Rolleston v Insurance Australia Ltd

Exclusion of expert evidence

1. The plaintiff's primary damages claim was for an amount of $3.4 million, representing the difference between what the plaintiff said would have been the value of the property if the fire damage were repaired, and the amount ultimately recovered upon its sale, in its damaged state, in February 2014. To substantiate the "if repaired" value, the plaintiff relied upon the evidence of an expert valuer, Mr Lechner. Mr Carolan of Counsel, who appeared for the defendant, objected to the report. I rejected it, and said that I would give reasons when I gave judgment. I now do so.
2. Mr Lechner said that he had adopted the "comparison method" of valuation. As its name suggests, that method of valuation requires the identification of properties, said to be comparable in their characteristics to the subject property, that were sold on the open market at around the valuation date. As Wells J said in Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541 at 550-551: It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances … appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia … to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape … land use (actual and potential), scope for, and difficulties of, development, … ; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected.
3. In seeking to identify comparable sales, Mr Lechner investigated a number of sales in the Mosman area. From those sales, he selected (on a basis that his report does not explain) some seven sales, on dates ranging from 12 October 2012 to 19 February 2014. Only two of those eight sales in fact occurred in 2014; and both of them were exchanged in the month of February.
4. In the usual way, Mr Lechner described the properties the subject of those selected sales, and compared their qualities to the subject property. It has to be said that he did so at a fairly high level of generality.
5. Again in the usual way, having carried out that exercise, Mr Lechner indicated the respects in which he thought the comparable properties were superior or inferior to the subject property (by reference to location, views, land area, quality of improvements and the like).
6. Then, having set out that sales evidence, Mr Lechner undertook his "direct comparison approach" assessment of value. He summarised the comparison method, and referred to the various factors that required "adjustments [to be] made for points of difference".
7. He noted that "[t]he most comparable sales evidence utilised … range in value between; $6,700,000 to $9,250,000". He commented that the range of values "reflects characteristics like location, land size, views, quality of improvements, functionality, accommodation, parking, vehicular access, building size and topography".
8. Mr Lechner then selected, from the seven sales to which I have referred, what he said were "[t]he most comparable properties". He did not indicate why it was that they merited that description. Somewhat strangely, those "most comparable properties" included one sold for a sum, $11,060,000, that was well outside the range of sales prices shown by the "most comparable sales evidence" to which he had referred earlier.
9. As to each of those four properties, Mr Lechner set out, essentially repeating with some expansion what he had said earlier, the respects in which, in his view, it was inferior or superior to the subject property. One he considered to be "broadly comparable"; one "superior overall"; one "inferior overall"; and one "far superior overall".
10. Having made those observations, Mr Lechner stated: On a direct comparison basis, the sales evidence analysed is considered to support a valuation assessment for the subject property; at $7,500,000 (his emphasis).
11. There was no identified reasoning whatsoever to show how the sales data that Mr Lechner had identified supported that figure. Put another way, there was no reasoning process deployed in the report to show why that "sales evidence … is considered to support" the figure that he derived. For all the report shows, that figure might have been plucked out of the air.
12. This is not just a matter of mere pedantic detail. The "broadly comparable" property that Mr Lechner identified sold, five months before the valuation date, for $7,350,000. The subject property, although it was to be valued on the basis that the fire damage had been repaired, was otherwise to be valued on the basis of its condition as at 10 May 2013. As the evidence showed, there was a substantial amount of detailed work to be done to finish the construction and bring the house into a state where it would be fit for sale. Nothing in Mr Lechner's report shows why the subject property was "considered" to be worth more, in its incomplete state, than the "broadly comparable" property that he had identified.
13. I do note that in earlier sections of the report, when discussing both that "broadly comparable" property and another one, Mr Lechner commented: Note: Local residential market having improved post this transaction.
14. Mr Lechner provided no data to support this assertion. He did not show, by reference to sales evidence over the period from September 2013 to February 2014, the way in which market prices for broadly comparable properties in the Mosman area had moved. Nor did he explain, in deriving his valuation figure, how (if at all) the suggested improvement in the market might have affected the valuation exercise that he was retained to perform.
15. In Bone v Wallalong Investments [2012] NSWSC 137, I dealt with a valuation report that displayed a similar want of reasoning (although, as was submitted for the plaintiff, involving very different valuation inputs). I said, at [20] to [26]: [20] Expert evidence may be exempt from the opinion rule set out in s 76 of the Evidence Act 1995 (NSW) if s 79 applies. The prerequisite for the operation of s 79 is that the witness have specialised knowledge based on the witness's training, study or experience. In those circumstances, the opinion rule: "Does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge". [21] Thus, if s 79 is to apply, it must be shown that the opinion expressed by the person is wholly or substantially based on his or her specialised knowledge. Where s 79 applies then, subject to any other factors affecting admissibility, the opinion rule does not apply, The expert's evidence may be admitted to prove the existence of a fact (in this case of the value of the land at 11 March 2010) about the existence of which the opinion is expressed. [22] The significance of the requirement set out in s 79(1) has been examined in several cases. Perhaps the most well known (until recently) was Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705. [23] In that case, Heydon JA looked closely at the requirements for admissibility of expert evidence, from [59] on. His Honour summarised his views at [85] by saying, among other things, that it must be established that the facts on which the opinion is based form a proper foundation for it, and that the intellectual basis of the conclusions should also be demonstrated. In his Honour's words: The expert evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based" apply to the facts assumed or observed so as to produce the opinion propounded. [24] If that did not happen, his Honour said: It is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. [25] His Honour returned to the question in Dasreef Pty Limited v Hawchar (2011) 277 ALR 611. His Honour was in dissent in the outcome of that case, but I do not think this detracts from the force of his Honour's exposition of the relevant principles relating to the admissibility of expert evidence. [26] One of the matters considered by Heydon J in Dasreef what was his Honour called the "statement of reasoning rule". His Honour looked at that from [91] to [94] (as to the position at common law) and from [95] to [101] (in connection with s 79). I do not think that it is overstating his Honour's views to say that unless the reasoning of the expert can be deduced from the report, so as to enable satisfaction of the threshold test posed by s 79(1), then the report may not be admissible.
16. In the same case, I referred to the decision of Pullin J in Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174. I said at [32], [33], adopting what Pullin J had said at [78]: [32] In Arcus ShopFitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174 Pullin J said at [78] that: It is not satisfactory...for a valuer who values land using the comparable sales method, to list a number of comparable sales, each one suggesting a different value for the subject land and each of which requires some adjustment, and then to simply state an opinion about the value of the subject land. [33] I agree with his Honour's observation, and I do so for the reason that his Honour then gave: that the opinion: ...[W]ill only have any value if the valuer explains which is the most important of the comparable sales, why that is so, and what adjustments have been made to reach a conclusion about the value of the subject land.
17. I should note that there was a successful appeal from the decision of Pullin J: Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295. The Full Court overturned the decision of Pullin J, because they concluded that his Honour had erred in failing to consider the comparable sales evidence overall. His Honour had proceeded by examining each sale individually, and determining from that process which was the most comparable. Having done so, his Honour reached the conclusion that he did as to value by reference to that one remaining sale. McLure J (with whom Anderson and Steytler JJ agreed) said that this approach was incorrect. Her Honour said at [52], among other things, "that a sufficient sample of comparable sales [should] be collected and analysed collective and individually" so that "comparable sales are weighted but the sample remains representative and sufficient in volume".
18. There is nothing in the reasons given by McLure J to suggest that the approach that Pullin J had taken to an unreasoned "ipse dixit" valuation was incorrect. I do not think it was.
19. In this case, Mr Lechner's report does not enable any assessment to be made of the validity of the reasoning process that he undertook. Thus, in my view, his report does not show that the conclusion expressed by him was based on, or the result of, the application of his specialised knowledge to, the facts (assumed by or known to him) stated in his report. Thus, in my view, Mr Lechener's report did not pass through the s 79 gateway.
20. In any event, and if I were wrong in that conclusion, I would have excluded the report in the exercise of the discretion conferred by s 135 of the Evidence Act. I would have done so essentially for the reason that I gave in Bone at [37]: [37] If I were wrong in that conclusion, I would nonetheless exclude the report from evidence relying on the discretion contained in s 135 of the Evidence Act. I would do so because, in my view, it is wholly unfair to the defendants to expect them to elucidate Mr Hadley's reasoning process in the course of cross-examination and then to challenge that process without the opportunity to reflect on it. Although perhaps some time could have been given to allow this, I do not regard the just, quick and cheap resolution of the real issues in dispute as requiring a staged process of cross-examination of an expert witness.
21. Mr Hadley was the valuer in that case. I had earlier referred, at [31], to the problems to which his unreasoned report gave rise. Since what I there said is also applicable by analogy in this case, I set out that paragraph: [31] It is thus not practical for the defendants to make some assessment of the integrity of Mr Hadley's reasoning process, which, of course, is a necessary element of cross-examination of an expert. In general, cross-examination of an expert is directed towards the assumptions on which the opinion is based, or on the reasoning process that traces the link between the assumptions of fact to the opinions expressed, or both. Since the reasoning has not been exposed in the report, counsel are put in the entirely unsatisfactory position that they need to expose the reasoning in cross-examination before they can (if they can) attack it.
22. I add to what I there said the consideration that, if counsel takes the forensic decision not to question the expert on the reasoning process, he or she runs the risk that the Court may accept the expert's evidence. I do not think that it is fair to put counsel in such a position. On the contrary, I think that to put counsel to such a choice would be prejudicial in the extreme.

Evidence Act, s 140

1. The defendant's case imputes serious dishonesty to the plaintiff in two ways. First, it is the defendant's case that the plaintiff procured someone (unidentified on the evidence) to set the fire deliberately, or connived at that person's doing so. Secondly, the defendant suggests that the plaintiff made deliberately false and fraudulent statements to its investigators in the course of their investigations.
2. Those are allegations of very serious and dishonest, indeed criminal, conduct. That is so self-evidently in the case of the first way in which the defendant puts its case. As to the second way, Beazley P said in Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325 at [57] that "fraud for the purposes of s 56, involves a finding that a person has been untruthful and deliberately so, with the intent of obtaining a financial gain. It is a finding of seriously wrong conduct."
3. In those circumstances, s 140(2) of the Evidence Act applies: 140 Civil proceedings: standard of proof (1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence; and (b) the nature of the subject-matter of the proceeding; and (c) the gravity of the matters alleged.
4. As has been held, s 140 reflects the common law position stated in Briginshaw v Briginshaw (1938) 60 CLR 336, and repeated on occasions without number since then.
5. This is a civil case. The onus of proof is, therefore, the civil standard: proof on the balance of probabilities. To satisfy the civil onus, the defendant must adduce proofs that raise a "more probable than not" inference in favour of what it urges; there must be a reasonable and definite inference available on the whole of the evidence; there must be something more than conflicting inferences of equal degrees of probability. And in assessing whether the defendant has satisfied its obligation, the Court must take into account the gravity of the matters alleged, and the "conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct" (Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALR 170 at 171, citing Rejfek v McElroy (1965) 112 CLR 517 at 521).
6. Mr Greinke submitted that what was required was "clear, cogent or strict proof" (he referred to Neat Holdings at 170-171). I think that this is an overstatement, based on a misreading of Neat Holdings. In that case, the majority (Mason CJ, Brennan, Deane and Gaudron JJ) warned that there were "circumstances in which generalisations about the need for clear and cogent evidence to prove matters of the gravity of fraud or crime are, even when understood as not directed to the standard of proof, likely to be unhelpful and even misleading". I think that this is such a case.
7. Mr Carolan submitted that the question of the inferences to be drawn should be considered in the light of all the evidence. I agree with that submission because, in particular, resolution of the questions of motive and fraudulent misrepresentation may be of assistance in considering what inferences to draw from the evidence as a whole. More generally, where there is only circumstantial evidence, the full impact of the proved circumstances should be considered in combination, not in isolation. See Winneke P in Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 127-129. Thus, whilst I shall set out the evidence by reference to each of the topics that counsel addressed, and make findings of primary fact where relevant, I shall return to the ultimate issues once that has been done.

Relevant terms of the policy

1. The defendant relied on certain terms of the policy. They were the insuring clause, in so far as it covered damage by fire; a general exclusion; and terms relating to the plaintiff's duties in making statements to the defendant.
2. I set out those terms: "Fire If loss or damage is caused by a fire. Covered fire Not covered if the fire was started with the intention to cause damage by: you or someone who lives in your home - for example, a tenant, or someone who enters your home or site with your consent, or the consent of someone who lives there damage which results from scorching or melting when your rental property or contents did not catch fire." … "What we don't cover Loss, damage, injury or death arising from: … any intentional act or omission by: you, your family or someone who lives in your home - for example, the tenants, or someone who acts with your or your family's consent, or the consent of someone who lives in your home" … "You must be truthful and frank in any statement you make to us" … "Your responsibilities when you are insured with us and make a claim are shown on page 55. You may put your insurance claim or cover at risk if you do not meet your obligations to us"

The fire

1. At the time the fire occurred, and for some time previously, the plaintiff was not living in his Mosman property. Up until 9 May 2013 (the day before the fire) he had been prevented from living in the Mosman municipality by a condition attached to a parole order to which he was then subject. That condition was lifted on 10 May 2013, but the plaintiff's evidence (as it appears from a recorded interview conducted by Mr Harris, an investigator engaged by the defendant), is that he did not learn of the lifting of the condition until the following Monday, 13 May 2013.
2. The fire was observed at about 8:41pm on 10 May 2013. The plaintiff was then (as the defendant has admitted) attending a performance of the Australian Ballet at the Sydney Opera House. It is likely that, by 8:41pm, the fire had been alight for some little time. I say that because there was a security system fitted to the property which recorded a "control over current" warning at about 8:04pm. That warning was consistent with the shorting out of the power cables to some element or elements of the alarm system. That in turn is consistent with the fire's being then well alight.
3. I should note that there is some lack of clarity in times, insofar as they are deduced from the alarm system. Mr Pendergast, an expert retained by the defendant, inspected the alarm system after the fire and considered material downloaded from its memory. He noted that "the time on the log is out of sync, note add approximately 30 minutes for actual time". Thus, it may be, less than 10 minutes had elapsed between the "over current" warning and the external observation of the fire that led to the calling of the fire brigade.
4. The alarm system did record that it had been disarmed at 7:49pm on 10 May 2013, by the entry of the correct user code. Presumably, in real time, this occurred at about 8:19pm, and thus about fifteen minutes before the over current warning was recorded.
5. The fire brigade was called when the fire was observed, and arrived very promptly. Fire brigade officers ascertained at the time of their arrival that all windows and doors (save for the garage roller door) of the property were secured. Mr Squire, a locksmith retained by the defendant who carried out an investigation concluded that there had been no forced access to the property by way of the two (there were only two) house doors, each of which was fitted with a lock. The only signs of forced entry were the result of the fire brigade's activities to gain access to the interior of the house.
6. According to Mr Ritchie, another investigator retained by the defendant, the garage roller door was not locked at the time of the fire. Thus, someone could have entered the property from the street through that door. There was an alarm control panel within the garage, so that person (if he or she knew the code) could have disarmed the alarm system from that point.
7. Mr Carolan submitted that the garage door might have been opened by the fire brigade. He had adduced evidence (by statement) from two fire brigade officers, Mr Gilmour and Mr Lynch. Neither of them said anything about any interference with the garage door. In circumstances where it was within the defendant's power to call evidence on this point from witnesses whose evidence in fact it adduced, I do not feel disposed to draw inferences favourable to the defendant's case where it failed to do so.
8. Mr Gilmour, a fire investigation officer, expressed the view that there were two seats of the fire. One seat, he thought, occurred in a downstairs bedroom (known as bedroom four). The other, he thought, occurred in a media room which was on the same level as the downstairs bedroom. In Mr Gilmour's view, the fact that there were two seats of the fire was consistent with its having been lit deliberately.
9. That view was shared by a police officer, Senior Constable Lynch, who attended the scene of the fire for the purpose of "examining, assessing, recording, interpreting and collecting physical evidence", and who held appropriate qualifications to enable her to do so. However, in support of that opinion, Senior Constable Lynch gave cross-references to three earlier paragraphs of her report. I have read those paragraphs very carefully. With the greatest of respect to Senior Constable Lynch, I am unable to see how they provide any support for the conclusion that she expressed.
10. It may be that if the evidence of Senior Constable Lynch had been taken orally, rather than simply by the tender of her statement, she could have explained why it was that the cross-referenced paragraphs did support her conclusion. However, she was not required to attend for cross-examination, and in those circumstances was not called to give oral evidence.
11. I mention those matters because another expert retained by the defendant expressed the view that there was only one seat of the fire. That expert, Dr Grantham, was called among other things to rebut the suggestion that the fire may have been the result of some electrical failure. I accept his evidence to the effect that electrical failure can be ruled out as a possible cause of the fire. However, Dr Grantham's evidence went further (and his qualifications and experience justified that course). In relation to the suggested seat of fire in the media room, Dr Grantham said that the fire damage "was not severe and [was] consistent with drop down ignition from above relatively late in the development of the fire". That aspect of his evidence is to an extent supported by a photograph which shows very extensive fire damage to the ceiling above the suggested second seat of the fire.
12. The evidence does not satisfy me that there were two separate seats of the fire. Thus, to the extent that the defendant's case that the fire was set deliberately depends on there being two seats of the fire, I do not agree.
13. There was no trace of accelerant found, either at the scene immediately after the fire was quelled or on later scientific examination of residue from the fire. Of itself, however, that seems to me to be a neutral factor. Whilst the presence of an accelerant could well indicate that the fire was deliberately set, its absence does not seem to me to indicate the contrary.

Access to keys and to the alarm code

1. Mr Carolan submitted that the only persons shown to have had access to the keys or knowledge of the access code were a Mr Vrachas; a Mr Brody; a Mr Yates; and the plaintiff's brother. Mr Vrachas was and is the plaintiff's accountant. He held a power of attorney from the plaintiff. It may be assumed that he was someone in whom the plaintiff reposed trust and confidence.
2. Mr Brody is the current project manager of the works. It is obvious why he needed keys and the access code. It may be assumed that the plaintiff trusted him.
3. Mr Yates was said to be both a friend of the plaintiff's and a person who had done landscaping work for the plaintiff.
4. There is some evidence, in the various statements made by the plaintiff, that he and his brother had a good and close relationship.
5. However, as Mr Greinke submitted, that summary of the evidence was incomplete. The builder that was completing the works in May 2013 was not the original builder. The original builder was a Mr Bishop. Electricians who were subcontractors to Mr Bishop had installed the alarm system. They must have known the code. It is likely that Mr Bishop, too, knew it.
6. Mr Bishop must have had a key or keys. There is no evidence that he returned them.
7. Likewise, Mr Ellem, an interior designer, had knowledge of the alarm code and had held a key. Again, there is no evidence that he returned the key.
8. There is no evidence that the alarm code was ever changed after the alarm had been installed, some four or five years before the fire broke out.
9. There is evidence that the plaintiff had fallen out with Mr Bishop and with Mr Ellem. The relationship with Mr Bishop appears to have become quite toxic; likewise the relationship with Mr Ellem, who is said to have stolen valuable property from the plaintiff's house.
10. Further, Mr Squire said that although he had been given numerous copies of keys to the house, he "[had] not been provided with any of the original keys that should have been provided with the locks". It followed, Mr Squire said, that there were at least those two original keys "and an unknown number of duplicate keys" that had not been accounted for.
11. In those circumstances, even if access had been obtained through a door rather than through the apparently unlocked garage door, there is no safe basis in the evidence for inferring that it was so obtained by someone to whom the plaintiff had entrusted a copy of the key for the purpose of setting the fire. Nor is there evidence that excludes the involvement of Mr Bishop (or his subcontractors, who appear to have made threats to the plaintiff). For that matter, there is no evidence to exclude Mr Brody (who was not answering his phone on the evening of the fire), although I hasten to say that there is absolutely no reason why he should be suspected of having set the fire.
12. There is one other matter which, whilst not having a logical connection with the topic of keys and access, should be mentioned at this point. It relates to the plaintiff's parole condition preventing him from (among other things) living at the property, and the removal of that condition on 10 May 2013.
13. The Parole Board considered the removal of that condition in April 2013. The Board notified the Victims Register of its intention to remove the condition, and sought comments. Presumably, that was so that persons who had been the victims of the offences for which the plaintiff was convicted and sentenced to imprisonment (historic indecent assaults) could express a view on the desirability of removing the condition.
14. In the result, whatever submissions may have been made by victims (and not surprisingly, the evidence is silent), the Parole Board decided to remove the condition. That decision took effect on 10 May 2013 - the very day of the fire.
15. Mr Greinke submitted that this was significant. He submitted that it was quite conceivable that some aggrieved victim, learning that the condition had been removed, had taken matters into his (or her) own hands.
16. There is no basis for concluding that this is in fact what happened. Indeed, I think, there is a strong basis for concluding otherwise: namely, that the hypothetical aggrieved victim would have to have known the access code, and there is no reason to think that any victim would have such knowledge.
17. To my mind, Mr Greinke's submission on this point does not rise above the level of speculation. It does not provide a credible alternative to those hypotheses that are open on the evidence.

Motive

1. Mr Carolan submitted that the plaintiff had a clear motive for setting the fire: namely, to collect the sum insured, and thus to relieve himself of severe financial embarrassment. Mr Greinke submitted, on the contrary, that the plaintiff had a motive for continuing with and finishing the building work, so that the property could be sold, thereby enabling him to pay his debts and obtain at least a modest amount for his own use.
2. The plaintiff had been a medical practitioner, but was unable to practice because his registration had been cancelled. He had served a sentence of imprisonment. At the time of the fire, he was in receipt of an aged pension. He had a few hundred dollars in the bank.
3. The plaintiff had some personal assets, but the evidence does not disclose their value. What the evidence does disclose is that, when or before serving his sentence of imprisonment, the plaintiff had sold off many of his assets so as to raise money to avert bankruptcy.
4. The construction of the house had been financed by the plaintiff's bank, the National Australia Bank (NAB). He owed that bank almost $4.2 million. That sum was secured by mortgage over the property. NAB had declined to advance further funds to enable the plaintiff to complete construction work.
5. Mr Vrachas had raised a sum of money, $675,000, from a group of investors. That money had been used, at least in part, to finance construction. The investors were to be repaid that sum and a "fee" of a further $675,000. There was an equitable charge over the property to secure repayment. Since Mr Vrachas held the plaintiff's power of attorney, it is safe to assume that the investors would have been paid out of the proceeds of sale, to the extent that funds were available.
6. The plaintiff had made a home owner's warranty claim for almost $1 million against the previous builder's insurer. That claim was settled in the sum of $299,500: the limit of indemnity under the relevant policy. The proceeds of the claim were applied towards completion of the construction works.
7. At the time of the fire, about $200,000 was required to enable the construction works to be completed. Mr Vrachas said (to Mr Harris) that he had arranged for that sum to be advanced.
8. I should say at this stage that although much of the evidence on which the plaintiff relies comes from transcripts of the interviews conducted by Mr Harris, the defendant did not submit that the evidence was not admissible or that it should not be given any weight. For the main part, the transcripts were tendered by the defendant itself. There was no restriction on the tender. In my view, the Court is entitled to use that material, where relevant, for the purpose of finding facts.
9. Some parts of some transcripts (in particular, those relating to the interviews of Mr Vrachas and Mr Yates) were tendered by the plaintiff. The defendant did not oppose the tender, or submit that the material should be received only for some limited purpose, or should be given no weight. Again, in my view, the Court is entitled to rely on that material, to the extent that it is relevant, for the purpose of making findings of fact.
10. Mr Vrachas told Mr Harris that the property was to be sold when construction work was completed. He said that on the advice of real estate agents, the property was expected to sell for between $5.5 million to $6.5 million, "somewhere in that range", and that, in those circumstances, he "understood that it would sell in the mid sixes if it was completed properly".
11. Mr Carolan submitted that the evidence did not support a finding that the property would have sold at the higher end of the range, as Mr Vrachas had "understood". That may be so; but, equally, Mr Vrachas' expectation, or "understanding", was that it should. It is clear that a sale for $6.5 million, allowing for the costs of sale, would have been sufficient to clear all the plaintiff's debts and leave him with a sum of, in round figures, $1,000,000.
12. Equally, and as Mr Carolan submitted, if the sale were at the lower end of the range, there would have been no surplus.
13. Mr Greinke submitted that on this evidence, there was a clear incentive for the plaintiff to complete the construction work and sell the property. He submitted, therefore, that there could not have been any motive for the plaintiff to set the fire, so as to claim on the insurance.
14. Mr Carolan submitted that the plaintiff did have a motive, because, assuming a total loss, he would have recovered $4.2 million under the policy. That sum would have been sufficient to pay out the amount owed to NAB. In addition, the plaintiff would have the land, which no doubt had some value. If it is correct to say that the improvements were worth $4.2 million and that the property might have sold for $6.5 million on completion of the works, it might be possible to infer that the land value was of the order of $2 million. On that analysis, the net financial return to the plaintiff, from proceeding by way of fire rather than by way of completion and sale, would be minimal, after discharging the plaintiff's other debts (see at [141] below) and allowing for the costs and expenses of completing the works and of sale.
15. The evidence of Mr Vrachas, as it appears from the transcript of his interview by Mr Harris, is that the plaintiff (through Mr Vrachas) was working to complete construction work and sell the property. To my mind, the evidence overall suggests that the plaintiff had a reasonable expectation of recovering an amount sufficient to pay all his debts and to leave some surplus, perhaps as much as $1 million. The evidence does not suggest that the plaintiff could have done any better (in financial terms) by procuring the destruction by fire of the house, and claiming on the policy.
16. In addition, Mr Vrachas at least expected completion of the work to occur fairly rapidly. In those circumstances, the property could have been sold within perhaps three to four months of the date of the fire. On the other hand, it must have been obvious that if the property were totally destroyed by fire, there would likely be a considerable delay before the claim would be paid (if, contrary to the event, the defendant decided to pay up). Further, the plaintiff would have been left with the task of clearing the remains of the hypothetically destroyed residence from the land, and arranging for the sale of that.
17. In my view, on the balance of probabilities, if the plaintiff had considered in May 2013 how to discharge his very substantial financial obligations, it must have been apparent to him that the quickest way to do so was to press on with construction work and, on its completion, put the property on the market. Conversely, if the plaintiff did not give thought to how he might discharge those obligations, the suggested motive disappears.
18. So far, I have proceeded on the assumption that the improvements would have been destroyed, so that the plaintiff could have claimed the agreed sum insured on the basis of a total loss. However, it could not have been safe to assume complete destruction. If there were only a partial loss, then there would be no gain at all to the plaintiff; indeed, his position would be worse. I say that because, on the hypothesis just postulated, the defendant might have paid out the amount necessary to rectify the fire damage, but the inevitable delay would have prolonged considerably the time taken to complete the work and put the property on the market.
19. In the event of what must have been a realistic scenario - partial loss, followed by repair and then completion of the construction works and sale - the plaintiff would have been considerably worse off, at least in terms of the time required to alleviate his financial distress.
20. In short, the motive postulated by the defendant was: 1. not one likely to produce any greater monetary gain to the plaintiff, compared to completion of the construction work and sale of the property; 2. even on the "best" assumption - total loss - not one likely to have been beneficial to the plaintiff overall; indeed he is likely to have been delayed considerably in resolving his precarious financial situation; and 3. on an available and realistic assumption - partial loss - one likely to be much less beneficial to the plaintiff.
21. In my view, the defendant has not shown that the plaintiff had any financial motive for setting the fire. Since no other motive was suggested, no inference adverse to the plaintiff ought be drawn on the basis of motive.

The relevant principles

1. As I have said at [5], the defendant puts its case on fraud in two ways. First, it says, the plaintiff caused or connived at the setting of the fire. Secondly, it says, the plaintiff knowingly made false misrepresentations to it, to induce it to pay the claim.
2. If the defendant makes good the first way in which it puts its case, then, self-evidently, the claim would be fraudulent. But if the defendant proves that the plaintiff caused or connived at the setting of the fire, that is enough in any event to entitle it to refuse to pay.
3. Mr Carolan submitted that, for the purposes of s 56 of the Insurance Contracts Act, a claim could properly be described as one "made fraudulently" if the insured made knowingly false statements to the insurer to induce it to pay the claim. In my view, that submission is correct.
4. I start by setting out s 56: 56 Fraudulent claims (1) Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim. (2) In any proceedings in relation to such a claim, the court may, if only a minimal or insignificant part of the claim is made fraudulently and non- payment of the remainder of the claim would be harsh and unfair, order the insurer to pay, in relation to the claim, such amount (if any) as is just and equitable in the circumstances. (3) In exercising the power conferred by subsection (2), the court shall have regard to the need to deter fraudulent conduct in relation to insurance but may also have regard to any other relevant matter.
5. The section was considered by the Victorian Court of Appeal in To v Australian Associated Motor Insurers Ltd (2001) 3 VR 279. Buchanan JA, with whom Charles and Callaway JJA agreed (Callaway JA gave additional reasons, but for present purposes nothing turns on them), said at [17] that the effect of s 56(1) was, subject to the operation (if available) of subs (2), that "an insurer need not pay a fraudulent claim, whether or not there is an underlying loss which is covered by the policy".
6. At [19], Buchanan JA said that s 56(1) "is concerned with fraud in the making of the claim, that is, fraud in the formulation and presentation of the claim". His Honour said that "if a false statement is knowingly made in connection with a claim for the purpose of inducing the insurer to meet the claim, the claim is one made fraudulently within the meaning of s 56(1)". His Honour added at [20] that the relevant "mental element … is an intention to deceive, that is, an intention to create a false belief in the person deceived …".
7. As to s 56(2), Buchanan JA said at [25]: Where … the fraud relates to the entire sum or benefit claimed, the division contemplated by the subsection cannot be achieved.
8. In Walton v Colonial Mutual Life Assurance Society Ltd [2004] NSWSC 616, Einstein J adverted to s 56. His Honour said at [144], adopting the reasoning in To, that: 1. "[t]he test for fraud is satisfied if the insured has a dishonest intent to induce a false belief in the insurer for the purpose of obtaining payment or some other benefit under the policy"; 2. a knowingly false statement, made to induce payment, would constitute fraud for the purposes of s 56(1); and 3. it was not necessary that the insurer must show prejudice before it could rely upon s 56(1) to refuse payment of the claim.
9. His Honour's reasoning was cited with approval by Beazley P (with whom Meagher JA and I agreed) in Sgro at [47].

Outline of the fraudulent misrepresentation case

1. The defendant relied on statements made by the plaintiff to: 1. its employee Ms Scanlon, when he telephoned to report the fire and notify his claim; 2. its claims consultant Ms Costelloe; and 3. its investigator, Mr Harris.
2. In broad terms, the alleged misrepresentations were said to relate to a number of topics. For convenience, I set out para 65 of Mr Carolan's written closing submissions: 65. The plaintiff made a series of false statements during the course of these interviews as to: (a) where he lived; (b) when he last lived at the house; (c) where he was staying after 10 May 2013; (d) where his personal possessions were kept; (e) why he was living at Balgowlah, rather than at the house. (f) whether he had a key to the house prior to the fire; (g) whether he had arranged for a removalist to take goods from the house to Balgowlah; (h) the extent of his credit card debt; (i) the existence of other liabilities, notably the joint venture debt.
3. The plaintiff's conversations with Ms Scanlon and Ms Costelloe were relatively short. The same cannot be said of Mr Harris' interviews. There were in fact two such interviews. The first took place on 29 May 2013. According to the transcript, it took about 3 ½ hours (with some breaks); the transcript occupies some 86 pages. The second interview took place on 15 June 2013. It took about 1½ hours, and comprises 36 pages of transcript.

The conversation with Ms Scanlon

1. In the course of his conversation with Ms Scanlon, the plaintiff, describing how he found out about the fire, said: I was, just got home and was greeted by the Police.
2. A little later, he was asked whether he would need somewhere to stay. He replied: Ah, no, I'll stay with some family tonight.
3. At the time, the plaintiff was living in rented accommodation at Balgowlah. He had left from that accommodation to go to the ballet, and had returned to it, on the night of the fire. Mr Carolan submitted that in answering the questions in the way that I have set out, the plaintiff was intending to convey to Ms Scanlon that he had been living at the Mosman property.
4. It is apparent from the plaintiff's interview with Mr Harris that the plaintiff regarded the Balgowlah flat as "home" at the time. In answer to a question, he told Mr Harris that he had been at the ballet and "came home from the ballet". He explained that he meant "by home, I went back to Balgowlah". He said "I had been home for about a quarter of an hour when there was a knock on the door. It was the police…".
5. I do not accept that, in giving the answer set out at [101] above, the plaintiff was seeking to suggest that he had been living at the Mosman property; or that he had gone from that property to the ballet and returned to it from the ballet; or that he was at that property when the police arrived and informed him of the fire. Indeed, the underlying proposition is ludicrous: had the plaintiff been living at the Mosman property, and had he returned to it from the ballet, he would not have needed the police to tell him that there had been a fire.
6. As to the answer set out at [102] above, there is no evidence that it was incorrect. The defendant has not shown that it was untrue that, after the fire, the plaintiff intended to stay with (for example) his daughter or his brother. In this context, Mr Greinke pointed out, correctly, that the transcript of the conversation between the plaintiff and Ms Scanlon showed that there was at least one other person in the room with the plaintiff when he made that call.

The conversation with Ms Costelloe

1. Mr Carolan submitted that, in this conversation, the plaintiff sought to continue what Mr Carolan said had been his deception as to his residence at the time of the fire. In one answer, the plaintiff said, of the Mosman property: I hadn't been there for the last week or so, because there were various electrical works and things which were sort of being sort of finished off completely and, and the power had to be off for a while and all that sort of stuff, and I'd just been staying with some friends for a bit.
2. He was then asked "where are you staying". He replied: I'm just staying with some friends at the moment, but I suppose I'll wait until the assessor comes…
3. The plaintiff was asked "how many people live in the house?" and answered "usually just myself". Ms Costelloe commented that it was "lucky you weren't in the house I suppose". The plaintiff replied: Yeah, well, I suppose so. I think, I mean, well two, things would happened, [sic] the smoke alarms would have gone off, so I would have noticed that if I was asleep, and if it was on the bottom floor I would have been on the floor above that…
4. The first answer (see at [107] above) was correct to the extent that the plaintiff had not been staying at the Mosman property. Whether he had been staying with friends before taking the lease on the Balgowlah property (and causing some possessions to be moved to that property) is a topic unilluminated by the evidence. Certainly, immediately before the fire occurred, he was living at the Balgowlah property and, presumably, not "staying with some friends".
5. Whether it was correct to say that he was "just staying with some friends at the moment" is, likewise, not clear. The conversation with Ms Costelloe took place on 13 May 2013. The evidence is silent as to whether, on that date, the plaintiff was living at the Balgowlah flat or whether he had moved in temporarily with "some friends".
6. The statement that "usually just" the plaintiff lived in the Mosman property was correct save that his daughter and her husband had lived in the property whilst he was imprisoned. Otherwise, the plaintiff had been the only person to live in the house, and he intended to return to it when he could.
7. As to the answer quoted at [109] above, it seems to me that the plaintiff was doing no more than following up Ms Costelloe's observation with the observation that, had he been in the property, it is likely that he would have become aware of the fire one way or the other. That is, I think, the plaintiff was replying to her assertion that it was "lucky" that he had not been there by the hypothetical observation that, had he been there, he would have been alerted of the fire in time to make an escape.

The interviews conducted by Mr Harris Place of residence

1. It is convenient to deal with Mr Carolan's submissions (see at [99] above) under four broad topics. The first set of allegedly false statements relates to the plaintiff's place of residence. The plaintiff told Mr Harris, early in the course of the first interview, that he had been living at Balgowlah at the time of the fire. He suggested that the builders "wanted the place [Mosman] to be sort of free": presumably, so they could complete their building work without having to work around him.
2. The plaintiff was correct to say that he was living at Balgowlah at the time of the fire. It was not correct - or at least, not the whole truth - to suggest that he was living there (by inference, only) because the builders wanted him out of the Mosman house. No doubt they did want unimpeded access to all parts of the property. But the more significant reason was that, until the relevant parole condition was lifted, he could not live at the house.
3. Nonetheless, the plaintiff did not seek to conceal from Mr Harris the fact that he had been convicted of and sentenced to imprisonment for offences of indecent assault, and that he was subject to conditions of parole. Mr Harris acknowledged that the plaintiff was (understandably) particularly sensitive about those matters. It is apparent both from the transcript of the first interview and from evidence given by Mr Harris in cross-examination that, despite this sensitivity, the plaintiff was prepared to (and did) give Mr Harris authorities to obtain his complete history. The plaintiff's concern was "that the [only] people who should know this sensitive information were people who were officially charged by the insurer to obtain that information" (T17.27-.30).
4. In this context, since it may be of some marginal relevance, I have to say that I did not regard Mr Harris as a particularly satisfactory witness. I accept of course that the transcript of his interviews of the plaintiff are accurate. Nonetheless, when questioned about the interviews and the extent of the plaintiff's cooperation (or otherwise), Mr Harris was evasive, and sought to foist answers upon Mr Greinke that were in no way responsive to the questions asked. In my view, Mr Harris tried his hardest, in the course of his oral evidence, to put an adverse slant on the plaintiff's case whenever he could do so, and whether or not his answers could be regarded as responsive to the questions asked. Matters got to the point where I was required to direct Mr Harris' attention to the importance of listening to the questions asked and confining his answers to those questions (T18.47-19.3). It should not have been necessary to give such a direction to an experienced investigator who had given evidence in court on other occasions.
5. Mr Carolan's submissions referred to, and placed emphasis on, particular answers on the topic of residence given in the course of (in particular) the first interview. Of course, Mr Carolan sought to put those answers in context, by referring to other paragraphs. However, when the entire passage of the first transcript is considered, it is apparent that the plaintiff made it clear: 1. that he was living at the Balgowlah premises at the time of the fire; and 2. that he was required to do so because of the relevant parole condition.
6. I do not think that the plaintiff gave untruthful, let alone knowingly untruthful, answers to Mr Harris on those topics.
7. The plaintiff's answers to Mr Harris disclose that the plaintiff had spoken to a Mr James, the loss assessor appointed by the defendant to assess the plaintiff's claim. The plaintiff told Mr Harris that Mr James, obviously having been informed that the plaintiff was living at the Balgowlah property, said that the defendant would take over "the leasing arrangements". Mr James was not called to say otherwise.
8. I might add that, in this passage of the first transcript, the plaintiff told Mr Harris that: 1. he had been living "in Balgowlah for a couple of weeks, two or three weeks"; and 2. that this "was in April, about the end of April".
9. In short, it must have been plain to the defendant, both from what the plaintiff told Mr Harris and from what he told Mr James, that the plaintiff had been living at the Balgowlah premises for some time before the fire. Keys
10. Another topic of allegedly untruthful answers relates to keys. Mr Carolan relied on the following questions and answers: Q.307 So the keys to the property, the front door and the basement door, do you know who's got keys to there? A. Alistair Brody, Frank Vrachas, my landscaper guy called Stephen Yates, he - I'd given him one because he'd been doing work on the outside of the garden and clearing all the weeds out and that type of thing. Who else was there? My daughter and that I think had handed hers back. I think that was all. Q.308 So that's only three, and yourself, of course? A. Yeah, at that stage I didn't have the key because I'd given mine to Steve Yates, the landscaper, but then I got that back and I think I got it back after the fire, I didn't get it back prior to the fire. … Q.238 In relation to keys for the property here, when did you first get keys for the property, John? A. I didn't have keys to get into the house here until after the fire so it would've been sometime in the week following the fire. Q.239 The week following the fire? A. Yes. Q.240 Do you recall who you got those keys from? A. I got it from Frank Vrachas, he had a key, and I didn't have a key, and he gave me a key, I don't know whether it was the Saturday after the fire because he - I rang him on the night of the fire and he came over but I think it was on the Saturday morning when he came back again that he may have given me his key. Q.241 So he's given you your key? A. Yes. He gave me his key which he had to get into the property. Q.242 Do you know what you did with that key? A. I kept it and used it when I needed to but I didn't get actually in - the first time I got into the house - the night of the fire I couldn't get into the house, they wouldn't let me go or Frank or that wouldn't let me get in. The next morning they let us come in and have a look at the house. Q.243 The next morning? A. Yes. Q.244 So who was here when you did that? A. There was myself; I think Frank was here, I'm not sure whether he was or not but there was Alistair Brodie and I don't know whether it's his wife or partner anyhow who was there. … Q.277 Before going into custody do you recall who you gave your key to? A. I would've given probably to my brother, I gave him what I had, things on me like my phone and things like that when I went into custody. Q.278 Did that include your keys as well? A. Yeah, it would've included my keys. Q.279 Do you know if Graham retained your key? A. He retained it up until you or Ross took it from him.
11. The first questions and answers (307, 308) come from the first interview. The others come from the second interview.
12. Mr Carolan submitted that the plaintiff had changed his story radically. Overall, Mr Carolan submitted, the plaintiff had represented that he did not have possession of a key to the Mosman property, from the time he had been released from prison up until the time of the fire.
13. Taken in isolation, the passages on which Mr Carolan relied support the submission that he put. But when the whole of the transcript is considered, a different picture emerges. It is plain, in my view, that the plaintiff was at the time of the interview uncertain both as to how many keys were in existence and as to who had them. I set out, by way of example only, the following: Q.315 So that equates to what, three keys? A. Yes. Q.316 Are there any others, John, other than that? A. I've had two cut since which I keep one spare and, oh, there's that one in the door, I don't know what happened to that one. I'm not sure. Ross had it. Q.317 Ross had it? A. Yeah, and he had it there but I don't know whether he took it with him. Q.318 He may have, but anyway we'll check on the way out. A. Yeah, okay, because I don't know whether I've got one now. … Q.333 No other keys? A. No. Q.334 So you said one --- A. I'm trying to think of who - the old keys there may have been more people but that's all the new ones. Q.335 You said one was cut. Do you know which, who had the cut one? A. Yes, Graham, my brother. Q.336 Graham, he's got the cut key? A. Yeah, because that made me suddenly think, oh, Graham got it cut, that's right. Q.337 So what about the remote control for the garage doors, how many of those --- A. I've got one and I think that's the only one that's there. Q.338 So there's only one of those? A. Yes. I think Alistair might have one, Alistair may have one. I'm not sure on that. Q.339 So will you surrender those keys to NRMA? A. Will I? Q.340 Yes. A. What for, why? Q.341 So the forensic locksmith, the gentleman who was here with me, he will examine them and just compare them with the locks and all that. A. Sure, yeah. I'll have to get those all from the people. … Q.268 You had a key? A. I had a key. No, I didn't have a key because I'd given it to Frank I think. Q.269 You gave it to Frank? A. Or whoever was there. Q.270 Is this why you were, sorry --- A. No, this is before I went in. Q.271 Into custody? A. Yes. When I went into custody I didn't have any keys so my daughter had one, Amelia, I had - and Graham had one and Frank had one and Alisdair had one. Q.272 Was there any other keys in existence other than --- A. I don't know. I think that was all.
14. There is much more to the same effect.
15. When one considers the whole of the material, it is quite clear that the plaintiff was uncertain as to: 1. how many keys there were for the property; 2. who had keys at any given time; and 3. whether he himself had keys at any given time.
16. It is also clear, in my view, that the plaintiff was trying hard to piece together details as to who held keys when. I do not accept that it has been shown that he gave untruthful, let alone knowingly untruthful, evidence on this topic. Engagement of removalist
17. Mr Carolan submitted that the plaintiff had lied to Mr Harris as to the engagement of a removalist. Mr Harris gave unchallenged evidence of two telephone conversations with the plaintiff on 11 July 2013. The first conversation included words to the following effect: Me: "Did you have a removalist attend the Mosman address?" Rolleston: "I can only think of my daughter and other daughter, they were taking stuff out of the garage and my other daughter had returned some items. That's the only thing that I know of. Removalist. No not that I know of. Not that I know. It's hard to check because my daughter is overseas at the moment."
18. The second conversation included the following: Rolleston: "I've just spoken to Alastair and the only thing he can think of was when my sister and brother went to the place to get some clothes and other items for me. The other things is that I had Stephen Yates also get some clothes and other items for me. I think that was all. Nobody officially went there as a removalist." … Rolleston: "Can you hang on a minute while I get that". … Rolleston: "They are the only people that went the house to get stuff for me. I can't remember a removalist."
19. The defendant tendered a statement made by a removalist, Mr Alves, to the police. Mr Alves was not required to attend for cross-examination. He said that on 22 April 2013, the plaintiff booked him (he worked for "Two Men and a Truck") to go to storage premises at Artarmon and remove furniture and effects from there to the Balgowlah premises. The plaintiff met them at the Balgowlah premises and provided access.
20. According to Mr Alves, the plaintiff then asked them to "go to his home in Mosman to pick up some more stuff and bring back [sic] to Balgowlah". Mr Alves and his offsider went there (the plaintiff did not). He said that "there were workers in the house" and that "[t]he stuff we were to collect was outside the front of the garage there". He and his offsider moved "a double door fridge, a large television, some box with a big rug … other boxes" and took them to the Balgowlah premises.
21. As will be noted, in the second telephone conversation, the plaintiff informed Mr Harris that he "had Stephen Yates also get some clothes and other items for me". Mr Harris interviewed Mr Yates. In the course of that interview, Mr Yates said: Q.201 Okay so there were removalists there was there? A. Two removalists from - they came with me - actually no they were only in the garage so I carried the chest of drawers up to the garage and the removalists came that afternoon and literally we just piled it all onto the - they didn't come into the house they took it all out - we took it out onto the where the driveway is and they took all that stuff to Balgowlah like couches from the garage, refrigerator all those sort of things that John needed to set himself in the place
22. When that evidence is read together with Mr Alves' statement, it is entirely consistent. It would seem that Mr Yates left material out for the removalists to collect, and that they did so. In substance, the plaintiff disclosed what had happened; and the fact that he could not remember that it was he who had asked the removalists to go to the Mosman property to collect the material that Mr Yates had made available is irrelevant.
23. The plaintiff did not suggest to Mr Harris, in the course of either of the conversations on 11 July 2013, that he had not caused possessions to be removed from the Mosman property to the Balgowlah property. On the contrary, the plaintiff accepted that he had done so. He said that he could not remember "a removalist", or that someone "officially went there as a removalist".
24. It might seem strange that, in July 2013, the plaintiff could not remember that he had asked a removalist to take possessions from the Mosman property to the Balgowlah property. However, it is apparent from the transcripts of the interviews between Mr Harris and the plaintiff that the plaintiff's memory was in parts faulty, and that he had trouble remembering the details of events that had happened. That is, perhaps, hardly surprising given the vicissitudes to which he had been subjected.
25. What is quite clear is that it was the plaintiff himself who disclosed to Mr Harris that Two Men and a Truck had been engaged, on four separate occasions in April and May 2013, to remove goods from Artarmon. Given that there were four separate occasions on which this appears to have happened, it may not be so strange that the plaintiff cannot now recall the detail of the one of them, the subject of Mr Alves' evidence, on 22 April 2013. That appears to be the first of the four occasions, and there is no evidence as to what (if anything) occurred on the three subsequent occasions when, according to the plaintiff's banking records, he retained Two Men and a Truck for whatever it was he asked them to do.
26. The plaintiff did not flatly deny having organised a removalist to take goods from the Mosman property to the Balgowlah property. Overall, his evidence is that he could not remember having done so. It has not been shown that, in saying this, he was speaking falsely. His memory may well have been faulty. However, when the whole of the evidence on this topic is considered, it does not support the conclusion for which Mr Carolan contended: namely, that the plaintiff had given knowingly false answers to Mr Harris on this topic. Financial situation
27. The final area of suggested misrepresentation concerns the plaintiff's financial situation at the time of the fire. Mr Harris asked the plaintiff a number of questions about his financial situation. It is correct to say, as Mr Carolan submitted, that in the course of those questions, the plaintiff did not give full and complete details of his financial position. First, the plaintiff did not disclose the syndicate loan to which I have referred at [72] above. Secondly, the plaintiff asserted (wrongly) that he had no outstanding credit card obligations.
28. The plaintiff was liable to repay the syndicate $675,000, and their fee of a further $675,000: a total of $1.35 million. Further, the plaintiff in fact had some eight credit card accounts, on which there was owing a total of about $107,000.
29. The answers on which Mr Carolan relied occurred in the first interview. In the course of that interview, the plaintiff agreed to provide a signed authority authorising Mr Vrachas to release financial information to Mr Harris, and suggested that Mr Harris should "speak to Frank [Vrachas] about it".
30. The authority was duly given. On 17 June 2013 (the first interview took place on 29 May 2013), Mr Harris emailed Mr Vrachas seeking documents and information on some 19 topics, including the plaintiff's credit card accounts. The relevant question was: 12. Copy of the [plaintiff's] credit card account - 1st December 2012 to 31st of May 2013 (advised there were between 8 to 10 accounts).
31. The email makes it clear that it was sent following an interview that Mr Harris conducted with Mr Vrachas. Presumably, it was Mr Vrachas who "advised there were between 8 to 10 accounts". The printout of the email that was tendered has a handwritten notation: CBA X 4/CITI X 4/AMEX X 1/ANZ X 1/NAB X 3.
32. That notation suggests that Mr Vrachas informed Mr Harris of the detail of the outstanding accounts, some of which were in fact not credit card accounts at all. That inference is supported by the fact that on 25 June 2013, Mr Vrachas wrote to Mr Harris confirming that the material sought by question 12 had been "provided". Mr Harris did not, then or now, controvert that statement.
33. When this particular passage of the interview is put in context, it seems to me to be plain that although the plaintiff may have been mistaken and answered the question wrongly, as to the extent of his credit card obligations, he was not seeking to withhold the relevant information from Mr Harris. On the contrary, he authorised Mr Vrachas to provide it, and Mr Vrachas did so.
34. Equally, with the syndicate loan (and fee), the defendant was not misled. The plaintiff authorised Mr Harris to obtain the relevant information from Mr Vrachas. Mr Harris did so.
35. I do not accept that the relevant answers were knowingly false. More importantly, perhaps, I do not accept that they were intentionally false: that is to say, made both with knowledge that they were false and with the intention of inducing the defendant to rely on them. It is entirely inconsistent with the existence of any such intention that the plaintiff should have acted as he did, authorising Mr Vrachas to disclose the relevant information.

Conclusions on the misrepresentation case

1. I accept that from time to time in the course of his lengthy interviews, the plaintiff gave incorrect answers to Mr Harris. I accept that, from time to time, there are answers that are inconsistent. I do not accept that any of the answers given was knowingly false. On the contrary, I conclude that, overall, the plaintiff sought, either directly or through Mr Vrachas, to give honest and complete answers to all the questions that Mr Harris asked (repeatedly).
2. Considering the evidence as a whole, I do not accept that there was any attempt to give knowingly false answers to the defendant's employees and agents, or to make knowingly false representations by a combination of words and silence. Nor do I accept that there was any intention, by any of those means, to mislead the defendant into accepting and paying the claim.

"Frank and truthful"

1. For essentially the same reasons, I conclude that the plaintiff did not give answers that, in context, were otherwise than frank or truthful. There is a very wide gap between, on the one hand, being uncertain or even mistaken and, on the other, being deliberately untruthful, or deliberately less than frank.

Section 13

1. Mr Carolan's submissions did not explain how, if I were to reach the conclusions that I have just set out, he could succeed on the s 13 point. The decision of the House of Lords in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 appears to suggest that, once the contract of insurance has been formed, the duty of good faith, in relation to the making of a claim, is no more than a duty of honesty in making representations to the insurer. See Lord Hobhouse of Woodborough at [57] and Lord Scott of Foscote at [111], noting that Lord Steyn and Lord Hoffman agreed with their Lordships. Lord Clyde gave separate reasons which, as I understand it, supported the approach taken by Lord Hobhouse and Lord Scott.

Conclusions on the arson case

1. I return to the defendant's first ground of defence: that it was the plaintiff himself who caused the fire to be set, or connived at its being set. The following points emerge: 1. someone disarmed the alarm system at about 8:20pm (correcting for the "out of sync" problem); 2. the fire appears to have gained sufficient strength to short out the alarm system about 15 minutes later; and 3. the fire was observed, and thus presumably was burning with some intensity, by about 8:41pm.
2. There is no evidence that an accelerant was used. On balance, and for the reasons I have given, I conclude, accepting Dr Grantham's evidence in preference to that of Mr Gilmour and Senior Constable Lynch, that there was only one seat of the fire.
3. There was no apparent electrical defect that caused or contributed to the fire. Nor is there any evidence to suggest that it was started other than by human agency. But human agency may encompass many things falling well short of arson; and a fortiori well short of arson on the part of the insured.
4. The person who disarmed the alarm system entered the house either using a key or through the garage door. The evidence does not permit a finding as to which of those modes of entry was used. Regardless, if the person knew the alarm code, it is likely (on the evidence overall) that the person also had a copy of the one or other (or both) of the keys.
5. In all the circumstances, it is less likely rather than more likely that the fire was started accidentally. Were it not for the evidence as to the locks and the alarm system, it could perhaps be open to infer that the fire was started by vandals or squatters. But the evidence as to the locks and the alarm system cannot be disregarded, and it renders that inference unlikely. That evidence renders equally unlikely the possibility that the fire started accidentally, through the neglect of some workman. Why would a workman have returned to the property at 8.20pm, if not for some malign purpose?
6. Accordingly, I think, the more probable inference is that the fire was set deliberately, by someone who had knowledge of the alarm code and who may very well have had a key. If the person did not have a key, he (or she) must have obtained entry through the garage roller door.
7. I do not think that the plaintiff had a motive to set the fire. On the contrary, for the reasons that I have explained, I think that his financial interests would have been best served by a prompt completion of the building works, and thereafter marketing and sale of the property: compare [85] above.
8. In considering what inferences to draw as to who was responsible for the fire, I have taken into account, as Mr Carolan urged me to do, the answers given by the plaintiff to Mr Harris and others in the course of the various interviews and conversations to which I have referred. I do not find in that evidence any basis for concluding that the plaintiff was being dishonest, or providing knowingly false answers to the defendant through its employees and agents. Thus, I do not think that the evidence of those conversations and interviews, taken overall, assists in drawing the inference, for which Mr Carolan contended, that it was the plaintiff (acting through some unknown agent) who was responsible for the fire.
9. There were many people who had keys to the house, and who knew the alarm code. Whilst I accept that, on the civil standard of proof, the insurer does not have to negate the possibility that all of them started the fire, nonetheless there has to be some reason for concluding that it is more probable than not that it was the plaintiff rather than one of those other people who did so. I accept of course that, of the people who had keys and knowledge of the alarm code, some - Mr Vrachas, Mr Brody and Mr Yates - are, to put it mildly, unlikely suspects. Nonetheless, there remain others, some of whom at least appear to have borne ill will to the plaintiff, whose movements are unaccounted for and who could well have set the fire.
10. In weighing the evidence, I take into account the fact that the plaintiff chose not to give evidence. But the significance of that fact is lessened by the consideration that the plaintiff's account of relevant events is before the Court. The plaintiff was interviewed twice, at length and with some repetition, by Mr Harris. The record of that interview was tendered by the defendant. In a real sense, the plaintiff has told his story, and the defendant has had all the opportunity it seems to have thought necessary to test that story.
11. Considering and weighing the evidence as a whole, and bearing in mind the gravity of the finding for which the defendant contends, I am not satisfied, on the balance of probabilities, that it was the plaintiff who caused the fire to be set (or that the plaintiff connived at its being set).
12. I therefore conclude that the defendant has failed to discharge its onus of proving that the plaintiff was relevantly responsible for setting the fire.

Conclusion and orders

1. The plaintiff is entitled to judgment. For the reasons I have given, that should be for the cost of repairs: $991,946. The plaintiff is entitled to interest in accordance with s 57 of the Insurance Contracts Act.
2. On the conclusions to which I have come, the plaintiff should have his costs. However, if the defendant wishes to argue otherwise (or if the plaintiff wishes to contend for some special costs order), they may have a limited time within which to do so.
3. I make the following orders: 1. find a verdict for the plaintiff against the defendant in the sum of $991,946.00 together with interest in accordance with s 57 of the Insurance Contracts Act 1984 (Cth). 2. Direct the parties to prepare an agreed calculation of interest up until the date of entry of judgment. 3. Stand proceedings over to 9:30am on 18 November 2016 before me for entry of judgment. 4. Direct the parties to notify each other and my Associate by 5pm on 16 November 2016 if any costs order is sought other than that the defendant should pay the plaintiff's costs. 5. Reserve liberty to apply in respect of costs. 6. Direct that the exhibits be handed out.

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: 04 November 2016