District Court New South Wales Medium Neutral Citation: Trajkovski v Commonwealth Insurance Ltd (No. 2) [2020] NSWDC 694 Hearing dates: 2-6 November 2020 Date of orders: 13 November 2020 Decision date: 13 November 2020 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraph 240 Catchwords: INSURANCE – home contents policy – whether items of jewellery in a safe stolen from insured address – section 56 of the Insurance Contracts Act 1984 (Cth) - whether fraud on the event – whether fraud on the claim Legislation Cited: Evidence Act 1995 (NSW), s 140 Insurance Contracts Act 1984 (Cth), ss 54, 56, 60 Cases Cited: ASIM v Penrose [2010] NSWCA 366 Blacktown City Council v Hocking [2008] NSWCA 144 Briginshaw v Briginshaw (1938) 60 CLR 336 Carr v Finance Corporation of Australia (No 1) (1981) 147 CLR 246 Insurance Manufacturers of Australia Pty Ltd v Heron (2006) 14 ANZ Ins Cas 61-669 McLennan v Insurance Australia Ltd [2014] NSWCA 300 Palmer v Dolman [2005] NSWCA 361 Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262 Tiep Thi To v Australian Associated Motor Insurers Ltd (2001) 3 VR 279 Vidal v NRMA Insurance Ltd [2005] NSWCA 390 Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444 Walton v The Colonial Mutual Life Assurance Society Ltd (2004) 13 ANZ Ins Cas 61-620 Water Board v Moustakas (1988) 180 CLR 491 Category: Principal judgment Parties: Mr D Trajkovski (Plaintiff) Commonwealth Insurance Ltd (Defendant) Representation: Counsel: Mr M Klooster for the plaintiff Mr R Perla for the defendant Solicitors: Unified Lawyers for the plaintiff Turks Legal for the defendant File Number(s): 2019/64733 Publication restriction: Nil Judgment INTRODUCTION 1. This case concerns a contested insurance claim in relation to allegedly stolen property. The plaintiff, Mr Trajkovski, and the defendant, Commonwealth Insurance Ltd (the 'Insurer'), entered into a home contents contract of insurance covering the period 27 September 2012 to 27 September 2013 in respect to Mr Trajkovski's residential home in an apartment block in an address at Brighton-Le-Sands. It was common ground at the hearing that he paid the premium on that policy. The maximum limit of the cover for general contents was $187,001 and, for specific contents, up to $176,590 in relation to chattels listed in Policy Schedule. One insured event under the policy was theft. 2. According to his evidence, Mr Trajkovski had over many years been an ardent collector of jewellery. Mr Trajkovski alleges that his apartment, which was on the third upper level of the building and which was potentially accessible through entrances to the building at ground level on the left and right sides of the building, was broken into on or around 3 September 2013 and alleges that many items of jewellery he had collected over a lifetime were stolen. He says he had been in Goulburn and Queanbeyan on 2 September 2013, and when he returned to his unit on 3 September 2013 he discovered that there was a significant hole in the ceiling of the main bedroom, which was not there when he left to go to Goulburn the previous day. He also discovered that a safe in which his jewellery was stored had gone. He promptly notified the police on 3 September 2013. The foremost factual questions in this case are whether the hole was created by an alleged perpetrator of the theft to get access into the unit, or whether it was fabricated to make it appear as though it was created in circumstances when access could have been, and was, obtained through the front door. 3. On 6 September 2013, Mr Trajkovski made a claim on the insurance policy, relying upon theft as the 'insured event'. In support of that claim and apparently on 11 September 2013, he compiled a Schedule of Loss which set out an estimate of the value of each item of jewellery which he claimed was stolen. In the aggregate, the estimated loss was calculated to be $323,600. Part of his claim also related to other non-jewellery items, which he estimated was quantified at the sum of $2,000. 4. On 10 December 2013, the Insurer refused the claim. The Insurer justified that refusal on the ground that Mr Trajkovski's claim was fraudulent and that he had provided fraudulent statements and information to it, in connection to how any theft was said to have occurred. By ss 56(1) and 60(1)(e) of the Insurance Contracts Act 1984 (Cth) (the 'IC Act'), the Insurer says it was entitled to refuse the claim and cancel the policy. 5. On 27 February 2019, Mr Trajkovski commenced this proceeding, in which he seeks damages for breach of the insurance contract, for the loss he has sustained, as well as pre-judgment interest under the Court rates. He finally quantified his claim in the sum of $173,590 for the principal sum and claimed interest. 6. The issues for the Court's determination are: 1. whether the alleged theft occurred in a manner covered by the policy of insurance; 2. if the answer to (a) is in the affirmative, the extent of the coverage; 3. whether the plaintiff made the claim fraudulently in an attempt to induce the defendant to accept the claim and make a payment (a 'fraud on the event'); or 4. whether the plaintiff made a fraudulent claim ('fraud on the claim'). 1. The central factual dispute between the parties to a significant degree turned upon whether the hole in the ceiling to the plaintiff's apartment, which appeared after 3 September 2013, was the result of conduct occurring above or below the ceiling. On this question, there was conflicting expert opinion evidence. Counsel for the plaintiff also accepted that his client's success substantially dependent upon the Court's acceptance of him as being a witness of credit. THE POLICY 1. The policy schedule stipulated that the period of insurance is from 27 September 2012 to 27 September 2013. The plaintiff had held the same coverage in some earlier years. It covered the plaintiff's address in Brighton-Le-Sands. Relevantly, the policy provided coverage for 'Specified Contents' for a total sum of $176,590. Those specified items were then individually listed. 2. Relevant features of the policy (Exhibit B) were as follows. 3. The plaintiff acquired a 'Residential Home Package' (Exhibit B, CB Vol 1, p 346). This fact has some significance upon one of the questions in dispute, being whether it was necessary for the plaintiff to have owned the items which he alleged were stolen, or whether it was sufficient that they belonged to him. 4. The policy extended to general contents and special limit items. For the purpose of the general contents, 'content' was relevantly defined as being items kept at the insured address and which belonged to the plaintiff (Exhibit B, Court Book Volume 1, pp 303-304). 5. 'Theft' was defined to include attempted theft, burglary and housebreaking. The insurer promised to cover the plaintiff for loss or damage to contents caused by the 'events'. One of those events was 'theft' (that event not being one which the plaintiff had removed from his policy). 6. I referred earlier to the maximum coverage for 'Specified Contents'. The balance of the plaintiff's claim for loss was made up of additional claims for 'contents in the open' (other items of jewellery not covered by the Specified Contents) and 'Business equipment' (relevantly a laptop), both items being capped at the sum of $2,000 each. 7. The policy contained an exclusion clause (among other general exclusions) for loss or damage caused by intentional acts or acts committed with reckless disregard for the consequences by the insured, his family or a person acting with the consent of himself or his family. However, in its Defence, the Insurer did not invoke the exclusion clause as a basis for denying the claim. Its entitlement to refuse to pay, and indeed cancel the policy, was centred upon s 56 (and s 60) of the IC Act. 8. In the plaintiff's Schedule of Loss compiled (by hand) on 11 September 2013, there are approximately 25 items listed; 18 of which were itemised in the 'Specified to the policy schedule Contents'. WAS THERE A THEFT? Mr Trajkovski's evidence 1. Mr Trajkovski was born in Macedonia. English is his second language. He gave evidence substantially through an interpreter. He moved to Australia in 1989. He is currently a pensioner. He identified himself as being an amateur musician, operating a music and copy store, and was a painter for most of his adult life until he severely injured his foot in or around March 2014. He stated that he grew up in a family which collected jewellery and that when he became an adult, he developed his interest in that subject as well. He indicated that part of his family's cultural belief was to put its faith in jewellery rather than other forms of investment. The unit where the alleged theft occurred, in Brighton-Le-Sands, has since been sold to his son. 2. Mr Trajkovski deposed that on 2 September 2013, he took a road trip to Goulburn with his then partner, Ms Jagoda Kostovska, to visit a friend of his (Mr Louie Skepev). The point of the visit, so he deposed, was to discuss the possibility of his painting. After that, he deposed to travelling to a friend who is resident in Queanbeyan, where he and his partner stayed for a few drinks. Mr Trajkovski exhibited some photos taken on that occasion. 3. That evening, he recalled that they stayed at a motel in Queanbeyan (owned by his friend, Mr Skepev). Receipts of payment he had made were also exhibited to his first affidavit. 4. They drove back to his unit the next day. After arriving in the afternoon, the plaintiff deposed to finding that the door was wide open: the plaintiff noticed that it was damaged. He deposed that when entering into the property he noticed that the internal alarm system had been removed from the roof and placed in a bucket of water. 5. The plaintiff then walked into the rear bedroom where he found a large hole in the ceiling, with debris and pieces of plasterboard on the floor. He noticed that the safe had been taken. The safe had been stored in a wardrobe accessible by sliding doors. The plaintiff also noticed that his laptop and mobile telephone had also been taken. 6. It was an agreed fact that the plaintiff reported the alleged theft to the police on 3 September 2013. A note taken by the investigator suggested that the police had been notified by the plaintiff around 2:00pm that day and the plaintiff had said that the police arrived on the scene at about 2:40pm. 7. He deposed that when he left his property on 2 September 2013 the front door and all windows and access points were locked and secured. This belief was based upon his practice of double-checking his securing of the unit and by putting on an alarm. He also deposed to seeing doors left open from time to time, but in cross-examination, could not identify the occasions when that had occurred. 8. In cross-examination, there was some ambiguity in the plaintiff's evidence as to whether he locked the deadlock before his trip to Goulburn: initially he said that he did not lock it, but a short time later, he said that it was. Eventually he said it was left in a horizontal position. He said that he also pressed a knob on the door handle. This was repeated in re-examination. 9. He said he was unaware whether the alarm in the unit went off (no witness was called to say it had). As the insurer later submitted, the plaintiff gave no evidence (when peculiarly placed to do so) to indicate that the alarm was not functional as at 2 September 2013. On the basis of his account, he plainly believed that it was functional. At any rate, when he arrived home, he saw the siren of the alarm left in a red bucket filled with water. The bucket had been placed in the laundry, which was 8-10 metres in distance away from the main bedroom. 10. In cross-examination, the plaintiff was asked whether, from 3 September 2013 until the defendant's building experts inspected the premises on 22 October 2013, he had interfered with the cavity in the ceiling in the main bedroom. He said that he had, but only to the extent that he had cut out large pieces of gyprock hanging from the ceiling and put a cover across the hole so as to prevent dust falling within the bedroom. He was challenged as to the timing of this, but maintained that this was done before the defendant's building experts entered into the building. This was the extent of the disruption: he did not say, for example, that he went up into the cavity of the roof himself. 11. Mr Trajkovski swore that he did not commit the theft and that no third party had committed the theft with his consent or knowledge. 12. Under cross-examination, the plaintiff said he was unsure whether the safe had been bolted to the place where it was stored. He had put the safe there, but could not recall whether someone had assisted him to do so. He said that his children, his brothers and his mother were aware that he had a safe in the apartment. He added that others had helped him to move into the apartment, but was unaware whether they knew about the safe. It emerged also that one of his brothers, Mile, had a criminal history, including time spent in custody on a charge of possession of stolen property, and had been in jail on two occasions. He had not mentioned that his brother, who knew of the safe, had this background when he was interviewed by the police. He could not wholly explain to the police what was in the safe: there were a lot of items. 13. He also said in cross-examination that four watches had been left in the living room, but had not been taken – these were old and faulty. He added that valuation certificates were left in the other bedroom in the apartment. He did not show these valuation certificates to the police when they saw him. It was suggested that the police had asked him to produce proof of the items that were stolen. The plaintiff's response was that this was probably so, but he could not recall. 14. The plaintiff was referred in cross-examination to the circumstance in which he initially had taken out his insurance policy, in 2010, and his recollection of being asked whether anyone within the household (for the insured address) had had been charged with committing certain offences in the preceding 10 years. The plaintiff accepted that he had been charged with offences in 1997 (receiving stolen property, common assault and unauthorised possession of a firearm), 1999 (common assault) and 2006 (shoplifting). Ms Jagoda Kostovska's evidence 1. Ms Kostovska was also born in Macedonia. She also gave evidence through an interpreter. She swore an affidavit (12 September 2019). She deposed to being in an on-again, off-again relationship with the plaintiff since 2009. 2. She gave evidence recalling that on 2 September 2013, she collected the plaintiff from a restaurant in Rockdale and drove to meet the plaintiff's friend, Louie Skepev, in Goulburn. She recalled that the purpose of the visit was for the plaintiff to discuss a painting job. 3. She deposed that after the visit to Mr Skepev (whose length she could not recall), she and the plaintiff drove to visit her friends in Queanbeyan. Photographs were taken at that place. She estimated that they stayed there for two or three hours. 4. Ms Kostovska deposed that they then travelled to the Central Motel in Queanbeyan. She understood that one of the plaintiff's friends was the owner of that motel. They stayed the night. 5. She deposed to driving the plaintiff back the following morning, dropping him at his unit in Brighton-Le-Sands. She deposed to receiving a telephone call later in the day, with the plaintiff informing her that the unit had been broken into and the safe, which contained his gold and jewellery, was stolen. 6. The next day, 4 September 2013, she deposed to visiting the plaintiff's unit and she took photos of the hole in the ceiling. The defendant's documentary evidence 1. The defendant relied upon the circumstance that prior to September 2013, the plaintiff had a criminal history (Exhibit 6). This included offences committed in the period from June 1997 to July 2011. Some of the more material offences included his being in receipt of stolen property, having goods in his custody reasonably suspected as being stolen (June 1997), and shoplifting (September 2006). 2. The defendant relied upon an incoming passenger card which the plaintiff completed in his flight back to Australia after his visit to Macedonia on 29 January 2008. The pertinent part of this was his answering 'no' to the question whether (to paraphrase the substance of the question) he had brought back into Australia goods obtained from a foreign country (including gifts) valued to over AUD$900. 3. Also tendered were outgoing passenger cards signifying a series of trips which the plaintiff had taken to Macedonia, pertinently between 2007 and 2010. Agreed Facts (Exhibit D) 1. The parties agreed on the following facts, mainly regarding the plaintiff's financial capacity between 2004 and 2009, although also dealing with other miscellaneous matters: 1. The defendant issued a notice to produce for inspection on the plaintiff dated 20 August 2019 (the defendant's first notice to produce) requiring production of documents evidencing the purchase of the jewellery alleged to be stolen and items 1 – 22, as described in the plaintiff's Schedule of Loss. 2. In response to the defendant's first notice to produce, the plaintiff produced a copy of: 1. company tax returns for Ideal Painting Services Pty Ltd (Ideal Painting) for the financial years ending 2005 to 2009; 2. the plaintiff's individual tax returns for the financial years ending 2005 to 2009; and 3. Commonwealth Bank of Australia Statement for account no: 06 2126 10159953 for the period 1 August 2013 to 31 October 2013 (Exhibit 2) but being only 2 of 4 pages. 1. The company tax returns for Ideal Painting for the financial years ending 2005 to 2009 record: BUSINESS – IDEAL PAINTING SERVICES Financial Year Total Income Total Expenses Net Income Court Book Reference 2004 - 2005 $206,503 $195,774 $10,729 668 - 673 2005 - 2006 $200,027 $188,250 $11,777 674 - 680 2006 - 2007 $213,835 $218,148 - $4,313 687 - 692 2007 - 2008 $134,823 $43,458 $91,364 663 - 667 2008 - 2009 $45,455 $45,455 $0.00 693 - 697 1. The plaintiff's individual tax returns for the financial years ending 2005 to 2009 record: INDIVIDUAL – DUSKO TRAJKOVSKI Financial Year Taxable Income Net Refund Court Book Reference 2004 - 2005 $10,729 $14,187.07 668 – 673 2005 – 2006 $11,777 $13,900.45 674 – 680 2006 – 2007 $16,000 $160 658 – 662 2007 – 2008 $11,115 $807.75 647 – 652 2008 - 2009 $32,448 $652.16 681 – 686 1. The defendant issued a further notice to produce for inspection on the plaintiff dated 12 March 2020 (the 'defendant's second notice to produce') requiring production of: 1. metadata of the photographs exhibited to the plaintiff's affidavit dated 16 September 2019; 2. all photographs of the plaintiff or any other person wearing the jewellery that is the subject of the claim; 3. all taxation material in the plaintiff's possession in relation to Balkan Trade Pty Ltd and Ideal Painting Services Pty Ltd for the period June 2005 to June 2014; 4. a copy of the plaintiff's itemised home phone records for the period 25 August 2013 to 10 September 2013; 5. a copy of Commonwealth Bank of Australia MasterCard account statements held by the plaintiff for the period 1 January 2010 to 10 September 2013 evidencing purchase and/or payment of the jewellery that is the subject of the plaintiff's claim and the plaintiff's whereabouts leading up to the time of the alleged theft; and 6. a copy of Commonwealth Bank of Australia Visa account statements held by the plaintiff for the period 1 January 2010 to 10 September 2013 evidencing purchase and/or payment of the jewellery that is the subject of the plaintiff's claim and the plaintiff's whereabouts leading up to the time of the alleged theft. 1. In response to the defendant's second notice to produce, the plaintiff re-produced the documents referred to in paragraph 2 above as well as a number of photographs. 2. Subpoenas to produce were filed on 30 July 2019 by the defendant and served on 6 August 2019 on the following recipients: 1. Timely Jewellery Pty Ltd; 2. Talia Jewellery (Aust.) Pty Ltd; 3. Diman & Co Pty Ltd; and 4. Michael Philip Smyth of Artegold Jewellery. 1. No documents have been produced in compliance with the subpoenas to produce referred to in the paragraph above. 2. As earlier indicated, the premium payable on the contract of insurance (Exhibit B) was paid by the plaintiff. 3. If it was put to the plaintiff that the theft did not occur, that the theft did not occur in the manner has alleged, or that he was somehow involved with the theft and that the making of the claim was fraudulent, he would deny those matters. Expert evidence 1. The parties both had building consultants give expert opinion evidence primarily on the issue of whether the hole that was discovered in the plaintiff's bedroom was attributable to the activity of someone within the apartment itself or whether it may have been attributable to the activity of someone above the ceiling, who had got into that position through a manhole outside the apartment. 2. Mr Ziade is a licensed builder and building consultant. Mr Targett is a civil and structural engineer. Mr Bournelis is a licensed builder and building consultant. Observations of Mr Ziade and Mr Targett 1. Messrs Ziade and Targett each inspected the plaintiff's unit on 22 October 2013, about 6 weeks after the event. 2. Inside the main bedroom on the ceiling wall they observed that: * debris was still inside the bedroom; * jagged pieces were hanging down from the ceiling; * the paper liner was torn; and * there were no sizeable chips of debris in the ceiling space above the hole. 1. Mr Targett recorded some separate observations. What struck him in particular was that on the remainder of the ceiling, away from the hole, there was no welling or popping of fasteners and the rest of the painted ceiling surface appeared to be intact. 2. He also surmised that if the ceiling breach was from the roof void, debris was to be expected, but he did not observe much debris. He found only a small amount of plaster dust. 3. Further, he observed certain chisel marks made to separate the lower plasterboard lining from the vermiculite. A screw fixing point was visible which corresponded with the location of the overhead ceiling joist. He, and Mr Ziade, did not consider that this could have been made by someone from within the roof void. If someone was exerting downward force from within the roof void, it would reasonably be expected that there would be a displacement of the lining surrounding fixing screws on the bottom layer of the plasterboard. 4. Mr Targett also observed plasterboard dust marks on the side of the ceiling joist in the roof void. When pushed up against the rough sawn timber, it left a residue. That was an indication that the ceiling hole was made from within the bedroom. 5. Mr Ziade separately commented that there was no debris of significance within the roof void. A point of significance for him was that the wire in the vermiculite around the ceiling breach was pushed and bent down into the bedroom. But if someone got through from the roof, the wire had to be bent up to enable access. This raised the question whether someone had bent the wire up and then back down again to remove debris. Mr Bournelis' experiment & opinion 1. Mr Bournelis did inspect the property, but only on 29 July 2019, after the cavity in the ceiling had been layered over. On that occasion, he made certain invasive openings with a chisel from above the ceiling in an area adjacent to the existing opening. He said that the chisel was able to penetrate the two layers of ceiling installed and, after using the palm of his hand to impact the chisel, found that the plasterboard broke away. Thereafter, he was able to pull sections of the ceiling apart. 2. Mr Bournelis also penetrated the ceiling from within the unit, by using his chisel and pushing it upwards. This penetrated the two levels of plasterboard sheeting and the fine wire mesh. 3. Mr Bournelis opined that the breach was more likely the result of entry above the ceiling than through the front door of the unit. This was because: * the manhole was unsecured and easily accessible; * access to the unit was open once entered through the roof cavity; * invasive opening was achievable via the roof cavity and above the bedroom without obstruction. Further, the roof height within the cavity did not prevent him from easily penetrating the ceiling; * the breach was made perfectly between the ceiling timber joists. That would be an impossible task to carry out from below without knowing where the joists were located and the direction that they were running in; * it was easier to create the invasive openings from above, rather than below; * the height from the ceiling and the bedroom floor was 2.7m; * there was no conclusive evidence as to how else entry to the unit could have been effected, as no invasive tests were carried out. 1. Mr Bournelis did not believe that the upward or downward position of the exposed reinforcing wire, following removal of the plasterboard linings and vermiculite, was an indicator of whether the ceiling hole was made within the roof void or within the bedroom. The joint expert report (Exhibit C) 1. Messrs Ziade and Targett (for the defendant) and Mr Bournelis (for the plaintiff) conferred on 26 October 2020 and produced a joint report, which they all signed on 30 October 2020. Areas of agreement 1. The material findings upon which they jointly agreed, included that: * entry could be made into the roof void by the existing manhole located in the ceiling of the building's stair well, with the assistance of an accomplice, or the use of a ladder; * one could gain entry into the main bedroom via the ceiling breach, but the access hole had restrictions. Further, there were ample locations within the roof void to cut easier access holes through the ceiling for the purpose of gaining entry into the unit. In particular, in relation to the location of the main bedroom, the ceiling (where the hole was located) had very limited airspace and it was not possible for someone to stand beneath it; * the distance between the manhole and the hole that was made in the main bedroom ceiling was approximately 10m; * the size of the ceiling hole roughly deviated between 300 to 350mm and 500mm wide; * the total thickness of the ceiling was approximately 40mm. This was a combination of two layers of plasterboard which 'sandwiched' vermiculite, which is a ceiling finish. The core of the vermiculite has thin wire reinforcement which strengthens the vermiculite; * Mr Targett agreed with Mr Bournelis that it was feasible to have the vermiculite reinforcing wire bent either way to gain access. If access was gained through the roof void then the wires would be bent downwards to prevent injury. The direction of the wires was not concrete evidence to determine access; * an implement or tool was likely used to breach the bedroom ceiling and this implement or tool likely featured a flattened sharp end (such as a chisel or crowbar); * the perpetrator was aware that material was plasterboard, though was not necessarily aware that there was vermiculite in between the layers of plasterboard; * access into the roof void, by the stairwell manhole, was not impossible but was unlikely without some form of additional assistance, such as by a crate or a ladder, or a second person; * although one was able to gain entry into the main bedroom through the hole, the place where the hole was created had restrictions. There were ample locations elsewhere within the roof void to cut easier access holes through the ceiling for the purpose of gaining entry into the apartment; * following the hole, the ceiling surrounding the breach remained firmly secured to the ceiling joints; * if time was not a consideration, the use of a sharp implement was not likely to cause any ceiling damage beyond the 'breach zone' regardless of whether the breach was initiated within the roof void or within the bedroom. (Mr Targett and Mr Ziade considered that if a person attempted to breach the ceiling in haste with that implement, there would be more widespread ceiling damage to the vermiculite and the lower plasterboard lining, due to the disturbance at the fixing points, because of greater downward force. A person would be better able to control the section of the plasterboard or vermiculite to be removed if that person was beneath the ceiling.); and * it was improbable that the perpetrator exited the apartment through the hole in the ceiling. 1. Mr Targett and Mr Ziade disagreed with Mr Bournelis' statement that his test did not result in debris collection on the back of the ceiling. They also disagreed that debris from above the ceiling would have fallen downward into the bedroom. 2. Mr Targett and Mr Ziade opined that the ceiling hole above the main bedroom was not in a logical location that a perpetrator would select whilst positioned within the roof void, given the obstruction and a height restriction resulting from the scissor rafter located above the hole in the ceiling. They believed that these circumstances, along with other considerations – including the absence of significant debris within the roof void around the hole, the absence of dust disturbance on top of the ceiling joists and adjacent to the bedroom hole, and, further, the absence of damage around ceiling fasteners immediately beyond the hole, and implement abrasion marks to the underside of the exposed vermiculite ceiling – did not support the possibility of bedroom access through the roof void. 3. Mr Bournelis opined that notwithstanding that his observations were made six years after the event, a person with or without assistance gained entry into the roof void, by the stairwell ceiling manhole. That person then breached the ceiling above the main bedroom and descended into the bedroom via the breach hole. Although the hole was rectified prior to his inspection, he was nevertheless able to enter the roof void and sight the location of the hole and also noted that the hole was perfectly located between the timber ceiling joists and that the ceiling hole did not extend beneath any ceiling joists. He said he was able to locate where the original hole was made by the perpetrator, and then proceeded to make his own hole beside the original hole. He believes that his photos indicated that he pushed the vermiculite reinforcement wires up to access the vermiculite and plasterboard under the ceiling. This is found to be very fragile and brittle. Concurrent evidence Impressions of the experts 1. The experts gave their evidence concurrently, notwithstanding that, at least in Mr Targett's case, he had a different specialty, in expertise, to Mr Ziade and Mr Bournelis. 2. All the experts were knowledgeable and competent and tried to express their opinions honestly. A relatively small number of questions were directed to Mr Bournelis, in comparison with the other two experts; even allowing for the circumstance that he was effectively 'outnumbered' by experts engaged on the defendant's behalf. My general impression was that both Mr Ziade and Mr Targett were very wedded to their views and both witnesses occasionally gave non-responsive answers to questions. In Mr Ziade's case in particular, I considered his evidence that he was '100% confident' in his opinion that an intruder could not have accessed the unit through the roof cavity, in light of the opinion of Mr Bournelis that it was probable, to be implausible, but he adhered to it nonetheless. I formed the view, accordingly, that both Mr Ziade and Mr Targett held a very high conceit of their opinions. That is not necessarily a vice in an expert witness, but it did carry the consequence that sometimes they gave non-responsive answers or answers which attempted to provide explanations for deeply entrenched views. 3. Another issue of some concern, in terms of independence, was the very close relationship between Mr Ziade and Mr Targett. During the concurrent evidence, Mr Targett indicated that he received information from Mr Ziade, which was not obviously explained in detail in his opinion. More than that, Mr Targett's first report (25 October 2013) was actually addressed to Mr Ziade and not even directly to the insurer, upon the basis of Mr Ziade's instructions to him (manifested in that report). Although this was not evident on the face of either expert's reports, Mr Targett also indicated that they inspected the premises at the same time. These matters suggested that they worked in combination. This would naturally leave questions open whether either of them would have been reluctant to depart from each other's expressed views when giving evidence and therefore be truly independent of each other. 4. In Mr Ziade's particular case, it struck me that he was somewhat emotive in his views. In regard to the relatively brief level of questioning of him, Mr Bournelis struck me as giving concise opinions, without hesitation and without appearing as defensive as the other two experts. 5. Mr Bournelis was at an obvious disadvantage to Messrs Ziade and Targett in the sense that his observations were confined to what he saw nearly 6 years after the event; in comparison with the other two. His brief was essentially to conduct an experiment and evaluate photographs. 6. I do not consider that it would be fair to say that a preference could be given for Mr Bournelis over Messrs Ziade and Targett, in terms of the merit of their opinions. In a real sense, they were speaking about different things at different points in time. 7. I propose to summarise the key matters addressed in the course of the concurrent evidence. Dust disturbance on the timber floorboard on the ceiling joist 1. The experts were shown a photograph depicting the 'ceiling breach', as viewed from within the roof void (Exhibit 4.5). Mr Ziade was not willing to admit of the possibility that dust which was apparent on the timber floor boarding on the ceiling joist (on the right side of the photo) could have been caused by an intruder in the cavity. He was unwilling to budge from his '100% confident' opinion that an intruder in the cavity could not have caused the dust disturbance. 2. Mr Targett was willing to accept that there was dust disturbance on the timber, and therefore near the hole. He was less certain than Mr Ziade in his view that someone could not have accessed the bedroom from a hole in the ceiling: his percentage level of confidence was in the high 90's. It was pointed out that this level of confidence appeared somewhat broader than what he wrote in his report, where he couched his assessment of the degree of probability at the level of 'most likely'. 3. Both Mr Targett and Mr Ziade were challenged on why, in their individual reports, they omitted to refer to the presence of dust on the timber board. Mr Ziade answered that he did what he was instructed to do (being asked to determine whether a hole had been cut within the roof void). Mr Targett alluded to someone cleaning up the area within the roof void; although there was no indication on the face of either of his two reports as to when he formed that belief. 4. Mr Ziade, and, to a lesser extent, Mr Targett, were entrenched in their view that it was not possible for a potential perpetrator to obtain access into the unit by kneeling on a timber board which was partly positioned over one of the ceiling joists depicted in Exhibit 4.5. Mr Ziade explained that to kneel on the timber floor boarding would have risked damage to the ceiling. He also explained that the timber, which was loose, could not have been used by an intruder to grip as that person moved into the bedroom. 5. Mr Targett also did not consider that an intruder could have knelt on the timber board. 6. Both Mr Ziade and Mr Targett noted that the timber boarding was there to help push the insulation, upon which the board was placed. All experts agreed that the timber boarding was partly placed on a ceiling joist and partly placed on the insulation. Dust on the other ceiling joist 1. When shown Exhibit 4.5, Mr Targett, somewhat grudgingly, accepted that it was possible that there was dust depicted on the left ceiling joint (viewing the photograph). Mr Ziade was not prepared to accept that as a possibility. 2. When it came to the topic of identifying the cause for the presence of dust, both Mr Ziade and Mr Targett, respectively, accepted that they had no special expertise on dust patterns or how dust might accumulate in roof voids. Bent up wire 1. Mr Ziade indicated in his second report, which was responsive to Mr Bournelis' experiment, that one consideration inclining him to the view that the hole was created from below the ceiling was the circumstance that the fine reinforcement wire from within the vermiculite ceiling layer (the layer that was sandwiched between two layers of plasterboard) was bent up. This was inconsistent with his observations in his inspection undertaken in October 2013, indicating that the wires were bent down. This was not one of the most important matters, but it was relevant; although he acknowledged that minds may reasonably differ as to the significance of this circumstance. Mr Ziade was challenged whether he actually saw this and he said that he had. At any rate, Mr Ziade was referred to Mr Targett's viewpoint on this matter, expressed in the joint report, which was to the effect that it was feasible to have the wire bent both ways in gaining access as they were thin and flimsy. Mr Ziade did not feel that Mr Targett disagreed with him on this matter. 2. Mr Bournelis explained, with reference to a photograph in his report (CB vol 1, p 251) that the wire was bent up as he had to remove it in an upward direction in order to get to the next level of plasterboard beneath the vermiculite. Other aspects of Mr Bournelis' experiment 1. With reference also to one of the photographs (CB vol 1, p 446) appearing in Mr Targett's second report (from 2019), Mr Bournelis accepted that he performed the inspection underneath the rafter. This was carried out 6 years after the event in question. It was suggested that the location where the hole was found was 'unusual', given its proximity to the rafter. Mr Bournelis did not consider that it was unusual, although he accepted that there was restriction in head space and it was not possible to stand up in that section of the roof. All the experts agreed that for an intruder wishing to create a hole from above the ceiling in the roof void, that person would need to sit, kneel or squat on the ceiling joist. They also all agreed that the plasterboard material was not a 'structural' part of the ceiling; and that anyone standing on it would face the risk of falling through. 2. Mr Bournelis was referred to the part of his report (section 9.1.5 vi) where he indicated that it was possible for a person wishing to pass through the hole from above the ceiling by hanging on to a ceiling joist and was taken, again to the photograph at Exhibit 4.5. Although he did not discount the possibility that either ceiling joist depicted in that photo might have been used, Mr Bournelis thought that the one on the left (looking at the photo) might afford greater head space. 3. Mr Bournelis thought that the time that it took him to create the hole as part of his experiment (depicted in photos on CB vol 1, p 251) was about 10 minutes, in terms of the time he devoted solely to creating it. He was referred to debris apparent (CB vol 1, p 250), but could not say whether he was responsible for creating this. 4. The hole that Mr Bournelis created was approximately of the dimensions of 60mm x 100mm whereas the experts generally agreed that the subject hole created in September 2013 was approximately 300mm x 500mm. 5. Mr Bournelis was referred to a photograph (CB vol 1, p 250), which appeared to show the same location within the roof void as a different photograph (Exhibit 4.5): the main difference being that the former photograph was taken after the damage to the roof had been inspected by Messrs Ziade and Targett in October 2013. It was suggested to him that in the former, some wood had been added to deal with insulation in the period from October 2013 through to when Mr Bournelis performed his own inspection in July 2019. Mr Bournelis disagreed with this. Other signs of damage 1. The experts considered a photograph closely depicting the damage to the ceiling (Exhibit 4.1). Mr Targett noted that fixing points, being screws or nails, can help affix the lower plasterboard sheet into the vermiculite. The damage was to some extent visible around the edge of the hole. It was significant to him that if an intruder had come into the room from above the ceiling, it was likely that the implement that s/he used would have exerted enough downward pressure on the plasterboard to create a ripple effect, causing distress to the fixing screws. That, however, was not evident to him during his inspection in October 2013. He did not see severe damage around the hole or chisel marks to extend the plasterboard opening. On this point, Mr Ziade agreed with Mr Targett. 2. Mr Bournelis said that he found no evidence of breach of fixing screws to the existing ceiling. 3. Both Mr Ziade and Mr Targett accepted, although not without an attempt (respectively) to supply explanations for the limitation, that they had only carried out visual inspections in October 2013. They did not use any implement, or even use their hands or engage in any other form of empirical testing. A handprint on the ceiling? 1. The experts were shown Exhibit 4.1 and what appeared to be (on the top left side) 3, or possibly 4 light markings against the purple colouring. Mr Ziade and Mr Targett both thought that the markings represented a handprint. But they had only conducted visual inspections and did not test this. Mr Targett appeared more open minded to the possibility that it might be something else other than a handprint. Was there property capable of being taking? 1. The defendant disputed that the plaintiff had jewellery in the safe in the insured address that was capable of being taken on 3 September 2013 and, on that basis alone, there was no insured event. The defendant submitted that the highest the evidence went was that the plaintiff's son had procured the valuations and the son had the items in his possession at the time of that valuation. Otherwise, the plaintiff could only rely upon his own evidence; which should not be accepted. 2. I reject the defendant's submission. First, although I have doubts about his credibility and reliability for reasons to be elaborated below, I do not accept that the plaintiff was dishonest when he gave his evidence generally, or at least in this particular respect. I therefore accord weight to his evidence about having a safe and having items of jewellery within it. That evidence was supported by photographic evidence of a safe being in the insured property (Exhibit F, photo 9). 3. Secondly, although agreement was reached between Counsel that there was no necessity for the defendant's Counsel to put to the plaintiff that a theft did not occur or that he was involved in it or otherwise engaged in fraudulent conduct, the agreement did not extend in such way as to obviate the basic requirement of fairness enshrined in the rule in Browne v Dunn, to put to the plaintiff the anterior point that he did not possess property, in his safe, in the insured address. The circumstance that the plaintiff was not challenged in this respect adds weight to the force of his evidence. 4. Thirdly, further weight can be accorded to the plaintiff's evidence in this respect by the content of the Schedule of Loss, which was admissible as to the truth of what was contained within it. As will be later noted in my consideration of the s 56 IC Act defence, ultimately, the defendant only identified the "statement" made regarding item 12 in the Schedule of Loss as a fraudulent statement. 5. Fourthly, the defendant neglects the circumstance that there were invoices admitted in evidence as business records, made out in the name of the plaintiff. These invoices, along with the valuations, helped the plaintiff compile the Schedule of Loss and were further evidence of his possession of the jewellery. 6. Fifthly, the defendant also neglects the circumstance that, for at least two years prior to the event, the plaintiff had taken out a contract of insurance with it, in which the same items which the plaintiff asserts were stolen on 3 September 2013 were specified. The defendant was content to accept premiums paid to it by or on the plaintiff's behalf in relation to insured items. It would be a bizarre circumstance that for 3 years the plaintiff would pay premiums in relation to specified contents when he did not have those items (secured in a safe) in the insured address in those years. What property was lost? The contested facts 1. On 11 September 2013, the day he brought his claim under the policy, he completed a Schedule of Loss and he thereafter supplied a commentary in his second affidavit as to how he acquired each item and he relied upon valuation estimates to support the claim for each item. The Schedule of Loss itemised 25 items of jewellery. The Schedule of Loss added items which had not been included in the 'Specified Contents' in the policy schedule to the applicable insurance policy. The plaintiff explained in his cross-examination that he had prepared the Schedule of Loss with the assistance of his son, and that the Schedule of Loss was based upon the valuations and 'receipts' he had in his possession. 2. The plaintiff exhibited to his first affidavit (sworn 16 September 2019) a range of invoices and valuation certificates evidencing his possession of the items of the property (Exhibit A [1] ). Over the objection of the defendant, these documents were all admitted; subject to the limitation that the valuation certificates were evidence only for proof of a representation that the plaintiff was in possession (and not ownership) of the jewellery at the time of the valuations. Counsel for the plaintiff did not press the tender of the valuation certificates for proof of the value of the respective items at the date of the certificate. 3. Many, but not all, of the items that were in the Schedule of Loss which the plaintiff compiled on 11 September 2013 (being part of Ex A, CB vol 1, pp 66-68) were the subject of supplementary evidence from the plaintiff in his second affidavit (sworn 26 October 2020). In his second affidavit, he did not give evidence about items 4 or 6 in his Schedule of Loss. 4. The cross-examination was primarily directed to those items. The plaintiff was not cross-examined on his evidence in his second affidavit about items 6, 15, and 23-24 in his Schedule of Loss. 5. The following matters (generally adverse to the plaintiff's interests) arose from the cross-examination. Items 3 & 4 1. These items were each identified as a gold crucifix with 16 diamonds. The plaintiff deposed to acquiring them in 2000 from Golden Idea after having provided that entity with some scraps of gold and diamond. He deposed to instructing that entity to only create two matching necklaces and two matching crucifixes: one each for himself and one each for his brother. 2. Although he did not locate a tax invoice or receipt, he obtained a valuation certificate from RP Valuers in May 2008 (Exhibit A, CB vol 1, p 97). He said that this certificate related only to his version of the crucifix. He had deposed to being informed by a representative of the insurer that he should obtain valuation certificates for insurance purposes. In cross-examination, it was suggested that he only obtained insurance from 2010 but the plaintiff did not recall whether that was so. When asked to explain why that was not disclosed in his affidavit, the plaintiff responded by saying that he was not asked about it. 3. In cross-examination he said he brought the diamonds from Macedonia into Australia from 1996 on multiple occasions. He also said that his brother had given him his identical crucifix (item 4) but he did not get that one valued. 4. Asked why he did not obtain a valuation certificate for this item, the plaintiff explained that this was because he obtained a valuation certificate for his copy of the crucifix and this was applicable to his brother's item. However, in his second affidavit (at paragraph 45) he erroneously asserted that this valuation certificate related to his brother's copy of the crucifix. He attributed this to a 'misunderstanding'. Moreover, his evidence in his affidavit (paragraph 43) that his brother had gifted him his crucifix was inconsistent with what he told the insurer's investigator; which was to the effect that his brother had sold him his crucifix for the price of $20,000 because of the brother's financial problems. 5. He could not recall how many crucifixes he had in his possession in September 2013. Items 5 & 6 1. Items 5 and 6 were described in the Schedule of Loss as 18 carat gold curb link chains. In his affidavit the plaintiff deposed that he had also acquired item 5 from Golden Idea. 2. Under cross-examination, the plaintiff could not say whether this was the same item as item 3. His brother had given him the other necklace (item 6) and he could not recall whether he had insured this item, but accepted that he had still made a claim in relation to it 3. The plaintiff said that these items were matching and that his brother had given him his copy. Item 7 1. This item was described in the Schedule of Loss as a 14 carat gold curb anchor link chain. In his affidavit the plaintiff had deposed to acquiring this from Marin Pencev in Chinatown after the plaintiff (and his brother) provided him with scrap gold and diamond. 2. Under cross-examination, the plaintiff said he erroneously asserted in his affidavit that he had provided the diamond to a maker in Chinatown (Marin Pencev) when he meant to say only that he had provided scrap gold. He also said that his brother had informed him that he had subsequently sold his gold chain. Item 11 1. This item was described in the Schedule of Loss as an 18 carat gold necklace with a crucifix. In his affidavit the plaintiff said that he had also acquired this necklace from Marin Pencev in Chinatown. 2. He accepted in cross-examination that in his second affidavit, he had erroneously identified the valuation certificate (Exhibit A, CB vol 1, p 93) as evidence of ownership of this item. Item 19 1. This item was described in the Schedule of Loss as a pair of 18 carat gold diamond earrings. The plaintiff did not disclose in his affidavit how he came to acquire this item, although he did depose to receiving a valuation of this item from RP Valuers in June 2005. 2. The plaintiff accepted that in his affidavit he erroneously identified a valuation certificate in evidence as applicable to this item: the correct one was the version that appeared at Exhibit A (CB vol 1, p 69 – not CB vol 1, p 72). He also erroneously stated, in relation to this item, that he obtained a valuation from RP Valuers, when that was manifestly not the case. A valuation was prepared but it was made out by a different valuer, Talia Jewellery, to Timely Jewellery Rockdale. 3. As with item 20, there was no receipt of any credit card payment accompanying the invoice. Item 20 1. This item was described in the Schedule of Loss as 18 carat gold men's ring with diamonds. The plaintiff obtained a valuation certificate for this (Exhibit A, CB vol 1, p 71). The plaintiff deposed to acquiring it from Timely Jewellery on 7 July 2005; the same day he deposed to purchasing item 19. The combined purchase price for items 19 & 20 was about $24,750. 2. The plaintiff said he could not recall how this item (or item 19) was paid for. There was no indication that it had been paid for by credit card. If it had been, there was no receipt of the credit card payment that accompanied the invoice (Exhibit A, CB vol 1, p 72) or the invoice for item 19 (Exhibit A, CB vol 1, p 70). 3. The plaintiff said that he kept cash on hand (in his safe) at home. When it was suggested that $11,800 was a lot to spend on women's earrings, the plaintiff said that he spent his money to invest in gold and diamonds. Item 17 1. This item was described in the Schedule of Loss as an 18 carat gold ring with diamonds. In his second affidavit, the plaintiff deposed to acquiring it from Timely Jewellery on or around 9 August 2005 for a purchase price of $9,800. This meant that within two months he had spent approximately $35,000 on jewellery. In his second affidavit, the plaintiff deposed to his sons helping him to finance the acquisition of this item. 2. Under cross-examination, he elaborated that they had all saved money together and that he asked his sons to help with the finance, since he did not have enough cash himself. The plaintiff said that it was an investment for the family. 3. He did not obtain a valuation for this particular item, in circumstances I touch upon below in the section which concerns my assessment of the plaintiff's credit. Item 16 1. This item was described in the Schedule of Loss as an 18 carat gold curb link necklace. In his second affidavit the plaintiff deposed to acquiring it from Timely Jewellery on or around 6 January 2006. If that was right, it would mean that in a period of six or seven months the plaintiff would have spent approximately $45,000 at the jeweller. 2. The plaintiff accepted that he had not obtained a valuation of this item. Item 18 1. This item was described in the Schedule of Loss as an 18 carat gold curb link bracelet. He deposed to acquiring it from Timely Jewellery on or around 11 February 2006. 2. As with items 16 & 17, the plaintiff had not acquired a valuation for this item. 3. The plaintiff deposed in his affidavit to using some of the proceeds of sale from property in Macedonia to help him purchase these items. He explained in cross-examination that during the 2000s, he owned "one house and one block of land - land, which belonged to all three sons - or all three brothers". He also owned two units and some farm land. The proceeds from the sale of the house and block of land were generally distributed to his brothers but he retained a slightly higher share of the proceeds to meet the funeral expenses of his father, from whom these properties were inherited. He kept the proceeds from the sale of the other properties. To some extent, he indicated, he stored the proceeds in cash in the safe in his apartment; but to some extent, some of the proceeds were retained on his behalf by his aunt and uncle. Items 9 & 10 1. Item 9 was described in the Schedule of Loss as an 18 carat gold bracelet. He deposed to acquiring this from Diman & Co on or around 20 January 2007. Item 10 was described as a Guess watch. This was also acquired from Diman & Co, but on or around 23 March 2007. 2. In cross-examination, the plaintiff identified a mistake in his affidavit in falsely attributing a valuation certificate (Exhibit A, CB vol 1, p 93) in relation to item 9. 3. An invoice (Exhibit A, CB vol 1, p 99) dated 23 March 2007, which was in evidence related to this item and item 10. To the extent that he deposed to purchasing item 9 on 20 January 2007, that evidence was also erroneous. Item 12 1. This item was described in the Schedule of Loss as a handmade 18 carat gold crucifix. The plaintiff had deposed to acquiring this on or around 12 November 2007 in Macedonia, after his brother had negotiated for the purchase. This was the date that a deposit was paid. 2. The plaintiff's evidence about this item in his second affidavit was hopelessly confused as to the circumstances by which he obtained a valuation: contrary to his affidavit evidence, it was his son who obtained it and, the plaintiff was suggesting, contrary to any indication in his affidavit, that the item in question – a crucifix – had been transported to Australia for the purpose of a valuation. The confusion was at such a level that after the Court extended invitation to him, the plaintiff asked that paragraphs 74-77 be withdrawn. Item 14 1. This item was described in the schedule as an 18 carat gold Rolex style bracelet with diamonds. The plaintiff deposed to acquiring it in January 2008 in Macedonia; after he left Australia on 26 December 2007 (the plaintiff having erroneously recorded the date as being 20 December 2007). 2. In cross-examination, the plaintiff said that this item was acquired from a friend of the plaintiff's, Kire Spirovski, a Macedonian restauranteur. He could not recall the purchase price, but appeared to suggest that he effectively received a discount on the purchase price of this item, representing a debt which he claimed Mr Spirovski owed the plaintiff in respect to a loan to help Mr Spirovski with his business. But the plaintiff could not recall the details of that debt, or how much he had paid him. It was pointed out to him that at paragraph 82 of his second affidavit he did not depose to anything to suggest that the price was affected by such debt. 3. The invoices which were in evidence (Exhibit A, CB vol 1, pp 100 & 102) were not supported by receipts for payment. Item 13 1. This item was described in the Schedule of Loss as an 18 carat gold curb link necklace. The plaintiff deposed in his affidavit to acquiring this item in Macedonia on or around 20 January 2008 and had annexed a tax invoice indicating the purchase price. 2. In cross-examination, the plaintiff said that this was another item which he purchased from Mr Spirovski, where the purchase price was affected by some unspecified amount which the plaintiff deposed to being owed by his friend. 3. The plaintiff made another mistake in paragraph 88 of his second affidavit when he said that he obtained a valuation, when it was in fact his son who had done so. Item 8 1. This item was described in the schedule as an 18 carat gold curb link solid bracelet. The plaintiff deposed to acquiring this item in Macedonia on or around 20 January 2008. 2. The cross-examination in relation to this item was directed to the amount of apparent value (referable only to the respective purchase prices) of all of the items of jewellery that the plaintiff asserted had been acquired in Macedonia which he brought back into Australia, and the indications supplied in the inbound passenger card completed prior to the plaintiff's return into Australia, where the plaintiff had answered "no" to the question of whether he had brought back goods exceeding the value of AUD $900. Items 1 & 2 1. These items were virtually identical gold rings (with rubies). The plaintiff said that two rings were made which had been given to him. To the extent that his second affidavit suggested that he was given two rings, that indication was erroneous. He could not explain why that indication was conveyed in his affidavit. 2. In re-examination, the plaintiff said that he did not physically give one of the rings back to his son, but retained it in his possession, in the safe. Items 21 & 22 1. Items 21 and 22 were described in the Schedule of Loss as an 18 carat gold Cartier Cougar watch and a 14 carat gold Rolex president watch, respectively. The plaintiff said he purchased the watches from Kire Spirovski. 2. When he brought them back into Australia, the plaintiff said in cross-examination that he did so without bringing back any boxes or manuals. He said that there was no need for manuals because he bought them for the investment purpose. Is it necessary to establish that the plaintiff owned the items of jewellery? 1. This question raises a point of construction of the contract of insurance. The plaintiff submits that for the items representing almost all of the plaintiff's claim, these were 'special limit' items (also called a 'specified contents item') and the plaintiff could recover on the basis that the items belonged to him; without him needing to prove that he owned the items. This submission was supported by the circumstances that, first, whilst the requirement for ownership was applicable to general contents items under the Investment Home Package, no such requirement applied to special list items under that package or the more relevant package, being the Residential Home Package; secondly, the policy distinguishes between property 'owned' by and 'belonging' to the insured; thirdly, although the policy does refer to the insurer's entitlement to request confirmation of ownership once a claim is made, that is for the purpose of helping the insurer replacing the item(s) with the closest possible match; and fourthly, in the event of ambiguity as to what is embraced by the term 'belongs' in a commercial contract with standard terms, the policy should be construed contra proferentem, against the insurer, who wrote it. 2. Alternatively, the plaintiff submits that if ownership of each item was required, then the only item in respect the ownership-possession distinction was material was item 1. The plaintiff said that this item was in his possession after he had transferred ownership of it to his son. 3. The defendant made no submissions on this point of construction. 4. I accept the plaintiff's submissions and find that there was no requirement for the plaintiff to establish that he actually owned the items of jewellery in order for the insurance coverage to extent to the specified items. Was property stolen or not stolen? Parties' submissions Plaintiff's submissions 1. Counsel for the plaintiff submitted that the Court should essentially accept the plaintiff's account of what occurred on 2 September 2013 regarding his trip to Goulburn and his overnight stay in Queanbeyan. That is, that he activated the alarm; he did not activate the deadlock to the front door; that jewellery comprising the specified contents items in the policy had been left in the safe, located within his bedroom (whilst a Samsung Galaxy mobile phone and a laptop were otherwise left in the insured property); and that a theft occurred on or around 3 September 2013. 2. Counsel acknowledged that whilst he may not have been the most impressive witness, he was not dishonest and it was unsurprising that his recollection of events occurring over 7 years ago was limited. Added to that, he had certain mental conditions and endured circumstances which would have hindered his capacity to recall. Nothing adverse could be drawn from his demeanour and in this regard, although he had the assistance of an interpreter, a language barrier lingered. He candidly acknowledged making mistakes in his affidavit evidence. He did not shirk in his evidence from acknowledging his own prior criminal history, or that of other members of his family. 3. Although the evidence of his financial capacity, as indicated through tax returns and documents, suggested that he was in receipt of a modest amount of income, Counsel said that the insurer's attack in this regard was blunted when the plaintiff's evidence of the proceeds from the sale of real property in Macedonia was taken into account. Most of the items of jewellery were purchased between 2005 and 2008. The proceeds from the sales were brought back into Australia on different occasions in portions of between $5,000 and $6,000. Although there was evidence of the plaintiff's travel movements from 2008 to 2010, this was not enough to show the full period of travel. 4. No adverse inferences should be drawn from the failure to discover or produce bank statements or business records. No one on the insurer's behalf asked him to produce bank statements during its investigation in October 2013. That evidence was corroborated because the prescribed Schedule of Loss did not indicate a need for bank statements. The plaintiff had produced invoices and valuation certificates, but it was not inevitably to be expected that he would retain and be able to produce receipts of purchases. The invoices and valuation certificates appeared, prima facie, to be authentic. 5. No Jones v Dunkel inferences should be drawn from the plaintiff's failure to call his brothers or other members of his family. Under the policy, he did not need to prove that he owned the items of property. There was no challenge to the accuracy of the content of the Schedule of Loss. When that schedule, with the source material (the valuations certificates and tax invoices) was considered together, he did not need to establish the source of the finance to pay for the goods. 6. Further, once it was found that there was a safe – a circumstance supported by some objective evidence – it was a short step to conclude that, generally, there were items of jewellery in it. 7. Once it was accepted that he was an honest witness, then subject to the matter of the expert opinion evidence, there were other evidentiary factors supporting his account: he was outside Sydney (and probably also New South Wales) when the incident occurred (and was with Ms Kostovska); and he reported the theft to the police without delay. His evidence that he reported the alleged theft to the police on 3 September 2013 very shortly after he had discovered it was not challenged and was partially corroborated by a record of the investigator annexed to Mr Ziade's affidavit (CB vol 1, p 403). That suggests that his reaction to the hole was not feigned and was inconsistent with the proposition of advance knowledge of a break in. There were no contemporaneous circumstances indicating desperate financial need in a context where he had accumulated the collection of items over a significant period of time. There was no evidence of police inquiry or investigation over him from 2013, notwithstanding his prior criminal history. 8. On the expert evidence, the Court should prefer Mr Bournelis' evidence over that of the defendant's experts, Messrs Ziade and Targett. Each of the defendant's experts' expressed level of confidence was overblown having regard to the limitations of what he did; being essentially visual inspections only. Both experts had their views infested by the untested evidence of Mr Castle who had formed an early view adverse to the plaintiff's credibility. They did not take material matters into account. Given that a significant matter that both Messrs Ziade and Targett had regard to was the absence of dust disturbance, neither had specialised knowledge on that subject and there was apparent dust disturbance on a piece of timber on one of the ceiling joists. Both had, without reasonable foundation, dismissed the possibility that a perpetrator might be able to kneel on the timber. They were both partisan. Mr Bournelis compared favourably to both of them. Further, photographic evidence (at CB vol 1, p 252) indicated that it was much easier creating a hole from the roof void than from below within the bedroom. Defendant's submissions 1. Principally, although there are conceptual complications in terms of the onus of proof (the plaintiff needing to establish theft and the insurer needing to establish fraud), in practical terms, the questions of proof converge to the decisive question in the case of what caused the hole in the roof; and whether it was cut from above (in the roof void) or from below (within the bedroom). The first step in the analysis, which needs to be engaged in before the defendant's case on fraud is considered, was whether the plaintiff proved theft; and in order to prove theft it was necessary for the Court to be actually persuaded that the hole in the ceiling was the work of an intruder. If there were competing possibilities as to how the hole got there, then the plaintiff could not make out theft and it was unnecessary for the insurer to go on to establish fraud. This is not a case where it is enough that the plaintiff makes out the possibility that an intruder cut the hole from the roof void and, thereafter, the onus fell (to a high standard) upon the defendant to prove that it was cut from below. 2. Viewing the dispute in this way, for practical purposes, the case turned upon the probabilities of how the hole got in the ceiling in the main bedroom. If it was cut from within the bedroom, that was virtually a conclusive step to a finding of fraud, as there was no other innocent explanation for the creation of the hole from within the bedroom: the only likely reason to create the hole was to convey the false impression of entry by means other than by the front door. 3. Once it was found, as it should be found, that the views of Messrs Ziade and Targett should be preferred to Mr Bournelis, that is that the hole was cut from within the bedroom, then the plaintiff could not prove theft on the balance of probabilities. Their views should be preferred because they had seen the condition of the roof void and the main bedroom close to the time when the alleged theft occurred (which observations were reduced to writing in contemporaneous accounts). Mr Bournelis' evidence rested upon comparison between an experiment he conducted years after the event and observations he made only from photographs. In this connection, the Court should be cautious about Mr Bournelis' opinions to the extent that they were formed on the basis of inferences he drew from photographic evidence [2] . Certain other points favoured acceptance of their accounts in preference to Mr Bournelis' thesis. On the premise that the condition of the roof void remained much the same in the six weeks since the incident occurred: (a) it was incongruous that much debris remained in the bedroom itself, but not within the roof void – a matter which Mr Bournelis had not considered in his evidence; (b) if the hole was created from the roof void, one would expect a very large dust disturbance in the roof void, particularly on the ceiling joists, which they did not see; and (c) Mr Ziade's evidence that the fine wire was curled up, which observation was not seriously challenged, was improbable if the penetration had been made from the roof void. 4. Further, even if, contrary to the defendant's contention as to how the hole was cut was not accepted, there would still be doubt about plaintiff's case on theft. The defendant submitted that acceptance of the plaintiff's version would require the Court finding that a person(s) unbeknown to the plaintiff were aware of the presence of valuable jewellery in the insured address; that such person(s) entered into the building and, thereafter, gained access to the roof void through the manhole; that such person(s) created a breach in the ceiling and removed the resultant debris; that such person(s) went into the laundry, seized a bucket, filled it with water, and detached the alarm siren which the plaintiff had said (and reported) was activated; and that such person(s) removed the safe and other items and exited through the front door without being noticed (without seizing watches which were exposed). In contrast, the way in which the defendant explained how the entry occurred had greater plausibility. There was, to be sure, damage to the lock on the screen door (Exhibit F, photograph 6), but otherwise access to the unit could readily have been obtained by use of keys to access the building first, and then the front door of the unit. Once it was found, as it should be found, that entry was made through the front door of the unit, if the plaintiff had an explanation for how someone else may have had such opportunity of access, through possession of keys, then he could have given evidence about this. In the absence of such evidence, it could be inferred that he had no innocent explanation. 5. The defendant submitted that, further, the plaintiff was not a witness of credit. His affidavit evidence was erroneous in multiple respects; but beyond that, much of what he said amounted to lies, such as when he deposed in his second affidavit to obtaining valuations himself (rather than through his brother or son, as his agent). Further, there were other discreditable acts, such as his failure to declare the diamonds he imported, or other items of property acquired in Macedonia, into the country from Macedonia. The plaintiff and his brother each respectively had criminal histories. His tax returns showed that he did not have the income to pay for the extensive collection of jewellery acquired over the period; particularly in some circumstances when in 2007 and 2008, he acquired very expensive items. He did not produce proof of payment through bank accounts and no documents were produced by the relevant jeweller firms. 6. The defendant also did not call other witnesses, who might have corroborated him, on such matters as how the jewellery was acquired or made, the financial contributions for the purchase of the items, or how one of them was used as an intermediary or agent to acquire them. 7. Even if the Court was to find that the plaintiff had made out theft, he did not establish that there were items of jewellery in the safe. Certainly item 12 (the crucifix valued at $37,500) was not in there and one or other of items 1 or 2 were not in there either. Consideration Credit The plaintiff 1. Counsel for the plaintiff frankly acknowledged that the success of the plaintiff's case substantially depended upon the Court's acceptance of him as a witness of truth. 2. The plaintiff acknowledged his receiving assistance from one of his sons, Kire, in the preparation of his affidavits. He did not identify any particular reason why Kire could not have given evidence. 3. The plaintiff was extensively cross-examined on a range of matters relevant to credit. 4. He was cross-examined on a financial analysis he supplied to the insurer's investigators which was the basis for a document dated 1 October 2013 (Exhibit 1). He was asked about his recollections of his financial position in 2013, covering such topics as his employment status, his income, his assets (including his interests in real property), his involvement in companies, his production of tax returns (from 2010 to 2019), his declared taxable income in those years, his bank accounts and liabilities; and a legal proceeding he commenced in this Court relating to a personal injury he said he sustained in 2014. 5. Several things generally emerged from this cross-examination. Firstly, his recollections, when giving evidence, about these topics, were poor. Secondly, the plaintiff indicated that he started to develop schizophrenia and depression from 2014, that is to say, after the events the subject of the proceeding. Thirdly, he had reported to one of the treating doctors in connection with his personal injury in 2014 that he suffered also from alcoholism. 6. He was also cross-examined about documents he did not supply to the insurer. These included bank statements proving payment out of the items, and policy schedules from insurance policies in relation to the items of jewellery, prior to 2010. It was put to him that he understood that it was important to provide documentation to the insurer to substantiate his claim. A common refrain from the plaintiff in response was that he could not recall being requested to provide documentation and that he would have provided (to his lawyer) documentation if asked, to the extent that he had it. He added that when he first made his claim, he had hoped that it would be accepted and indicated that he hoped he would be spared the need to be questioned about what information and documentation subsequently supplied. 7. In his most recent affidavit (October 2020), the plaintiff purported to give further evidence elaborating upon the circumstances in which he obtained items identified in the Schedule of Loss he had prepared in September 2013. The plaintiff accepted that there were multiple errors in the affidavit. Some were minor (such as certain dates), but some were more significant, such as when, with reference to item 19, he erroneously asserted that he obtained a valuation because of advice from a recommendation from the insurer. It was also suggested that he made a prior inconsistent statement to his affidavit evidence relating to item 4: in his affidavit, he conveyed that this item was gifted to him by his brother, but he had previously told the investigator that his brother had sold it to him for the price of $20,000, which he had financed from his work and, apparently, savings in the bank. 8. There were also inaccuracies in the Schedule of Loss, prepared in September 2013, itself: the plaintiff could not say whether item 5 was different to item 3. 9. My firm impression of the plaintiff was that he was an unreliable correspondent. To be fair, he was not helped by the circumstance that English was his second language. Nevertheless, allowance on that account is reduced to the extent that he did receive the assistance of others in making his insurance claim (who were not called). What was of greater concern was that the plaintiff exhibited a looseness or carelessness in making undocumented assertions in his affidavit. After getting himself hopelessly confused in relation to paragraphs 74-77 (inclusive), relating to item 12, he withdrew those paragraphs. At another point in his evidence, when referred to something he had deposed to in relation to item 19, he accepted that he "didn't pay a lot of attention to trifles", i.e. the correctness of what he had deposed to. This was especially concerning in relation to the accuracy of his second affidavit; prepared, as that affidavit was, in relatively close proximity to the hearing and avowedly for the purpose of supplementing evidence that, presumably, was apparently regarded by the plaintiff's lawyers as being necessary to address omissions or deficiencies in evidence arising from his first affidavit. The litany of errors in his second affidavit bespoke a lack of care in the presentation of his evidence which was generally to his discredit. 10. There were other instances where his evidence strained credulity. For example, when it was suggested that he did not declare that he carried back into Australia, in January 2008, numerous items of valuable jewellery well exceeding a certain monetary limit, he explained this by saying that he always answered no to that type of question on the relevant passenger card. I found it difficult to accept that he would baulk at paying $50 for a valuation (relating to item 17) for an expensive item in circumstances where the plaintiff prima facie appeared to be very liberal in his acquisition of so many items of jewellery and when, according to his evidence, he had received a recommendation to have the items insured. He also gave conflicting evidence about how many mobile phones he had used, bearing the same mobile number: his evidence under cross-examination veered from an initial position of saying he had only one towards a position where he may have had multiple phones. 11. More generally, the fact that so much pertinent information relevant to the circumstances as to how he acquired the items was only teased out during the course of cross-examination indicated to me that he was not forthcoming in the accounts he gave in his affidavits. 12. Because of my serious concerns about the reliability and credibility of his evidence, I am very cautious in accepting his evidence unless it is corroborated, or consistent with objectively proven facts. 13. Notwithstanding these credit findings, I do not consider that the plaintiff was dishonest or lied when preparing his affidavit or when he gave evidence. When he swore his main affidavit (his second one), explaining the circumstances in which the items were acquired, he was doing so seven years after the event. I accept Counsel for the plaintiff's submission that the issues associated with limited memory were exacerbated by other personal issues associated with his mental health. When he said that that "I" had obtained valuations when it was his brother or son, I did not regard that evidence as being deliberately false, perhaps because of a desire to conceal the involvement of his brother or son. With a limited memory and with documents, he was trying to reconstruct events on the basis of documents – the valuation certificates and the invoices. 14. Nevertheless, the circumstance that he has been convicted of certain offences which may be characterised as denoting dishonesty is another circumstance that will be weighed in the overall assessment. Jagoda Kostovska 1. I accept that Ms Kostovska tried to give her evidence honestly. But it was evident in cross-examination that she had general difficulties with her memory – she could scarcely recall what she had deposed to in her affidavit sworn just over a year ago; let alone any recollection of events occurring over 7 years ago. 2. That said, she was not seriously challenged on the thrust of her evidence which corroborated the plaintiff's account that he was physically out of Sydney at the time the alleged theft occurred. She provided an 'alibi', of sorts, to the plaintiff. Onus of proof & standard of proof 1. Issues of onus of proof and standard of proof become somewhat complicated in the context of civil claims on insurance contracts for stolen property. On the question of onus of proof, where an insured relies upon an obligation qualified by an exception (i.e. that theft occurred without his involvement or consent) but where an insurer relies upon an exclusion (i.e. the insured, or someone with the insured's consent, committed the theft): 1. the insured bears the onus of proving that the property was stolen (i.e. without his involvement or consent) [3] ; and 2. the insurer bears the onus of proving that the insured was involved, either through his own intentional act or through the conduct by others undertaken with his consent [4] . 1. The content of the standard of proof is shaped by the considerations in s 140(2) of the Evidence Act 1995 (NSW), informed as they are by the principles in Briginshaw v Briginshaw (1938) 60 CLR 336. 2. In Briginshaw v Briginshaw [5] , Dixon J pointed out that in a civil case, it sufficed that the standard of proof required the trier of fact to "feel an actual persuasion of its occurrence or existence" before it is found, and whether a party has made out an allegation to "the reasonable satisfaction of the Tribunal". However, the issue of what constitutes a reasonable satisfaction is not to be determined independently of the nature and consequences of the fact to be proved. His Honour continued: "The seriousness of an allegation made, given the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to that question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. 1. An insurer's conduct in putting the insured to proof of theft (by its denial of it) is not the same thing as alleging fraudulent statements in connection with the theft and does not shift the onus of proof. 2. In Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262, at issue was an insured's onus of proof when alleging theft of a motor vehicle and the insurer's onus and requirements in alleging false statements of matters connecting with the theft (relating to the insured's whereabouts and that of the allegedly stolen vehicle). The insurer had put the insured to proof on the theft of the vehicle. The trial judge had found that on the whole of the evidence, the probabilities were equal, and the insured had therefore not discharged its persuasive burden of proving that the motor vehicle was stolen. On appeal, the primary judge's conclusion was upheld. Beazley P (as her Excellency then was) said (citations omitted) that: "[43] In order for a plaintiff to succeed, it must satisfy the court, on the whole of the evidence, of the facts necessary to establish the cause of action. In coming to its determination, a court is not required to accept the whole of the evidence adduced by one or other of the parties. Nor is it required to accept the whole of the evidence of a particular witness. It may find itself satisfied in respect of some facts, not satisfied in respect of other facts, and not satisfied one way or the other in respect of other matters. If, on the whole of the evidence, the court is satisfied that the facts necessary to sustain the cause of action have been proved on the balance of probabilities, the plaintiff will succeed. In the present case, that required the appellant to satisfy the court that an insurable event had occurred. The relevant insurable event was the theft of the vehicle. As I have said, her Honour specifically found that she was "not satisfied to the requisite standard" that the vehicle had been stolen. Accordingly, the appellant's claim failed. [44] In a case where, on the whole of the evidence, the probabilities are equal, a plaintiff will fail, having not satisfied the court on the balance of probabilities of the necessary facts to establish the cause of action. If in a case such as the present, the court had found that the probability that the vehicle was stolen was equal to the probability that it was not stolen, the appellant would not have succeeded on his claim… Thus, even if I have misunderstood her Honour's conclusion at [128] as being a finding that the probabilities were equal rather than a finding on the balance of probabilities, the appellant's claim would still have failed." (emphasis added) Findings 1. In my view, it is unnecessary to make specific findings of which of the items within the Schedule of Loss were lost. In light of the following reasons, it can be assumed for the sake of argument that some of the items of jewellery were lost: for the purposes of the present analysis, it matters not precisely what was taken. 2. By its pleaded Defence, the defendant put the plaintiff to proof as to how the theft occurred and ran a defence, under s 56 of the IC Act, to the effect that the insured made fraudulent statements about the circumstances of the theft; and also fraudulent statements about what was stolen. In this proceeding, the plaintiff advanced a case that the theft occurred because an intruder (without the plaintiff's knowledge or consent) got into the unit by means of cutting a hole in the roof void above the main bedroom. In partial answer to that case, the insurer adduced evidence that the hole in the roof had been created from within the bedroom. Although the factual acceptance of that case may have had certain implications for the insured, the circumstance that the insurer advanced it did not shift the persuasive burden upon the plaintiff to establish that a theft had occurred. 3. In stating this, I recognise that all the facts relevant to the plaintiff's allegation of theft have to be considered, including, but not limited to, his 'alibi' evidence. Nevertheless, the probability that a theft occurred is inextricably tied to the plaintiff's case as to how the theft occurred. Ever since 3 September 2013, his supposition has been that the theft occurred by a person (or persons) getting access into his unit through the roof void. If it was more likely that access into the unit was obtained by other means, that is, through the front door, then I agree with the defendant's submission that the only reason for someone within the unit to wish to create a hole in the ceiling in the bedroom was to deliberately create the false impression in the minds of others that entry was obtained through access to the roof cavity. In his opening address (T 5-6), Counsel for the plaintiff virtually conceded that unless the Court made a finding that access to the unit was made through the hole in the ceiling, his client could not succeed. 4. In several respects, I did not find Messrs Ziade and (to a lesser degree) Targett to be very satisfactory expert witnesses. They could have engaged in other forms of more empirical testing and shown a greater willingness to be open-minded about other evidentiary leads. Nevertheless, the force of their evidence was perhaps less in their opinions, and more in their observations (informed by specialised knowledge) of what they saw, which Mr Bournelis was not in a position to seriously challenge. Indeed, Mr Bournelis was not in a position to form his own observations of the state that the unit which was relatively contemporaneous with the event in question. Aside from the experiment which he carried out, he could make observations of the condition of the property on 3 September based upon what he saw in the photographs alone which, as the Court of Appeal has noted, are a much less reliable source of information for expert opinion. 5. For the following reasons, I find that it is much less likely that any intruder into the unit would have used the roof void than through the front door. A premise to these reasons is my finding that there was no material alteration of the condition of the roof void from 3 September 2013 before Messrs Ziade and Targett inspected it 6 weeks later. 6. Firstly, even if their respective levels of confidence in the minimal extent of dust disturbance they respectively observed may have been overstated, I accept their views that the level of dust disturbance would have been much greater had someone been in the roof void 6 weeks before their respective observations. Quite significant dust disturbance within the roof void must follow from the theory advanced by Mr Bournelis that the intruder would have had to have hung onto the ceiling joists to facilitate passage through the hole, and had knelt on the timber cut. The timber cut could not be used to hold on to as it was loose. But if both those activities had occurred, there would have been a significant dust disturbance on both the left ceiling joist and the timber cut. Although to varying degrees, each of Mr Ziade and Mr Targett accepted the possibility of some dust disturbance, on the left sided ceiling joist or on the timber cut partially lying on the right side ceiling joist (viewing the relevant photograph, Exhibit 4.5), their opinions, based upon what they saw, were that there was not dust disturbance to such degree as to be consistent with human activities of the kind within the roof void that would substantiate the plaintiff's theory. As an experienced builder and an experienced engineer (two different specialties), I do not accept that they were not qualified to express that opinion, or that someone else with an unspecified special form of expertise was more qualified to express it. At any rate, Mr Bournelis had no greater expertise in that area and the plaintiff did not call someone with such discrete form of expertise. I also consider am cautious in rejecting those observations simply upon the basis of what is seen in the photograph. 7. In relation to the timber cut, I do not consider it likely that it could have been knelt or sat upon for the length of time that was likely to have been necessary in order to have created the hole, having regard to the composition of the ceiling and its relatively brittle nature. I accept that the timber cut was not fixed and that its edge was resting on insulation. Mr Bournelis mentioned that it had taken him 15 minutes (or perhaps 10 minutes in terms of continuous cutting) to cut a much smaller section through the ceiling. For the period of time that it would likely have taken to have cut a hole with the agreed dimensions, there was an ever increasing risk that a human body would fall through the roof. 8. Secondly, I accept the insurer's submission that if a result of Mr Bournelis' experimental testing in creating a hole was the creation of debris, within the roof void itself, of much smaller dimension than the hole created on 3 September, then it would be expected that a greater volume (if that is the right word) of debris would have been created and remained in the roof void by reason of a bigger hole being created on the date of the alleged theft. In this regard, I do not consider that it is likely that all of the debris would have fallen through into the bedroom. 9. Subsequent to the conclusion of the hearing, the plaintiff's Counsel purported to supply supplementary submissions on the aspect of the absence of debris. This was without leave being granted for him to do so and without leave being sought. In the circumstances, I do not propose to engage with these particular submissions [6] . 10. Thirdly, I also accept that it is strange that an intruder within the roof cavity would have chosen that precise location for the creation of the hole; near the rafter and with no capacity to stand up in preparation to create a hole and fall through it; when there were other more practicable spots within the roof void. I do not accept that it is likely that the choice of location was motivated by a desire to move as far away from the manhole as possible to reduce noise and thereby the reduce of detection. 11. Conversely, I do not attach much significance to Mr Bournelis' point that an intruder creating the hole from above needed to know that the spot they were cutting just happened to be between two ceiling joists. In circumstances where there is nothing to indicate that they felt that they had to proceed with haste, the intruder(s) was or were in no hurry to pick a spot where a sizeable hole could have been created. There was no necessity for that to be above the main bedroom. 12. Fourthly, I accept Mr Targett's view that there was a greater risk of structural damage to the fixing points if force was exerted from above, rather than below, the ceiling. Although Mr Bournelis did not accept that, that is one area where I consider, with no disrespect to Mr Bournelis, that a civil engineer may be more qualified to express a view than a builder or building consultant. 13. On what might be a related point, I do not consider that the circumstance that it was easier to create a hole by exerting pressure downwards than upwards to greatly assist the plaintiff's position. The composition of the ceiling was vermiculite 'sandwiched' between plasterboard of comparable width. I expect that it might have taken longer to have created a hole of the agreed dimensions if it was cut from below rather than above, but there is no indication that the matter of time was or could have been in the minds of the person(s) who cut the hole. 14. Fifthly, I infer that an intruder(s) entering the unit by means of the roof void above the bedroom, upon entry into the bedroom, would, according to the plaintiff's case, likely have set the alarm off; and thereby have given rise to the serious risk of exposing the intruder(s) to detection of committing break-in offences. In this regard, the plaintiff said in his evidence that he activated the alarm (consistent with what he told an investigator for the insurer at the operative time). A sensor was placed in the bedroom. He expected that it would work when he activated it on 2 September 2013. As Counsel for the defendant submitted, he did not give evidence to say that it had worked erratically or anything else to suggest that it would not have gone off if an intruder had entered into the bedroom. Contrary to what appeared to be suggested by the plaintiff's Counsel, I do not consider that the precise location of where the sensor was within the bedroom to be material. To the contrary, I infer that it was set up in a way by the installer that would have made it functional if a person had entered into the room at all. If an intruder made his way through the hole into the main bedroom, it is very highly probable that the alarm would have gone off. The evidence that it did not go off, but rather was dismantled and part of it placed in the red bucket, indicates that it was more likely that the alarm was not activated at all or, if it was, it was de-activated before pronounced entry was made into the unit. 15. Sixthly, having regard to the relative fragility of the surface of the ceiling, if entry though the ceiling hole had occurred, I would have expected more of a breach than the dimensions of the hole that were eventually measured. 16. Seventhly, this is not a case where there was no other possible means of entering the unit or that it was extremely inconceivable that only the plaintiff knew of his possession of valuable jewellery. Plainly, his brothers (at least one of whom had a criminal history including charges of theft of property offences) and sons, who had contributed to his funding the purchase of the jewellery, knew of the fact of his possession of the jewellery. Other friends had helped the plaintiff move into the premises and they may or may not have seen the safe that he deposited into the unit. It is not inconceivable that the plaintiff had given keys to the front door (if not also to the building itself) to others, be they family or friends, even for innocent purposes. The front door was not deadlocked. 17. Eighthly, although this aspect is far from conclusive, I give further weight to Messrs Ziade and Targett's evidence that what is depicted in the top left hand side of the photograph comprising Exhibit 4.1 is a handprint: it appears to resemble a left hand resting against the ceiling, alongside the hole. If, as the plaintiff suggested, he removed parts of what was dangling from the ceiling, it was not necessary for him to rest his hand upon the ceiling itself to do so, but a person resting a hand upon the ceiling might be the sort of thing that a person endeavouring to puncture the ceiling wall from below might do; for example, to steady himself or herself in using a sharp implement. Although Mr Bournelis thought it could have been something else, this is another instance where Messrs Ziade and Targett had the advantage of personal observation. 18. So far these reasons have concerned the physical evidence. There are other matters casting doubt on the plaintiff's case of theft. As noted, I have doubts about the plaintiff's credibility. In particular, his evidence of giving false information in in-bound passenger cards by refusing to disclose his importation of goods into the country well exceeding the prescribed amount was, in my view, discreditable. I do not accept that he was unaware of the need for disclosure. Further, to the extent that he explained his capacity to fund the acquisition of expensive jewellery, not all of that could be explained by his coming into the possession of the proceeds sales from properties in Macedonia and even if it was, the frequency of his trips to Macedonia was not such that, on the basis that he was bringing back parcels of cash, he had readily liquid means to acquire the items in 2005 and 2006. As Counsel for the defendant had noted, he spent €37,000 to €40,000 on 3 or 4 items out of a total exceeding 20 items, but the proceeds from the sale of the Macedonian properties was no more than about €80,000. He had no means himself to afford the other items. I also have regard to the plaintiff's prior criminal history, which features property-related offences (Exhibit 6) which demonstrates dishonesty, although I acknowledge that those offences are not that recent. Nevertheless, this history, combined with the criminal history of his brother Mile, does not assist him. 19. Related to this point is that even accepting the plaintiff's evidence as to his means of financing the jewellery items, it appears that this particular plaintiff had practices whereby there was much mutual financial assistance with other members of his family. At one point, he indicated that he had sold an item of jewellery (item 15) to help out another family member (T 89-90) who was in financial need. The plaintiff had deposed in his first affidavit that he had chosen jewellery over other classes of investment product. This was, he also deposed in his first affidavit, the product of cultural influence and family upbringing. My impression was that the plaintiff had significant dealings in jewellery and not all of the dealings consisted of his acquisition of jewellery. He did not appear to attach any sentiment to the items. This means that to the extent that other family members (or associates) experienced financial distress, the plaintiff appeared to be quite prepared to part with items of jewellery if this was required to help his family and associates; and, in all probability, other family members and associates were likely to have known of that predisposition. 20. In this regard, contrary to the plaintiff's submission, the omission to call his brothers or sons was not irrelevant on the basis that he did not need to prove ownership of the items of jewellery. Although I have found elsewhere in these reasons that it was unnecessary for him to do so in order to prove an insurable event, the plaintiff had in in his pleading positively asserted ownership of them and, at any rate, he asserted again in both of his affidavits his acquisition of ownership. I consider that in the absence of corroboration the failure to call them exacerbates my doubts about the plaintiff's case. At least, any inability to prove his ownership cast general doubt upon his credibility. 21. Then there are the objective probabilities. I think it would have been an extraordinary happenstance for someone, or more than one person, to have randomly visited a unit in a not overtly prepossessing apartment block with the purpose of effectuating a break in if that person, or persons, did not have a strong sense of expectation that they would find something valuable to seize. It would be another coincidence that without apparent evidence of an intruder flailing about within the property itself, the intruder/s just happened to know the location where the safe containing the jewellery was located. It is also yet another remarkable coincidence that the intruder/s arrived at the unit at a time when the occupant of the unit was out of town (and in the company of someone else). 22. Relevant in this regard was the view of all the experts that any intruder wanting to enter into the manhole would need assistance of some kind to get up into the manhole. That might be a crate or ladder, but for an intruder to bring that or those items would have required a not insignificant degree of foresight unlikely to be ascribed to a random stranger. Another possibility was a second person being on hand to assist, which would again indicate a not insignificant level of planning with some familiarity with the insured address. 23. To be fair, there are some countervailing circumstances that ostensibly assist the plaintiff. He did not seek to conceal a prior criminal history. He apparently rang the police soon after his return. It was not shown what particular motive he might have had to gain by fraudulently attempting to make financial gain in September 2013 and not in earlier years when he had the same insurance coverage in respect to the same specified contents. 24. But these matters are not very strong factors to support the plaintiff's case and are not inherently incompatible with the defendant's case. There was not a great deal of forensic benefit in the plaintiff, confronting a case of fraud put against him, trying to conceal the existence of a criminal history which could not be controverted. Contacting the police soon after his return home on 3 September 2013 might, for a person with past involvement in the criminal justice system, be the sort of thing that a person allegedly involved in a fraudulent scheme might do to help exculpate him or her. Further, it is not necessary for the insurer to ascribe any personal motive for gain to the plaintiff – conceivably, there may have been benefit to family members (at least one of whom had a prior criminal history relating to offences or charges of dishonesty) who had a pressing financial need. The Court does not need to speculate on whether or not these possibilities are real and it would not be fair to the plaintiff to try to do so. The main point, however, is that are matters which, individually or in combination, are not so cogent as to balance out the other problems in the plaintiff's case. 25. Weighing the matters raised in his favour, against the physical evidence, which I regard as having a very decisive influence, and the other matters I have referred to, I am not persuaded that the probability that a theft occurred was any greater than the probability that it was not. That being so, I am not persuaded, to the requisite standard, that a theft occurred and it is unnecessary for me to make any final determination of whether the plaintiff was fraudulently involved in the seizure of the items of jewellery. 26. I do not find that an insured event occurred, which could trigger coverage under the contract of insurance. 27. The plaintiff's claim accordingly fails. 28. In case I am wrong, I now proceed to consider, in that provisional sense, the two aspects of fraud which the defendant relies upon. WAS THERE A FRAUD 'ON THE EVENT'? Provisions & principles 1. Section 56 of the IC Act is titled 'Fraudulent claims' and provides that: "(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." 1. Section 60(1) of the IC Act relevantly provides that where, in relation to a contract of general insurance: "(e) the insured has made a fraudulent claim under the contract or under some other contract of insurance (whether with the insurer concerned or with some other insurer) that provides insurance cover during any part of the period during which the first-mentioned contract provides insurance cover; the insurer may cancel the contract." 1. Certain propositions emerge from the authorities regarding the proper construction of s 56. They are: 1. the provision substantially alters the common law only to the extent that the remedy in the event of fraud is denial of the fraudulent claim, rather than avoidance of the policy, and to enable payment where the fraud concerns only a minimal or insignificant part of the claim [7] ; 2. in the context of false statements, fraud is established where the claimant knowingly made a false statement in connection with the claim in order to induce a false belief (in the insurer) for the purpose of obtaining payment or some other benefit under the policy. It is unnecessary (for the insurer) to establish that the false statement was material to the claim [8] , or that the insured knew or believed that s/he had an entitlement to the money or benefit [9] ; and 3. fraud may also be established by the omission to disclose information in relation to a claim in circumstances where the non-disclosure is dishonest and the non-disclosure creates a false belief in the insurer which improved the insured's prospects of the claim being accepted [10] . 1. Where an insurer invokes fraud under s 56, the allegation needs to be properly pleaded and proven to the requisite standard of proof. As to the latter, in Sgro, Beazley P said at [53]: "The seriousness of a finding of fraud, including statutory fraud, does not permit of other than a specific finding that the fraud, or the contravening conduct, has in fact occurred. This was well explained by Dixon J in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336, albeit in the context of the requisite standard of proof. His Honour stated, at 362-363: "It is often said that such an issue as fraud must be proved 'clearly', 'unequivocally', 'strictly' or 'with certainty' … This does not mean that some standard of persuasion is fixed intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability. It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained [that the fraud has been committed]." (citations omitted) 1. Given that the plaintiff was not physically present at the time that jewellery items were seized and in the absence of any admission by him that he was involved in any fraud, the defendant has to rely upon circumstantial evidence to prove that he made a fraudulent claim. In this regard, the principles were summarized by Ipp JA (Basten JA and Tobias JA agreeing) in Palmer v Dolman [11] : "[41] Certain principles have become well-established in determining, in a civil case, whether circumstantial evidence leads to an inference of fraud. The following are presently pertinent: (a) The jury must consider "the weight which is to be given to the united force of all the circumstances put together"...; (b) The onus of proof is only to be applied at the final stage of the reasoning process: "(i)t is erroneous to divide the process into stages and, at each stage apply some particular standard of proof. To do so destroys the integrity of (a) circumstantial case"...; (c) The inference drawn from the proved facts must be weighed against a realistic possibility as distinct from possibilities that might be regarded as fanciful. (d) Where the competing possibilities are of equal likelihood, or the choice between them can only be resolved by conjecture, the allegation is not proved." Pleading of fraud on the event 1. The first aspect of the part of the defendant's Defence which relies upon fraud is whether the plaintiff committed a fraud 'on the event'. 2. At paragraph 14 of the Defence, the following particulars were supplied as to the first way in which the plaintiff was alleged to have made the claim fraudulently: "(a) The theft did not occur in the manner alleged by the plaintiff; (b) The plaintiff provided false and misleading information in relation to the manner in which the alleged theft occurred. (c) The plaintiff did not tell the truth to the defendant in relation to the circumstances surrounding the claim." (emphasis supplied) 1. At its highest, these particulars of fraud, in this relevant sense, were that the theft did not occur in the circumstances stated by the plaintiff. It is to be noted that there was no particular of fraud that the plaintiff had dishonestly omitted to disclose information. But as Meagher JA observed in Sgro (at [74]), there is a difference between a fraud case based upon misstatements or the provision of information as to how a theft occurred and a fraud case in knowing that no theft had occurred at all. 2. The difficulty for the defendant was that in the absence of evidence of any interview that the plaintiff had with investigators for the defendant, the Court is in no position to compare the findings it has made as to whether or not the theft was proven against what the plaintiff informed or stated to the defendant, and to then take the second step of establishing that such statements were knowingly false before taking the third and final step of establishing that they were made with the requisite purpose. 3. For the plaintiff to report a theft, as he did, was not a statement of fact, but a statement of his opinion based upon a series of other facts, including his belief in his securing the property before he left his unit to go out of town and what he discovered upon his return to the unit, including the state that he found the unit in (compared to his recollection as to how he left it on 2 September 2013) and, most obviously, the loss of the safe containing his jewellery. The defendant never identified the facts that sustained the plaintiff's opinion which were said to have been not only falsely stated, but knowingly so, in order to induce the insurer to confer a benefit. 4. It is true that there was a note from an investigator which formed part of the brief which Mr Ziade received [12] , apparently sourced in what the plaintiff had reported to Mr Castle. No attempt was made, however, to suggest to the plaintiff in his evidence that what was contained within it was knowingly false and that this was so for the requisite purpose. 5. If the matter was considered from the point of view of strict compliance with pleading, the defendant's case on fraud in this sense should be rejected. 6. However, the defendant, in substance, appeared to want run a case on fraud based upon the circumstance of the plaintiff's alleged involvement in the fraud. It is reasonably arguable that the requirement of proper particulars to that effect was obviated by the plaintiff's apparent willingness to fight the case [13] on the understanding that the defendant was alleging that he was complicit in fraud. The premise for the defendant's case on fraud was that the hole was cut in the ceiling in the bedroom not as evidence of theft but as evidence of fraud – that the plaintiff knew that his property was not stolen because of his complicity in acts by other persons involved in the appropriation of the property. But even if that particular case should be permitted to be adjudicated, it faces significant obstacles of proof to the requisite standard. 7. It appears that the defendant is asking the Court to engage in a form of res ipsa loquitur reasoning: that because the hole in the ceiling has been found not to have been an indication of theft, but the plaintiff had reported a theft, the finding that there was no theft must therefore be treated as a badge of fraud. That might be acceptable reasoning in negligence claims (under certain conditions) but it is unsatisfactory in allegations of fraud, especially in circumstances where the insured has given a conflicting account of the event; which was to the effect that he was unaware until 3 September 2013 that a hole had been created in the ceiling (paragraph 25 of his first affidavit) and did not consent to any third party stealing his property (paragraph 40 of his first affidavit). 8. To make out its case in this regard, various matters would need to be addressed, principally what benefit that the plaintiff would obtain by having his collection of jewellery taken from his possession. The absence of demonstrable motive is telling against a case of fraud, which the combination of suspicious circumstances which I have alluded to cannot overcome. 9. I reject the s 56 defence to the extent that it tries to make out that the plaintiff was knowingly involved in a fraud. WAS THERE A FRAUD ON THE CLAIM? The pleading 1. At paragraph 17 of the Defence, the defendant alleged an alternative case on fraud. It was that the plaintiff: "(a) the plaintiff stated to the defendant or the defendant's representatives that the event was a theft covered by the policy of insurance; and (b) providing (sic) information to the defendant or the defendant's representatives regarding the circumstances of the theft so as to entitled (sic) the plaintiff to a claim (sic) within the cover provided by the policy of insurance." 1. The defendant relied upon the same particulars for this alternative case on fraud as it did in relation to its case that there was a fraud on the event (paragraphs 18-19 of the Defence). 2. In this way, on the face of the pleading, it is difficult to distinguish the two cases, which are said to be distinct, that the defendant relies upon in its Defence. 3. But in a supplementary written submission filed, with leave, after the hearing had concluded, Counsel for the defendant submitted that in the event that the Court found that item 12 identified in the Schedule of Loss was not in the safe at the time of the theft, it would be sufficient for the Court to find that the statement by the plaintiff that it was constituted a fraudulent statement made with the intention of inducing the insurer to accept his claim that the jewellery overall was stolen. 4. As indicated, no reference was made to item 12 (or any other item in the Schedule of Loss) in the particulars of fraud (on the claim) in the pleading. 5. As is indicated in Sgro [14] , an insurer wishing to invoke s 56 on the basis of fraudulent statements must properly plead: (a) the statement; (b) the facts indicating that the statement was fraudulent; and (c) that the purpose of the making of the fraudulent statement was in order to induce the insurer to accept his claim that the jewellery was stolen. In short, there needs to be a connection between the false statements and the fraudulent purpose of inducing the insurer to pay the claim. 6. As noted in the summary of the cross-examination on each of the items earlier in these reasons, when the defendant's Counsel, in certain respects, drew out the falsity or inaccuracy of assertions made by the plaintiff about the individual items in cross-examination, this appeared to be done so with the forensic objective of indicating a lack of credibility in the plaintiff, which might cast doubt upon the claim of theft, rather than any concerted effort to establish what was required by s 56. As was apparent in the limited nature of agreed fact 10 (Exhibit D), there was no attempt to demonstrate that the plaintiff knew that the inclusion of item 12, or for that matter any other item, stated in the Schedule of Loss was fraudulently misstated for the requisite purpose. Nor was the proposition as to purpose put to the plaintiff. 7. On the basis of these omissions alone, in my view, it would be inappropriate to find fraud to the requisite high standard of proof. At any rate, although the plaintiff was so hopelessly confused as to the state of his recollections when he gave evidence at the hearing as to the basis of what he stated about this item in September 2013, that is still insufficient to meet the standard of proof. Relevant in this regard is the plaintiff's indication that he had a family member assist him to prepare the Schedule of Loss generally. Although that particular circumstance may not have assisted the plaintiff in terms of the Court's assessment of his reliability on the general question of theft, it does leave open the question as to the extent to which any misstatement he made by including item 12 in the Schedule of Loss he prepared in September 2013 was affected by what he may have been informed by that other family member. Further, as with the defendant's case of fraud on the event, the defendant has not established any motive in the plaintiff. 8. Accordingly, the s 56(1) IC Act defence fails on the 'fraud on the claim' argument. It is therefore unnecessary to consider the operation of s 56(2). SUMMARY & ORDERS 1. The Court finds that the plaintiff has not established the theft of the items of jewellery. The defendant has not made out its defence under s 56 of the IC Act under either of the two limbs it relied upon. 2. The Court orders that: 1. There is Verdict and Judgment for the defendant. 2. The plaintiff is to pay the defendant's costs as agreed or assessed. 3. Liberty to apply is granted on 14 days' notice for any application, by way of Notice of Motion supported by evidence not exceeding 5 pages, for variation of the costs order. 4. Exhibits are to be returned within 28 days. ********** Endnotes 1. These covered vol 1 of the Court Book, pp 23 to 128 (excluding pp 34 to 44). 2. Blacktown City Council v Hocking [2008] NSWCA 144 per Spigleman CJ (at [7]-[14]), per Tobias JA (at [167]-[170]). 3. Vidal v NRMA Insurance Ltd [2005] NSWCA 390 at [3], [15]; Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444 at [28]. 4. McLennan v Insurance Australia Ltd [2014] NSWCA 300 at [6]; Wallaby Grip at [36]. 5. (1938) 60 CLR 336 at p 361–2. 6. Carr v Finance Corporation of Australia (No 1) (1981) 147 CLR 246 per Mason J at 258. 7. Tiep Thi To v Australian Associated Motor Insurers Ltd (2001) 3 VR 279 per Buchanan J (Charles JA and Callaway JA agreeing) at 284. 8. Walton v The Colonial Mutual Life Assurance Society Ltd (2004) 13 ANZ Ins Cas 61-620 at [144]. 9. Tiep Thi To at 285-6. 10. Insurance Manufacturers of Australia Pty Ltd v Heron (2006) 14 ANZ Ins Cas 61-669. 11. [2005] NSWCA 361; applied in the context of fraud defences to insurance claims in ASIM v Penrose [2010] NSWCA 366 per Tobias JA (Macfarlan JA and Young JA agreeing) at [140]-[143]. 12. This was pp 43-44 of Mr Ziade's affidavit of 4 December 2019. 13. Water Board v Moustakas (1988) 180 CLR 491 at 497-498. 14. Per Beazley P at [48], [55]-[57] & [65]; per Meagher JA (McDougall J agreeing) at [70]-[74]. 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: 13 November 2020