McLennan v Insurance Australia Ltd t/as NRMA Insurance

The Plaintiff's Background 4The plaintiff was born at Cowra on 17 October 1961. At the time of the fire she was 45 years old. At the time of the hearing she was 51 years old. Se is the youngest of four girls, the fruit of her parents' marriage. Her primary education was at Errowanbang Primary School. She attended Marsden Ladies College at Bathurst to the middle of year 9 and then Kinross College to the end of year 11 when she left school. She gave this evidence: Q. And what sort of student were you, average, bottom of the class, top of the class? A. Bit above average. The reason I didn't do the last year was, I was trying to get my levels up high enough to do vet science and I was about 10% off what I needed. Q. And what you're saying is you were 10% off getting sufficient grades to - which you thought would get you into vet science? A. Yes, and the-- Q. Vet science has always been very difficult to get into, hasn't it? A. Yes, it has. She then told me that she was advised by the school counsellor to study political science but that that did not interest her. From what the plaintiff said, one might think that she had some academic prowess but that is not consonant with: a.her failure to undertake year 12 studies and sit for the Higher School Certificate; b.her failure to undertake any tertiary studies; c.her subsequent occupational history; d.her poor handwriting and spelling (see her handwritten comments on Exhibits H, J, K, L, P, in particular spelling "green" as "grean"; and typing errors in Exhibit B; and e.her presentation before me. 5After leaving school, the plaintiff commenced working on the family property, "North West", at Errowanbang, 30 kilometres out of Orange. The evidence gives two postal addresses for this property: via Carcoar, NSW 2791 and 2241 Cadia Road, via Carcoar NSW 2791, but the latter address could only have been provided after the establishment of the Cadia mine. The plaintiff's father died when she was 9 years old. The evidence suggests that North West was worked by the plaintiff and her mother, Mrs Merle Blanche McLennan. 6With the advent of the Cadia mine, Mrs M.B. McLennan sold North West to Cadia Holdings. Originally North West was almost 1000 acres. The homestead ("the house block") was 86 acres and was divided out of the original property, and it was eventually bought by the plaintiff and she and her mother continued to reside at the homestead. The remainder of the holding was let back to the plaintiff for a number of years. The mining company laid down Cadia Road through the middle of North West. In or around 1999 the plaintiff lost the lease for that half of North West that did not contain the homestead. She had to move the shearing shed, sheep yards and dip from that side of the property ("the top hand side") to the homestead side. That left to the plaintiff "close to 500" acres, which she said was viable for earning an income for herself and her mother. The plaintiff still "owned" North West (i.e. 86 acres with a lease of the balance of about 400 acres) and was working it at the time of the fire. The evidence suggests that it was the only source of her income prior to the fire.

The Edward Street Property 7The plaintiff bought the property known as 171 Edward Street, Orange in, probably, 1995 (T312.46). The property is Lot 60 in Deposited Plan 882905, Parish of Orange, County of Bathurst. (Hereafter "the property", "the plaintiff's property" or "the Edward St property"). The property was valued on 6 May 1999. The valuer described the house erected on the property thus: a "striking old dwelling, built before the turn of the century". The house has the name "Warrembah". Exhibit O (a proposal prepared by the plaintiff and Ms Claire Lutkie) dates the "historic" house to circa 1886. Inspector Alexander of the NSW Fire Brigade described the house as "a federation style brick and iron structure". From the photographic evidence before me, I would describe the original house as a large late Victorian house with Italianate features. The plaintiff bought the property for $150,000, part of the proceeds of the sale of North West to Cadia Holdings. The plaintiff described the house as a "real mess" when she bought it and she spent 15 months renovating the original house. 8After the initial renovation, the plaintiff ran the property as a restaurant for "about 18 months". It was known as "Leonardo's Trattoria". One of the plaintiff's fiancés was Mr Leonardo Casella from Brisbane. The plaintiff told me that "[w]hen he was down here [Orange] he was cooking in my restaurant". In early 1999 the plaintiff let the property to Micon Pty Ltd for use as a restaurant. It was at this time that she had to move the improvements from the "top hand side" of North West to the homestead side. She then started an extension on the property for the tenant. When inspected by the valuer, there was "a skillion roofed addition at the rear which is Hardiplank clad and is not in keeping with the dwelling". However, the valuer said that "[e]xtensions underway propose to turn the storage area at the rear into a reception area with additions; a bar and extra male and female toilets". Annexed to the valuation report is an architectural drawing showing how it was proposed the property would look after the construction of the reception room. A plan of the property after the fire shows that, externally, that proposal was completed but there was an internal variation which is of no significance. At the time of valuation, the property was let for $52,000 per annum. The valuer estimated that with the completion of proposed extensions it would return $83,200 per annum (i.e. $1000 p.w. then $1,600 p.w. in futuro). 9However, the tenant did not operate the restaurant for a whole year. The inference to be drawn from the plaintiff's evidence is that the lease was not renewed. The plaintiff criticised the tenant: "They ran it right down, they did a dreadful job. Food went off, the wait staff ... they actually employed mine, all left". The plaintiff reopened the restaurant "for a little while but it wasn't viable". The plaintiff then decided to work on the extension. That work continued from sometime in 2000 up until the time of the fire i.e. 27 December 2006, a period of almost 6 years. The extension was not finished during that period. It had advanced to lock up stage, lacking internal fit out, at time of the fire. Exhibit L is a "to do" list dated 24 September 2006. For the "Big Room" and to "Build" are included: (a) building work in new bar area: (b) carpet or suitable flooring; (c) electrical work required; (d) ceiling to be installed; (e) heating to be installed; (f) tiling of laundry, bathrooms and bar; (g) installation of plumbing in laundry, bathrooms and bar; (h) interior painting. 10The only lessee during these six years was "David and his girlfriend" for a period of two or three months, perhaps in the middle of the period. David had been a chef in a restaurant at Millthorpe but left the property (which I assume he used as a restaurant) to buy an existing business in Orange. The plaintiff did not tell me what the rent was during this period of a few months. Leaving aside this short lease, the plaintiff had no income from the property since 1999. The plaintiff had to concede that the property was a drain on her income: Q. Because it was Edward that was a cause of net expenditure - more cost than revenue, and had been for years, hadn't it? A. I'd been improving it for years. Q. You mean, "Yes" because you had been spending on improvements, is that what you mean? A. Yes. Q. So it had been costing you money - it had not been returning money. Right up until the fire, do you agree? A. And gaining in value. Q. Please - you must answer my question. A. Yes. Q. You agree, don't you? A. Yes.

The Plaintiff's Proposed Purchase 11Adjoining North West (I can only assume on the homestead side that the plaintiff continued to "own") was a rural property known as Triangle Park. That was owned by Mr Cliff and Mrs Carol (or Caroline or Carolyn) Healy. Mrs Healy was subsequently known as Mrs O'Shea, after a further marriage, and I shall hereafter refer to her as Mrs O'Shea. This couple divorced and Triangle Park was divided: Mr Healy took that part of the property that contained the infrastructure, "the house block", but Mrs O'Shea obtained a larger share of the land. Mrs O'Shea's portion of the land was 340 acres and was known as Part A of Triangle Park (hereafter "Part A"). The plaintiff agreed that this was "a possibly once in a lifetime opportunity" to buy similar, contiguous land. Mrs O'Shea offered the land for $746,258. The plaintiff and Mrs O'Shea agreed on the sale of Part A for that price. CPT acted for both the vendor and the purchaser. The deposit was $30,000. The evidence does not disclose when contracts were exchanged. Mr Walker SC suggested to the plaintiff "the end of August 2005", which "sounded correct" to the plaintiff. I do know that the plaintiff drew a cheque (No 73) for $15,000 on 1 July 2005 and another cheque (No 79) for a further $15,000 on 11 August 2005. Whether they were drawn in favour of Mrs O'Shea or, for example, the Trust Account of CPT, I do not know. 12The contract for the sale of Part A was to be completed within 12 months. One of the conditions of the contract, gleaned from cross-examination of the plaintiff (T171), was this: Completion of this contract is subject to the prior, or simultaneous, completion of the sale of the purchaser's property at 171 Edward Street, Orange and in the event that such sale has not been completed by the completion date and at any time after that date either party may rescind this contract and the provisions of clause 19 shall apply, except certain parts of it and for clarity the parties acknowledge that the deposit is not refundable to the purchaser in the event of a recision pursuant to this clause. The plaintiff was aware of the ramifications of this provision. On the third day of hearing the plaintiff made these concessions in cross-examination: Q. So that you knew when you signed that contract somewhere between say August/October 2005 that within 12 months you had to come up with $716,258 so as to perform your obligation as purchaser didn't you? A. Yes. Q. And you failed to perform that obligation didn't you? A. Yes, I sent-- Q. Please, please. You knew didn't you that it was a condition of the contract, one in your favour, that your obligation to complete it, that is to pay the purchase price balance and become the owner was subject to the prior or simultaneous completion of a sale by you of the property of 171 Edward Street, you knew that didn't you? A. Yes. Q. So the idea was pretty obvious from the contract you entered into with Carol O'Shea, namely you would sell the property at 171 Edward Street and no doubt with its proceeds and anything else you may need to fill the gap, you would pay her within the 12 months as promised, correct? A. Yes. Q. And if you failed to do that, you were entitled to what they call rescind, if you like, call the contract off but if that is what happened you would - she would keep the $30,000? A. Yes. Q. It's pretty clear isn't it that while ever that contract bound you the very idea of it was that you would be selling 171 Edward Street, correct? A. Yes.

The Property is placed on the Market 13The plaintiff placed the property on the market to be sold by auction. The inference to be drawn is that a real estate agent was involved. According to Ms Lutkie, who lived directly opposite the property at 170 Edward Street, the property was on the market in October and November 2005 but was passed in at auction. The reserve price was $700,000 but the plaintiff told Ms Lutkie that she "wanted a figure of around $900,000". In or around January 2006, the plaintiff placed a homemade sign on the front of the property advertising it for private sale. That sign can be seen on a photograph on page 40 of Exhibit B. The plaintiff said in evidence that she received one offer of $695,000 from a couple and that she made a counter offer of $700,000 but that that was not accepted. 14However, the offer of $695,000 may not have been a formal offer, merely one to test the water. This evidence was given by the plaintiff on the fourth day: Q. You regarded those people as having been what are called tyre kickers, is that right? A. Well, no, the husband was - was very, very keen on it. The wife worked up at the club in the kitchen, I'm assuming chef. She wasn't so keen on it. Q. You deny that they were tyre kickers in your view because you want his Honour to understand that there was at least somebody in the market really serious about offering 695, is that correct? A. No, I said, the husband was keen, the wife was not so keen. Q. You're trying to convey to his Honour that these weren't just tyre kickers, this was a serious possibility, is that right? A. They may have been tyre kickers, they might have gone to a number of premises, I don't know. Q. Yes, but you told the police the day after the fire that those people must have been tyre kickers, didn't you? A. Well, I might have said that. It's a long time ago. Q. Was it true when you said it? A. I might have said they were probably tyre kickers or could have been tyre kickers. When Edward Street was shut you had a lot of people come that wanted to look at it. When it was open lots and lots of people came. Q. I am asking you about what you told the police, do you understand, on 28 December 2006? You told them of the highest offer being $695,000, you told them they could have it for seven but they didn't come back, so they must have been tyre kickers. That's what you told the police the day after the fire, isn't it? A. Well, to be honest with you, the day after the fire I was in shock, so, yes, I - if its in there, that's what I said. In his address, Mr Walker SC described a "tyre kicker" as a person who kicks the tyres of a motor vehicle in a spurious display of worldly knowledge of such vehicles but is never going "to stump up with the readies", the cash.

A New Proposal for the Purchase of Part A 15As ought be obvious, the plaintiff found no purchaser for the property. Time for completion of the purchase of Part A was approaching in August 2006. It must have been obvious to Mrs O'Shea, as was known to the plaintiff, that the plaintiff was unable to sell the property. On the fourth day, Mr Walker SC commenced to cross-examine the plaintiff about a conversation she had with Mrs O'Shea in July 2006 (at T175.47). The plaintiff was then aware of the approaching time to complete the purchase of Part A. Mrs O'Shea contacted the plaintiff to express concern about when she would receive the balance of the purchase price. The plaintiff confirmed that she still planned to buy Part A. Mrs O'Shea wanted to know what was happening with the plaintiff's property. Mrs O'Shea told the plaintiff that she needed the money due on completion of the sale. It was then suggested to the plaintiff that she told Mrs O'Shea that she had decided to keep the Edward Street property and open it as a restaurant. The plaintiff denied that she said that but eventually said that she told Mrs O'Shea that she was keeping half of the property, the plaintiff's position being that she proposed to sell the other half to a proposed business partner. Implicit in what the plaintiff admitted was that she and her business partner would open the property as a restaurant. The cross-examination then turned to other matters but returned to this conversation at T183.39. 16Mrs O'Shea told the plaintiff that she needed her money "now", forthwith. The evidence then continued: Q. She also said to you something like this, "We need to clear our new mortgage and cover the capital gains tax from the sale of the land. She said that to you didn't she? A. Yes, probably. Q. You said to her, "Would $400,000 cover this cost"? A. Yes. Q. She said to you something like "Yes it would" didn't she? A. Yes. Q. You said to her, "Well I can get that money to you in six weeks" didn't you? A. Yes. Q. You added, "You have to give me something in writing so I can take it to the bank so they know where the money is going, can you do that?" A. Yes. Q. She said, "Yes, I'll get something ready for you right away?" A. Yes. Q. Now, what I have just put to you is, as you know, the version of a conversation that Carol O'Shea has set out in her affidavit, isn't it? A. Yes. Q. None of that was a surprise to you. You have read her affidavit, haven't you? Or is that another document you didn't study? A. Yes, I've read it but I haven't studied it. 17On 13 July 2006 Mrs O'Shea provided to the plaintiff a letter addressed "To whom it may concern" to enable the plaintiff to approach her bank to obtain finance. The text of the letter can be gleaned from T186: I Caroline Healy accept the amount of $400,000 from Jaqueline McLennan being part payment of said property being Part A of Triangle Park, 30 Panura Road, Carcoar, New South Wales. The balance of the agreed value as per the existing contract for the sale of land to be paid with agreed terms which will be determined through a joint meeting between myself, Jaqueline McLennan and [CPT], solicitors. 18The plaintiff told me (at T205) that within a few days of 13 July 2006 she rang her bank manager, Gwen, who worked at Wagga Wagga and discussed a loan with her. Gwen advised the plaintiff that "it was too big for her department" and Gwen organised for a local business manager to see the plaintiff. The plaintiff's best recollection is that the business manager called upon her. According to the plaintiff, the St George Bank approved a further loan to her of $400,000 on condition that she placed the property on the market, presumably in the hands of a real estate agent. She said the loan was approved "within six weeks", she presumed, but conceded it might not have taken that long. In any event, even if this loan were approved, it was never taken up. Six weeks from 13 July 2006 takes one approximately to the end of August 2006, when completion of the contract for purchase of Part A was due. That date passed without the plaintiff's completing the contract or honouring the accommodation offered by Mrs O'Shea by 13 July 2006.

Ms Lutkie's Payment of $100,000 to the Plaintiff 19There is no dispute that on 12 September 2006 Ms Claire Lutkie gave her personal cheque for $100,000 to the plaintiff. I shall use the word "advance" to seek to be neutral at this stage. There is a major dispute between the plaintiff and Ms Lutkie as to the nature of this advance. The plaintiff maintains that it was a deposit towards a business partnership in which Ms Lutkie would buy half of the property and the restaurant business to be conducted in it. Ms Lutkie says that it was a personal loan to help the plaintiff out in her financial difficulties with Mrs O'Shea. I shall return to this issue later. There is also no dispute that on 18 September 2006 the plaintiff paid $100,000 to Mrs O'Shea.

Ms Lutkie asks for her $100,000 back 20The following is contained in Ms Lutkie's affidavit (Exhibit 9). It was not challenged by the plaintiff. 41. On 14 November 2006, I contacted Jaqueline, we had a conversation during which words to the following effect were said: Me: "Jaquie, I need the $100,000.00 that I loaned you back please." Jaqueline: "I'll have it to you in 48 hours." Me: "Thanks." 42. On 16 November 2006, I had not heard from Jaqueline so I contacted my solicitor and commenced legal action to recoup my money. 43. On 22 November 2006, Jaqueline received a letter of demand from my solicitor indicating that she had to repay the $100,000.00. Jaqueline was given two weeks to repay me. 44. On 6 December 2006, I still had not received my money so I again contacted my solicitor and they lodged an application through the Court to have an order made for her to repay me. Ms Lutkie's solicitors, Baldoch Stacy & Niven, commenced proceedings in this Court at Orange on 18 December 2006. The plaintiff admitted that she knew by 13 November 2006 that Ms Lutkie wanted her money back. The plaintiff retained Mr Manwaring to act for her to defend Ms Lutkie's action.

Another Potential Financial Liability for the Plaintiff 21In cross-examination on the fourth day, the plaintiff admitted to another potential liability existing prior to the fire: Q. Now, in December 2006 and before the fire, there was still in existence another financial dispute in which you were involved with another former partner or fiancé of yours, Heath Rogers, is that correct? A. Yes. Q. And at the time of the fire is this a fair summary, you thought you had succeeded but you knew it was not yet over, is that correct? A. Yes, yes, we'd been to court once. Q. There was still hanging over your head the possibility that you'd have to pay him some money as well, wasn't there? A. Well we'd beaten him in court once. Q. Would you please answer my question. You mean yes but you had beaten him once, is that what you mean? A. Yes. Q. Yes, you did end up paying him money, didn't you? A. Yes. Q. So it was a real substantial prospect of having to pay him money as well, wasn't it? A. No, if we'd defended in court-- Q. How many tens of thousands did you end up paying him? A. I think Mason settled it for 26, something like that. Q. It was $35,000, wasn't it? A. Okay well Mason must have settled it for the 35, yes. Q. That's not something you're blaming Mr Manwaring for, is it? A. No, no. There was a commercial risk and that's why we decided not to go back to court. Q. Until I raised this matter this is a piece of evidence about your financial position, possible claims against you and uncertainties about your position that you've not told the Court about at all, isn't it? A. I think on the first day we touched on it. HIS HONOUR: We did not.

An Overview of the Plaintiff's Financial Position Prior to the Fire 22The defendant retained a forensic accountant, Mr Domenic Quartullo of William Buck Accountants, to review such financial records of the plaintiff that had been produced. A brief summary of his conclusions in this for the period December 2003 to December 2006: a.the financial position of the plaintiff deteriorated by $179,469.28; b.the plaintiff's outgoings exceeded receipts by $184,086.58; c.the credit limit on her Portfolio Loan Account with the St George Bank progressively increased from $100,000 to $240,000. The approved credit limit was last increased on 1 October 2005. 23From Exhibit 14, the plaintiff's financial records examined by Mr Quartullo, the following can be ascertained as at 27 December 2006: d.there was a CREDIT of $1,031.65 in a cheque account with the Commonwealth Bank in the names of the plaintiff's mother and herself; e.there was a CREDIT of $627.64 in her Portfolio Cash Management account; f.there was a DEBIT of $240,716.56 in her Portfolio Loan account with the St George Bank, secured on a mortgage over the property; g.there was a DEBIT of $178.45 in her American Express account; h.there was a DEBIT of $52,665.57 in her account with Capital Finance on a Chattel Mortgage over a Holden Crewman Dual Cab utility truck bought new for $60,000 on 8 July 2004. The total amount of cash available to the plaintiff was $1,659.29. Her indebtedness was $293,560.58. Even if one were to assume that the value of the Holden purchased on 8 July 2004 for $60,000 was the equal of the debt on it as at 27 December 2006 (a major assumption), the plaintiff's debt was approximately $240,000. The plaintiff's assets were the Edward Street property, North West (which was unencumbered), its stock and plant, her furniture, household goods and personal effects. 24To the plaintiff's liabilities must be added the following: i.she owed Mrs O'Shea $715,258 for a property that she wished to purchase, being prepared to sell the Edward St property to do so; j.she owed Ms Lutkie $100,000 plus sums claimed in her Statement of Claim (eventually Ms Lutkie recovered $90,000 on 18 June 2008 and a further $67,743.01 on 28 August 2010); k.she had a potential liability to Heath Rogers (eventually capitalised at $35,000). 25What were the plaintiff's assets? I leave aside the Holden for the reason given in [23] above but it is more likely to have been a liability than asset. The assets were: l.North West. The plaintiff represented to Ms Lutkie that it was worth $700,000 on 13 September 2006 but it was sold by a mortgagee, pursuant to a power of sale, for $440,000 in November 2010 (T319.23); m.stock on North West and the furnishings of the homestead and, I assume, moveable farm equipment, but the value of these is unknown; n.the property, of which there is no evidence of market value except that the plaintiff was prepared to accept $700,000 to sell it; o.the contents of the property, insured for $262,500 by the defendant; as quantum was not an issue before me, this was not the subject of any evidence except that the Fire Brigade Records estimate the value of the contents at $60,000 (Exhibit 10, annexure 1).

Events Immediately before the Fire 26The plaintiff spent Christmas Day at North West with her family and was there on Boxing Day. Mr Robert Beasley visited North West on Boxing Day. He had dinner and Christmas pudding with the plaintiff and her mother. The plaintiff and Mr Beasley then left North West and drove to the property, arriving around 9.30pm (T264.04). They watched a DVD and Mr Beasley left about midnight or 12.30am (T263.30). He had a long drive ahead of him as he lived at Yarrangul, on the other side of Wellington. He had to go home as he had contact on 27 December 2006 with his children (T264.48). 27On the day of the fire the plaintiff carried out a "wet and dry vac" of floor coverings in the property. Her floor coverings appear to have been left "wet". The plaintiff said she was unable to walk around the various original rooms of the property because of these wet floor coverings (T273.15). Accordingly, she decided to make a visit to the Norman Lindsay Gallery at Springwood. This had been described by her previously as a "whim" (T272.44). The journey to Springwood would take her two and a half to three hours (T276.07). The plaintiff left the property sometime between 6pm and 7pm (T272.39), leaving the house all locked up, double locking the front door, leaving everything secured. 28According to the plaintiff, the reasons why she wished to visit the Norman Lindsey Gallery was because she had previously been there with her friend, Ms Carol King, but had spent very little time there as it was necessary to continue to travel to Sydney for Ms King to visit her cardiologist (T272.49 to 273.15). The plaintiff and Ms King had agreed to return on another occasion to do the (guided) tour. However, there was no suggestion that on this occasion the plaintiff made any attempt to invite Ms King to join her. However, she wanted to be accompanied by her fiancé, Mr Hugh Williams. They were not in the habit of spending Boxing Day together as Mr Williams liked to go fishing, as he had on this occasion. The plaintiff thought this excursion would be a break for Mr Williams (T273.36) and for herself (T274.50). Her "being away with Hugh was a break" (T275.11) but she did not mind being away on her own, which sometimes she quite liked (T276.25). Accordingly, the plaintiff advanced four reasons for going to the Gallery: (i)to take the guided tour which she and her friend had previously planned to do, but without her friend; (ii)because the floor coverings of her house were wet; (iii)to give her fiancé a break (which plan failed); (iv)to give herself a break, either with or without her fiancé. 29The plaintiff admitted that visiting the Gallery would not be her fiancé's "cup of tea". Yet she thought he might accompany her although she knew him to be hung-over, the effect of Boxing Day's fishing. She telephoned him when she was en route (T273.44) to tell him what she was doing and he told her that he "might follow down" after her. She said he "probably wouldn't have come to the Art Gallery" but might have joined her in overnight accommodation in Lithgow and have gone fishing at Lake Lyell on the following day (T274.09). Never explored in evidence was why the plaintiff did not call in to her fiancé's residence at Lucknow (which is en route to Lithgow) and offer him a lift, with or without his fishing tackle, to Lithgow. Mr Walker SC did seek to explore with the plaintiff why, given her parlous financial circumstances, she would incur the costs of overnight accommodation but that was never satisfactorily explained. 30The plaintiff's financial records (Exhibit 14) establish that at 7.59pm on 27 December 2006 the plaintiff withdrew $500 from her Portfolio Cash Management account at an ATM in Bathurst. That is consistent with the plaintiff's leaving Orange around 7pm. When the plaintiff arrived at Lithgow she was unable to stay at the hotel where she normally stayed so she booked herself into the Zig Zag Railway Hotel, where she had a couple of glasses of wine by herself. She said she also sought to telephone Mr Williams but her calls were transferred to a message service where she left three voice messages: (i)saying the usual hotel was "full" and that she was going to the Zig Zag Railway Hotel; (ii)in what room she was staying at that Hotel; (iii)how to find that Hotel. The plaintiff went on to say: "None of these he received as he was in a no service zone at Lucknow. At some stage during the evening, and we were told it was around the time of the fire, text messages must have gone through", indicating that messages had been left (T277.04). Most of this is hearsay. At best it proves that Mr William's phone was in a no service zone, not Mr Williams himself. It does not explain why text messages could get through "about the time of the fire" (11.30pm to midnight) but not at, say, 8pm or 9pm or 10pm. If text messages went through "about the time of the fire", that might indicate that Mr Williams' phone was moved from one place without service to another with service. It is clear that telephone records had been obtained by the police, but none was put into evidence. 31At the commencement of the last paragraph I pointed to objective evidence consistent with the plaintiff's having left her house around 7pm on 27 December 2006. That date is within a week of the summer solstice and during daylight saving time. Darkness did not fall until a few hours later. Yet, after dark, lights were seen within the plaintiff's house by Ms Lutkie who, it ought be remembered, lived directly opposite the plaintiff's house.

Description of the Plaintiff's House 32It is necessary at this stage to describe at least the original part of the plaintiff's house. Edward Street runs north to south. 171 Edward St is on the western side of that street, so the front of the property faces east. The house at the front is symmetrical with the front door in the middle. The front door opens into a central hallway which has two rooms off each side. The hallway admits one to a large central room described as either the dining room, the atrium, the foyer or the Dome room because of its high, intricate ceiling. The plaintiff called it the Dome room and it is so described in Exhibit E and I shall use that description. The back wall of the Dome room was replaced with wooden folding doors containing lead lights, which, when opened, admitted one to the extension, known as the function room. 33The two rooms at the very front of the house are not as long as the next two rooms. The best simile I can provide is the chancel end of a cruciform church, where the main window has been replaced by the house's front door. Around the front of the house is a large veranda: using the same simile the veranda starts at the end of each transept of the cruciform church, then goes along each side of the chancel and beyond the east end to completely envelop the chancel. From the second room on each side (each "transept") there is a door onto the veranda, so three doors open onto the front veranda: a door from the northern or right hand side (facing the house) second room, the main front door, and from the southern or left hand side second room. There are two other entrances to the house: one on the north or right hand wall giving admission to the function room and a central double door in the rear wall (western side) giving admission to the function room, clearly designed to be the main entry to that room. 34The rooms on the northern or right hand side of the house were the: a.room at the front: "Green Room", used as the plaintiff's office; b.second room: "Apricot Room", the plaintiff's bedroom; c.opening onto the "Dome Room": (i)disabled toilet, (ii)coffee bar, which also had an entrance to the function room. The rooms on the southern or left hand side of the house were: d.room at the front: "Blue Room", used as the lounge room; e.second room: "Suede Room", which is not quite as big as the Apricot Room as it had on its northern side (but on the south side of the hallway) a storeroom which had a door onto the central hallway; f.opening onto the Dome Room: (i)kitchen, (ii)bathroom (vintage).

Lights in the House before the Fire 35In pars 67 to 72 of her affidavit (Exhibit 9), Ms Lutkie describes seeing lights in the plaintiff's house after dark. They were not all "on" at the same time. She was cross-examined about this by the plaintiff, but to no effect. Ms Lutkie told me (T375.16) that she told the police in her statement about the lights. The date of that statement is not given but one would expect police to have taken it very soon after the fire. The first lights that Ms Lutkie saw were the lights in the Apricot Room, the plaintiff's bedroom, and in the Blue Room, the lounge, and in the central hallway. Later, between 10pm and 10.30pm, she looked across again and saw lights in the Blue Room, in the Apricot Room, and the veranda exterior light on the southern or left hand side i.e. the hallway light was no longer "on" but a new external light had been switched on. Ms Lutkie went to bed at 10.30pm. At that time she noticed that the Blue Room light had been switched off but there was flickering light showing in that room, consistent with the television being switched on but not light that could have been generated by a candle (T377.43). The light in the Apricot room was still "on" but she makes no mention of seeing any other light at 10.30pm. There are credit issues involving Ms Lutkie and the plaintiff which I shall in due course address. However, I have no hesitation in accepting Ms Lutkie's evidence about the lights she saw at the plaintiff's house on this evening. The plaintiff called no evidence from any other neighbour to contradict it.

The Fire 36On the evidence before me, the first person who may have noticed the fire was Ms Lutkie. There is a possibility it was first noticed by another neighbour, Mr Sione Vito of 172 Edward Street but there is no evidence from him. Ms Lutkie's bedroom is at the front of her house, facing onto Edward Street, directly opposite the property. She gave this evidence in cross-examination: Q. And in your affidavit you state that you were awoken by crackling and popping noises, no mention of breaking glass? A. That is the noise like, it was, it was weird. I'd come out of my sleep and my room's actually painted a dark red colour so similar to your chair. So it's quite sort of surreal because I have a big over mantel mirror over the mantle and I woke up and my, the tops of my windows, I don't have curtains over them so my whole room was quite illuminated with the reflection from across the road. So it was quite surreal coming out of a sleep and then being groggy and then going, "What's going on?" And then hearing noises and then waking up and then actually realising what was going on. She went on to state that only the lower half of the windows of her bedroom were covered by fabric, so that light from outside could easily penetrate her bedroom. In her affidavit she said she was woken at "about 11.55pm". She could see fire in the Green Room when she got out of bed. She made a call to 000. Hers was the first 000 received about this fire. A recording of it is in evidence (Exhibit 10, annexure TF2). It was received at the Katoomba Communication Centre of the Fire Brigade at 11.47pm and immediately conveyed to Orange Fire Station, which responded to that call within the same minute. The first fire appliance left the Station at "23:48:19". It is not clear to me from the Fire Brigade records (Exhibit 10, annexure TF1; Exhibit 11 annexure BA1) when that appliance arrived at the property, but one can confidently assume is that it was very shortly thereafter. 37In the meantime, Ms Lutkie ran outside in her pyjamas. She saw Mr Vito near her driveway (T350.18). As she had a very long hose at her house, Ms Lutkie sought the assistance of Mr Vito to pull that hose out, across the road, to the property, but it was not long enough. She then went across to the property and tried to use a garden hose at the front right hand side of the property. However, there was no pressure in the hose. She told both the police and fire officers about that and perhaps also Mr Vito (T350.31). Both when at her own home and when at the property, Ms Lutkie saw fire within the Green Room. She assumed the armchair within the Green Room was burning and the lace curtains across the bay window of that Room were also burning. The Fire Brigade first response appliance then arrived, to be followed by appliances dispatched at 23:50:26 and 23:52:48. 38Two of the first firemen to arrive at the scene were Station Officer Thomas Fenlon and Senior Fire-fighter James Thomas Patrech. Mr Patrech was required for cross-examination. He joined the NSW Fire Brigade in October 1998. At the time of swearing his affidavit (14 February 2011) he had been a fire fighter for 12 years and at the time of giving evidence for 14 years. I had no hesitation in accepting his evidence. His affidavit evidence I set out below. Any material in square brackets is my comment. 4. In transit to the above address I observed large volumes of smoke coming from the vicinity of Edward St. Upon arrival at the fire I observed smoke and flames issuing from the roof and right hand side windows of the structure of the Property. 5. I alighted from the truck and donned my Self Contained Breathing Apparatus ("SCBA"), and also taking with me the Thermal Imaging Camera ("TIC") and a charged line of 38mm hose and proceeded to the front entrance of the House with Station Officer Fenlon. 6. Station Officer Fenlon and myself found the front door to be locked. 7. I also observed that all the windows and doors of the front of the Property were intact. There appeared to be no signs of forced entry to the front windows or front doors of the Property. None of the windows in the front of the Property were broken. 8. I then assisted Station Officer Fenlon in gaining entry through this door. We used a halligan tool and sledge axe to do this. 9. Upon entering the premises I observed large volumes of smoke within the premises. 10. Upon entering the first room to the right off the entrance hallway, a bedroom, I observed flames and embers starting to emanate from parts of this room's ceiling, in numerous places. At this time the bed and furnishings in this room were unaffected by fire. I interpolate that this "first room" was not in fact the "first room", the Green Room, but rather the plaintiff's bedroom, the Apricot Room. In his oral evidence Mr Patrech said: I believe a room on the right-hand side had a four-poster bed in it, it was the first room I went into. At the time the place was smoke logged, it was very hard to see and find initial doorways, so it was the first doorway that I came to on the right-hand side that I went in. It was a bedroom with fire in the ceiling at the time. Mr Patrech's affidavit continues: 11. I proceeded down the hallway, glancing into the other rooms leading off it to determine the areas that were alight, these rooms also appeared to be furnished. 12. At the head of the hallway was a doorway without a door leading into what appeared to be a restaurant area [the Dome Room]. 13. Approximately 2 to 3 metres before and to the right of this doorway, I located a sideboard type cupboard, and noticed a flickering of lights emanating from inside it. Upon opening the cupboard doors, which were already ajar, I found several different sized and types of candles that were alight. 14. I also observed a 20 litre metal jerry can approximately 1 metre from the cupboard towards the head of the hallway. I also observed a smaller 5 litre metal fuel can between the jerry can and the cupboard. I did not move or touch this jerry can. 15. At this time I was joined by Retained Fire-fighter Scott Lang, who also observed the 5 litre metal fuel can and pointed it out to me. I informed him to take note of this and also showed him the lit candles and the 20 litre metal jerry can, and then extinguished the candles. 16. I told Fire-fighter Lang to accompany me to find the seat of the fire. We then moved to a doorway on the left side of the hallway [the store room] directly before the head of the hallway. In this room I observed 2 to 3 open cupboards or bookcases that were partially involved in flames. 17. Upon several of the shelves I also noted that there were numerous lit candles of various sizes. Some of the candles were burning, others had completely melted through as they sat on the shelving. 18. We moved through the dining area [the Dome Room] and looked into the kitchen on the left and also an elaborate bathroom containing marble style walls and a spa. At this time I did not observe any apparent flames or embers emanating from either of these rooms. 19. Whilst moving through the dining area, I observed several fire fighters forcing entry to a doorway to my right. This doorway was an exit on the right hand side of the Property. [This must have been the doorway from the veranda into the Apricot room] 20. The kitchen had a moveable rack stocked with items that appeared to be cooking ingredients and containers. 21. We continued through the building to a large concertina door [into the Function room] which was closed. This door spanned the width of the room from left to right, covering a distance I estimated to be between 10 to 20 meters. At this time I handed the 38mm hose to Firefighter Lang and proceeded to switch on the TIC. 22. I then felt the concertina door with the back of my gloved hand, and could feel heat emanating from the doors. I asked Firefighter Lang to direct a water spray at the area of the door opening whilst I carefully opened the doors. 23. Upon opening the doors I observed flames engulfing the back 2 thirds of what appeared to be a large Function Room. This room appeared to be in a state of renovation, with a high portable style platform device, ladders and other renovation equipment within it, much of which was already involved in fire. There were also numerous tables, chairs and other furniture also within the room and also most of it was already involved in fire. 24. Firefighter Lang and I then proceeded to attempt to extinguish this room. I directed Firefighter Lang's hose stream by observing the room through the TIC and conversing with him. I told him to concentrate on the main area of the fire which was located towards the rear of the room but not to venture past the partially open concertina doors. 25. I then noticed a second crew of two firefighters with a line of hose coming towards us from our rear on the right hand side. I directed them to also attack the fire from the doorway concentrating on the right side of the room. 26. I then commenced a scan of the function room and the room we were in, using the TIC. Through this I was able to observe that the Function Room roof was fully involved in fire and that the ceiling above us was also two thirds involved in fire. 27. Within this time which I estimate to have been about 5 to 7 minutes, the fire had continued to spread and was starting to impinge on the ceilings to our rear. I relayed all this information to Station Officer Fenlon, via radio communication, and informed him that the internal integrity of the structure appeared to be deteriorating to an unsafe working capacity and that I was withdrawing the internal attack crews from the building. 28. Station Officer Fenlon then also relayed this withdrawal to all firefighters via radio communication and advised all firefighters that we would be conducting an exterior defensive attack strategy. 29. Upon withdrawing I then proceeded to Station Officer Fenlon's location and gave him an updated report on the internal condition of the structure and the extent of the fire's involvement within the structure. I also informed him of the candles and fuel cans I had located, their location and approximate numbers. 30. Station Officer Fenlon then directed me to proceed down the right hand side of the Property in order to direct the other fire fighters where to undertake their defensive fire fighting from [sic], and also to generally observe the outside of the Property. 31. At this time I observed a doorway on the right side of the Property. This door was situated further to the rear of the Property than the door I had earlier observed other fire fighters force entry into. I then forced entry through this door. This door was an old style wooden door. I gained access by kicking it in with my foot. [This was the door on the north or right hand side of the property which gave admission to the Function Room.] 32. After the fire had been extinguished, I showed Station Officer Fenlon the areas where I had found the fuel cans, the candles and the different areas I observed to be possible seats of fire. In par 4, Mr Patrech referred to smoke and flames issuing, inter alia, from "right hand side windows" but in cross-examination it became clear that he was referring to the gable above the Green Room, which he believed to be a window at the time. He also said that he and Mr Fenlon walked "both sides of the veranda" before breaking the front door in and all the windows at the front were "intact" i.e. had not been broken through, although some pieces of glass may have "popped out" of the elegant Victorian glassware. As to the fire in the storeroom, Mr Patrech gave this evidence: Q. In paragraph 16 you recite that you told Fire Fighter Lang to accompany you to find the seat of fire, you moved to doorway on the left side of the hallway directly before the head of the hallway. If I'm reading the statement correctly, that enters into either the store or the suede room? A. I believe it to be the store, from this thing. At the time it was a small room that appears to be that, and the wall on the topmost side of this diagram was partly burnt out already so you could see into the dome room through that thing so it appeared to be a three sided room when I saw it. But it was a very small room. Q. In that you say that you observed two or three open cupboards or bookcases that were partially involved in flames, and upon several of the shelves you noted there were numerous lit candles of various sizes. Some were burning, others were completely melted. In your opinion was that melting of the candles and the lit candles a secondary result of a primary fire or a seat of fire, or can't you tell? A. It would be too hard to tell at the time. What I believe it to have been was that there were several candles in there, it could have been up to a dozen. Some were burnt, some were melted from fire that had started [to] encroach onto the furnishings because one or two of the bookcases were alight, one was partly collapsed, so it could be extreme heat from that [that] could have melted some and some could have been melted down from burning for a while. Q. As far as you could ascertain the main seat of the fire was in what's referred to as the function room? A. That is correct. But there was a separate fire in that storeroom; it wasn't a major fire, but it was enough that it had burnt through - at least - at least one of the book cases, a couple of shelves and that [they] were partially collapsed, so to me that would be a second seat of fire, but a smaller one. Whether it was started from the candles or something else, I don't know. The plaintiff asked Mr Patrech to assume that the door of the storeroom opened in and Mr Patrech said that he could see into that whole room, which could mean either that the door had been completely opened or had burned away. 39At the time of swearing his affidavit (14 February 2011) Mr Fenlon had been employed by the NSW Fire Brigade for 14 years. He was not required for cross-examination. He was the Officer-in-Charge of the Fire Brigade at this Fire. The substance of his evidence is this: 10. On arrival at the Property, I found a house of brick and iron construction well alight with visible flame and smoke extending through the roof space of the building. 11. In the initial stage the priority was to gain access as there were conflicting reports about there being people on site in the front rooms of the Property. 12. I directed crews to gain entry, carry out search and rescue and initiate an offensive attack on the Fire. 13. The fire crews donned breathing apparatus and prepared to gain entry to the house located on the Property ("the House"), I assisted in gaining forced entry to the House through both front entrances of the House by prying the doors with a halligan tool. 14. Fire fighters Patrech and Lang then entered the House through the front door with a 38mm hose line and began searching the front section of the House. 15. I then isolated all utilities and carried out a full size up and inspection of the House from the exterior. 16. I walked around the right hand side of the Property. I believe I attempted to open the rear doors and found them to be locked. 17. Although my attention was focussed on gaining access to the front of the House I did not observe any signs of forced entry prior to Fire Brigade's arrival. 18. While the fire was being fought a hose line was set up to the left side of the House to protect adjoining properties. 19. The Fire was in an advanced state and had already extended to the rear of the House. 20. Fire fighter Patrech then contacted me by handheld radio. We had a conversation to the following effect: Fire fighter Patrech: "I have carried out a primary search of the front of the house and no persons have been found. The ceiling has begun to collapse so I can't access the rear of the premises." Me: "All crews are to withdraw from the house. It's not safe to continue working in there." 21. I then instructed all crews to withdraw from the house and change fire fighting tactics to a defensive mode as in my opinion it was unsafe for crews to work inside the building. 22. I spoke with Fire fighter Patrech when he exited the House, we had a conversation to the following effect: Fire fighter Patrech: "We found fuel containers in the hall way area of the house. Also there were candles that had been burning in various areas of the house." 23. As a result of this conversation, I instructed all crews not to disturb these items during fire fighting operations. I relayed this information to police on scene at that time. 24. I then donned breathing apparatus and together with Fire fighter Patrech entered the House through the front door to examine the fuel containers and candles. 25. I found one 20 litre fuel container and one 5 litre container in the centre of the hallway area of the House. 26. In the hallway area of the House I found a wooden cabinet with its doors ajar containing candles in an upright position that appeared to have been lit and allowed to burn melting wax onto the timber interior of the cabinet. 27. Fire fighter Patrech told me that the candles were still burning when he found them. 28. Fire fighter Patrech then showed me a storage/pantry type area of the House just off the hallway area and said he had also found burning candles in that area, this area was severely damaged by fire at this stage. The cabinet that Fire Fighter Patrech observed candles in had been completely destroyed. 29. Fire Fighter Patrech and myself did not disturb any items, leaving them in situ and exited the House. When the fire was extinguished I brought police into the House to examine the suspicious items. 30. The area was then secured with barrier tape and no unauthorised persons were allowed entry into the premises. 31. Operations were then scaled down and a fire watch was carried out throughout the night ensuring no re ignition and that no persons made unauthorised entry. 32. After bringing the fire under control I called for the fire investigations unit to attend the house. 40Annexed to Mr Fenlon's affidavit are the relevant records of the Fire Brigade. If I am reading those correctly, they indicate these facts: a.at 1.14am on 28 December 2006, the fire was "in hand" and the control of it was reduced to using 2 hoses. It was then stated that a "secondary search" would be carried out "when safe to do so". "All persons appear to be accounted for". Police were at the scene and would be "maintaining a fire duty"; b.at 2.08am the fire was "officially" extinguished and two of the three pumping appliances returned to the Fire Station; c.at 2.37am Mr Fenlon requested the Fire Investigations Unit [FIRU] to assist the police, at the earliest convenience or at first light; d.at 2.54am FIRU advised that Bob Alexander would be in contact with Orange Fire Brigade about this fire; e.at 8.39am, the Fire Brigade officially terminated its duty and the remaining fire appliance was assigned to other work. 41Inspector Robert Gregory Alexander is a very experienced Fire Investigation Officer employed by NSW Fire Brigades Fire Investigation Unit. His Curriculum Vitae is most impressive. He joined the Fire Brigade in December 1973 and joined the Fire Investigation Unit in August 1997. He is responsible for the ongoing training of fire fighters in NSW. He has done fire investigations for the Tasmanian, New Zealand and Western Australian fire authorities. He developed and implemented and facilitated the delivery of fire investigation training packages for the Thai and Indonesian forensic services police and developed and delivered such a training package to the Royal Solomon Islands Police. He assists in the development of fire investigation training courses and is a member of a national technical group that has developed a national competency for fire investigation. Mr Alexander arrived at the property at 9.43am on 28 December 2006. He had had to travel from Sydney. On his arrival he observed a number of police in attendance and that the property had been barricaded with tape. To use police parlance, "the crime scene had been secured". He then had a conference with Mr Fenlon in which Mr Fenlon confirmed that he found all doors and windows securely locked with no sign of any forced entry prior to the arrival of the Fire Brigade. I shall return to Mr Alexander's findings and opinions shortly. 42Mr Stuart Ritchie, a Criminal Forensic Consultant, was retained by the defendant. Between 1983 and 1990 Mr Ritchie was a Crime Scene Examiner with the NSW Police. From 1990 to 1991 he was employed by NRMA Insurance Ltd as a fire investigator and from 1991 to 1995 he was a forensic consultant with two companies before commencing his own forensic consultancy. He attended the scene on 1 January and 8 January 2007. Par 2.17 of his Report of 22 January 2007 is this: The examinations of the doors and windows revealed that the same had been secured after the fire event. Examinations [of] the doors and windows revealed same to have been subject to post fire forcible entry, and we note the Fire Brigade advised that the premises was secure on their attendance, with the Brigade forcing entry to fight the fire.

First Factual Conclusions concerning the Fire 43Accepting the evidence of Mr Patrech and Mr Fenlon and the evidence I have just quoted from Mr Ritchie, I have no hesitation in finding on the balance of probabilities that there was no forced entry to the property. I accept that at the time that the Fire Brigade arrived all windows and doors were unbroken and firmly locked. It follows logically that whoever set the fire had keys to the property. I make this finding bearing in mind the extent of the onus as described in Briginshaw v Briginshaw (1938) 60 CLR 336. 44The lights that Ms Lutkie observed within the property after dark, before the fire, also allow inferences to be drawn. The first inference is that whoever set the fire was not expecting the plaintiff to return to the property. It does not permit an inference that the arsonist knew that she was not home, as any knock or repeated knocking on the door would establish that fact. However, to allow lights to show for so long a period of time on that evening leads to the conclusion that the arsonist must not have expected the plaintiff to be returning, that she was away. The only person that the plaintiff told me that she told was her fiancé, Mr Hugh Williams. However, it is possible that she may have discussed her proposed trip with Ms Carol King before undertaking it or told someone else, but evidence was not given about any such communication. It is also possible that Mr Williams passed on information about the plaintiff's trip to someone else but, again, there is no evidence of that. 45Another inference which can be drawn is that if any relative, friend or neighbour of the plaintiff called in at the property, the caller would not be surprised to find within the house whoever it was that was there with the lights on, presumably some other relative or friend of the plaintiff.

The Nature of the Arson 46Some inferences can be drawn from the nature of the arson. I set out below the relevant portions of Mr Alexander's affidavit. Again, square bracketed matter has been added by me. 25. During my preliminary internal examination I walked through the Property from the front to the rear, which was in the direction of the least to most damage. 26. At the entrance to the Property, I observed that there was an entry hallway with rooms running off it, the hallway then went into an entry foyer area [Dome Room] that I assumed was used as a reception area. 27. Located on the right hand side of the hallway I inspected a wooden cabinet ["the sideboard type cupboard" referred to in par 13 of Mr Patrech's affidavit] and found 3 candles in various stages of degrading. I was informed by the NSW Fire Brigades that these candles were alight at the time of the Fire. 28. I observed an associated burn pattern inside the cabinet adjacent to the candles which supported the theory of the candles being alight prior to the Fire. At pages 7, 13, 16, 18, 28, 30, 40, 42 and 52 EXH BA1 are photographs of the cabinet depicting these burn patterns as well as the exterior of the cabinet. 29. As can be seen in photographs at pages 16 and 40 of EXH-BA1, the outer area of the cabinet was not heavily involved in fire. There are only minimal burn/scorch marks to the exterior of the cabinet. The photographs at pages 16 and 40 of EXH-BA1 show the outer right hand side of the cabinet with some minor burn damage. 30. The photograph at pages 7, 18 and 28 and of EXH-BA1 shows the inside of the right hand side of the cabinet, with more severe burn patterns. This indicates that the burning that occurred to the cabinet in this area originated inside the cabinet, and did not occur as a result of the spread of fire outside the cabinet. 31. Based upon my observations, I consider that it is likely that the candles were used as an ignition device to promote development of the Fire. The candles were left alight inside a wooden cabinet. I am informed by Thomas [Mr Fenlon] that at the time of the discovery of these candles the cabinet was shut. In order for the candles to be used as a delayed ignition device, the intention would be to allow the candles to burn slowly down until completely melted. A liquid accelerant would then be used to spread the fire, underneath the candle once it had fully burned. In this case, it appears that the fuel load was too rich in this portion of the Property to allow a Fire to fully take hold. That is, if too much liquid accelerant is used, and there is not enough oxygen to create vapour, the accelerant will not burn freely. 32. Centrally located in the Property was the foyer area [Dome Room]. I observed evidence of liquid accelerant burn patterns, the patterns were holes in the floor in localised areas of damage. 33. The rear area of the Property was used as the dining area [Function Room]. This did not seem to be in use at the time of the Fire as there was evidence of some renovation or maintenance work being carried out with scaffolding located in the room as well as other items of machinery such as a lawn mover. 34. Based upon my observations of the post Fire damage, I was able to conclude that there was a light to medium fuel load in this room. 35. I could not see any set up tables or chairs to indicate usage. There had been a high amount of damage sustained in this room. Based upon my observations, including the very limited amount of furniture and other fuel load to fuel the fire, the damage sustained in this room is consistent with a liquid accelerant being used. This room was far more open and ventilated than other areas of the Property, which allowed the Fire to burn more fiercely. 36. At this time I suspected that there had been an introduced liquid accelerant throughout the Property due to: (i)the large amount of rapid fire damage and the relatively light fuel load; (ii)this needed to have had further fuel added to it to reach this level of damage in the time frame indicated to me. 37. The main area of examination was the central foyer and hall area. 38. I excavated the floor and found the hallway was clear of any burn patterns. 39. I found a smoke alarm with a battery adjacent to it on the floor in hallway. Inspection of the damage to this smoke alarm was minor compared to the heat that would have been involved at ceiling height. 40. It is likely this was removed prior to the Fire so as not to alert any person in the vicinity of the [fire] on the right hand side and allow it to develop for a longer period. 41. I then excavated the foyer area of the Property. I found burn patterns on the floor consistent with liquid accelerant being used, these were elliptical burn patterns. 42. Elliptical burn patters [sic] occur commonly with "tongue in groove" type floor boards. Generally floor boards when involved in fire burn evenly. However, when liquid accelerant is poured onto this style of floor board, small amounts of the liquid seep into the gaps where the boards slot together, the accelerant then pools in these areas. When fire passes over these areas, the areas where the accelerant has pooled burns more fiercely, resulting in a burn pattern as depicted in the photograph at pages 32, 54, 56 and 69 of EXH-BA1. 43. On the large carpet located in the foyer [Dome Room], and depicted in the photographs at pages 32, 54, 58 and 67 of EXH-BA1, I observed localised burning. When carpet such as the one depicted in photograph 3 is involved in fire the burn pattern would be relatively even and consistent. However, when a liquid accelerant is used distinct heavy localised burning occurs. This is due to the fuel load being introduced in a localised area. This then burns rapidly causing the localised damage. That is the burn pattern that can be seen in the photographs at pages 32, 54, 58 and 67 of EXH-BA1, these are known as "delineation lines". 44. The photograph at page 49 of EXH-BA1 shows an "inverted V" burn pattern on the off white wall. Inverted "V" patterns can be caused by a number of phenomena, examples such as a polyurethane pillow combusting or a leaking a natural gas pipe below the flooring being ignited. I saw no indicators of these types of fire behaviour. This indicates that there was a fuel load on the floor that burnt more fiercely closer to the ground. This is indicative of a fire caused by liquid accelerant. 45. I found clear delineation lines in the covering carpet which also indicated a pour of a liquid accelerant in this area. 46. Dividing the foyer and the dining room were a set of doors. Inspection of these doors indicated a burn pattern to the underside of the doors. 47. This type of burn pattern does not occur in a normally developing fire, rather there must be a fuel load underneath the doors to cause the underside of the doors to burn. This also was consistent with the use of a liquid accelerant. 48. In the doorway I saw heavy localised burning at the base of the door jam and adjoining skirting board, this also indicated to me the use of liquid accelerant through the Property. 49. Located in the rear I found signs of containers located in the rear south area of the Property. The containers included thinners, paint, petrol, diesel. I found one "jerry" can and a 5 litre fuel can located in the hallway near the doorway [as described in pars 14 and 15 of Mr Patrech's affidavit]. 50. I also observed that the sections of the Property closest to the street did not show any evidence of flash over damage, as the paint remained largely on the walls, and there was no whole room involvement. The heavy localised damage is indicative of the use of liquid accelerant. 51. Flashover is where hot smoke and gases cause flashover from a fire rising to ceiling level and then burning rapidly upon reaching ignition temperature. 52. The heat radiated downward from this flashover causes horizontal surfaces such as table tops, and beds to char or singe. Flashover produces an even or uniform burn on exposed surfaces as opposed to the uneven burn associated with an accelerant. 53. In my opinion the cause of the Fire should be recorded as a deliberately set fire with the use of liquid accelerants. 54. The physical evidence suggested to me the accelerant had been poured throughout the entire Property. 55. Due to the rear area being of a double volume in height compared to the normal ceiling throughout the remainder of the Property, this area would have formed a more combustible combination than the front area due to the ventilation available in this room. 56. Due to the possible large amounts of liquid accelerant being used and the mix with the oxygen in the front would have been too rich to support rapid volatile combustion, hence the lesser damage in the front than the rear. 57. I concluded my investigation at 2.04pm and entered the cause of Fire in Brigades records as incendiary. 47Some further matters can be gleaned from Mr Ritchie's report (Exhibit 12, annexure C). Firstly, he excludes an electrical fault as the cause of the fire: The examinations of the extant and available electrical conductors, fittings, fixtures and appliances revealed damage to same commensurate with exposure to the developing fire event, with no evidence of localised fault, failure or response. Review of the meter box revealed all of the circuit breakers were to the off position. Secondly, even at the time of this first inspection 1 January 2007, at least 4 days after the fire was extinguished, he could still smell accelerant: Odours suggestive of flammable liquid were detected throughout the premises during scene examinations. Thirdly, he took a number of samples from the scene, four of which were submitted for analysis. Using the numbers provided by Mr Ritchie the four relevant samples were: a.Dome Room carpet b.Hallway runner carpet c.Blue Room animal hide rug d.Apricot Room floor covering The analysis result for each of these samples was: Significant quantities C9-C15 alkanes in ratios of a petroleum fraction, also aromatics and naphthalene, consistent with kerosene or a charcoal lighter. 48Mr Ritchie agreed that arson had occurred using this verbiage: The fire event was determined to be the result of a deliberate human involvement via the use of an applied flammable liquid. The recovery locations of the samples suggested a planned and targeted human involvement, in which person(s) yet to be identified, moved throughout the premises. 49 The police expert, Detective Sergeant Peter Karl Rudens (DS Rudens), came to the scene late. He attended the property on 11 April 2007 to execute a crime scene warrant together with DSC Dormanovic of the Arson Investigation Team (of which DS Rudens was a member) and DSC Pack (the officer in charge of the police investigation) and DSC Beatty who, like DSC Pack, was from Orange Detectives Office. He made a large number of findings, some only of which I need recite. In the Green Room he found a seat of fire within the bay window area. His affidavit, Exhibit 7, continues thus: 23. I observed what appeared to be the remnants of the lounge at this location with evidence of intense burning which had burnt through the floor boards in this section. I swept away ash and debris from the wooden floorboards of this room and I noticed that pour patterns of a flammable liquid which had burnt were evident on the floorboards in this room which appeared to lead up to the bay window. 24. The burnt pour patterns were localised to this room and did not lead out of it. I took six (6) digital photographs of the burnt pour patterns on the floor boards in this room and the bay window area which can be seen at pages 9 to 11 of EXH-PR1 and are marked #16 to #21. 25. Also located in the northern side room was a green sofa which had been pulled away from the wall. I observed significant fire damage to the centre of the sofa and in the area of the wall where its original position would have been was an inverted 'V' pattern. 26. The presence of the inverted 'V' pattern could indicate and suggest that a liquid based accelerant had been ignited on this couch. The area of burning was localised to the centre of the couch and aligned on the wall. I formed the opinion that this was another origin of fire. A photograph of the sofa can be seen at page 12 of EXH-PR1 and is marked #22. He also found a seat of fire and a smoke alarm in the Blue Room: 27. I inspected the room at the south eastern side of the Property and saw an inverted 'V' pattern in the south eastern corner of the room to indicate that a seat of fire had occurred at this location with evidence of a fuel load as well. Also in the room, a 9 Volt Energiser battery was located on the debris in close proximity to a white round plastic smoke alarm also on the debris. I took six (6) digital photographs of the inverted 'V' pattern in this room and of the smoke alarm and Energizer battery which can be found at pages 13 to 15 of EXH-PR1 marked #23 to #28. He also found a seat of fire in the Apricot Room: 28. I also inspected the main bedroom which had a double bed and a wardrobe located in it. From the amount of fire damage to the wardrobe, I formed the opinion that there appeared to be a seat of fire within it and was another origin of fire. I took three (3) digital photographs of this wardrobe which can be found at pages 16 and 17 of EXH-PR1 marked #29 to 31. He formed the opinion that the fire was deliberately lit because of the presence of multiple seats of fire and the use of a flammable liquid as an accelerant.

Further Factual Conclusions Concerning the Fire 50 I do not know who set the fire. It may have been one person or more than one person. I do not know the sex or sexes of that person or those persons. To avoid using multiple nouns and pronouns I shall hereafter refer merely to "the arsonist" and use the masculine, singular, personal pronoun. The arsonist certainly wanted to burn the property down. This can be seen by: a.the use of a large amount of accelerant, probably kerosene; b.multiple seats of fire not limited to the Green Room, the Blue Room, the Apricot Room, the Function Room and the storeroom; c.the use of the hallway cupboard (it was in fact a sideboard but has been more often described as a cupboard and was so described at the hearing - hereafter "the cupboard") as a delayed ignition device, with containers of fuel left nearby; d.the candles in the storeroom may also have been intended as a delayed ignition device, but this device "detonated" before the advent of the Fire Brigade; e.the removal of the smoke alarms from the ceilings and the removal of batteries from the alarms: there were in fact two alarms which suffered the same fate. 51An aside on the question of smoke alarms is that there is no evidence that anyone heard any alarm sounding. The plaintiff cross-examined Ms Lutkie about that (T376). Ms Lutkie said she did not recall smoke alarms "going off". The fire brigade records indicate that no smoke alarms had been installed, so one can confidently say that none was sounding when the fire brigade arrived. 52The next thing one can infer is that the arsonist was not an experienced or practiced criminal as the oversupply of accelerant actually inhibited the progress of the fire at the front of the property. The work was not that of an experienced arsonist or pyromaniac. 53The evidence does suggest that the arsonist may have had some familiarity with the property, to be able to move about it, splashing accelerant where the was something that would readily burn, knowing where the smoke alarms were in order to "disconnect" them. However, the length of time that the arsonist was within the property may lessen the significance of this. 54Finally, I must say that I draw no inference from the fact that Ms Lutkie could not obtain any mains pressure in the plaintiff's hose. The plaintiff's response to that evidence was a belief that it was a concoction. However, I do not accept that. As a tribunal of fact with some knowledge of how our cities and towns are constructed, I readily accept that a fire in a house ought not affect water main's pressure. However, I can draw no inference that the arsonist had turned that pressure off by closing off the water supply in light of there being no evidence that anyone checked it and so found. After all, Ms Lutkie said that she told both the fire brigade and the police that she could find no pressure but no evidence came from any investigator that he or she checked the water supply. Of course, if the arsonist had turned off the water it would add to his determination discussed in [50] above and show further familiarity with the property as discussed in the last paragraph.

The Plaintiff's Case 55On 14 February 2011 Toner SC J made certain orders. Unfortunately, a full copy of those orders is not available to me. Some interlocutory applications were dealt with in Orange and others in Sydney and different files were opened. The present court file was commenced at Orange, transferred to Sydney and then transferred back to Orange. A number of his Honour's orders are set out in the interlocutory judgment of Norrish QC J of 31 May 2011, which bears a completely different plaint number. On page 5 of that judgment, it is stated that the following orders were made on 14 February 2011: a.plaintiff to serve her evidence including any expert evidence on or before 8 April 2011; b.defendant to serve any evidence upon which it proposed to rely on or before 6 May 2011; c.if the defendant seeks to be relieved of that obligation, defendant to file and serve a motion returnable at the sittings commencing 30 May 2011. Norrish QC J dealt with such a motion on 31 May 2011. It was unsuccessful. His Honour then made an order that the defendant serve the evidence upon which it intended to rely on or before 28 June 2011 or such later date as might be fixed by the Court, to enable the defendant to pursue properly any appeal rights arising from his Honour's decision. 56The plaintiff only served one affidavit pursuant to this timetable, an affidavit of the plaintiff herself sworn on 21 April 2011, which became Exhibit A before me. Annexed to that affidavit was the exhibit referred to in par 6, a certificate of insurance. The other documents which were supposed to be annexed to the affidavit were not. The photographs referred to in pars 11 and 12 had been placed in a portfolio which also contained a commentary. That became Exhibit B. The letter from the defendant refusing the plaintiff's claim referred to in par 14 of the affidavit became Exhibit C. The defendant's lawyers gave to the plaintiff a copy of the document which is in fact the insurance policy. She tendered that, by consent, and it became Exhibit D. The only other documents tendered before the cross-examination of the plaintiff commenced were a plan of the property (Exhibit E) and the valuation of 6 May 1999 (Exhibit F). 57The plaintiff's affidavit is exiguous. Par 1 establishes that she is the plaintiff. Pars 2, 11, 12 and 14 refer to what were supposed to be annexed or exhibited to the affidavit. Par 3 establishes that she was the registered proprietor of the property. Pars 4 to 8 establish the insurance with the defendant. Par 10 establishes that the property was substantially damaged by the fire. Par 13 recites the making of a claim on the policy "on or about 27 December 2006" even though the defendant had formally admitted to its defence filed on 17 April 2009 that the plaintiff had made a claim pursuant to the policy on or about 28 December 2006. The only remaining paragraph is that numbered 9, which is this: On or about 26 or 27 December 2006 the property was subject to fire. I was not at home when the fire started. By the time of swearing her affidavit, the plaintiff must have known that the fire had been deliberately set. After all, she had been charged with a very serious, arson-related crime. Nevertheless, the affidavit does not even contain a formal averment that if the property was the subject of arson, that that occurred without her knowledge or consent. From the nature of the crime that had been alleged, from the defendant's refusal of her claim and from the defendant's correspondence with her, the plaintiff must have been aware that it was suspected that she had a financial motive to set the fire or to cause the fire to be set, yet she provided not a scintilla of evidence about her financial position at any time until cross-examination of her commenced. 58It is to be recalled that the plaintiff was discharged at the committal hearing on 13 August 2010. At the time of swearing her affidavit the plaintiff had been exonerated of any criminal activity. The exiguity of her affidavit is not explicable by the need not to reveal anything which it might be thought incriminated her. The tactic adopted by the plaintiff, when legally represented, was to prove only the bare necessities, to provide to the defendant the smallest target and then to see what the defendant could or could not prove, when it was the plaintiff who bore the onus of proof. This was the first subject raised in cross-examination of the plaintiff.

The Plaintiff's Evidence 59The plaintiff was a most exasperating witness. Her preferred method of answering questions was to confess and avoid, but she often omitted the necessary confession. She would often introduce new matter (sometimes irrelevant, sometimes inadmissible), often designed to throw her cross-examiner, Mr Walker SC, off the trail he was pursuing (a forlorn hope), but which often led to sometimes lengthy diversions before Mr Walker SC returned to his trail. The plaintiff would often blame her former solicitor, Mr Manwaring, or someone else for a defect or failure. Some of this is evident from the commencement of the cross-examination: Q. In your affidavit of 21 April 2011, you swore the following, didn't you? "On or about 26 or 27 December 2006, the property was subject to fire. I was not at home when the fire started." You swore that, didn't you? A. Yes. Q. And I suggest to you that those 23 words was the only evidence you offered in your affidavit about the fire and any possible involvement in it by you, do you agree? A. Could you rephrase the question? Q. No, could you answer it please? A. I'm not exactly sure what he means. Q. Those 23 words I just quoted to you were, I suggest, the only evidence you gave in your affidavit about the fire and your possible involvement in it, do you agree? A. I'd like to read through it before I agree or disagree. EXHIBIT A SHOWN TO WITNESS Q. You take whatever time you need, please, to read that to yourself. You take whatever time you need, please, to reread to yourself, that is silently, that affidavit. If it assists you, the words I quoted were taken from and comprised paragraph 9. If you read it and just let us know, please, when you've finished reading it. A. Could you re-ask the question? Q. Those 23 words comprising paragraph 9 that I quoted to you in the question are, I suggest, the only evidence you have given in your affidavit touching on the fire and your possible involvement in it, do you agree? A. Yes. Q. When you swore that affidavit, you had by then understood for over four years that some people, including police investigators, were suspicious of you having been involved in arrangements for the house to be burnt, weren't you? A. I suspect this affidavit was one that Mason did the first year-- Q. Could you please answer my question. When you swore this affidavit, you had been aware for over four years that persons including police investigators had been suspicious about your possible involvement in arranging for the property to be burned? A. Yes, and by this stage I had a fair idea of what went on. But Mason-- Q. Sorry, just my question, please. A. Mason did this application-- WALKER: Your Honour, it's going to be-- HIS HONOUR: Look just answer the question asked. WALKER Q. You had been aware of that-- A. Yes, I had knowledge of the fire after the fire. Q. No. Please listen. For over four years, when you swore this affidavit, you had been aware that there were persons, including police investigators, who were suspicious about your possible in involvement in arranging to have the property burned. You were aware of those suspicious for over four years then, weren't you? I remind you of the date, 21 April 2011, if you take off four years-- A. This was way after the committal but again-- Q. Please. A. --Mr Manwaring created this. Q. Over four years when you swore that affidavit, you had had in your mind that there were people who suspected you of involvement in the fire. That's right isn't it? A. And - yes. Q. Thank you, that's the answer. You were also aware that there had been investigations including your partner, I mean your partner in life, not in business, Mr Hugh Williams and his possible involvement in the fire? A. Yes, proven - proven not to be true in Court. Q. Would you just answer my question rather than argue a point. Do you understand? A. Yes. You had been aware of that for over four years when you swore this affidavit as well, weren't you? A. Yes. Q. You were also aware that there had been investigations made of persons who may have had access, with your consent, to the property immediately before the fire started. You've been aware of that for over four years as well haven't you? A. Who are you referring to? Q. Well one of the persons who was a close friend and had been in the house the day before the fire was Mr Robert Beasley, is that correct? A. Yes, Robert came over and had Christmas pudding. Q. You knew that he had been the subject of investigation as well didn't you? A. They attempted but-- Q. So the answer is yes, is that correct? You knew he had been. A. I knew that they wanted to talk to him. I shall soon turn to examine the plaintiff's financial position. From that consideration it will become clear that the plaintiff's evidence contains a number of inconsistencies, contradictions and glaring implausibilities.

The Plaintiff's Evidence about her Financial Position 60It must be noted that the plaintiff never produced to the defendant or to the Court any income tax returns or other documents relating to her income. Par 39 of Ms Lutkie's affidavit (Exhibit 9) is this: 39. Over the next month [from 12 September 2006] or so Jaqueline only gave me a one page document showing her personal farm income figures for the 2003/2004 financial year. This was for the amount of around $6,000.00. When Jaqueline handed me this document, we had a conversation during which words to the following effect were said: Me: "Jaq, where's the rest of it?" Jaqueline: "Don't worry, my income is good. My accountant is doing all the remaining taxation figures at the moment." The plaintiff was cross-examined about that. Cross-examination of the plaintiff about her financial position commenced on the second day of hearing at T68.29. She denied that she was in "a desperate financial position" by the time of the fire. A little later this evidence was given: Q. Can I go back to, you're clear in your mind, are you, and careful, you say, in giving your evidence, you deny that your financial position was desperate at the time of the fire? You're clear in your mind and careful in saying that? A. Yes, I was rolling over a thousand a week. Q. Say that again? HIS HONOUR: I was rolling over a thousand a week. WALKER Q. You mean, you were receiving revenue of a thousand, or spending a thousand, what do you mean? A. Making over $1,000 a week. Q. Do you mean net? A. Yes. Q. Profit, more margin, is that right? A. Before tax. Mr Walker SC then drew to the plaintiff's attention the difference between gross income and net, taxable income and continued thus: Q. Your taxable income in about the calendar year 2006 was $6,000 wasn't it? A. I would have to look at the bookwork back there but, no, the accountants always try to keep it under the taxable income. Q. You're not suggesting that your taxable income was fraudulently depressed in amount were you? A. No, you write if off and you lease vehicles. Q. So $6,000 spread over a year is - shows that from the $1,000 a week you were receiving, if that's true, you were certainly paying nearly all of that in costs weren't you? A. Yes. Q. Well now at the same time-- HIS HONOUR: Just excuse me. Q. See $6,000 is an income of $115 a week. Not very much money is it? A. No. Q. Not enough to live on? A. No, but I had plenty of money to live on. Q. You had plenty of money to live on? A. Yes, they must be very old accounts that - again, out of your forensics accountants report, and I only have one page of that, which I think is the relevant page-- The plaintiff was pointing out that the figure just put to her was drawn for Mr Domenic Quartullo's affidavit, but it was not. This created a diversion. Yet her assertion is clearly that her finances had improved since 2003/2004. They were, indeed, as the plaintiff pointed out, "very old figures", but her financial position was deteriorating, not improving, as I pointed out in the overview commencing at [22] above. 61The plaintiff went on to deny that her financial position could be described as "desperate", or "very difficult" or even "difficult". She went on to assent to a proposition that her position was "an easy one where resolution of financial problems was assured" (T74.25). She did accept that she had financial problems, but initially minimised them. By the fourth day of hearing the plaintiff admitted that she was "in desperate financial straits" when she applied to Westpac for an $800,000 loan on 13 December 2006 (T259.36). By the fifth day of hearing she admitted that her financial affairs before the fire were "in an utter mess" but then tried to avoid by giving novel evidence (T301). 62When asked whether her financial affairs were "in good order" in 2006, the plaintiff admitted that there was a "mix-up" with Claire Lutkie. The "mix up" was "where she wanted to buy and put the deposit on". This was later explained to be a proposal that the property be used as a restaurant and that Mrs Lutkie would buy half of the property and the business to be run from it. When asked whether this "mix-up" was Ms Lutkie's fault, the plaintiff said it was "a combined effort' (T122). She was then asked to tell me of any other circumstance which might prevent her describing her financial affairs as being in good order in 2006. She said her accountant, Mr David Brough of WHK Todd & Niven, was ill with cancer but another accountant, Mr Dennis Rapley, was trying to attend to her tax affairs, which needed to be "caught up". More than six years later, I interpolate, no income tax return was produced. The plaintiff then gave this evidence: Q. Well, I'm getting at would you describe your financial affairs throughout calendar year of 2006 as being in good order but for the episode with Claire? A. Yes, Carol was fine she needed the money but I had go ahead from, no, sorry. Q. No, you keep going, keep going please. A. I had go ahead from St George to give Carol the money that she required to be debt free in town-- Q. I have to-- A. --on the block I was buying next door. Claire wanted to buy half of Edward Street and then didn't want to buy half of Edward Street. But I wasn't worrying because I already had the go ahead from St George before I did the deal with Carol. Q. Well now you've talked about a number of persons and transactions there, none of which has yet been proved to his Honour. Let me try and-- A. But they are coming aren't they? Q. Indeed they are. A. Good. Q. You said you had the go ahead from St George. A. Where I was purchasing the block next door. Q. No, let me ask the question. Do you mean by that you had a written approval for an advance of money to you from the St George Bank? A. Yes. Q. Where is that written approval? A. Burned in the fire with the other paperwork. Q. That's not a serious answer is it? A. Yes, it is and I tried to get a copy of it-- Q. Let me remind you why it could not be serious-- A. No, I tried to get a copy of it and the bank said they did not keep it because I hadn't signed it and taken up the offer. This was the first mention by the plaintiff of her proposed purchase of Part A. I have recited the relevant facts at [18] above. I find it difficult to accept that a bank would not keep any record of a loan it had approved, even if not taken up, especially when that bank was the plaintiff's own bank and the property's mortgagee. Furthermore, no evidence was called by the plaintiff from her bank manager friend, Gwen, nor from the local business manager who called upon the plaintiff at the property. As Mr Walker SC submitted, bank officers rarely disappear. I also have difficulty in understanding why papers from St George Bank (and also Westpac) were burnt in the fire yet others were quite unscathed; the valuation of 6 May 1999 (Exhibit F) and certain documents prepared by Ms Lutkie for the plaintiff (Exhibits L to R). 63When asked why she did not accept the St George offer the plaintiff said: Because Claire wanted to buy in half of Edward Street and get it open so I would require more money than that to do the block next door, and stay in Edward Street and get the business going. That's why we went to Westpac. One would be forgiven for thinking that a proposal by Ms Lutkie to buy half of the property and of the proposed business was only made after the St George offer, from this answer. Yet it is clear from [20] above that the plaintiff and Ms Lutkie were at loggerheads by mid November 2006 and the plaintiff was only to approach Westpac in late November or December 2006. At T144.09 the plaintiff described Ms Lutkie's advance to her of $100,000 to be a deposit on a purchase agreed between her and Ms Lutkie, albeit that there was no written evidence of it. At T145.37 the purchase was "half of Edward Street and the business we were going to open". When asked what was the total purchase price the plaintiff said, "We were looking at [$]580,000, round about". The figure was not yet fully calculated because the cost of various items for the business had yet to be established, and the range was between $550,000 to $600,000 (T145 to T146). What Ms Lutkie had to say about this advance was then put to the plaintiff but denied by her: Q. The $100,000 was given to you by Ms Lutkie because you asked for a short term accommodation so that you could in-- A. No. Q. --so you could in turn give some money to O'Shea. Is that right? A. No. Q. Did you use the $100,000 given to you by Ms Lutkie to give to Ms O'Shea? A. Yes. Q. It went straight over, as soon as you received it, it generated an exactly equivalent payment by you to O'Shea, didn't it? A. Yes. Q. It wasn't being used by you to pay builders, was it? A. No. Q. It wasn't being used by you to pay anything to set up a business, was it? A. No. Claire knew exactly where it was going. Q. It wasn't being used - please let me finish - it wasn't being used by you to reduce any indebtedness secured over Edward Street, was it? A. No. Q. You told Ms Lutkie that you would be able to give it back to her if and when she needed it on 48 hours' notice, didn't you? A. No, the discussion described in there never took place. Q. You repeated to her when she later sought the money back, that she could have it within 48 hours, didn't you? A. No. Q. She eventually sued you, didn't she? A. Yes. Q. She has eventually, a long time after the fire admittedly, been paid everything you owed her? A. Yes, in fact today she is the only person-- Q. I didn't ask-- A. --that has ever earned anything out of it. Q. Madam, could you just answer my question? You eventually were in litigation with her and she threatened bankruptcy proceedings, correct? A. Yes. Q. During the whole of those proceedings you knew that her claim was that she had lent you the money and that you had to pay it back, didn't you? A. Yes, and I-- Q. You conceded those claims and paid it eventually back, admittedly after being forced and threatened by bankruptcy proceedings, correct? A. I instructed Mr Manwaring to defend it and take costs out. Q. Are you blaming another lawyer now? A. No, the same one, and he refused to defend it. He said I had to get rid of Rogers and Lutkie and keep my eye on the big picture. So I took advice. Q. The fact is the public records of this State will show you were sued for money advanced to you and you agreed to pay it all back, correct? A. Yes. The plaintiff went on to deny that Ms Lutkie's demand for her money back placed her under any financial pressure. She said she could have gone back to St George Bank (T148.37) and reactivate the loan earlier offered. When it was pointed out that she did not, she said that was because she applied to Westpac for a loan of $800,000: I was applying for the big loan, because Claire and I had decided not to do the business and she was not buying into half. I then went for the larger loan, not the [$]400,000 that I was going to give to Carol; I was going to do Carol and get Edward Street up and running and put it back on the market. That evidence is completely inconsistent with the first piece of evidence which I quoted in this paragraph. 64The plaintiff went on to admit that she did not have "money in the bank" to repay Ms Lutkie's $100,000. It was again suggested to her that she was "strapped for funds", to which she answered "Not terribly, no" and then referred to her equity in the property and her equity in North West. When asked why she did not resort to this equity to repay Ms Lutkie the plaintiff again raised her application to Westpac for $800,000 loan. When asked whether "all" depended on that loan being granted she confessed but then avoided: Q. It all depended upon whether Westpac was going to lend you what you call "the big money". That's about $800,000, is it? A. It was around that. Yes. Q. It all depended on that, didn't it? A. No. Because if it didn't work, my full intention was going back to what I was going to do before Claire conned me into going into business with her-- Q. I beg your pardon. Did you just say she conned you into something? A. Well, she kept at me and kept at me-- Q. Madam, did you just say that? A. Well, I might have used the wrong expression. Q. Did you just say you were conned? A. Yes, I did. Q. You intended by that to suggest fraud against-- A. No. I just used the wrong expression. Q. You are being deliberately-- A. No I am not. Q. You are being deliberately defamatory about somebody. A. No I am not. Q. I suggest-- A. Claire requested and requested and requested that we do it then-- Q. It's her fault is it? A. No. We both agreed on it. I wasn't keen but, really, something had to be done with Edward Street and if she was prepared to go into it and get it up and going, then that was as good as selling. I mean you still owned half. Q. Are you seriously painting yourself as a slightly reluctant participant in the project of keeping Edward Street and running a business there? Are you seriously suggesting that? A. No. It's true. Q. You were the initiator and promoter of that idea? A. No, I was not. Q. You even asked the O'Sheas whether they would like to invest some of the money you owed them in the business, didn't you? A. I suggested that Carol might want to come in with Claire and I when Claire and I and Carol were all over there one day-- Q. Is it too difficult for you to answer yes to that? What I suggest is correct, isn't it? A. I think I offered Carol at some stage if she wanted to. ... Q. And that would have been accurate? A. Yes. I think so. The plaintiff's being "conned" by Ms Lutkie must be contrasted with the "mix-up" at [62] above, which was the result of their "combined" fault. 65The plaintiff's attention was later drawn to a conversation with Mrs O'Shea in July 2006. The plaintiff denied that she told Mrs O'Shea that she had decided to keep the property and re-open it as a restaurant (T176.134). She then said that she had decided to "keep half" (T177.04). She went on to say (T179) that she had an oral agreement with Ms Lutkie to buy half the property by July 2006 and then said it was "about five months" prior to the advance on 12 September 2006. That would mean that the oral agreement was made in April 2006, although the plaintiff said it was in May 2006, or four months before the advance (T180). This is hardly consistent with the evidence I quoted at the commencement of [63] above. Furthermore, this evidence raises a number of implausibilities. The first can be seen in a question put by Mr Walker SC to the plaintiff: Q. You see, if it had been April or May, from what you've told us this morning you waited until a conversation in July 2006 to tell Caroline O'Shea that you weren't going to be relying on proceeds from Edward Street because you weren't going to be selling it. Isn't that right? From what you've just told us, if it's true - I suggest it's not but if it's true - you keep from Caroline O'Shea for either three - two or three months you'd kept from her the fact that you were no longer going to get proceeds of sale from Edward Street to meet you obligation to her. You were now going to be re-opening it as a restaurant. Isn't that right? The plaintiff sought to avoid answering this question, but eventually answered "No" at T181.37. The second implausibility is that it is clear that she did not tell St George Bank in July 2006 that she already had a buyer for half of the property (T183.23). That would have been of great interest to the Bank and significant for the plaintiff herself: a. the plaintiff's prospects of obtaining the loan would be increased by there being a viable business proposal and the amount of the loan would be affected by the amount of money offered by a future buyer of the property: the larger the offer, the greater the value, the bigger the loan. I pointed out at [63] above that the half price being discussed by the plaintiff and Ms Lutkie (according to the plaintiff) was "round about" $580,000, in a range between $550,000 and $600,000. However, at this point of cross-examination this had become $500,000 (T182). The evidence soon continued thus: Q. It was very important for you to be able to tell the bank things about your prospects in order to borrow money, wasn't it? A. Yes, it would be. Q. If you had a deal with Claire under which she would be putting in $500,000, half a million dollars capital into a business to be conducted at Edward Street, that would be the very first thing you would tell the bank, wouldn't it? A. Yes. Q. And you never did, did you? A. No. b. the bank itself would not only be interested in such things but also in the value of the collateral: if the value of the property were $1,000,000 then the plaintiff's equity, assuming a sale to Ms Lutkie proceeded, was $500,000, yet she already owed St George, in July 2006, just over $240,000 and that debt, combined with a further loan of $400,000, could be seen as exceeding the plaintiff's equity, requiring additional collateral over, say, North West or the plaintiff's interest in Part A, assuming the loan of $400,000 was paid to Mrs O'Shea; c. but why should the Bank require the plaintiff to put the property on the market if she already had a buyer for half of it and why should the plaintiff accept such a term, knowing that she had an oral agreement with Ms Lutkie? 66The plaintiff was then pressed again as to why she did not honour the contract, as "modified" by Mrs O'Shea, of an upfront payment of $400,000. The plaintiff advanced a change in circumstances affecting Mrs O'Shea's husband Mr Pat O'Shea: Q. No, now you are not answering at all. Unfortunately you couldn't honour your promise to her, could you? A. Yes, I could. Q. Why didn't you then? A. Because Claire wanted time to organise her half and we were giving her time. Pat got another job, the pressure was off Carol. Q. Why was the pressure off Carol, she hadn't got the $400,000? A. No, but Pat had got another job. Q. So, her husband starts receiving a wage, that is Pat O'Shea? A. Yes. Q. Her new husband was beginning to get a wage and you are telling his Honour that is a reason why you wouldn't try to do the right thing by your good friend by honouring your promise to her for the $400,000 she wanted to cover her mortgage liability? A. No, but-- Q. The fact is the beginning of her receiving a wage via her husband wasn't going to look after the $400,000 was it? A. No, but-- Eventually the plaintiff said that all Mrs O'Shea wanted was to be "debt-free in town", which, again, can only mean free of a mortgage of $400,000. How Mr O'Shea's getting a job, the promise of an income, could make Mrs O'Shea debt free has never been adequately explained other than by my drawing an inference that his earning a salary might make it easier for Mr and Mrs O'Shea to pay interest on their mortgage debt. The position eventually adopted by the plaintiff was this: A. I asked Carol if that like, what she needed when she came to see me and I told Claire that I was going to go to St George over it. Later Claire came back and said, no, she definitely wanted to buy in half and get the business started. I already had the go ahead from St George. Carol came over one day, she was happy because Pat had got another job, the pressure was off and we were going to give Claire time to come up with hers which she never did. Q. Well-- A. When I, I finally after months, I finally said to Claire one morning, "I've got to get the money to Carol, I'm going to take St George up on the offer and put Edward Street back on the market. She went over the road and came back with $100,000 cheque, she said, "Here's the deposit." And I said, "Well, I'll give it to Carol but we've got to get the rest of it organised." And that is when the $100,000 changed hands. Claire knew exactly where the money was going. Q. In that last answer, you haven't in any way given any explanation as to why you weren't obliged to pay the $400,000 in full within six weeks, have you, except Mr O'Shea getting a wage. That's the only thing you've offered, is that right? A. And Carol-- Q. Please, is that right? A. And Carol wasn't under the pressure, yes. This position was reached after a tripartite meeting at the property between the plaintiff, Mrs O'Shea and Ms Lutkie (T197.27) about three weeks or a month before 12 September 2006 (T197.50). The plaintiff later agreed that she had read affidavits prepared by Mrs O'Shea and Ms Lutkie and neither of them referred to any such meeting (T201.18). 67Commencing at T228.33, Mr Walker SC commenced cross-examining the plaintiff about Mrs Lutkie's evidence as to their relationship. The substance of that to which Mr Lutkie had deposed was denied. At T238.13, the plaintiff admitted receiving from Mrs Lutkie's solicitor a letter of demand seeking repayment of the $100,000 advance on 22 November 2006. The evidence soon continued: Q. Before the fire Claire sued you for $100,000 didn't she? A. Yes, that's correct. Q. Right. So before the fire all this stuff you've told the Court about putting off Carol to give Claire time and having plans with Claire to reopen the restaurant, all of that had turned to ashes before the fire because Claire had said, "I'm not in" or "I'm out" and "I want my $100,000 back," and she said it in the most emphatic way possible by suing you. That's correct, isn't it? A. Yes, that's correct. Q. So all these reasons you've been advancing to his Honour of not paying Mrs O'Shea, all of those ceased to have any operation by the middle of December. Isn't that correct? A. Yes. Q. And you still didn't pay Mrs O'Shea and you still didn't pay Mrs Lutkie, correct? A. Correct. Q. And that's because you couldn't, that's right, isn't it? A. Had I gone back to St George-- Q. Could you please, what about if you just answer the question first? It's because you couldn't pay that you didn't pay, isn't that right? A. Without going to the bank, yes. After another witness was interposed, the plaintiff made these concessions: Q. Before the fire and in December 2006 your financial position was so bad that according to you, you knew you had to sell the property soon so as to meet your obligations. Is that correct? A. No, I had to put it back on the market. Q. Yes, but putting it back on the market is to try and sell it, is that correct? A. Yes. Q. You had to sell it soon because you were already in breach of obligations to two of your friends, weren't you? A. To clear up the two deals, yes. Q. You were in breach of both of them, weren't you? A. Yes, your Honour. 68In December 2006, the plaintiff made an application to Westpac for a loan of $800,000. It appeared in re-examination (by me) that the plaintiff may have gone to Westpac twice: HIS HONOUR Q. Can you remember when it was you went to Westpac, by reference say to Christmas Day? A. It would've been three - three to four weeks after Melbourne Cup Day. Q. Melbourne Cup is held on the first Tuesday of November, correct? A. Yes. Q. In the year 2006 that was 7 November. You can assume that, I've looked up the perpetual calendar, all right, so three to four weeks after Melbourne Cup Day would make it late - very late November or early December? A. Yes, I think November. Q. So that means as of the time of the fire there would be probably three or more weeks between your making an application to Westpac? A. The last time I saw Claire was the first time I went down and then I had to get things together and take down to them. Q. When did you lodge - formally lodge an application with Westpac? A. From memory it was about a week - it was around about a week in between. Again I went back to my accountants and tried to get some of the tax caught up because that was one of the things that Westpac was asking for. Earlier the plaintiff agreed that the formal application to Westpac was on or about 13 December 2006 (T125.38). Of that sum "a portion ... was to go to Carol [O'Shea], a portion to Claire [Lutkie], and I was going to use the rest on Edward Street". The plaintiff did not say that she intended to discharge her debt of approximately $240,000 to St George Bank, but she could have as she had commitments outstanding: (i)to Mrs O'Shea of at least $300,000, (ii)to Ms Lutkie of $100,000 plus legal expenses and accrued interest, and (iii)to St George Bank of just over $240,000, which might leave her $150,000 to expend on the property and enable Westpac to take a first mortgage over the property. She conceded she might have to offer Westpac further collateral over North West (T255), (T259.36). Very shortly after the fire, the plaintiff was advised by Westpac that an application to that bank was unsuccessful, for reasons unconnected with the fire (T298.08). 69Later Mr Walker SC cross-examined the plaintiff about a telephone discussion she had with Mrs O'Shea "sometime in October 2006", although the plaintiff said it was "after Melbourne Cup Day" (T294.04). The conversation admitted by the plaintiff was this: Q. You became aware, didn't you, that it appeared Claire Lutkie had rung Carol O'Shea to notify Carol O'Shea that it was Claire Lutkie's money that funded the $100,000? You became aware of that, didn't you? A. Yes. Yes. Q. And you became aware of it because Carol O'Shea rang you sometime in October 2006 to say, "Jaqui, where did the $100,000 come from? I got a call from someone called Claire who said it was hers. What's going on Jac? Where did this money come from? Why is she calling me?" And you answered something along the lines of, "Everything's fine, look." Is that correct? A. Yes, and it was. This evidence is inconsistent with the existence of the tripartite conversation referred to at the end of [66] above. 70Mr Walker SC suggested to the plaintiff that she had two meetings/conversations with Mr and Mrs O'Shea, one at the Parkview Hotel in Orange on or about 1 December 2006 and the other on 15 December 2006. Mr Walker SC suggested (at T292) that at the Parkview Hotel the plaintiff showed to Mr and Mrs O'Shea documents from the St George Bank relating to the $400,000 loan of mid-2006 that had not been taken up. It was soon suggested that it was at that time that the plaintiff told Mrs O'Shea that she had had a falling out with Ms Lutkie and said words to the effect that Ms Lutkie was not going into business with the plaintiff and that Ms Lutkie was demanding the repayment of $100,000. The plaintiff agreed with this. The evidence continued: Q. Then Carol responded to that by saying something like, "I'm worried that you have used Claire's money to pay us?" She asked that, didn't she - she said that didn't she? A. She was concerned and she had Claire on the phone for - by memory, and it's a long time ago, about an hour and a half, she said Claire had been getting really upset and carrying on so much that she ended up putting the phone - or giving the phone to Pat. Q. You responded to Carol along these lines, didn't you, "Don't worry about that. It's not your concern. I took the money from Claire, not you. I've spoken to a solicitor about it and everything's okay"? A. Yes, and I'd taken bookwork up to Mr Manwaring about it and spoken to him. although the plaintiff may have been interjecting into the conversation being suggested to the plaintiff, part of what I record in the last paragraph. After a diversion the evidence continued thus: Q. You then did meet Mrs O'Shea and her husband at the Parkview on 1 December, didn't you? A. It would have been around then, yes. Q. You had contacted them to say that you had arranged the finance, didn't you? A. No. Q. At the pub you had a conversation when you said something like this, "The money is definitely going to be in my account on 15 December 2006" didn't you? A. No. Q. And they responded - or she responded - Carol responded, "Jaqui that's great, we can finally cover the mortgage" didn't she? A. No. Q. Did you tell them anything about when the money was going to be in the account? A. I think - no we did, we discussed where I was going for the larger loan, but honestly, it is that many years ago, no, I don't remember that conversation. Q. You are confusing it with a later occasion on 15 December, when you hadn't paid, and there was an arrangement reached about bridging finance over the next couple of days, is that right? A. I remember we had the conversation about the bridging finance but I really can't remember exactly the date or-- Q. It was after you had yet again failed to make good on your promise to pay her, wasn't it? You told them that you would have to get bridging finance and in her goodness Mrs O'Shea rang you back a couple of days later to say we don't want you to go to the expense of bridging finance, pay us later, isn't that right? A. Yes, that's it. Q. Yes? A. Yes. Q. So you had failed yet again to meet your representation that you would pay her; you had mentioned the necessity to go off and get bridging finance; she had gone off - apparently discussed things with her husband, and come back and made you the generous indulgence that she didn't wish you to incur that expense and she would hold off waiting - she would wait longer for her money, that's correct isn't it? A. Yes. Q. And bridging finance, you understood, was finance which would carry a considerably higher interest rate, correct? A. Yes. Q. In fact in March 2007 your financial position did drive you to mortgaging, very short-term, bridging finance at an expensive rate, North-west, didn't it? A. Yes, it did. The plaintiff then attempted to insinuate that her need to seek bridging finance was because of the fire. Some evidence I quoted earlier at [10] was then given and the plaintiff then made these admissions: Q. The fire didn't stop you from receiving revenue from Edward Street that you had already been receiving because you had not been receiving any, correct? A. Yes. Q. And Westpac rejected what you call the big money application that included the refurbishment for the supposed re-opening of the restaurant for reasons that had nothing to do with the fire, correct? A. Yes, I think. 71The plaintiff was then cross-examined about what she said to Mrs O'Shea after the fire (which I shall discuss later). She then made the admission I quoted at [61] that her financial affairs were in an "utter mess" but then sought to avoid the consequences of that admission by advancing, at T301, on the fifth day of hearing, that she had discussed with Mrs O'Shea, before the fire, rescinding the contract for the purchase of Part A. This was novel evidence, not previously advanced, because "no-one asked me the question" (T302.08). By the plaintiff's memory this conversation occurred at the Parkview Hotel on 1 December 2006 (T302.40), which was a conversation she could not previously remember (T296.35), quoted in the last paragraph. It was suggested to the plaintiff that her evidence about this proposed rescission, discussed on 1 December 2006, was a recent invention but the plaintiff denied that (T303.22).

The Plaintiff's Financial Defaults 72There are clear, objective reasons why the plaintiff could not, and therefore did not, take up the St George loan of $400,000 and why Westpac would not offer her a loan of $800,000. The plaintiff was sometimes and increasingly more often in default of her existing financial obligations. I state these below in tabular form. In this table: "Amex" means American Express "CP" means Capital Finance (lessor of Holden) "Or" means other "SGB" means St George Bank Defaults Date Debtor Amount Fee paid 27-04-04 SGB $610.96 $45.00 26-06-04 SGB $624.64 $45.00 23-11-04 Amex $3,297.72 $45.00 09-12-04 CF $1,026.47 $45.00 09-02-05 CF $1,026.47 $45.00 21-06-05 Amex $9,222.96 $45.00 05-10-05 Or $3,300.00 $45.00 09-12-05 CF $1,026.47 $45.00 27-01-06 SCB $1,525.33 $45.00 09-02-06 CF $1,051.47 $45.00 27-02-06 SGB $1,527.05 $45.00 08-03-06 CF $1,026.47 $45.00 09-05-06 CF $1,026.47 $45.00 11-07-06 CF $1,056.47 $45.00 18-07-06 CF $1,056.47 $45.00 26-07-06 SGB $1,526.59 $45.00 26-08-06 SGB $1,578.56 $45.00 26-09-06 SGB $1,636.04 $45.00 09-11-06 CF $1,026.47 $45.00 09-12-06 CF $1,026.47 $45.00

73If the plaintiff was finding it increasingly difficult to service her existing obligations to her bank, a loan of approximately $240,000, and to her motor vehicle financier, one must ask how could she service a further debt to her bank of $400,000 or a debt of $800,000 to Westpac, even assuming that the latter debt included a discharge of her debt to St George Bank? Such inability adequately explains why the plaintiff did not take up the St George Bank offer of a $400,000 loan in July 2006.

Ms Lutkie's Evidence Concerning her Advance to the Plaintiff 74For reasons which I do not need to canvass, the plaintiff and Ms Lutkie had a very good relationship from the commencement of 2006. Those reasons can be seen in pars 17 to 31 of Ms Lutkie's affidavit. She then attested to the following: 32. In September 2006, I was over at Jaqueline's house having a cup of coffee and she started talking about starting up the restaurant again. During this conversation we had words to the following effect: Jaqueline: "So before we start up the restaurant you and I will need a business plan." Me: "What do you mean we?" Jaqueline: "You as my business partner. We'll need to get some finance and finish renovating the house. I've picked out a name for the restaurant; Lillies, what do you think?" Me: "Jaq, I've never considered myself as your business partner in this." Jaqueline: "Do you think I could temporarily borrow $100,000.00?" Me: "What for?" Jaqueline: "I have to throw some money to Carol to keep her happy. Its for an on-going payment for the sale of Carol's farm. Me: "Sorry Jaq, I can't lend you that sort of money. You need to sort your own finances out." 33. In the past, I had given her advice about different things relating to setting up the business and renovating ideas but I had never considered myself as her business partner. 34. A few days later, I was at Jaqueline's having coffee we had a conversation, during which words to the following effect were said: Jaqueline: "So I was wondering whether I can borrow that $100,000. It would only be a temporary thing. If you loan me the money you'd be helping me out in a huge way. That way, I won't have to worry about getting finance for a short period just to make the payment to Carol. I could pay it back anytime with 48 hours notice. I just have to call my bank manager, Gwen, at St George." 35. She had told me previously that bank manager, Gwen, worked at the Wagga Wagga branch of the St George Bank. 36. I thought about Jaqueline's proposal for me to loan her the money. I did have the money in my account and I decided to loan the money in good faith from one girlfriend to another. 37. On 12 of September 2006, I gave Jaqueline a personal cheque for $100,000 made out to J.I. McLennan. 38. After this, Jaqueline and I had some serious discussions about being partners in the restaurant she was going to open. We said words to the following effect: Me: "Jaq, can I see some of your business figures for when you plan to open the restaurant?' Jaqueline: "Yeah, I can get them to you." Me: "Can you also get your tax done so I can see proof of your income for the business loan application?" Jaqueline: "Ok." Me: "You'll also need to get the property valued by the bank. All this needs to be done before I make any final decision on joining you as a business partner, ok?" 39. Over the next month or so Jaqueline only gave me a one page document showing her personal farm income figures for the 2003/2004 financial year. This was for the amount of around $6,000.00. When Jaqueline handed me this document, we had a conversation during which words to the following effect were said: Me: "Jaq, where's the rest of it?" Jaqueline: "Don't worry, my income is good. My accountant is doing all the remaining taxation figures at the moment." 40. I did not receive any of these documents and on 13 November 2006 I contacted Jaqueline we had a conversation during which words to the following effect were said: Me: "Jaq, I'm sorry, but I'm just not interested in becoming a business partner with you. I'm happy to help you set up the restaurant but I'm not having any financial interest in it." 41. On 14 November 2006, I contacted Jaqueline, we had a conversation during which words to the following effect were said: Me: "Jaquie, I need the $100,000.00 that I loaned you back please." Jaqueline: "I'll have it to you in 48 hours." Me: "Thanks". 42. On 16 November 2006, I had not heard from Jaqueline so I contacted my solicitor and commenced legal action to recoup my money. 75In cross-examination, Ms Lutkie was shown a number of documents prepared by her, which became Exhibits L to R. She agreed, in essence, that these were "working documents from when I was talking with Jaqui about becoming involved" in the proposed restaurant business (T345.46). Most of those documents are dated but some are not. The range of dates provided is between 10 September 2006 and 12 November 2006. None of those documents is inconsistent with either Ms Lutkie's timetable or Ms Lutkie's position concerning them. Exhibit O is an eight-page document. The first page is a cover with a graphic of part of the façade of the property. On it is printed: Jaqueline McLennan & Claire Lutkie Proposal: LILLIES at Warrembah House. At the foot of each of the subsequent pages is printed: Application for finance - Lillies That, clearly, is the purpose of the document. Page 2 is an index which indicates that there were to be a number of appendices. None of those has been put into evidence although some other exhibits may have been drafts of intended appendices. Appendix I was to be this: I Jaqu McLennan Financial Statement of Position Valuation of real estate assets (2) Insurance schedules (2) Income verification Resume Appendix J was to be the same matter for Ms Lutkie. If anything in appendix I were made, none was put into evidence. Page 3 commences with an "Introduction". The substance of the first paragraph is this: [The property] is for sale ... The current owner is offering a 50% share buy-in, to purchase into the property, complete the rear extension and open the venue as a diversified business (restaurant - art gallery). The current owner last traded in 1999 [as] Leonardo's Trattoria before leasing to subsequent operators. Page 6 commences with a section headed "Organisational structure", which in substance deals with the staffing proposal. There at the top of the list are: Owner operators: 2 fulltime to reduce to part-time (Jaqu and Claire) 76Nothing in the document itself, read as a whole, indicates that Ms Lutkie had committed herself to this proposal, which appears never to have been completed and never to have been submitted to anyone. When confronted with the documents, Ms Lutkie said this: Q. You will now be shown an eight-page document. Did you make that document? A. Yes I did. Q. When? A. Late 2006 although I suggest there's part of it that I would've given to Jaqui earlier on in the year to help her get organised and get her business off the ground. As I said earlier, I've had the computer so I would type things up for Jaqui. Q. Right. But the cover - the first page has got your name on it as well, has it not? A. Yes. Q. When about in late 2006 was this document made? A. It's not a complete document so it's a working document. So, this was from some time [in] September, October, November when I was talking to Jaqui with the prospect of either myself coming in, or someone else, or partners coming in with her. Because in the context of - Jaqui was offering me to come in, or she would do it alone, or she would go on with other partners. So this is something that would've been put together and then if - at the time when we had finished talking and I wasn't involved anymore, she asked for all of the paperwork and I didn't have any reason not to trust Jaqui and I handed everything back over. That's why I had everything that she had because she needed it to show somebody else or carry on with her paperwork. And then contact was cut and we weren't talking at all anymore. Ms Lutkie's evidence maintained her position that there was no serious discussion about her going into business with the plaintiff until September 2006 (T368). Ms Lutkie was cross-examined about a large number of matters, at least one of which was offensive (T342.01 to 342.21) but none of what was said by Ms Lutkie was inconsistent, implausible or contrary to objective or known facts or documents. Furthermore, I formed a favourable impression of her and I accept that what she told me was truthful.

Conclusion about the Plaintiff's Evidence 77From the evidence I have canvassed thus far, and from evidence yet to be canvassed, I am unable to accept the plaintiff as either an accurate, reliable or honest witness. I cannot accept her unless she be corroborated by other reliable testimony. I cannot accept any of the following propositions which the plaintiff asks me, by inference, to accept: a.the plaintiff and Ms Lutkie reached an oral agreement in May 2006 whereby Ms Lutkie would buy half of the property and the business proposed to be run from it; b.that the advance of $100,000 by Ms Lutkie was a "deposit"; c.that the plaintiff's failure to take up the St George proposed loan of $400,000 was because of a proposal from Ms Lutkie; d.that she did not solicit Ms Lutkie for a loan and that she did not represent to Ms Lutkie that she could repay it on 48 hours' notice; e.that the plaintiff's financial position was such that she could easily satisfy her financial obligations to Mrs O'Shea Ms Lutkie and her other creditors; f.that Mrs O'Shea relented in pressing for payment to her because of her knowledge of Ms Lutkie's agreeing to be the plaintiff's business partner and agreeing to buy half of the property or, for that other matter, because of Mr Pat O'Shea's finding employment. The plaintiff has made such "facts" material to facts in issue.

The Outcome of the Plaintiff's Dispute with Ms Lutkie 78The credibility of Ms Lutkie is enhanced and that of the plaintiff diminished by the outcome of Ms Lutkie's action against the plaintiff to recover the advance of $100,000. That action was settled by way of a deed of agreement dated 28 September 2007. The recitals in the Deed are these: A. On 12th September, 2006 Claire provided funds to Jaqueline in the sum of $100,000.00 by way of personal loan; and B. Jaqueline acknowledges receipt of $100,000.00 from Claire on 12th September, 2006; and C. A dispute has arisen between Claire and Jaqueline ('the parties') as to the repayment of that money; and D. Claire commenced proceedings in the District Court of NSW sitting at Orange, proceedings numbered 47 of 2006 ('the proceedings') on 18th December, 2006; and E. Jaqueline filed a defence in the proceedings of 14th February, 2007; and F. The parties wish to resolve the proceedings on the terms and conditions as set out in this Deed. The Deed required the plaintiff to pay to Ms Lutkie $107,500 by 18 January 2008 plus simple interest at 10% p.a. from 25 June 2007. The proceedings were adjourned until 28 January 2008 but the money had not been paid by then. Judgment was entered against the plaintiff on that day for $128,479.45. I have recited Ms Lutkie's eventual recovery of her money at [24(j)] above. The significant things, of course, are the recitals in the Deed. There is no recital, as there usually is, of the contending parties' various positions and then of the compromise reached. When cross-examined about the Deed, the plaintiff said that "Mr Manwaring made me" sign it (T150.10), that the Deed was not a document that she created (T153.28). Mr Manwaring was the solicitor who acted for her in numerous transactions between 4 December 2006 and 11 March 2013: a.Ms Lutkie's action; b.Mr Heath Rogers' financial dispute; c.the criminal prosecution of the plaintiff, and; d.this action. Mr Manwaring appears to me to have been used conveniently by the plaintiff as a scapegoat. There is nothing to suggest that Mr Manwaring could not have negotiated "appropriate" recitals. The plaintiff's ostensible behaviour could be seen to be the "complete surrender" of the plaintiff to Ms Lutkie's claim, as was suggested to the plaintiff by Mr Walker SC (T153.23) but with which the plaintiff would not agree.

Keys to the Property 79In light of the finding I made at [43] above, it is important to know who had keys to the property. Those who had keys to the property were: (i)the plaintiff (T261.48), (ii)her fiancé, Mr Hugh Williams (T262.01), (iii)her niece, Ms Stacy Burns-Brown, and, (iv)perhaps, Ms Carol King. The plaintiff had her alibi; she was in Lithgow. The plaintiff provided an alibi to her niece. She was in New Zealand, on holiday (T270). Ms Carol King is the lady who had been accompanied by the plaintiff on a trip to Sydney to visit Ms King's cardiologist when the plaintiff and Ms King made a visit to the Norman Lindsay Gallery (see [28] above). The plaintiff's evidence about Ms King's possible possession of a key I found curious: Q. Now, did anyone else besides yourself, Hugh, and your niece, have a key to Edward Street? A. I had a friend, Carol King, that-- Q. Sorry? A. I had a friend, Carol King, that had come and gone a fair bit before Christmas, and I wasn't sure whether she had a key or not. She'd come over and stayed. She'd not been well and her daughter had not been well, and they were both in Orange, on and off, before Christmas. Q. Well, where did Ms King normally live? A. At Parkes. Q. When did she come to stay at your place? A. She stayed a number of times mid to late-- Q. It's irrelevant if she stayed at your place in 1990. I only want to know about the relevant time which is December 2006, January 2007. Do you understand? A. Early December, I think. Q. Early December 06? And for how long did she stay? A. Three or four days by memory. Q. So she'd well and truly left by Christmas Eve, for example? A. Yes, she'd dropped in once more but she didn't stay. She dropped in a Christmas present and a card. Q. Did she, or did she not, have a key? A. I'm not sure your Honour. She may - I may have lent her one. Q. Surely, in light of what's happened - in light of the fact that you were charged with a serious criminal offence that carries a maximum penalty of 14 years imprisonment, you would have made an inquiry of her as to whether she had a key? A. I've not spoken to her since. I've tried the phone a few times. It doesn't work. And I've not seen her since, your Honour. Once I'd left Edward Street - it used to be where everyone dropped in to see me, so-- Q. Are you in any doubt that your property was deliberately burnt down? A. Not at all your Honour. Q. Thank you. Aren't you concerned as to who may have caused the fire? A. Terribly, your Honour. Q. Wouldn't it be important to know who may have had access to the property? A. Yes, your Honour. Q. Why would you not be concerned to find out whether Carol King had a key, or not? Or, for example, if she had a key but lost it or gave it to somebody else? Why would you not make such basic inquiries? A. I tried to contact her a number of times your Honour, and I've not been able to. Q. All right. So this fire occurred over six years ago? A. Yes, your Honour. Q. This is a lady who you had put up at your house, who is a friend of yours, and for six years you have not been able to make contact with her by telephone; email; letter; card, or by popping around to her place at Parkes? A. I've never been to her premises at Parkes. She had a flat there. We were friends but we were only friends for probably six months. I didn't know her terribly well. It was just convenient for her come over when she needed somewhere to stay, and she was a lovely lady. She would not have done anything like that. Different inferences can be drawn from this evidence. It appears to me that no genuine attempts were made to locate Ms King and to ascertain whether she had a key or not. It is to be recalled and that the plaintiff had lawyers acting for her from the time of the fire until March 2013. An electoral roll search or the hiring of a private enquiry agent ought to have uncovered her whereabouts. Did the plaintiff really believe that Ms King might have had a key? Or, did she have no suspicion about her having a key because she knew who the arsonist was? I draw the first inference more readily than the second inference. 80However, there clearly were spare keys. The plaintiff was cross-examined about whether Mr Robert Beasley had a key or keys to the property. As well as being a friend, Mr Beasley had long ago been one of the plaintiff's fiancés. The plaintiff's position was this: Q. I just asked you a question, have you ever - had you given them to him? A. I used to leave a key to the back door under the mat if I was going to be too late and he wanted to have a shower and go down trivia with Claire. Q. So he knew where there was a key concealed? A. No, it was only occasionally if I was going to be late back from the farm, then I would leave a key under the back mat. The plaintiff said she did not leave a key out for Mr Beasley on 27 December 2006 as he wasn't coming over (T272.20). However, he had been at the property in the early hours of 27 December and the plaintiff could have given him a key at that time but she said she did not (T272.32). 81Another key, a key to the double back doors, had been given to Ms Lutkie, as well as a key to the shed at the back of the property (T379.14). The plaintiff called her on the telephone on or shortly after 13 November 2006 and asked for the keys back. Ms Lutkie consulted her solicitor and in accordance with his advice dropped them into his office, to be returned to the plaintiff. They were contained in a letter addressed to the plaintiff, dated 29 November 2006, the receipt of which the plaintiff acknowledged in her letter of 4 December 2006 (Exhibit G). As an aside, it should be noted that Mr Walker SC commenced to cross-examine the plaintiff about this letter at T156.26. When pressed about what is not stated in the letter, this answer was given: What I wanted out of this letter was my keys back and the rest of her gear removed. That prompted me to interject thus: HIS HONOUR Q. No, you've just mentioned that your concern at the time of this was to get your keys back? Remember saying that? A. Yes. Q. Would you just read through the letter, please, and does that not say you've recovered all your keys? A. No. At that stage I thought-- Q. Please read the letter. A. That was after I got the keys back. Sorry your Honour. Q. Look, you're not doing yourself any good, Ms McLennan. You try to downplay the significance of the omission from the letter of any reference to the $100,000 and your liability to repay it by saying you were concerned about the keys. But it's clear from the letter you'd recovered the keys. A. Yes, I just I remembered around that time your Honour-- Q. If you say the first thing that comes in your mind in order to explain away why something happens and it's untrue, it doesn't look very good, does it? A. Yes, I'm sorry your Honour. I know around that time I was concerned about the keys but I'd obviously got them back by the 4th. In parrying with counsel, the plaintiff was prepared to say anything which she thought might assist her. 82It is, of course, possible that the spare key held by Ms Lutkie until no later than 29 November may have been the same key that was left out from time to time for Mr Beasley. However, the important fact to note is that the spare key or keys were, at the relevant time, in the possession or power of the plaintiff. There is no evidence that any key was misplaced, lost or stolen, nor did the plaintiff tell me of any key or keys for which she could not account. 83A person who did have a key but for whom no alibi has been provided is Mr Hugh Williams. The plaintiff asks me to believe that he was in Lucknow but, as I pointed out at [30] above, the evidence does not establish that. Mr Williams died in 2009 (T211.20). Mr Williams lived in rental premises with Ms Margaret Walker and "Paul", her "partner" (T48) but neither of them were called to say that Mr Williams spend the night of 27 to 28 December 2006 at their residence at Lucknow. Whether Mr Williams provided a statement to the police or gave an electronically recorded record of interview has not been proved. If he had, such might have been tendered by the plaintiff, but none was. Exhibit 22 suggests that Mr Williams may have been interviewed by the police. That exhibit contains two letters from Nick Boyden Lawyers, of both Darlinghurst and Orange, addressed to DSC Pack. The letters are each entitled: Re Jaqueline Isabelle McClennan [sic], Hugh Williams, Robert Beasley. The first is dated 12 April 2007 and its substance is: I act for the abovenamed whom I understand are currently under investigation for a fire that occurred on or about 28.12.06. Given your conduct of this matter to date, the abovenamed do not wish to be spoken to by police without myself being present. Accordingly, any further inquiries of the abovenamed should be directed to me at first instance. The second is dated 18 April 2007 and its substance is: I refer to previous correspondence in this matter and to our telephone discussion of 16.04.07. I advise that none of my clients are willing to participate in further interviews with police. If Mr Williams had given an interview to the police, what he said would probably have been admissible in these proceedings under Evidence Act 1995 section 63.

What was not Damaged in the Fire 84The plaintiff had been rearing, hand-feeding puppies at the property, until they were old enough to feed themselves. They were not at the property at the time of the fire but at North West (T279). 85The plaintiff had jewellery. When at home, she kept it in a secret hiding place in a chimney. However, the plaintiff asked me to accept that when she left the property, her normal practice was to take her jewellery with her in a case. She brought that case to Court with her on the fifth day of hearing, after being cross-examined about her jewellery on the previous day and openly displayed it in Court (T289.09). I took that to be a formal demonstration. The plaintiff agreed that she had told Mrs O'Shea that she had taken it out of one of her chimneys and that it was in the glove box of her "ute' but that she may have omitted to tell Mrs O'Shea that that was her normal habit (T280). I soon asked the plaintiff why she bothered to hide her jewellery in the property if she always took it with her when she left the premises. She gave this answer and then cross-examination continued: A. Because a lot of the time, your Honour, especially in summer, I had the two doors open, the bedroom and - like the door veranda, they'd all be open and if you were down the back people could wander in and out so I used to just put it in the bedroom, in the apricot room. I used to put it in behind the flapper in the fire during summer and I had another hiding spot in the marble bathroom, that if I had doors open I could put it in there as well. WALKER Q. The fact is that the explanation you've just given his Honour is one way which, if - if true, one way to put to rest any suspicions about a fire having happened in a house from which jewellery had been taken. You know that, don't you? That's one way of answering that suspicion, isn't it? A. Well, it was just a habit of mine. Q. But, I suggest to you, this is the first time anyone's heard about this habit of yours. You didn't put it in any affidavit, did you? A. No, but no-one's asked me about it. Q. Madam, you understand you have a case to make out for three-quarters of a million dollars. You understand that, don't you? A. Yes. Q. You understand that suspicion was cast on you, in the most solid way imaginable, by a criminal charge that you had been involved in having your house burnt. You understood that, didn't you? A. Yes, and it took two and a half hours to clear. Q. Let me finish. You understood that my client continued to resist your claim even after you were discharged on committal, didn't you? A. Yes. Q. And you understood that anything which was relevant to the possibility of you being involved in arranging for your house to be burnt would be at the heart of the case. You understood that, didn't you? A. Yes. Q. And you have no doubt, as a person of commonsense, that the removal of your jewellery on a trip taken on a whim - for a trip taken on a whim the very night that unfortunately your house is burnt is something which would call for explanation. You knew that, didn't you? A. No, I didn't even think of it. That last answer is implausible. She later agreed that she had never mentioned her usual habit to anyone until giving evidence in cross-examination (T282.21). Later, this evidence was given: Q. Unless you could say and persuade people it was your habit this would look terrible, taking the jewellery away, wouldn't it? A. Yes, it would. When pressed to explain why this usual habit was never previously disclosed, the plaintiff sought to shift responsibility to Mr Manwaring (T285.43). 86This evidence has an air of implausibility about it. Would the plaintiff take her jewellery with her if she popped down to the corner shop to buy bread or milk? Or, if she went into town to do the grocery or other shopping? Cars are liable to be stolen and theft from motor vehicles is very common, which the plaintiff admitted (T283.01). Would the plaintiff's jewellery be safer hidden in her locked-up property or being in her glove box or in a room in a public house? Since the property was burnt and North West sold the plaintiff may have adopted a practice of carrying her jewellery with her, but was it her practice before the fire?

An Admission? 87On Saturday 30 December 2006 Mr and Mrs O'Shea were driving past the property, stopped and spoke with the plaintiff. This evidence was given about a conversation at this time: Q. ... you said to her during that conversation, something like this, "We're right. The insurance will cover everything. You'll still be all right", didn't you? A. Yes. Q. You also said something to her like this, "Don't worry about the payment for the $400,000 as I'll pay you with the insurance money", correct? A. No. I said the insurance would take care of it. The people from the insurance company - a Mr-- Q. I'm only asking about what you said? A. --no, please let me finish? Q. No, please just tell me about what you said? A. Please let me finish. WALKER: Your Honour, the witness ought to be directed just to answer the question please? HIS HONOUR: Look, all you are being asked to do is to say, or agree, or disagree, with the proposition as to what you said to Carol on 30 December, all right? WITNESS: All right. HIS HONOUR: Please concentrate on that. WALKER Q. In particular I'm not asking you to tell the Court anything that somebody else said - I'm not asking for hearsay, do you understand? A. Yes. Q. Just you? A. All right. Q. You told Carol O'Shea something to the effect that she wasn't to worry about the payment of the $400,000 that you were obliged to pay her, didn't you? A. Yes. The plaintiff then went on to suggest that her remark had been taken out of context. The plaintiff's putting this into context led to absurdity: Q. That means that she would get her money that you owed her? That's what it meant, isn't it? A. Yes, because I intended as soon as Edward Street was back up to do the same as what I intended to with St George. God. Q. Are you suggesting that you were going to put Carol on the never-never for the refurbishment; re-opening, and selling of Edward Street as a going concern? A. No, I was going-- Q. Is that what - you reassured her that the insurance money would provide you funds to pay her, didn't you? A. No, I said it would take care of it. I expected the insurance would take care of fixing Edward Street. God. Q. Well then, if that is the approach you took concerning the money, you were, in effect, according to what you now say, telling Carol, "I don't know when I'll be able to pay you because it depends upon when I get the insurance money, how the rebuilding goes, how the restaurant opening goes, how the market responds, and what price I will eventually get, and when I will eventually get it - that's what you were telling her, wasn't it? A. Not really. Not in my mind. Q. It must be from what you have told his Honour? A. No-- Q. It wasn't simply her being paid $400,000 from the insurance proceeds, she was being put on the never never until after you were able to complete your plans for refurbishment, re-opening, and re-marketing, correct? A. Or renting out as I planned to, and putting it back on the market. Q. You are agreeing with me, aren't you? A. I think so, yes. I am unable to accept this absurdity. Clearly, the plaintiff was representing to Mrs O'Shea that she would pay Mrs O'Shea that which was owed to her from an insurance payout.

Lack of Cooperation 88The evidence canvassed at some length the plaintiff's failure to cooperate with both the defendant and the police. The defendant's letter of 28 February 2007 refusing the plaintiff's claim (Exhibit C) provided this ground: This decision has been taken because information which we obtained during the investigation of your claim led us to conclude that it was not genuine and that the incident did not occur in the way in which you stated. On 14 March 2007, the defendant wrote to the plaintiff offering to review her claim (Exhibit 2). The relevant part of that letter is this: A further review of your claims will be conducted if you supply the following documents: All bank statements covering the period from 1 January 2006 to 31 January 2007 for all separate and joint accounts held by you and any business operated by you or in which you held and interest during that period. ATM transaction receipt or record for monies you claim you withdrew from the ATM in Bathurst on the evening of the 27 December 2006 that indicates the time the transaction was made. A signed authority allowing NRMA Insurance to obtain a verbal and/or written reference regarding finance held over your vehicle with Capital Finance (an authority is enclosed for your assistance). Profit and Loss and Balance Sheets for and business operated by you or in which you held an interest for the 2005 and 2006 financial years. Documentation regarding any pending or current legal actions being taken against yourself or any business operated by you or in which you held an interest (including details of the quantum of such claims) during the period from 1 January 2006 to date. Following receipt of this additional information I will conduct a further review of the decision that has been made to decline your claims. It may also be necessary to request further information. The plaintiff accepted that she sent nothing to the defendant (T79.28). The plaintiff then made this concession: Q. So from that date when you received and considered that letter you were in no doubt whatever, were you, of the central relevance to the insurer's consideration of your claim what your financial position might reveal about a motive to arrange the fire? You knew that, didn't you? A. Yes, by that stage I think, yes, I would have been aware of it. 89The first response to the defendant's letter of 14 March 2007 is one from CPT dated 7 August 2007, sent by facsimile on 8 August 2007 at 12.35pm and received in hardcopy by the defendant on 29 August 2007 (Exhibit 5): We advise that our firm now acts for Ms McLennan. We refer to your letters dated 28 February 2007 and 14 March 2007 respectively. We note that NRMA has refused our client's claims. We note the decision to refuse our client's claims is based on information which you say has been obtained during the investigation of the claims leading to a conclusion that the claims were not genuine and the incident upon which the claims were based did not occur in the manner in which our client has stated. We note that you have not provided our client with the information nor have you described in any detail what the information is. Notwithstanding your failure to provide the information and/or provide a detailed explanation you have requested further documents and/or information from our client. Whilst our client may be willing to supply the information you seek (including the provision of documents) our client needs to understand the relevance and/or the basis upon which you request the documents. Therefore, would you please provide us with the information obtained during the course of your investigation that has led NRMA to conclude that our client's claims are not genuine and did not occur in the way in which our client has stated. Alternatively, please provide a detailed explanation as to what the information purports to evidence and how the provision of the documents and/or information you seek in your letter of 14 March 2007 would assist in your enquiries vis-a-vie [sic] the information you have received and generally. Upon receipt of your favourable and substantive response to the foregoing our client will give urgent consideration as to whether or not the documents and information you request in your letter of 14 March 2007 will be provided. The letter continues with the threat of litigation if no favourable resolution was reached by 31 August 2007. Now, the plaintiff herself knew by this time, as would any reasonably worldly person (which ought include a lawyer), that the plaintiff's financial position was extremely relevant when it ought to have been clear to anyone that the property had been the subject of arson. 90On 9 April 2008 the plaintiff sent an email to the defendant requesting a review. The defendant replied by letter dated 14 May 2008 (Exhibit 3). The plaintiff had requested copies of records of interviews conducted on behalf of the defendant. The defendant sent to the plaintiff records of interviews between herself and employees or agents of the defendant but declined to provide those of others "due to privacy laws" without first requiring the plaintiff to complete a "Personal Information Access Request", which the defendant enclosed and asked the plaintiff to complete. The plaintiff asked for a list of questions that the defendant proposed to ask her at interview, but the defendant declined such a restrictive format of interview because it was, in essence, inefficient. The defendant then again asked for the documents requested on 14 March 2007, none of which had previously been provided by the plaintiff or by CPT. The letter then continues: Aside from the above, we also request that you now provide the following documentation: All credit card statements covering the period from 1 January 2006 to 31 January 2007 for all separate and joint accounts held by you and any business operated by you or in which you held an interest during that period. All statements covering the period from 1 January 2006 to 31 January 2007 for all separate and joint loan, mortgage, finance or overdraft accounts held by you and any business operated by you or in which you held and [sic] interest during that period. Documentation regarding any proposed, anticipated or actual purchase of any properties, including properties adjoining the Property. Documentation regarding any proposed, anticipated or actual commencement or operation of any business, including a restaurant or café, at the Property. In our view it is clear that the only way in which we will be able to cover this documentation with you is if you agree to the face to face interview we initially proposed. Consistent with that aim, we require the documents to be provided as soon as possible to allow the documents to be covered in the interview. As stated in our previous letter, in accordance with the Policy, you have a general obligation to co-operate fully with us (see page 59). Specifically, you also have the following obligations: "you must pass on any additional information we request" - see page 57; and "you must provide us with all the information, documents and help we need to deal with your claim" - see page 59. In addition to those obligations, you are also obliged to act in good faith pursuant to section 13 of the Insurance Contracts Act 1984 and the Policy. We are of the view that in order for you to discharge these obligations and assist us in making a decision concerning your claim you are obliged to provide us with the documents and agree to, and participate in, the further interview outlined above. We are happy to organise for the interview to take place in Orange, however, we cannot limit the extent [of] our inquires to the provision of a list of documents. Please advise when you can provide the documents and the dates that you are able to participate in a face to face interview. The plaintiff accepted and understood from this letter that the defendant required an interview and provision of the specified financial documents as a necessary and reasonable piece of cooperation on her part (T81), but she refused to do so on "legal advice" (T82.02). 91The plaintiff replied by letter dated 23 May 2008 (Exhibit 4): I refer to your letter of 14 May 2008 and thank you for same. I look forward to receiving the further documents I have requested and confirm I have sent my Personal Information Access Request form as requested. Respectfully, I see no reason why I should participate in a further interview. I simply request you provide me with a list of questions in writing that you require to be answered and I will do so. With respect to the documentation that you have requested my solicitors wrote to you last year. You did not respond. Would you please advise as to how the documents you have requested will assist you in assessing my claim. My claim relates to a fire that started at 171 Edward Street. Please advise how each of the documents you have requested are relevant in determining my claim in that regard. Finally, NRMA refused my claim. Am I to assume that my claim is still denied [?] The author of this letter appears to have been Mr Christopher Murtagh, a "retired barrister" who either assisted the plaintiff directly or assisted Mr Manwaring (there is evidence each way), until he became "too unwell". If the plaintiff be believed (which I do not), Mr Murtagh's assistance was unsound as the plaintiff repeatedly said that he advised her that her financial position was irrelevant. 92Cross-examination on this issue was lengthy. The plaintiff often admitted that she knew what information the defendant required but her reasons for not providing it lack any cogency. She said that Mr Manwaring advised her not to communicate with the insurance company (although she did) and that he would become angry with her when she did. However, she also conceded that his advice may have been only to communicate with the defendant through him, through CPT. Exhibit 6 is the draft of a letter which was sent to the plaintiff on 10 June 2008 by the defendant giving a number of grounds for refusing the claim which grounds included non-cooperation and the withholding of particulars. Finally, it is to be noted that the plaintiff made no attempt to provide to the Court any of the documents which the defendant had been seeking since 14 March 2007, for over six years.

"The Cupboard" 93The cupboard (see [50(a)] above) was also the subject of considerable cross-examination. It was the site of the "undetonated" delayed ignition device. The evidence concerning this could be viewed as almost farcical, although the ramifications of it are not. After the initial fire brigade and police inspections, the plaintiff was permitted to salvage what she could from the property. She recovered the cupboard, which was taken 3 days later and placed in a shed on the rented property at Lucknow in which Mr Williams lived. On 12 April 2007 DS Rudens asked the plaintiff about the cupboard, which he told the plaintiff that the Arson Investigation Unit would like to inspect. She volunteered to bring it to DS Rudens as the following Monday (16 April 2007) - see Exhibit 7. The plaintiff said (T47): I put it on the back of the ute with Hugh's help, was driving it into town because they said they had to get back to Sydney and [Mr Manwaring] spoke to me and said, "Don't give them anything". At T49.40 she reiterated that this advice was given to her by Mr Manwaring but then at T51.25 by Mr Nick Boyden and then at T52.40, T54.28 and T65.10 by both those solicitors. The cupboard was then taken to North West. Police then attempted to execute a search warrant at North West, unsuccessfully, as the cupboard was not there. The plaintiff had moved it to a hayshed on Part A (T64.03), covered it with an old woolpack with wooden pallets on top to prevent the wool pack from being blown off, this to protect the cupboard, not to hide it. She knew that the police were eager to inspect the cupboard. This evidence was given: Q. ... You knew that a cupboard in which there had been ignited candles, by the observation of the firemen when they were extinguishing the fire, would be of interest to any fire investigator. You knew that? A. Yes. Q. In fact, it was really obvious to you as a matter of common sense, wasn't it? A. Yes, and obvious to me-- Q. What you're trying to say four or five times is, you only wonder why they didn't come for it earlier, is that correct? A. I wonder why it wasn't taken-- Q. Could you just answer the question? A. --the morning after the fire. Q. None of that explains why you would be unwilling to hand it over, does it? A. Because I had legal advice not to, and by memory, off two solicitors. Q. So now two solicitors who gave you that advice, is it? A. Well, if Nick did write this and if it is in reference and that's the right dating, then he would have advised me when I spoke to him at the farm that morning, I had already rung Mason and got a message off Mason later in the day, as I came back from Lucknow, by memory. Q. What do you mean, if he wrote it? Are you doubting the authenticity of that copy? A. No, I'm not, but-- Q. Then why did you say, "if"? A. Well if it pertains to the cupboard, depending on the date, but I can't tell you-- Q. I'm not suggesting it does pertain to the cabinet. There was a complete ban on any interview with you, isn't that right? A. Yes. Q. In other words, complete lack of co-operation with those investigating the fire, is that correct? A. Yes. Q. It is also a complete lack of co-operation to deny access to a cupboard, which is a matter of common sense, you thought would be of interest, and straight away, to a fire investigator. Would you agree with that? A. Yes. Q. You made the police, in effect, go to the trouble and expense of a warrant in order to obtain that cupboard, didn't you? A. Yes. Q. You would agree that was, on any view of it, uncooperative in investigating the truth. Do you agree with that? A. No. Uncooperative in being railroaded and verballed, I would agree with that. Q. You accept, do you not, that on 16 April 2007, Mr Pack contacted Mr Boyden who was acting for you, and Mr Pack said to Mr Boyden, "I understand that Jaqui has removed the wooden cupboard from the home in Edward Street, I need to obtain this for further investigations, can you see whether she's prepared to hand it over to the police." It was inside the property at the time of the fire, and you accept, don't you, that Mr Boyden, on your instructions, said, "Jaqui will not be passing any items over to the police." You accept all that, don't you? A. Yes. Q. That's completely uncooperative with those in authority, seeking to investigate the truth of the fire, isn't it? A. They were not seeking to investigate the truth. Q. So your only answer to that last question I've asked you, is to cast an aspersion on the honesty of the police investigator. Is that correct? A. Yes. This is a good example of the plaintiff's failure to cooperate with police, just as she failed to cooperate with the defendant. It is also an attempt to blame her lawyers for her conduct and to cast aspersions on investigators.

Quantum 94Despite the threat of CPT, proceedings were not commenced in the Supreme Court but in this Court. The sums insured under the policy were: Buildings: $848,000 Contents: $262,500 However, quantum was not in issue before me. Exhibit 1 establishes that the parties agreed (when the plaintiff was represented by CPT) that on the basis that the plaintiff agreed to limit her claim to the jurisdictional limit of this Court ($750,000) that quantum was not in issue. It is clear that this proposal was put forward by the plaintiff, who abandoned her claim for any amount exceeding the jurisdictional limit of this Court (see letter of CPT to the defendant's solicitors dated 17 February 2011 contained in Exhibit 1). The plaintiff complains about this. She said Mr Manwaring did that without her instructions and proposes to sue him for the balance of the sum insured ($360,500) should she be successful. I am unable to accept that a partner in a well-established firm such as CPT would abandon his client's claim for $360,500 without instructions. 95I have already drawn attention to the fact that the Fire Brigade records indicate damage to the contents of the property amounted to $60,000 rather than anything close to the sum insured. The same records indicated that the extent of damage to the property was $650,000. If the market value of the property were only $700,000 (which the plaintiff was prepared to accept in late 2005 or early 2006) then the property may have been overinsured.

The Policy 96A contract of insurance has been traditionally called a "policy of insurance" or, in short, "the policy", just as the consideration paid by the insured is "the premium". The defendant calls its policy "Product Disclosure Statement and Policy Document" in accordance with modern, bureaucratically driven prolixity. I shall merely refer to it as "the policy". The relevant part of the policy is on page 8: Fire If your home or contents suffer loss or damage caused by fire we will under contents insurance *replace or repair your damaged contents We will under buildings insurance *rebuild or repair that part of your home that was damaged however "we will NOT cover loss or damage as a result of fire started with the intention of causing damage by you or someone who lives in your home, or who has entered your home or site with your consent, or the consent of a person who lives in your home. 97As a matter of construction, the phrase "by you" does not qualify the noun "damage" but modifies the verb "started'. The alternatives to "you" are also governed by the preposition "by". One permissible reading of the "however" clause is this: however we will NOT cover loss or damage as a result of fire started (with the intention of causing damage) by someone who has entered your home with your consent. This clause can be conveniently described as an "exception clause". 98The policy formulation I am now considering was the subject of the judgment of Middleton J in Secure Funding Pty Ltd v Insurance Australia Ltd [2010] FCA 1094. That action proceeded on agreed facts. After stating the material facts of special importance in determining the extent of the cover of the policy and after reciting a number of authorities relied upon by the insured, his Honour said: 13. However, the relevant clause in this proceeding is not focussed upon the claim or claimant, and defines the risk undertaken by the insurer. The present exclusion clause expressly states that it will operate if the relevant person "entered your home or site with your consent, or the consent of a person who lives in your home". The relevant person does not have to be the claimant himself or someone acting on his behalf, as was the case in Condition 7 in VL Credits [1990] VR 938. The present exclusion relied upon by IAL is not dependent upon whether the claimant is the named insured or Secure Funding. 14. The focus must always be on the precise terms of the contract. The precise terms of the relevant clause are set out above, but restated to take account of the agreed facts and the claim made by Secure Funding under the Policy, can be stated as follows: However, [IAL] will NOT cover loss or damage as a result of fire started with the intention of causing damage by [Secure Funding] or someone

• who lives in [the home insured on the Certificate of Insurance], or
• who has entered [the home insured on the Certificate of Insurance], or site with [Secure Funding's] consent, or the consent of [Parker]. 15. In the present case it is agreed Philp, with the intention of causing damage, deliberately set fire to the Property as a result of which the Property was extensively damaged and that he was a person who had entered the Property with the consent of Parker, being a person who lived at the Property. This would mean the Policy did not cover the event that caused the damage. At [18] his Honour pointed out that the actual format of the relevant clause of the policy was significant and then set it out. That format is the same as that in this case. His Honour then turned to matters particular to that case and continued: 21. What a principled approach to questions of contractual interpretation requires is an objective reading of the terms of the Policy and a textual and contextual analysis of the relevant provision. The primary object is to construe each provision so that it is consistent with the language and purpose of all the provisions of the Policy. Each claim will ultimately depend on the terms of the Policy and the cover agreed to be given. 22. Insurance cover may be defined positively by specifying the risks or circumstances in respect of which cover is provided. Alternatively, cover may be expressed in broad terms, such as "property damage", subject to exceptions that subtract from broad terms, so that the precise ambit of the insurer's liability is tailored. This is what has occurred in this Policy. 23. Therefore, the Policy here limits the ambit of the cover to not include liability in the circumstances that give rise to these proceedings. In my view, this is the proper characterisation of the relevant clause now relied upon by IAL. 99To succeed, the plaintiff must prove, on the balance of probabilities, that the loss or damage for which she seeks to recover damages falls within the terms of the policy. Consistent with this interpretation of the policy, the plaintiff must prove (limiting the policy to buildings insurance, for ease): a.her home ("the property") b.was damaged by fire, and c.the fire was not started by someone who entered the property with her consent with the intention of causing damage The same three "elements" apply to contents insurance, mutatis mutandis. The defendant's primary submission is that the plaintiff has failed to discharge her onus of proof in respect of each of these three elements. 100A similar situation arose in Halikiotis v Insurance Australia Ltd [2011] NSWDC 31, to which Mr Walker SC was kind enough to refer me. In that rather lengthy judgment I said this: 72. At [7] above I listed the issues tendered for my determination. The first issue is whether the vehicle was "stolen and found damaged". The onus is upon the cross-claimants to establish the facts that entitle either of them to rely on the policy. That the insured is George Halikiotis is clear from the Certificate of Insurance (Exhibit 9). George must establish on the balance of probabilities that the vehicle was "stolen" and later "found damaged". Maria bears the same onus insofar as she relies on this provision of the policy. The following have not been proved on the balance of probabilities: (a) forced entry into the vehicle: it must have been left unlocked or entry was obtained by using a correct key. I have discussed the inconsistencies in George's evidence as to whether the car was secured at above. Clearly his initial position was that the vehicle was "secured". His backsliding in evidence was perhaps to fit in with the hypothesis advanced by Mr Squire; (b) that there were an emergency key or a valet key in the driver's compendium in the glove box of the vehicle, a subject I have already canvassed at length; (c) the taking and/or asportation of the vehicle without his consent. Since the vehicle was driven to the site at which it was found by the police with a correct key and the only two keys were within the power or control of George Halikiotis, relevant elements of larceny have not been established. I must point out that there was no suggestion of any breaking, entering and stealing from the property at 13 Renway Avenue, Lugarno or any entering and stealing from that property and the two keys which he had were given by him to Maria who gave them to IAG which made them available to the experts. 73. The first cross-claim must, accordingly, fail. My findings above do not establish a positive case, merely that the cross-claimants have failed to establish that they can rely on the policy: Compania Naviera Vascongada v British & Foreign Marine Insurance Co Ltd (The Gloria) (1936) 54 L1.L.R 35; Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd [1972] 2 QB 625; Simon v NRMA Insurance Ltd (NSWCA, 22 Oct 1991, unreported); Hammoud Brothers Pty Ltd v Insurance Australia Ltd [2004] NSWCA 366. The second cross-claim must also fail insofar as it relies on this provision of the policy. One case to which I did not refer, but would have done so if counsel had referred it to me, was Vidal v NRMA Insurance Ltd [2005] NSWCA 390. That was an appeal from Master Harrison (as she then was) who had determined an appeal from the Local Court. The policy in that case appears to have been identical to that I considered in Halikiotis. Handley JA (with whom Mason P and Brownie AJA concurred) said this: 14. Some of the problems in this case arose because the insurer pleaded defences by way of confession and avoidance under which it had the onus of proof. In reality they were the mirror image of the plaintiff's claim, on which she had the onus, that her vehicle had been stolen, that is, removed without her consent or connivance. 15. Sometimes an insurer simply puts the insured to proof without having a positive case. At other times, such as here, the insurer may have a positive case, what may be described as a negative pregnant. An insurer is fully entitled to run a positive case, without undertaking anything more than an evidentiary burden of displacing the plaintiff's prima facie case. The question was considered and explained by the House of Lords in Rhesa Shipping Co SA v Edmunds [1985] 1 WLR 948. This was a marine insurance case where the underwriters denied that the ship had been lost by perils of the sea, and sought to prove that she had been scuttled. Lord Brandon said at 951: "... it is important that two matters should be borne constantly in mind. The first matter is that the burden of proving, on a balance of probabilities, that the ship was lost by perils of the sea, is and remains throughout on the shipowners. Although it is open to underwriters to suggest and seek to prove some other cause of loss, against which the ship was not insured, there is no obligation on them to do so. Moreover, if they chose to do so, there is no obligation on them to prove, even on a balance of probabilities, the truth of their alternative case. The second matter is that it is always open to a court, even after the kind of prolonged inquiry with a mass of expert evidence which took place in this case, to conclude, at the end of the day, that the proximate cause of the ship's loss, even on a balance of probabilities, remains in doubt, with the consequence that the shipowners have failed to discharge the burden of proof which lay on them." 16. This statement applies, with appropriate modifications, to insurance claims for theft, fire and the like.

The Plaintiff has failed to discharge her Onus of Proof 101At [99] I set out three "elements" that the plaintiff must prove on the balance of probabilities. There is no dispute that the property and its contents were damaged by fire (elements (a) and (b)). There is no dispute that the fire was deliberately set and there can be no argument, considering the nature of the arson and my findings arising therefrom, that the fire was set with the intention of causing damage. However, I am not satisfied that the plaintiff has proved on the balance of probabilities that the fire was not started by someone who entered the property with her consent. Shortly, my reasons for that are: (i)there was no evidence of forced entry and it follows logically that the arsonist had a key or keys to the property - see [43] above; (ii)the arsonist was not expecting the plaintiff to return to the property, indicating that he had some knowledge of the plaintiff's movements on the night of 27 to 28 December 2006 - see [44] above; (iii)the arsonist is likely to have been a relative or friend of the plaintiff - see [45] above; (iv)the arsonist appears to have had some familiarity with the property - see [53] above; (v)the keys to the property were within the power or possession of the plaintiff and there is no evidence that any key to the property was misplaced, lost or stolen - see [82] above; (vi)the matters I canvassed under the heading "What was not damaged in the fire" - [84] to [86] above; (vii)the plaintiff had a clear motive to cause the fire to be set, to rescue her from her financial obligations - on this issue I shall say more soon; (viii)that which the plaintiff told Mrs O'Shea on 30 December 2006 - see [87] above; (ix)the plaintiff's failure to cooperate with both the police and the defendant, consistent with her having something to hide or, to use the jargon of the criminal law, a consciousness of guilt. The plaintiff's action must, accordingly, fail 102The plaintiff testified that "no one ... ever entered my premises with my permission to do damage to it" (T265.23 to T265.26). However, for reasons already given, I am unable to accept the plaintiff's evidence without reliable corroboration and, on this issue, there was none. The main thrust of the plaintiff's case is that she had spent so much of her time, care and income on the property that she would not allow it to be damaged or destroyed. Looking at the "before" photographs in Exhibit B excites much sympathy for that position. The final plaint of Ms McLennan in her address was this: I state again, I would never, ever have anything to do with the destruction of my beautiful Warrembah house or allow anyone else to attempt to destroy it. Warrembah actually is an Aboriginal word that means to love and care for, and from the time I bought the house until the time of the fire that's exactly what I did. However, the significance of this falls away when one recollects that for the plaintiff the purchase of Part A was more important than retaining possession of the property. Completion of the agreement she had with Mrs O'Shea was contingent on the plaintiff's being able to sell the property. That agreement was struck in August 2005. By December 2006 the plaintiff owed at least $300,000 to Mrs O'Shea (but could rescind that debt if she forfeited $30,000), $100,000 to Ms Lutkie and was barely able to service her debt to St George Bank ($240,000) and her debt to Capital Finance ($52,665.57). Mrs O'Shea was pressing for payment of the debt due to her. I do not accept that on 1 December 2006 at the Parkview Hotel that there was a discussion of rescission of the contract to purchase Part A. That clearly was a recent invention. The only way out of the plaintiff's financial position was to liquidate (that is, turn into cash) the property. The property had been passed in at auction in 2005 and had failed to sell on the private market before the fire. On the day after the fire, the plaintiff told the police that the market was "a little flat". The adjective was not contained in the question (at T255.39) but the relevant police officer was not called to give evidence. The traditional method of liquidating the property had been unsuccessful. Her creditors were pressing. The plaintiff clearly had a motive to seek an insurance payout. Especially is that so when one considers the values insured and the fact that the reserve price at auction was $700,000. 103That part of the policy I have quoted contains the defendant's promises to "replace or repair" contents and to "rebuild or repair" buildings. However, it is clear from page 41 of the policy that the defendant had the option of paying the insured the cost of replacing contents and of paying the insured the cost of rebuilding or repairing the buildings. Exhibit B contains a statement by the plaintiff that: I have since [the fire] been informed that it is common practice for insurance companies to doze properties and then take the value of the block off the claim. That is an admission by the plaintiff that after the fire she might expect a lump sum payout. Considering my findings as to credit, why should I confine the plaintiff's expectation to after the fire? 104No evidence was adduced that there was a pyromaniac loose in Orange or the local region. No evidence was adduced of other suspicious fires in Orange or the local region. No evidence was adduced of any other house fire where a similar modus operandi had been employed. The only person who the plaintiff suggested had an animus against her was Ms Lutkie. She said on oath that she did not know who set the fire and I accept her in that regard. Implicit in that evidence is that she did not set the fire. Furthermore, the following considerations speak against her being the arsonist: a.she was the first person to report the fire to 000. Why not lie in bed and wait for someone else to do so to allow the fire to burn longer? b.she did not have a key to the property; c.why seek to reduce the ability of the plaintiff to pay her claim - the fire would lead to, at least, some delay before the plaintiff could attend to Ms Lutkie's claim; d.why impair the amenity of her street, and therefore lessen the value of her own property? If the property were completely destroyed, a modern residence might be erected, out of keeping with the Victorian architecture of much of central Orange.

The Defendant's Positive Defences 105The defendant pleaded a number of positive defences or, to use the terminology used by Handley JA in Vidal, "defences by way of confession and avoidance under which it had the onus of proof". Those defences are (the numbers provided are those in the Defence filed on 17 April 2009): (19)it was entitled to refused the claim if the plaintiff was not truthful and frank - Policy p.67; (22)the plaintiff failed to pass to the defendant any additional information requested by the defendant and failed to provide to the defendant all information, documents and help it required - Policy p.57 and p.59; (26)breach by the plaintiff of her obligation under Insurance Contracts Act 1984 (Cth) section 13 to act with the utmost good faith; (27)deliberate arson of the property caused by the plaintiff or a person acting with her consent - Policy p.35; (28)a fraudulent claim within the meaning of Insurance Contracts Act 1984 (Cth) section 56(1). 106The problem arises with a number of these defences that the plaintiff may be entitled to some statutory relief e.g. under section 56 itself. However, no reply was ever filed to the defence. Whilst it is not necessary to plead the law, it may be necessary to plead facts entitling the plaintiff to statutory relief. Furthermore, no submission was put by the plaintiff about any such entitlement, but that is hardly surprising considering that she appears to have very little knowledge of the law, other than American vocabulary not used in this country. However, as she made no submission, Mr Walker SC made no submission in reply: he was absent during the final day but could have provided me with written submissions if the plaintiff had raised in her submissions any question of statutory relief. Were I to afford the plaintiff any statutory relief in respect of the positive defences, I would not have had the benefit of the defendant's submissions thereon and it could be argued that I had failed to provide to the defendant a basic right - the right to be heard: audi alteram partem. I shall therefore deal with these positive defences in the manner suggested by Mr Walker SC, by not considering them: ... if at the end of the parties' respective persuasive exercises your Honour is with us on that proposition the plaintiff has failed to discharge her onus then that's an end of the case without any need for consideration of the positive defences. It doesn't mean, bearing in mind the strictures that I think both the High Court and the Court of Appeal have expressed from time to time, it doesn't mean that your Honour must not decide the positive defences but, and with great respect to some of those strictures, it does mean you need not. If I may say so and with great respect to the Courts I've just named, sometimes trial judges might be entitled to feel damned if you do, damned if you don't bearing in mind the labour and time called for in a case such as the present in relation to positive defences. I don't think I need or should go further than saying what I have just said; your Honour has with respect experience in that side of things.

Orders 107I give verdict and judgment for the defendant against the plaintiff. Subject to any application on this subject (and such was foreshadowed by the defendant's solicitor on the last day of hearing), I propose that the plaintiff pay the defendant's costs.

Amendments 18 September 2013 - Reformatted last sentence to paragraph font (not a heading) Amended paragraphs: 101 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2013