelligible 25 Cap. 555, Art 19(3)(c) 26 Art. 5 states: In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. (Arbiter’s Emphasis) 27 Cap. 378 of the Laws of Malta 16 language which can be understood by the consumers to whom the contract is directed. (2) Where any term is ambivalent or any doubt arises about the meaning of a term, the interpretation most favourable to the consumer shall prevail. As has already been stated in this decision, a controversy, a serious doubt and an ambiguity have arisen about the extent of the meaning of ‘surf boarding’. Consequently, according to law, the interpretation most favourable to the consumer prevails. In this way, the law also tallies with contra proferentem rule explained above. Therefore, the Arbiter cannot conclude that kite surfing was excluded from cover, and the burden of proof to prove that surf boarding included kite surfing rested on the service provider. The only witness brought forward by the service provider declared that she could not say whether surf boarding and kite surfing were the same. Consequently, the service provider did not prove the exclusion of kite surfing from insurance cover. For the above stated reasons, the Arbiter decides that the complaint is fair, equitable and reasonable in the particular circumstances of this case28 and is accepting it in so far as it is compatible with this decision Compensation The complainant asks the Arbiter to order the service provider to pay him: ‘the losses of approximately £9200,’ and for ‘further surgery and rehabilitation which has been estimated to cost in the region of £20,000’. The Arbiter is accepting the complainant’s request that the claim regarding the injury be accepted by the insurer. However, the Arbiter cannot order the payment of ‘approximations’ or ‘estimates’ as suggested by the complainant in his complaint. 28 Cap. 555, Art. 19(3)(b) 17 Therefore, by way of compensation the Arbiter orders Axeria Insurance Limited to accept and process the claim regarding the injury sustained by the complainant merits of this case, and pay the complainant (against receipts), for all medical care necessary in accordance with the limits of the policy, if any. The legal costs of these proceedings are to be borne by the service provider. Dr Reno Borg Arbiter for Financial Services