Q&As and counting

December 2016

Insurance - Home and contents - Substantive rights - Policy held by third party

December 2016


My client resided with his grandfather in his grandfather's house. Half of the contents in the house were owned by my client.

The house burnt down and a significant amount of my client's personal belongings were destroyed and/or taken by the insurance company.

My client did not insure his contents.

The house and contents were insured by my client's aunt. She did not have any contents at the house nor did she have a proprietary interest in the house.

An insurance payout has since been made to the aunt. She has made no attempt to reimburse my client for his loss and does not reply to correspondence (she is unrepresented).

Does the aunt have an obligation to pay out my client for his share of the contents?

If so, how should the money be recovered?


Thank you for the question.

This is a question about substantive rights rather than procedure.

On a very general level, whether there is any claim against the aunt will depend on the arrangements between the client, his grandfather and his aunt. It will depend on whether there was some sort of agreement between them and whether the client or his grandfather were contributing to the premiums. Depending on the arrangements, there could be an argument that the aunt held the benefit of the policy on trust for the client and his grandfather.

The best course would be to engage counsel to interview the client to obtain the relevant instructions and to provide a brief advice on prospects. On the bare facts provided here, it would be very unwise to commence proceedings immediately as the cause of action is not clear and poor prospects could end up costing the client a lot more in costs than the value of his claim. If there were sufficient prospects, proceedings would most likely be in the Magistrates’ Court as it is unlikely his belongings are worth more than $100,000.