A decision by Suncorp to deny a claim for a stolen car, relying on an exclusion in relation to theft arising from a private sale, has been upheld by the Australian Financial Complaints Authority (AFCA).

AFCA says the customer, who cancelled the paperwork for the transaction after his bank rejected the false cheque given by the buyer, “likely” has a valid claim since the available information shows he has most probably suffered accidental loss due to the theft of the vehicle by a third party.

But while the comprehensive motor policy provides for accidental loss, including theft, it has a general exclusion that states the customer will not be covered for loss of vehicle or proceeds of sale following a private sale transaction.

The policy does not define the term “private sale transaction” but AFCA says the intention of the exclusion is to apply to the circumstances of this complaint.

“The exclusion is clearly intended to apply if the loss of the car (or the proceeds of sale) includes theft,” AFCA says in its ruling of the dispute.

“Further, I am satisfied that the loss followed a ‘private sale transaction’. This is because the complainant offered the car for sale to a third party. The parties agreed to a purchase price.”

AFCA says the complainant gave the car to the third party on the assumption that the consideration would be paid.

The fact that the third party deceived the complainant in relation to the payment does not mean that the private sale transaction did not occur, according to AFCA.

“The car was taken (and the loss occurred) after the private sale transaction had occurred,” AFCA said.

Suncorp had denied the complainant’s claim, saying it can rely on the exclusion as the complainant took possession of the cheque, he handed the car to the third party, and a private sale transaction occurred.

The insurer says there would be no purpose to the exclusion in the policy if the policyholder had to receive the funds for a car sale to be complete.

The complainant, whose car was insured for the agreed value of $40,000, subject to an excess of $1200, had insisted he was still the owner of the vehicle despite not being in possession of it.

He provided a formal statement dated December 5 last year to Queensland police, describing the events that took place the previous month when the third party took his car.

The statement includes information that the name on the cheque presented in payment was not the same as the name provided by the third party to the complainant.

The complainant says his car was “dishonestly” taken by a third party with no sale occurring since the third party did not pay for it, had produced false identification, did not return the car when contacted and had presented the bank with a false cheque.

It was also stated in the statement that the false cheque deposited as payment on November 16 was returned as unpaid.

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