Supreme Court New South Wales Medium Neutral Citation: Voitenko t/as Access Party Hire v Zurich Australian Insurance Ltd [2021] NSWSC 1441 Hearing dates: 16-21, 24-26 November and 10 December 2020 Decision date: 09 November 2021 Jurisdiction: Common Law Before: Walton J Decision: The Court directs that Zurich should file and serve short minutes of order reflecting this judgment within 21 days of the judgment. Catchwords: CONTRACT OF INSURANCE – co-insured parties – insurance claim – part payment of claim – statement of claim – claim for damages – breach of contract – circumstantial evidence – two elements of defence of fraud – s 56 Insurance Contracts Act 1984 (NSW) – Fraud in the Claim – value of the stock and equipment claimed significantly and deliberately exaggerated – Arson – fire deliberately lit – means of entry – no alarm or security cameras – use of accelerants – opportunity – attendance at the warehouse – motive – financial difficulty – debts – Proof of Loss – double counting and inflation of claim – duty of good faith – cross-claim – further amended statement of claim failed – amended statement of cross claim succeeded – orders made Legislation Cited: Evidence Act 1995 (NSW) Insurance Contracts Act 1984 (Cth) Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336 Cook v Sirius International Insurance Corporation Australian Branch [2020] NSWSC 1631 Entwells Pty Ltd v National and General Insurance Co Ltd (Unreported, Supreme Court of Western Australia, 19 July 1991) Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Ltd (1999) 1 Qd R 507 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66 Palmer v Dolman [2005] NSWCA 361 Ricciardi v Suncorp Metway Insurance Ltd [2001] QCA 190 Sharma v Insurance Australia Ltd (t/as NRMA Insurance) [2017] NSWCA 307 Voitenko v Zurich Australian Insurance Limited [2019] NSWSC 680 Voitenko t/as Access Party Hire v Zurich Australian Insurance Limited [2016] NSWSC 324 Tiep Thi v Australian Associated Motor Insurances Ltd [2001] VSCA 48; (2001) 3 VR 279 Walton v Colonial Mutual Life Assurance Society Ltd (2004) 13 ANZ Ins Cas 61-620; [2004] NSWSC 616 Category: Principal judgment Parties: Andrei Voitenko t/as Access Party Hire (First Plaintiff) Irena Voytenko t/as Russtyle Productions (Second Plaintiff) Zurich Australian Insurance Ltd (Defendant) Representation: Counsel: J Sexton SC, with S J Walsh (Defendant) Solicitors: Wotton + Kearney (Defendant) File Number(s): 2014/204107 Judgment 1. HIS HONOUR: By a further amended statement of claim filed 1 June 2016, Mr Andrei Voitenko and Mrs Irena Voytenko (collectively, "the plaintiffs") sought "damages for breach of contract", interest and costs. The plaintiffs claimed the sum insured ($1,100,000 less payments made by the defendant, Zurich Australian Insurance Ltd ("Zurich"), of $284,917, that is $814,883) under a business insurance policy issued by Zurich in respect of stock damaged or destroyed in a fire at the plaintiffs' warehouse at Mortdale (the "warehouse" or "premises") on 21 August 2010. Zurich filed a cross claim on 11 November 2016 which was amended on 11 June 2019. 2. The plaintiffs used the warehouse to operate their businesses. Mr Voitenko's business was named Access Party Hire (the further amended statement of claim referred to the first plaintiff as "Andrei Voitenko t/as Access Party Hire"). Through that business he manufactured and/or hired out marquees, air dancers and associated party hire equipment for outdoor events. Mrs Voytenko's business was named Russtyle Productions (the further amended statement of claim referred to the second plaintiff as "Irena Voytenko t/as Russtyle Productions"). She produced and supplied dumplings and spring rolls. 3. Zurich issued a Steadfast Business Gold Policy ("the Policy") to the plaintiffs to insure plant, machinery and all contents of the business for loss and damage by, relevantly, fire, to the sum of $1,100,000. The Policy period was from 21 May 2010 to 31 May 2011. The first time the plaintiffs took out property contents insurance over the premises was by the Policy, taken out three months prior to the fire. It was a term of the Policy that Zurich and the plaintiffs would, when making or assessing a claim made in accordance with the Policy, conduct themselves towards each other with the utmost good faith. 4. A claim for indemnity was made by the plaintiffs under that Policy after a fire at the warehouse on 21 August 2010. 5. In the course of assessing the claim and after the appointment of a loss adjuster, Crawford Company (Australia) ("Crawford") with respect to the claim, Zurich made interim payments to the plaintiffs totalling $284,917 ("the payments"). The payments were principally in respect of joinery, tables and chairs, a portable dance floor, electrical equipment (power tools, portable air conditioners, lighting, computers, televisions, cameras), gas heaters and components and other items. The items paid are shown in a final adjustment spreadsheet for Access Party Hire and Russtyle Productions respectively. 6. The principal items that Zurich did not pay were: 1. marquees and component parts (claimed at $350,000 incl GST); 2. 540 air dancers and 20 air blowers (claimed at $370,469 incl GST); and 3. a dumpling machine, flour mincer and mince mixer (claimed at $65,600 incl GST). 1. Some other items were not paid on the grounds they were not used for the insured businesses (for example, a car sound system, a fishing set, the sauna and tyres and rims for the plaintiffs' Lexus and a box of clothes). THE POLICY 1. As mentioned, the cover taken out by the plaintiffs was in respect of Business Property (a defined term under the Policy). 2. The insuring clause provided that: We [Zurich] will cover You [the persons named on the current Policy Schedule as the 'Insured'] for loss or damage caused by the events listed under 'Defined Events cover' and 'Accidental Damage cover' to Your Business Property which occurs during the Period of Cover. 1. As mentioned earlier, the relevant "event" insured against in this case was fire. The other events covered were narrowly defined, such as earthquake, impact by various things, aircraft or tree, malicious damage and flood. No cover was taken out for other types of cover, such as cover for theft, money, machinery or motor vehicles. 2. "Your Business" was relevantly defined to mean the business described in the Policy Schedule". That business was: 1. "Andrei Voitenko T/as Access Party Hire", 2. "Irena Voytenko T/as Russtyle Production" 1. "Business Property" was defined to mean "buildings, contents, Stock and items listed on the current Policy Schedule and used in Your Business." The relevant item listed in the Policy Schedule was "Plant machinery and all contents." 2. The Policy provided that Zurich would pay the cost of replacing any damaged part of the plaintiffs' Business Property to the same condition as they were when new, subject to the qualification that Zurich would only pay for the new installed cost of a replacement item which would give the "same total function, capacity or output as the Business Property" that had been damaged. 3. The Policy excluded loss caused by a deliberate or wilful act of the insured. The exclusion was in the following terms: Subject to the provisions of the Insurance Contracts Act 1984, we will not pay for any loss or damage caused by either Your wilful act or by the wilful act of another party committed with Your knowledge and consent and which You were capable of preventing. THE EVIDENCE Documentary Evidence: General 1. There was a substantial amount of documentary evidence before the Court, which included the following: 1. a Key Documents Bundle, consisting of two volumes (marked Ex 13); 2. a Court Book, consisting of 20 volumes (marked Ex 11) ("the Court Book"); and 3. a Supplementary Court Book, which consisted of two volumes (numbered 21 and 22, respectively, continuing from the last numbered volume of the Court Book) (marked Ex 12) ("the Supplementary Court Book"). 1. On the second day of the hearing, Mr Voitenko tendered the affidavit of Craig David McLeod sworn 21 June 2019, together with exhibit CM-1, which was comprised of four lever-arch folders of documents (marked Ex 5). The documents in Ex 5 may, for the most part, be found duplicated in the Court Book. The Plaintiffs' Evidence 1. The plaintiffs relied upon the affidavits of Mrs Voytenko and Mr Voitenko dated 12 and 14 February 2020, respectively. Both plaintiffs were cross-examined at the hearing. 2. In addition to their respective affidavits and the material found in Ex 5, the plaintiffs relied on 12 statutory declarations and two references, which are to be found in the Supplementary Court Book (Volume 22, Tabs 833-846). 3. One witness, Dmitri Aronov, stated that he lent Mr Voitenko $60,000 in the year 2000 to help him develop his business. 4. Mr Aronov also declared that he saw equipment of various kinds in the warehouse, as did a number of the other other witnesses (Elene Delon, Euguen Charaev, Gint Vilks, Gabrielle di Mattia, Mikhail Okrugin, Victor Okrugin, Pericles Pericleous, George Pericleous, and Dmitri Sogrine). None of the witnesses gave any evidence as to the quantities of equipment they observed, nor any evidence as to its value. 5. Mikhail Okrugin was the friend of Mr Voitenko's whose car window was smashed while parked at night near the warehouse. Valeria Knyazeva, Mr Voitenko's sister, and Sergey Mironov, Mr Voitenko's son-in-law, gave evidence that Mr Voitenko's sister gave Mr Voitenko US $60,000 as his share of the assets of his mother's estate, which Mr Mironov brought to China in 2008 and gave to Mr Voitenko. The purpose of this evidence appeared to be to demonstrate that Mr Voitenko obtained the funds to acquire the air dancers he stated he purchased in China in 2008. No documents have been produced confirming the distribution of the estate. 6. The two references from Mr Voitenko's employers after the fire were also not produced in the plaintiffs' case. The Evidence of Zurich 1. Zurich relied upon the following: 1. Affidavits of Mr Craig Anthony Solberg sworn on 29 April 2019 and 12 June 2019, respectively. 2. Six factual reports of Mr Solberg for Greg Kelly and Associates ("GKA"), which were prepared as follows: 1. the first report on 15 February 2010; 2. the second on 21 September 2010; 3. the third on 22 October 2010; 4. the fourth on 6 December 2010; 5. the fifth on 16 June 2011; and 6. the sixth report on 4 August 2011. (Each report shall be referred to as the First to Sixth Solberg Report respectively and collectively as "the Solberg Reports"). 1. An affidavit of Ms Li Min sworn on 30 April 2019. 2. Three investigation reports prepared by Ms Min, namely: 1. the first investigation report dated 11 May 2011; 2. a supplementary report dated 26 June 2011; and 3. a final investigation report dated 30 June 2011. 1. An affidavit of Peter Hughes sworn on 2 May 2019. 2. Stocktake reports by Abacus Stocktaking Services Pty Ltd ("Abacus") of Access Party Hire and Russtyle Productions ("the Stocktake Reports"). The primary author of the Reports was Mr Hughes. 3. An affidavit of Mr Gregory Michael Kelly sworn on 8 May 2019. 4. Three reports provided by Mr Kelly dated 30 August 2010, 28 September 2010 and 3 May 2011 (which shall hereinafter be referred to as the First, Second and Third Kelly Report respectively). 5. An Origin and Cause Report prepared for QBE Insurance Australia Ltd ("QBE") by Ms Melissa Salmon on 27 August 2010. 6. An affidavit of Detective Senior Constable Adam David Glasson sworn on 17 May 2019. 7. Photographs taken by the NSW Police Forensic Services Group of the premises on 21 and 22 August 2010, respectively. 8. Photographs taken by Detective Sergeant Strik and Constable Field at the premises on 22 August 2010. 9. Aerial photographs taken by the NSW Police Aerial Wing of the premises and surrounding areas on 22 August 2010. 10. Fire Brigades Report dated 31 August 2010. 11. Police Report dated 1 September 2010. 12. Logs for the fire recorded on the Computerised Operational Policing System ("COPS") on 11 December 2014. 13. Expert report by Mr Geoffrey Campey on 3 June 2019. 14. Forensic copies of webpages, Home Page Captures and HTML Source Code on 12 May 2019. FACTUAL BACKGROUND 1. From 19 January 2005, Access Party Hire was a registered business of Mr Voitenko. Russtyle Productions was a registered business name of Mrs Voytenko from 19 September 2007. 2. Mr Voitenko entered into a heads agreement to lease the premises on 3 October 2009. 3. From 10 October 2008, the plaintiffs carried on their respective businesses from a commercial property, the warehouse, comprised of commercial brick and metal frame roof structure. 4. As mentioned, the Policy commenced 21 May 2010 for fire cover over plant, machinery, and contents of the businesses in the premises. The plaintiffs stated that they had an insurance policy for Public Insurance Liabilities for 3 years through Action Insurance Brokers ("Action Insurance") before the fire under which their four vehicles were insured. 5. Prior to the fire, on the plaintiffs' case: 1. On 21 April 2009 the plaintiffs' truck was stolen from the warehouse (see police report E37285412). 2. On 11 May 2010, an attempt to break into the warehouse with the front windows being smashed and security door damaged. The owner of the factory ignored the plaintiffs' request to fix the alarm system. After that occasion, the plaintiffs fitted the metal security door on the entrance at their expense (see police report E40393452). 3. On 23 May 2010, a friend of the plaintiffs left his car overnight outside of the warehouse and it was vandalized (see police report E43242883). 4. On 29 July 2010, Mr Voitenko's truck was parked at the warehouse and somebody removed the four transmission bolts from the connection between gearbox and driveshaft (see police report E41964358). 5. "During period of renting the warehouse, there were a lot of various cars were burn down outside the warehouse". 1. Further, prior to the fire: 1. the plaintiffs' sledgehammer had been left inside the warehouse. In a Joint Memorandum of Facts and Issues ("the Joint Memorandum") Mr Voitenko stated "my sledgehammer was in its place in my factory, where it was found after the fire" (the sledgehammer was found inside the premises after the fire and a mallet found in a hole underneath the verandah at the rear of the building); and 2. Mr Voitenko had purchased but not installed security cameras for the warehouse. 1. On 21 August 2010, there was a fire at the premises. At 11.11pm, the first triple-0 call was logged for a fire at the premises. 2. At the time of the fire: 1. The doors to the warehouse were locked, the Fire Brigade cut the security lock on the front door and later a hole was cut in the rear roller door to allow fire crews entrance (a delivery van was located at that point). 2. No one other than the plaintiffs had keys to the warehouse. 3. Zurich said Mr Voitenko's sledgehammer had been used to break through the downstairs brick wall. The plaintiffs stated that the police report indicated that a mallet was found next to a hole (as discussed further below). The hammer was seized for fingerprints/DNA analysis. A NSW Fire Brigade report of 31 August 2010 refers to a "mallet". 1. After the fire: 1. On 21 and 22 August 2010, the NSW Police and NSW Fire & Rescue attended the premises and took photographs. The following day NSW Police issued a Crime Scene warrant for the premises on 22 August 2010. 2. The plaintiffs voluntarily did DNA tests and electronically recorded interviews at Hurstville Police Station. The first interview was undertaken with Mr Voitenko on 24 August 2010 after a walk through with Detective Sergeant Joerdens and Detective Senior Constable Glasson on the same day. 3. NSW Police Force, NSW Fire & Rescue officers and other forensic investigators who attended the scene found in the warehouse: 1. A 20L fuel drum in front of a stack of plastic chairs. 2. The plaintiffs' van parked in the warehouse. 3. A petrol can next to the van near the area of origin of the fire. 4. Zurich says 15 to 20 timber tabletops placed under the van and one on the front bonnet. The plaintiffs disagree and say that, all tabletops of round tables were moved by fire fighters to stop them burning during the fire. 5. The remains of clothing belonging to Mr Voitenko soaked in kerosene were found on the floor behind the van. 6. Electrical cables which had been stripped with the bare ends wired together resting against a mop. 7. An empty packet of firelighters. 8. A small metal mallet: 1. In the Police Report dated 1 September 2010 it was stated that adjacent to the hole a small metal mallet with a wooden handle was found: …the hole appeared to have been smashed using the mallet, in order to gain entry to the building. 1. In the narrative details of the Police Report: …a small sledge hammer was located near this hole and has been seized for fingerprint/DNA evidence. 1. In the summary of the Fire Brigades Report dated 31 August 2010, it was stated: …at bottom of the stairs the large hole was evident in brickwork and a mallet was found beside the hole. 1. As to the location of where the mallet was found, it was variously described as being found near the hole, adjacent to the hole and beside the hole in the Police Report and Fire Brigades Report. 2. I note that in the Police Report dated 1 September 2010 it was stated that: …upon inspection the fire fighters believed the fire had been deliberately lit using an accelerant. 1. I also note that the expert reports provided by Melissa Salmon and Greg Kelly found that the fire was as a result of arson. 1. A sledgehammer: 1. As earlier mentioned a sledgehammer was also found inside the premises. 2. In photos taken by Mr Kelly on 2 September 2010 there was a sledgehammer located on timber adjacent to a vehicle. The relevant photographs are found at tabs 197 (Vol 10-3568), 198 (Vol 10-3568) and 199 (Vol 10-2569). 3. In Mr Kelly's second report at paragraph 9.5: …although aware that Police had recovered fuel cans, cloth and a hammer from the scene, during our examination we identified a further sledgehammer that was amongst marquee materials adjacent to the motor vehicle. 1. Further, in Mr Voitenko's affidavit at par 21: …The Police had a discussion with me about the hole being made by a sledge hammer or mallet. I have a mallet which I used in my business. I saw that the mallet was in the same place I always kept it next to the roller door. 1. Zurich stated items were arranged around two seats of fire in an apparent attempt to maximise the spread of fire. 1. There was a dispute as to the significance of broken bricks and markings near the hole at the rear of the premises. The subject of that dispute and my observations with respect to the same are as follows: 1. Zurich stated that debris found outside the downstairs brick wall of the warehouse was consistent with the hole having been made from the inside. The plaintiffs disagreed and contended that debris was found inside and outside the hole. In part, this dispute concerned photographs of the premises and in particular, the area at the rear of the premises in question. 2. The plaintiffs disagreed and contended that the arsonist's goal was to destroy the building completely, not just the plaintiffs' equipment inside. The plaintiffs contented that the incendiary mixture was not applied to the plaintiffs' equipment but it was done specially to burn the building. The plaintiffs' equipment was destroyed because of the high temperature during the fire. The plaintiffs relied in that respect upon evidence of Mr Hughes' affidavit at par 33; although that passage of the affidavit would not seem to support that contention. 3. There were fragments of bricks found on both the inside and outside of the wall. Detective Senior Constable Glasson opined in his affidavit, that the hole had been made from inside the property (at par 38): During the Walkthrough, I observed that the brickwork of the external wall of the basement of the Property had been broken to create a hole, apparently as a means of gaining entry to the Property. I observed broken bricks on the ground outside the wall. The location and distribution of the broken bricks suggested that the hole had been made from inside the Property due to the way the broken bricks had fallen. 1. In the Second Kelly Report at 9.4 it was identified that there were marks on the inside and outside of the wall, extracted below: … numerous broken sections of brickwork were identified outside of the hole under the main structure, I identified impact marks on the brickwork on the underside of the premises and on the outside of the wall that were consistent with impact with a hammer…. 1. It is difficult to see how either person had any particular expertise in the significance of the observations for whether entry was made from the inside or outside the premises. 2. Zurich relied on photos 154,156,157,158,181,183,191,192 and 193. 1. Photo 154 (Vol 10-3538) is a photo looking down the stairs inside the premises. In relation to this photograph Mr Sexton submitted: …photograph 154 is a photo looking down the stairs, and your Honour can just see the corner of the hole in the wall at the bottom of the stairs. That's just to put it into context. 1. Photos 156 (Vol 10-3540) and 157 (Vol 10-3541) show the inside of the premises and that there are brick fragments located at the bottom of the hole. In relation to these photographs Mr Sexton submitted: The photos inside - photo 156, your Honour. Your Honour can see the hole in the wall in the top left-hand section of the photo. Below that, at ground level, there are some blue boxes which seem to contain rocks for the sauna, but your Honour can see at the bottom of the photo there are some brick fragments. There is a more close-up photograph of that at photograph 157…. 1. Photo 158 (Vol 10-3542) shows there are some brick fragments located at the bottom of the hole looking back into the sauna. In relation to this photograph Mr Sexton submitted: …at 158, looking back into the sauna, there are some brick fragments at the bottom. 1. An alternative view of the same material is found at Photo 159 (Vol 10-3542). 2. Photos 181 (Vol 10-3560) and 183 (Vol 10-3561) showed that there were a couple of metal drums and there are brick fragments located below the hole. In relation to these photographs Mr Sexton submitted: The starting point is outside the wall, so photograph 181 in that bundle, your Honour. Your Honour can see there the hole, and below that there is a couple of metal drums. There are some brick fragments there, but they are more clearly seen in photograph 183. 1. Photos 189 (Vol 10-3564) and 190 (Vol 10-3564) show marks that were made outside the wall. Mr Sexton submitted in relation to these photographs: Then photograph 189 was the photograph that Mr Voitenko wanted your Honour to see, and 190, which show the marks on the outside of the wall. 1. Photos 191 (Vol 10-3565), 192 (Vol 10-3565) and 193 (Vol 10-3566) show the marks made on the bricks. Mr Sexton submitted in relation to these photographs: There is another one at 191 and 192, and 193 is where Mr Kelly put a 50 cent piece next to the mark to give it some perspective. 1. The observations of the photographs in question are sound. 2. Mr Voitenko relied on photos 155 (Vol 10-3539), 156 (Vol 10-3540), 157 (Vol 10-3541), 158 (Vol 10-3542) and 159 (Vol 10-3543) in supporting his submission that the hole was made by a person outside the premises. The photos relied upon by Mr Voitenko show bricks found inside the premises located below the hole as well as bricks located at the bottom of the hole looking back into the sauna. 3. Sledgehammer marks were found on the outside of the wall. Whilst this points to the hole being made from the outside (at least, in part), Zurich contended that it is not a factor to be given great weight. I agree the marks are also consistent with somebody (on Zurich's case, Mr Voitenko) endeavouring to create an impression that the hole had been made from the outside. 4. Further, I accept the logic of the following contention by Zurich: I think the evidence, your Honour, is that fragments of brick were found both inside and outside the building, the point being that both Detective Senior Constable Glasson and Mr Kelly opined that the attack on the brickwork with the hammer, on the probabilities, occurred on both sides of the wall. So that points against a stranger having done it, because the stranger wouldn't have had access to the inside of the wall until the hole had been completely made through. … 1. Mr Kelly, quite fairly, in his report identified that there were marks on the outside of the wall as well as on the inside of the wall. But our point about that is that it actually doesn't go anywhere in terms of resolving whether it was a stranger or whether it was Mr Voitenko who made the hole in the wall that there are marks on the outside of the wall, because if somebody intended to make a hole to look like a stranger had made it, then it wouldn't require a great deal of thought to do so from the outside. But the evidence was that the way the fragments were found was consistent with the demolition work having been done on both sides of the wall, which points more strongly towards Mr Voitenko having done that work. 2. On 24 August 2010, Zurich appointed a loss adjuster Mr Frank Pecar ("Mr Pecar") from Crawford. Mr Pecar attended the premises on the same day and took photographs. The following day Zurich appointed, via Crawford, Abacus. 3. Over the next two days Mr Hughes of Abacus with Mr Voitenko attended the premises to conduct a stocktake of Mr Voitenko's damaged items. Zurich appointed GKA to conduct factual and forensic fire investigations. Mr Kelly of GKA was appointed as forensic fire investigator and attended and inspected the premises on 27 August 2010. On that same day, Ms Salmon prepared her report on the origin and cause of the fire. 4. Sometime after 27 August 2010, Abacus, completed Stocktaking Reports of Access Party Hire and Russtyle Productions. The first investigation report was the First Kelly Report, prepared by Mr Kelly on 30 August 2010, followed by the Second and Third Kelly Reports. 5. The plaintiffs lodged a claim with Zurich under the Policy to the limit of the insured sum on 30 August 2010. 6. On the 7 October 2010, a claim submission was prepared and provided to Crawford by the plaintiffs. 7. Ms Suzanna Djulamerovic of the Physical Evidence Laboratory of the Division of Analytical Laboratories, Sydney West Area Health Services, NSW Health, provided a Certificate of Analysis issued in relation to the selected items of the First NSW Fire Brigade Evidence on 22 October 2010. 8. Mr Solberg prepared his first factual report on 21 September 2010, namely, the First Solberg Report. As mentioned, the Second Solberg Report was produced on 22 October 2010, followed by a further four reports, with the final report being the Sixth Solberg Report, prepared on 4 August 2011. 9. Mr Solberg interviewed the plaintiffs on 16 October 2010 and 24 January and 6 June 2011. 10. On 5 November 2010, Mr Pecar confirmed to Mr Voitenko that the damaged goods in the premises had no salvage value and could be disposed of. Zurich, on 26 November 2010, confirmed with the plaintiffs' broker, Action Insurance, that the plaintiffs had provided insufficient information to confirm the indemnification of the claim. 11. On 2 December 2012, Mr Pecar provided the plaintiffs with his adjustment of their claim submission. 12. Two reports were provided by Crawford. The first report on the 21 February and the second on the 28 February 2011. (Both reports were prepared by Mr Longman Huang). 13. Mr Pecar provided to the plaintiffs two amended adjustments of the claim Submission in the month of April 2011. Ms Min an investigator produced the three investigation reports over the period of 11 May and 30 June 2011. She interviewed Xiaochang Cai of Guangzhou Carnival Inflatables Manufacturers Co ("Guangzhou Carnival") (which business was located in China). 14. An amended adjustment of the claim submission for Russtyle Productions was provided by Mr Pecar. Three days later Mr Voitenko confirmed to Zurich that he disagreed with the adjustment of the claim submission by GKA. 15. Before Zurich had concluded its investigations into the claim, Zurich made a total of six payments to the plaintiffs in response to the claim under the Policy totalling $284,917. The first payment was on 13 December 2010 and the final payment on the 21 April 2011. 16. On 16 December 2011, Zurich sent a letter to the plaintiffs regarding the continuation of the investigation into the remaining items in the Claim Submission. A further letter was sent on 10 April 2012 outlining Zurich's suspicions that the claim was made fraudulently, and that Zurich would not make any further payments under the Policy until it had concluded its investigation. 17. Zurich advised the plaintiffs by letter dated 7 December 2012 that they had not provided sufficient information to support the claim. The plaintiffs claimed the sum of $815,085 from Zurich for the reinstatement cost and the replacement value of the claimed items, which Zurich refused. 18. The plaintiffs filed a Statement of Claim on the 10 July 2014 and an amended Statement of Claim on 25 February 2015. 19. A Notice of Ceasing to Act was filed by Mr Kevin Emanuel of Boyd House & Partners in relation to legal representation of the plaintiffs on 2 September 2015. THE PLAINTIFFS' CASE IN GENERAL 1. In summary, and having regard to the plaintiffs' pleading, it was contended by the plaintiffs as follows: 1. The plaintiffs' case should be assessed in the light of the fact that they lost legal representation, were represented by Mr Voitenko who had no legal training and that "documents signed" were at the "recommendation" of the former solicitors. 2. The defendant indemnified the plaintiffs for loss and damage of plant, manufacturing and the contents of their businesses for fire in the sum of $1,100,000. The policy included reinstatement or replacement of lost items. 3. The warehouse containing the plaintiffs' businesses plant and equipment was destroyed by fire in 2010. They suffered loss and damage. 4. The defendant was required to act in utmost good faith pursuant to s 13(1) of the Insurance Contracts Act 1984 (Cth) ("the ICA"). The obligation extended to a requirement for an affirmative or a positive action and for Zurich to act consistently with commercial standards of decency and fairness. 5. Zurich, its agents and its solicitors, acted contrary to the obligations under the ICA. 6. Zurich, its solicitors and Crawford failed to meet these obligations in dealing with the claim made by the plaintiffs under the Policy. 7. The plaintiffs provided to Crawford, Schedules of Items damaged or destroyed in the fire. It was pleaded that "Crawford completed their schedule by identifying the Assessed Replacement Value" allowed by Zurich and the reason for any adjustment relied upon by the defendant. 8. A payment of $284,917 was made by Zurich to the plaintiffs but this was not payment of the reinstatement costs or replacement value of all items included in the resolved claims. 9. Further, Zurich did not pay the plaintiffs the reinstatement costs or replacement value of all items particularised in the plaintiffs' Schedule of Items. 10. The Schedule of Items was accurate as to the items that were contained in the premises at the time of the fire and the amounts nominated on the Replacement Value for each item. Each item was supported by "quotes" obtained at the time the list was prepared. The quoted process represented the "current price" for each item in the "local market" and were applied by Crawford "to [the] list of items on [Mr Voitenko] spreadsheets to compare". 11. The plaintiffs were entitled to a larger amount than they were entitled under the Policy due to the actual replacement value of lost items, but made no such claim. 12. The list of lost items provided by the Abacus to Zurich was done without confirmation by the plaintiffs and was inaccurate having regard to the number of items shown in photos taken by Abacus (which predominately related to groups of items rather than individual items). 13. The plaintiffs were asked by Abacus to estimate the value of items at the premises. However, it was unclear which items Abacus was referring to and, as a result, the process of estimating the value was uncertain. In any event, Abacus did not accurately account for all items that were lost by the plaintiffs and, therefore, the list of losses prepared by Abacus was not comprehensive. 14. The actions of Zurich, its agents or legal representation which was said to be illegal or inappropriate were as follows: 1. Approving Zurich's agents to undertake two unauthorized entries (including forcible entry on 2 September 2010) at the premises and being actively complicit in those criminal offences. 2. Authorising their agents to remove documents and property without their Insured's knowledge and/or approval of the plaintiffs and being actively complicit in those criminal offences. 3. Failing to advise the plaintiffs of their involvement and attempting to conceal their and their agents' involvement in those criminal offences. 4. Deliberately withholding documents and property stolen from the premises that they knew were required by the plaintiffs to substantiate their claim. 5. Deliberately withholding documents and property stolen from the premises that they knew were required to be produced in earlier proceedings in 2015 Voitenko t/as Access Party Hire v Zurich Australian Insurance Limited [2016] NSWSC 324 until they were "provided to their Insured on the steps of the Court". 6. Deliberately withholding information from plaintiffs that NSW Police had advised the Zurich that the Police investigation had been closed in November 2011 without any evidence of the plaintiffs' involvement being uncovered. 7. Repeatedly asserting that the plaintiffs would likely need to undergo additional police interviews when they had no basis for making that statement. The plaintiffs attended NSW Police in 2012 but only to collect their property that had been "collected as part of [the Police] investigations". 8. Producing "evidence" that they asserted in the proceedings in 2019 (concerning a Notice of Motion filed by Zurich on 6 May 2019: Voitenko v Zurich Australian Insurance Limited [2019] NSWSC 680) implicated the plaintiffs in the fire, but then "withdrew it when the illegal, forced entries by their agents were identified as a part of these proceedings". It was further contended that: "On the basis of altered reports from the Police and Fire brigade and other fake facts, Judges in past courts were misled and on that basis I was given a guillotine order, prohibiting me from providing any evidence in this case". 9. Withholding evidence obtained from Zurich's independent investigations in China that confirmed information provided by the plaintiffs was accurate and verified and supported their Insured's list of damaged property previously provided to GKA. 10. Withholding information from the police during the investigation about persons interested in arson by investigators of GKA. 11. The making of a fraudulent total payment of 25% of the entire contract by Zurich, and confirmation of this payment in District Court in 2015 with "explanations as a resolved Claim with the plaintiffs". 1. The plaintiffs placed considerable reliance upon actions they asserted had been taken by Mr Kelly of a firm known as GKA whom the plaintiffs' described as a "forensic investigator". It was submitted that Mr Kelly was charged with the task of undertaking a forensic and factual investigation in relation to events leading up to the fire in the premises. 2. Specifically, the plaintiffs' submitted that Mr Kelly had engaged in "illegal criminal entry" unauthorised entry to that premises and had illegally removed documents from the premises "that could have been used to support the claim". These actions were engaged in despite Mr Voitenko acting on Crawford's advice to secure the premises to prevent entry. 3. The plaintiffs had been unaware until they received documents of their solicitor that Mr Kelly had illegally entered the premises. 4. Zurich, by its solicitors, had withheld evidence that supported the plaintiffs' claims, specifically in relation to the "arson attack". They had also failed to disclose relevant evidence to Police in their investigation of arson at the premises. 5. Evidence as to the shipping of various items (by investigators) did not undermine the plaintiffs' contentions as to the value of lost items. 6. The plaintiffs denied that they were responsible for the fire at the premise in 2010 or engaged in arson. Reference was made as to the directions bricks fell at the rear of the premises by "the arsonists". As noted earlier in answer to Zurich's contention that debris was found outside the downstairs brick wall of the premises consistent with the hole having been made from the inside. The plaintiffs contended the "photographic evidence" revealed the wall fell inwards and that a breach occurred from outside. 7. In 2019, the solicitors for Zurich asserted that they had evidence of an "ignition device" which supported a contention that Mr Voitenko had started the fire. In cross-examination Mr Kelly agreed that an ignition device had never been provided to NSW Police. Nor was it provided in these proceedings or that contention maintained in these proceedings. The contention made by Zurich was knowingly wrong. The Court should have regard to the earlier deliberate misrepresentations. 8. In closing written submissions, Mr Voitenko contended: I strongly believe that Zurich paid 25% of the contract, as is usually done, and tried to close the case for further payments under the contract, and most clients agree to such payments (although part of the contract was paid) and continue to live with it – I believe this is common practice, since going to court is expensive and not everyone can afford it. And this is what insurance companies use to reduce payments under contracts by applying their knowledge of the law. And if the victim goes to court, they start blaming him for everything and endlessly drag him around the courts until the person drops the case. After analysing all their criminal actions based on the facts in this case, it looks like this is their usual practice. It is the business of justice to check all the facts and punish the guilty and I appeal to the court that I have shown that my wife or I had nothing to do with lighting the fire and we have not been treated by Zurich in good faith. I request that the court order Zurich pay my claim and compensate us for interest, costs, loss of opportunities and the suffering myself and my family have endured to bring this to the courts attention. I also ask, if the court see's fit, this could be an opportunity to send a message to the insurance industry that this is not the way to treat it's customers. All supporting documents confirming above facts (but are not limited) with references to the court files located in Appendix 1, attached to this written submission, located on pages 10-16. ZURICH'S CASE 1. Zurich's primary case is that the claim has been made fraudulently and it is entitled to refuse to pay the claim under s 56 of the ICA ("the s 56 defence"). 2. The s 56 defence was advanced on the basis: 1. that the evidence indicates (and it is understood to be common ground) that the fire was deliberately lit, and Zurich's case is that Mr Voitenko was, on the balance of probabilities, the person who likely lit the fire; 2. Zurich says that the value of the stock and equipment claimed has been significantly and deliberately exaggerated. 1. Alternatively, if the claim is not fraudulent, then Zurich contended that the plaintiffs had not proven most of the loss claimed. 2. If the Court found that Mr Voitenko lit the fire, the effect of s 56 of the ICA is that Zurich is entitled to refuse to pay the claim. In that event, Zurich submitted that the monies it has paid in respect of the claim ($284,917) have been paid on the basis of mistake induced by Mr Voitenko and the plaintiffs were never entitled to receive the payments or any payments under the Policy. Zurich sought repayment of the payments made. 3. Zurich accepted that the evidence did not establish to the relevant standard that Mrs Voytenko knew of, or was involved in, the arson. In those circumstances, Zurich's case in respect of the claim for goods owned by her business was limited to the second limb of the s 56 defence and the alternative contention. 4. Further in that respect, by an amended statement of cross-claim dated 11 June 2019, Zurich pleaded that monies were paid by it in the discharge of its duty of good faith on the assumption that the fire was not the result of a wilful act of one or both of the plaintiffs (cross-defendants). Pursuant to the provisions of the Policy dealing with wilful acts (see [14] of the judgment) and the requirement that the claim made by the plaintiffs be made in good faith (in accordance with s 13 of the ICA), it is pleaded that payment was made on the basis of mistaken assumptions. The true position was that the plaintiffs were never entitled to receive the monies paid in respect of their claim. 5. Zurich sought restitution for the monies paid, plus interest and costs and further or alternatively damages for those sums upon the premise that the plaintiffs had failed to conduct themselves toward Zurich with the utmost good faith. THE ISSUES 1. The parties were unable to reach a common position on issues required to be resolved by the Court but did manage to prepare the Joint Memorandum in which the facts and issues were stated by the defendant but supplemented by the plaintiffs adding issues, indicated by italics in the below extract, in the areas where the plaintiffs disagreed with or supplemented the entry. That statement of issues is produced below: LIABILITY: 1. Was Voitenko at the Warehouse within one to two hours prior to the Fire? 2. What caused the Fire to ignite? Refer to police report E41863848 3. Was the Fire deliberately lit? If so, by whom and for what purpose was the Fire lit? Refer to police report E41863848 4. Who to obtained or was likely to a benefit from igniting the Fire? Refer to paragraph 1.16b(vi) 5. Were the Voitenkos likely to obtain a benefit from setting fire to the Warehouse namely, receiving payment of the insurance monies? Refer to paragraph 1.16b(vi) 6. Did the Fire cause loss or damage and if so, to what extent? 2 businesses were lost from the fire just before the start of the work season and we lost all out clients getting a lot of stress and losing all my and my wife earnings, I still "with your help" can't restore my business and it's been 10 years for these 10 years if nothing happened in 2010 I would be have one of the best Party hire businesses in Sydney, which it was 10 years ago. 7. Was the loss or damaged caused by the Fire a "wilful act", which was excluded under the Policy? Disagree 8. To what extent, if any, did the Voitenkos act dishonestly in respect of the Claim? 9. To what extent, if any, did the Zurich act dishonestly in respect of the Claim? 10. To what extent, if any, did the Voitenkos act fraudulently in respect of the Claim? 11. To what extent, if any, did the Zurich act fraudulently in respect of the Claim? 12. To what extent, if any, did the Voitenkos deceive Zurich in relation to the Claim and was it the Voitenkos' intention to deceive Zurich? 13. To what extent, if any, did the Zurich deceive Voitenko in relation to the Claim and was it Zurich intention to deceive Voitenko? 14. Did the Voitenkos breach the Implied Term? Could you be more specified on this question? What exactly do you mean by this question simple language would be very appreciated 15. Did Zurich breach the Implied Term? 16. Did Zurich breach the Policy by not paying the reinstatement costs or the replacement value of all Claimed Items? Agreed 17. What application, if any, does section 56 of the ICA have on the Claim? Please specify question correctly (in simple language) 18. Was Zurich entitled to refuse to pay the Claim on one or more of the following grounds: 18.1 the Voitenkos breached the Implied term; Could you be more specified on this question? 18.2 the loss and damage claimed was caused by Voitenko's wilful act, cover for which is expressly excluded by the Policy; and/or Disagree 18.3 under section 56 of the ICA? Disagree 19. Are the Mistaken Assumption correct? Sorry, I didn't understand the question you were asking 20. Were the Payments made by Zurich on the basis of mistake namely, the Mistaken Assumptions? I strongly believe that Zurich paid part of the contract, as is usually done, and tried to close the case for further payments under the contract, and most clients agree to such payments (although part of the contract was paid) and continue to live with it – I believe this is common practice, since going to court is expensive and not everyone can afford it. And this is what insurance companies use to reduce payments under contracts. And if the victim goes to court, they begin to accuse him of everything and endlessly drag him around the courts until the person drops the case. Under the guise of knowledge of the laws. This is exactly what happened in my case. 21. To what extent, if any, are the Voitenkos' entitled to be indemnified by Zurich under the Policy in respect of the Claim? We have the right to receive the entire amount due under the contract interest for 10 years on outstanding's and all our money spent on our expenses due to red tape in the courts, together with running cost our solicitors, who was helping us to prepare this case, to fully restore our businesses and bring people joy again with our work. 22. The Voitenkos request that to what extent, if any, has Zurich use change arguments from quantities to fraud for the reason to make harder for Voitenkos to be represented by legal representatives on "pay if you win" basis, considering lack of "strong or new" evidences? (add) To what extent, if any, did the Zurich has acted in bad faith in respect to the client QUANTUM 23. Did Voitenko have items to the value of $900,000 stored at the Warehouse? 24. Did Voytenko have items to the value of $200,000 stored at the Warehouse? 25. Zurich requests that prior to and at the time of the Fire, did the Voitenkos have effectively no savings and had incurred credit card debts of approximately, $70,000? The Voitenkos disagree and say that, prior to the Fire Voitenko had approximately, $50,000 debts not $70,000. And we don't see this as a debt at that time, we are talking about investing in a business because since you are already familiar with the party rental business, you should know, that before you rent something out, you need to buy or make a rental product. And at this time, we are really in trouble, big thanks to lawyers of Zurich, who drag us around the courts, taking our time and money and creating bad financial and stressful situations for us. 26. Did the Voitenkos suffer loss and damage as a consequence of the Fire? If so, to what extent did they suffer loss and damage? Our family suffered great moral and financial problems - we lost 2 (two) businesses in the fire and got a lot of stress not only from the fire but also the "wonderful" service from Zurich insurance company. 27. Have the Voitenkos provided sufficient evidence in support of the Claimed Sum? We provided all available documents remaining after the fire to complete the process of restoring our businesses as soon as possible, and I am sure that if everything burned to the ground - in this case, the insurance company would say that we had nothing at all – even the premises in which we worked. 28. How should the Voitenkos' loss and damage be assessed ie reinstatement cost or replacement value? In accordance with the terms of our contract with Zurich 29. Did Voitenko suffer loss and damage as a consequence of the Fire to the value of or over $900,000? Agreed 30. Did Voytenko suffer loss and damage as a consequence of the Fire to the value of or over $200,000? Agreed 31. Were the amounts claimed by the Voitenkos for the Claimed Items exceeded their true loss? Disagree 32. Were the Payments made by Zurich reflective of the reinstatement costs or the replacement value of those items? Several payments were made without explaining what was paid for. After that, we heard from your Loss Adjuster Mr Pecar: you have been paid everything - what else do you need? And of course. he did not reflect this in his letters to the head office. Abbreviation "TBA" (to be advised) appear everywhere on my spreadsheets. 33. Are the Voitenkos entitled to: 33.1 retain the Payments; Agreed 33.2 payment from Zurich for the Claimed Sum; Agreed 33.3 interest; and/or Agreed 33.4 costs? Agreed on all running costs, including my previous solicitors running costs and contract. 33.5 Apology for drugging our family through all courts over 9 years 33.6 To what extent should Voitenkos be compensated if Zurich have acting in bad faith in regards the claim 34. Is Zurich entitled to: 34.1 restitution of the Payments from the Voitenkos; Disagree 34.2 interest; and/or Disagree 34.3 costs? Disagree 35. To what extent, if any, has Zurich use change arguments from quantities to fraud for the reason to make harder for Voitenkos' to be represented by legal representatives on "pay if you win" basic, considering lack of "strong or new" evidences? 1. Two versions of the above Joint Memorandum formed part of the Key Documents Bundle. For the most part the documents are duplicated save for one being executed and one not. However, on the executed version there are a couple of additional supplementations with respect to paragraphs 1, 33.5, and 34.4, they are extracted below: 1. Was Voitenko at the Warehouse within one to two hours prior to the Fire? Disagree According to my witness statements and police reports I was at the factory in between 9 – 9.30pm just to only pick up my Photo Camera and make back up to my flesh drive. This took me no more than 5 to 10 minutes …. 33.5 Compensation Lost interest/loss of opportunity for having to sue to recover insurance benefits owed, losses resulting from unpaid insurance benefits. Emotional upset/anxiety/pain and suffering resulting from the insurance company's conduct … 34.4 Punishment under statutory or case law for the insurance company's failure to pay benefits owed. Acting in bad faith Failure to act to Industry Cod of Coduct. FINDINGS IN RELATION TO CREDIT Mr Voitenko General Observations 1. I will commence with some general observations about Mr Voitenko's appearance in the proceeding before dealing with his evidence. He presented as an intelligent and articulate person who was, particularly when viewed in the light of the evidence in the proceedings and his evidence in particular, a somewhat beguiling character. For example, during Mrs Voytenko's cross-examination, he sought, in the course of making an objection, to, in my view, correct her evidence that was inconsistent with his case about the number of cameras he had on the premises. 2. Despite being a lay person with no legal experience, he was able to understand and follow the Court's processes and the course of the evidence, notwithstanding his protestations to the contrary. 3. I also accept Zurich's contention that he displayed a knowledge of business, as demonstrated by his cross-examination of Mr Campey on website archives and coding. Mr Voitenko's Evidence 1. As a witness, Mr Voitenko was unsatisfactory. I came to that conclusion after my observation of him as a witness and the numerous particular bases for that conclusion which are discussed below. 2. Mr Voitenko would engage in advocacy during cross-examination. Two examples are particularly relevant: 1. during the course of being shown photographs of the area under the building, he sought to be taken to a photograph that suited his case ("Why don't you just continue with the photos further down … Let's take the photo, let's say, on tab 188"; and 2. when it was put to him (at T 116.43) that he had no insurance covering damage to his property in the warehouse prior to May 2010, his response was to give a long answer about why he took out fire cover but not cover for theft. 1. Mr Voitenko was evasive, particularly as to some important issues referring to Zurich's fraud contentions. The following are examples arising during cross- examination: 1. when it was put to him that he could not account for his movements on the night of the fire by stating where he was, such as at a shop, or petrol station or pointing to some record of his movements, he first sought to deflect the question by asserting that the police had investigated and found proof that he was at home by the time of the fire (this is not the effect of the police evidence). Mr Voitenko then sought to challenge the cross-examiner ("do you have the proof that I make something wrong on that night?"), then stated that the police had closed their case (implying that the police were satisfied of his innocence), and in the end effectively declined to answer the question ("That's the only answer I can give to you. I'm not going to be say[ing] things about myself any things you try to point [put] on me"); 2. when it was put to Mr Voitenko that there had been ample time prior to the fire for him to go back to the warehouse after (on his version) he had returned home from Roselands shopping centre, Mr Voitenko again effectively declined to answer the question ("Well, I will say I've got nothing to do with this fire and got nothing else to add for it"); and 3. when it was put to him that the loss estimated in the Abacus report ($795,000) was about $300,000 less than the sum insured of $1.1 million, he initially sought to address a different issue (his argument that Abacus had not included items that had been destroyed and therefore had not been photographed), then stated, "Your Honour, I cannot answer this question…" and the Court had to direct him to answer the question. 1. Zurich correctly contended that some answers given by Mr Voitenko strained credibility: 1. when asked why he did not arrange insurance cover for theft, his response was, "Why? I explain already that we don't have anything in our office to steal". The reference to the earlier explanation was to evidence, where he had proffered an explanation that it would need "at least 5 to 6 men and three to four trucks working three or four days just to empty my factory to get away with my equipment". Zurich was correct to submit that answer was an exaggeration and overall incorrect – many of the items claimed, for instance air dancers which weighed only 500 grams and cameras, were both portable and (on Mr Voitenko's case) of substantial value; 2. Mr Voitenko repeatedly stated that he was "growing the business". Those answers were obviously designed to explain away the fact that his business had made a loss each year for which taxation records are available. However, he could not point to evidence of investment in equipment that could support this evidence. When confronted with the depreciation schedules in his taxation returns, he proffered the explanation that he had been using "my old stock"; 3. when it was put to him that he had represented to Rinkaz Finance in March 2010 that he had plant and equipment to the value of $100,000, his response was that "that was only figure for the – for the small amount of money I would like to borrow". His response suggested that he was prepared to tailor the value of his business assets he represented according to the amount of money sought; and 4. he denied that he had any involvement in the importation of the air dancers in 2008, even when confronted with his facsimile to "Christian", who worked for Matzen Cargo, attaching the Chinese invoice. Mr Hughes 1. Mr Voitenko's evidence was in conflict with that of Mr Hughes evidence, Mr Voitenko's evidence in that respect is undermined by inconsistences in his evidence about the quantities of air dancers and other damaged items at the premises. Further, Mr Voitenko insisted that his recollection was to be preferred to Mr Hughes, nonetheless consistently asserted at important points of his cross-examination that he had memory failures (and inconsistencies in his account) due to him, at various times being in "shock" at stocktake, the police interview, during the preparation of a claim to Crawford and upon the receipt of Abacus' stocktake report. Those assertions were also inconsistent with the comprehensive and detailed quotes obtained to support his claim during the same period as those events. In fact, he obtained a quote from Baytex two days after the fire and before Crawford or Abacus had attended the premises. 2. Further, my observations of Mr Hughes were that he was a credible witness. His evidence reflected the fact that he had no personal interest in the proceeding and he gave his evidence in a forthright manner and was definite in his memory. His evidence was generally consistent with the documentary evidence. I shall further discuss his evidence below (see the discussion of air dancers), but it follows from these conclusions (as well as my further discussion) that I prefer his evidence over that of Mr Voitenko. Mrs Voytenko 1. Mrs Voytenko gave evidence through an interpreter. At times the promptness of her responses suggested she may have understood the question in English before it was translated. 2. I also found Mrs Voytenko to be an unsatisfactory witness. Making due allowance for the evidence being taken through an interpreter, she was also evasive and inconsistent in her answers. 3. A vivid example was, when asked a straightforward question about whether the camera Mr Voitenko had returned to collect on the night of the fire still took photos, she was unable to answer because she was in "shock". She stated "I was in such shock on that day that I don't recall what we were using to photograph what". When asked when she last saw the camera, she first sought to avoid the question - her response was, "It's not my camera". These answers were followed by Mr Voitenko's intervention during cross-examination about the camera which I have earlier described. The evasiveness was undertaken, in my view, so as to avoid answers that undermined her husband's evidence (Mr Voitenko was in the Court during her cross-examination). 4. Mrs Voytenko gave inconsistent answers about the timing of Mr Voitenko's return from the warehouse on the night of the fire. In response to being asked what time he met her at the Roselands shopping centre (at T 352.42), she said "I don't know. It may have been 9 or 9:30. I wasn't looking at the watch." When it was put to her a short time later that she could not remember the precise time they met at the shopping centre, her answer was more definite, "It was 9 or half past 9, approximately then". She denied that it could have been as late as 11 o'clock, and refused to acknowledge the possibility that it could have been later. Mrs Voytenko's explanation was expressed thus, "it couldn't have been, because the police interrogated everybody, everybody with the video cameras in the shopping centre. Have a look at them". No video recordings showing Mr Voitenko at the Roselands shopping centre have ever been produced. There is no suggestion in the police event report or any other document that any such recordings exist. Detective Senior Constable Glasson gave evidence that there was no CCTV recording produced by Roselands. 5. Mrs Voyenko's evidence regarding the movements of her husband on the afternoon before the fire further undermined the credibility of her evidence. When asked, in the context of the time Mr Voitenko had left home to return to the warehouse, as to the answer being given during her interview by Mr Solberg, she sought to imply that her responses had been obtained through pressure from Mr Solberg ("With this mister who pressed me as hard as he could, I could have said anything just to get rid of him"). When it was put to her, after being played part of the audio recording of the interview (in which she had told Mr Solberg that it was still light when Mr Voitenko left to go to the warehouse for the third time on the day of the fire), that Mr Solberg had not put pressure on her when asking the question, she avoided a direct answer to the question ("At that point, I tried to control myself"). 6. Mrs Voytenko sought to explain the inconsistency in her response to Mr Solberg about the time at which Mr Voitenko had left home by telling the Court that she had told Mr Solberg "that after he [Mr Voitenko] came back from rolling back the freezers [ie the second occasion Mr Voitenko went to the warehouse, which on his evidence was at 11:00 to 11:30 am that day] it was still – at the time it was still light, but maybe it didn't sound that way." 7. It was submitted by Zurich that, on the issue of the time at which Mr Voitenko returned from the warehouse on the night of the fire, Mrs Voytenko's evidence is unreliable and should be rejected by the Court. I accept the submission. Conclusion: Credit of the Plaintiffs 1. The aforementioned assessments of the evidence of Mr Voitenko and Mrs Voytenko come after careful observation of their evidence and a review of the record of their evidence. As earlier mentioned, Mr Voitenko was not hampered in his understanding of English or his capacity to understand the processes of the Court or directions made, although the Court made due allowance for him being self-represented during the hearing and in the formulation of these reasons for judgment. I have also taken into consideration that Mrs Voytenko gave her evidence through an interpreter, and that the only assistance provided was that of Mr Voitenko. 2. Overall, the evidence of Mr Voitenko and Mrs Voytenko was quite unsatisfactory for the reasons I have given. The various substantial and numerous inconsistencies and their approach to the evidence cannot ultimately be explained on the basis of language difficulties or their self-represented status. Rather I am left with the impression of witnesses constructing their evidence to avoid difficult questions and confecting memory loss or lack of understanding in those circumstances. The inconsistencies were gross. The evidence was, as I have decided, unreliable. 3. It was contended by Mr J Sexton of senior counsel who appeared for Zurich that there should be a finding that neither the evidence of Mr Voitenko nor the evidence of Mrs Voytenko be accepted unless corroborated by independent testimony or by contemporaneous documents or where their evidence is against their interests. I accept that submission. LEGAL PRINCIPLES 1. Zurich has pleaded fraud in defence of the further amended statement of claim. It has pleaded an arson case, namely that Mr Voitenko lit the fire at the premises and a fraud in the claim, namely, that the plaintiffs have exaggerated the claim. Fraud 1. Those defences need to be understood in the light of s 56 of the ICA. 2. Under s 56 of the ICA, if the claim is found to have been made fraudulently, the insurer may (subject to one qualification, set out in s 56(2)) refuse to pay the claim. 3. Section 56 of the ICA provides: 56 Fraudulent claims (1) Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim. (2) In any proceedings in relation to such a claim, the court may, if only a minimal or insignificant part of the claim is made fraudulently and non-payment of the remainder of the claim would be harsh and unfair, order the insurer to pay, in relation to the claim, such amount (if any) as is just and equitable in the circumstances. (3) In exercising the power conferred by subsection (2), the court shall have regard to the need to deter fraudulent conduct in relation to insurance but may also have regard to any other relevant matter. 1. The relationship between those provisions and the common law position with respect to fraud was described in the Court of Appeal of Victoria in Tiep Thi v Australian Associated Motor Insurances Ltd [2001] VSCA 48; (2001) 3 VR 279 where Buchanan JA (with whom Charles JA and Callaway JA agreed) stated at [17]: [17] … In my opinion the changes to the common law position effected by s 56 are only to limit the insurer's remedy in the event of fraud to the denial of the fraudulent claim rather than avoidance of the policy and to enable the Court to order payment where only a minimal or insignificant part of the claim, is fraudulent and it would be harsh and unfair not to pay the remainder. Otherwise the legal position remains unaltered: an insurer need not pay a fraudulent claim, whether or not there is an underlying loss which is covered by the policy. There was a moral or public policy dimension to the common law principle, which is preserved in s 56. While s 56 is remedial, and is to be construed beneficially, its effect cannot be pushed beyond the meaning of the words in the section… 1. Bearing in mind the two prongs of the defendant's case as to fraud it is important to bear in mind that the reference to fraud in this context does not ultimately require a finding that Mr Voitenko lit the fire, but may be established by the making of a false statement, that is, one knowingly made in connection with the claim for the purpose of inducing the insurer to meet the claim. As Einstein J observed in Walton v Colonial Mutual Life Assurance Society Ltd (2004) 13 ANZ Ins Cas 61-620; [2004] NSWSC 616 at [144]: [144] The operation of s 56 of the Act has been considered in a number of cases. Relevant principles include the following: • the test for fraud is satisfied if the insured has a dishonest intent to induce a false belief in the insurer for the purpose of obtaining payment or some other benefit under the policy. As such, where the insured makes a false statement with knowledge in a claim to induce the insurer to meet the claim, the claim is made fraudulently. The fraudulent statement need not be material to the insured's claim nor is the insured absolved of any responsibility by asserting that he considered his claim to be valid. (See Tiep Thi To v Australian Associated Motor Insurers Ltd (2001) 3 VR 279; Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Ltd (No 1) [1999] 1 Qd R 507 and Mourad v NRMA Insurance Ltd (2003) 12 ANZ Ins Cas 61-560); • it is not necessary to show prejudice as having been suffered by the insurer for s 56 to be relied upon. 1. Section 52(2) provides that the Court may, if only a minimal or insignificant part of the claim is made fraudulently and non-payment of the remainder would be harsh and unfair, order an insurer to pay a claim. 2. Zurich referred to three authorities: Entwells Pty Ltd v National and General Insurance Co Ltd (Unreported, Supreme Court of Western Australia, 19 July 1991) ("Entwells"); Ricciardi v Suncorp Metway Insurance Ltd [2001] QCA 190 ("Ricciardi") and Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Ltd (1999) 1 Qd R 507 ("Naomi Marble"), in order to extol the meaning of "minimal or insignificant" in s 56(2). 3. In Entwells, Ipp JA in the Supreme Court of Western Australia would have regarded an exaggeration of $27,000 of an otherwise genuine claim for loss of stock as part of a claim totalling $520,000 to come within s 56(2) ICA. In Ricciardi, Williams JA (with whom Mackenzie J and Chesterman J agreed) in the Queensland Court of Appeal agreed held that a fraudulent over-statement of value of one-third of the true value of a house damaged by fire could not be regarded as "minimal of insignificant" for the purposes of s 56(2) of the ICA. In Naomi Marble, Shephardson J in the Supreme Court of Queensland held that a claim totalling approximately $1.03M that had been falsely inflated by some $108,000 through the procurement of quotations that were not genuine was not "minimal or insignificant" for the purposes of s 56(2). 4. Zurich contended that the exaggeration in this case was not "minimal or insignificant". The dumpling machine and mixers represented approximately 30% of the value of the Russtyle claim. The total of the marquees, air dancers and blowers and dumpling machines amounted to $760,069 including GST, the majority of the unpaid portion of the claim. I agree with that submission. 5. Zurich also contended that a distinguishing feature of this case is that Zurich had already paid $284,917 in respect of those items which appeared genuine. In doing so, Zurich and its assessor, Mr Pecar, gave the plaintiffs the benefit of the doubt when it came to a number of items for which proof was not available. It is the outstanding balance of the claim ($814,833) that is in contest. Zurich contended that it is that outstanding balance that sets the parameters of the "claim" that remains. Even if the plaintiffs satisfy the Court that some proportion of the claim was justified, Zurich contended that the fraud (in terms of exaggeration) was not minimal or insignificant. Again, I accept that submission. 6. As to s 56(3) of the ICA, Zurich submitted that to allow the plaintiff's claim would not achieve the result of determining fraud. 7. Zurich bears the onus of proof with respect to the defence based on fraud (as distinguished from the onus falling? upon the plaintiffs to satisfy the Court they have sustained the loss claimed and that the insurance policy covered the loss, upon which they bear the onus). 8. A question arises as to the standard of proof of fraud. 9. That consideration excites attention to s 140 of the Evidence Act 1995 (NSW) and the principles stated in Briginshaw v Briginshaw (1938) 60 CLR 336 ("Briginshaw") reflected in s 140(2). 10. In that context, however, it is important to bear in mind the observation of Mason CJ, Brennan, Deane and Gaudron JJ in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170;[1992] HCA 66 at [2]: [2] … the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct… 1. Here the arson case of Zurich is based on circumstantial evidence. 2. Circumstantial evidence can be sufficient to establish a defence of fraud by arson, particularly in a case in which there is a strong financial motive for fraud and the suggestion that a third party started the fire is inherently implausible on the objective facts: Cook v Sirius International Insurance Corporation Australian Branch [2020] NSWSC 1631 ("Cook"), Ward CJ in Eq. 3. In Cook, Ward CJ reviewed the question of onus (at [60]) as follows: [60] The Insurers accept that they bear the onus of establishing that they are entitled to rely upon an exclusion clause in the Policy or that there has been a breach of the insured's duty of utmost good faith (see, for example, McLennan v Insurance Australia Ltd [2014] NSWCA 300; (2014) 313 ALR 173). Further, the Insurers accept that s 140 of the Evidence Act 1995 (NSW) (Evidence Act) requires an approach similar or identical to that set out by Dixon J, as his Honour then was, in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw ) (see particularly at 362; and see also, for example, Bale v Mills (2011) 81 NSWLR 498; [2011] NSWCA 226 (Bale v Mills ) at [71]-[73]), having regard to the seriousness of the allegations here made against Mr Cook. 1. Her Honour referred to the decision of Ipp JA (with whom Tobias J and Basten JA agreed) in Palmer v Dolman [2005] NSWCA 361 ("Palmer") (to which I will turn to below). I extract her Honour's discussion at [155]-[159] which is applicable to this matter as follows: [155] First, that the fact-finder must consider "the weight which is to be given to the united force of all the circumstances put together" (quoting Belhaven & Stenton Peerage (1875) 1 App Cas 278 at 279 per Lord Cairns, quoted with approval in Chamberlain v R (No 2) (1984) 153 CLR 521 at 535; [1984] HCA 7 per Gibbs CJ and Mason J, as his Honour then was). [156] Second, that 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" (quoting Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 129 per Winneke P). [157] Third, that the inference drawn from the proved facts must be weighed against realistic possibilities as distinct from possibilities that might be regarded as fanciful. [158] Fourth, that, where the competing possibilities are of equal likelihood or the choice between them can only be resolved by conjecture then the allegation is not proved (see also Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 per Dixon J, as his Honour then was, Williams, Webb, Fullagar and Kitto JJ). [159] With these principles in mind, the Insurers say that it is not incumbent on them to negate, beyond reasonable doubt, all possibilities other than fraud by the insured; but, instead, that they need only persuade the Court, on the balance of probabilities having regard to all the circumstances, including the seriousness of the allegations, that Mr Cook lit the fires. I accept this submission and bear in mind the preceding observations. 1. As to the issue of the implausibility of a stranger starting the fire reference may be made to the following parts of her Honour's judgment (at [194], [195] and [199]): [194] The possibility that a person or persons could have entered the Hotel through the window located on the southern side of the Hotel above the stairwell leading up to the top level function room is not consistent with the evidence that the window was opened by the fire brigade in order to allow air into the building (noting the statement of Senior Constable Walker that the window had been opened by the attending fire brigade - see at [103] above) and is not consistent with the evidence that the dust and debris on the windowsill was undisturbed. [195] To the extent that this evidence alone does not foreclose the possibility that someone entered (and, perhaps, exited) through this window (noting here that Senior Constable Walker might have been wrong in her record), I consider that such a possibility is inherently implausible. More particularly, it is implausible that someone entering the Hotel by those means would then have triggered the single PIR detector but could then have moved around the premises and escaped without setting off other PIR detectors (and, indeed, without being seen by Mr Cook in the period of time that he says he went around the premises looking to check for any disturbance). … [199] Again, the hypothesis that an outside intruder gained access to the upstairs function room from the staircase window does not, to my mind, plausibly explain how only the single PIR activation occurred. This is not least because, on that hypothesis, the intruder must then have come down the stairs in order to trigger the alarm but the intruder could not have got out through the downstairs stairwell (and the door leading to the maintenance room) because that door was locked according to Mr Cook's evidence and he was adamant that those doors could not be forced open in the manner in which Mr Burgin suggested in his evidence (see, for example, T 60.33-T 61.46). Moreover, if it was not Mr Cook who had set off the alarm outside the manager's residence then again it is inherently implausible, if not inexplicable, that other PIR alarms (say in the reception or bistro area) would not have been activated by the putative intruder. 1. As to the deposition of those proceeding reference may also be made to [208] and [212] as follows: [208] In my opinion, and acutely conscious of the seriousness of the allegations here made against Mr Cook, I consider that the matters to which the Insurers point (namely, the complexity of two fires on different levels, the impossibility of forcing the doors at the base of the staircase leading down towards the storeroom thus necessitating an outside perpetrator entering and exiting the hotel part of the building externally to light the fire in the function room, the single alarm activation outside the manager's flat which would not have occurred had an intruder simply entered and exited via the stairwell window, the absence of evidence of forced entry to the hotel part of the building, the evidence against the stairwell window being open and the sixteen minutes during which the alarm system was switched off) inexorably point to Mr Cook lighting both fires. … [212] The basis for my conclusion that Mr Cook did so, on the balance of probabilities and having regard to the standard of proof required by application of the Briginshaw principles, is that I can see no other plausible explanation for the events that occurred. The Insurers have, I think, foreclosed the doubts that have been raised, and might otherwise have existed, on the evidence. 1. As to the approach to be applied in establishing whether circumstantial evidence leads to an inference as to fraud the observations of the NSW Court of Appeal in Palmer were applied in Sharma v Insurance Australia Ltd (t/as NRMA Insurance) [2017] NSWCA 307 at [66] as follows: [66] In Palmer v Dolman [2005] NSWCA 361 at [41], Ipp JA (with the agreement of Tobias and Basten JJA) described the following principles as having "become well-established in determining, in a civil case, whether circumstantial evidence leads to an inference of fraud": (a) The jury [i.e. fact-finder] must consider "the weight which is to be given to the united force of all the circumstances put together" [Belhaven & Stenton Peerage (1875) 1 App Cas 278 at 279 (Lord Cairns), quoted with approval in Chamberlain v R (No 2) (1984) 153 CLR 521 at 535 (Gibbs CJ and Mason J)]. (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" [Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 129 (Winneke P)]. (c) The inference drawn from the proved facts must be weighed against realistic possibilities 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: Bradshaw. 1. It was not incumbent on the insurer to negate, beyond reasonable doubt, all possibilities other than fraud by the insured but instead the insurer needs only persuade the Court, on the balance of probabilities, having regard to all the circumstances together, that Mr Voitenko lit the fire. 2. In reaching a conclusion as to Zurich's arson case it is necessary to look at the entirety of the relevant evidence, weighing in this respect the plaintiffs' evidence (and contentions) as to other available explanations and reasons from the circumstances (or suspicious conduct) against the objective facts and contemporaneous documents. The entirety of the findings of the Court as to credit of the plaintiffs is a relevant factor in that respect. 3. As to Mrs Voytenko, Zurich made the following submission as to the arson case: If the Court finds Mr Voitenko lit the fire, that is an end to his claim. The policy expressly excluded cover for loss or damage caused by the insured's Wilful Act. Zurich contends that lighting the fire with the intention of bringing about the loss insured against also constitutes a breach of the term implied by s 13 ICA requiring an insured to act with utmost good faith. It is accepted that the evidence does not go as far as to prove that Mrs Voytenko was personally involved in lighting the fire, or that she knew that her husband had lit the fire. It is further accepted that, as the legal owner of the goods acquired by her for her business, her insurable interest is separate and not defeated by a finding of arson on the part of Mr Voitenko in the absence of knowledge and involvement on her part. Zurich's case is that her claim was, nevertheless, "made" fraudulently for the reasons set out below under the heading Fraud in the claim. FRAUD IN THE CLAIM 1. One limb of Zurich's fraud defence was that the claim advanced by the plaintiffs was made fraudulently. In my view, Zurich established that contention. That conclusion may be reached in a number of parts. First, by considering the weight to be attached to the Jorgensen Report relied upon by the plaintiffs. Secondly, it is necessary to look directly at the stock taking process and the plaintiffs' claim in that respect. Finally, I will examine three significant parts of the plaintiffs' claim, namely, the claims with respect to the air dancers, marquees, and dumpling machinery. This analysis is undertaken in the light of the fact that the plaintiffs did not make any material adjustments or amendments to their claim submission and essentially maintained that stance in these proceedings with some minor exceptions. The Jorgensen Report 1. The plaintiffs' relied upon the evidence of Mr Jorgensen in order to sustain their claim. Mr Jorgenson produced a report issued on 28 May 2018 ("the Jorgensen Report"). The Jorgensen report appears in the Court Book at Vol 1, Tab 18. 2. A conclave was conducted between Mr Jorgensen and Mr McLeod, Zurich's expert, on 23 April 2020. A Conclave Report was produced, and filed on 16 September 2020 ("the Conclave Report"). 3. The plaintiffs placed considerable reliance upon the Jorgensen Report to sustain their claim and to meet Zurich's fraud defence. 4. The Jorgensen Report proceeded upon a number of premises as follows: 1. the information in the Abacus report came from actual counting of items by Abacus employees and Abacus estimates of value; 2. Mr Voitenko was not present during the whole stocktake; and 3. Abacus had been instructed to conduct a comprehensive claim assessment for the benefit of the plaintiffs. 1. However, the evidence in these proceedings has not sustained those assumptions. The evidence was that Mr Voitenko was present for the entire stocktake. I accept Mr Hughes' evidence that Mr Voitenko supplied both quantities and estimated values for the items listed in the Abacus report. 2. Further, Abacus' and Crawford's valuation relied on valuations supplied by Mr Voitenko. As Zurich made clear, this is something which the plaintiffs' then solicitors had specifically drawn his attention to in the letter of instruction. None is comprehended in Mr Jorgensen's report. 3. Further, Mr Jorgensen did not check the claim submission for double-counting of items, to which I will shortly turn. 4. I accept Zurich's submission that Mr Jorgenson's thesis that the Abacus process was inadequate, as a basis for the proposition that there was much more plant and equipment on the premises than recorded by Abacus, was not supported by the evidence. 5. Mr Jorgensen refused in cross-examination to accept that it was unreasonable, in the circumstances, to remove and separately photograph every single item which could be found on the premises. The proposition put to him by Mr Sexton to that effect was reasonable and the response of the witness was an illustration of the witness descending into advocacy as it may have been expected Mr Jorgensen would simply have accepted what was put to him. 6. Some parts of the Jorgensen Report and Mr Jorgensen's observations in the Conclave Report involved purporting to make factual findings on matters for which he had no specialist expertise. 7. It follows that the Jorgensen's Report does not offer the plaintiffs the support they may have anticipated. In the circumstances, the weight that may be afforded to the report is significantly reduced. The Stocktake Reports 1. As mentioned, Mr Hughes of Abacus prepared Stocktake Reports. 2. The first page of each of the Access Party Hire and Russtyle Stocktake Reports was in the following terms: ASSISTANCE FROM INSURED The Insured, Mr Andrei Voitenko was present during the stocktake and was able to assist with valuation of most items including plant and equipment. COUNTING AND CHECKING PROCEDURE The assignment was managed in the following manner: The insured assisted in the identification of inventory items … Each item was, where possible, identified and photographed by the stocktakers. Some additional items were added and valued by the Insured during the stocktake. The stocktake was conducted manually with the stocktakers counting and listing identifiable stock and recording the replacement value of items according to estimates provided by the Insured. The Insured provided valuations for unidentifiable stock progressively during the stocktake. … The Stocktakers could not access the Mezzanine floor of the premises which had collapsed onto the ground floor. The Insured provided information to the stocktakers regarding inventory items in this location. SUMMARY … In general, the total valuation relies totally on valuations supplied by the Insured as instructed by Crawford & Company. Process of the Stocktake 1. The stocktake was conducted over two days on Thursday 26 and Friday 27 August 2010. 2. Mr Hughes' evidence was that he and his team started at one end of the warehouse, the office at the front, and finished at the other end, the basement. They systematically inspected the contents and remains of damaged items. 3. I accept Mr Hughes' evidence as to the process adopted for the stocktake which was as follows: 1. Two members of Mr Hughes' team, Mr Fredericks and Mr Prijit, located and counted each item that was identifiable. 2. Mr Hughes inspected the items located by Mr Fredericks and Mr Prijit and called out a description. 3. Mr Hughes held a clipboard with a number on it next to the item identified and a photograph of it was taken. The purpose of taking the photograph was to identify the type of a fire damaged product, not the number or quantity of goods of that type that were present in the warehouse. 4. Mr Voitenko followed Mr Hughes and his team around the warehouse as they conducted the stocktake. He informed them of items he said had been in the warehouse that had been destroyed. 5. When an item was located, Mr Hughes or another member of his team would ask Mr Voitenko, or Mr Voitenko would tell them, the value of the item that had been identified. 6. Mr Hughes called out the description, quantity, photograph number and the value reported by Mr Voitenko for each item. 7. A member of Mr Hughes' team, Craig Beaton, wrote the description, quantity, photograph number and the value on a stocktaking sheet. Copies of the stocktaking sheets appear at Ex 11, vol 9, tab 384. 1. The process also accounted for items that could not be identified such as burnt or melted items. 2. For items that could not be identified or counted, Mr Hughes or another member of his team asked Mr Voitenko what those items were, the quantity that had been in the warehouse, and their value and Mr Beaton wrote down the number and values reported by Mr Voitenko. 3. Further, any items that Mr Voitenko told them had been present prior to the fire that could not be located or identified were recorded in the stocktaking sheet. 4. Mr Voitenko agreed in cross-examination that he told Mr Hughes and his team the equipment that had been in the warehouse prior to the fire. He said that he did so based on his memory of what was in stock. 5. He also stated that during the stocktake, Mr Hughes told him that he should not worry if items were not photographed as Zurich would cover "your lot[loss?]". Mr Voitenko also asserted that, even if something could not be found, Mr Hughes and his team would just take a picture of the plant and Zurich would reimburse ("represent") him for "everything [he had] lost in the fire" and, if something was missed, Mr Voitenko could "add it on". 6. Mr Hughes' evidence was that he did not believe he made the statements Mr Voitenko had attributed to him. For reasons earlier given as to Mr Hughes' credit and Mr Voitenko's credit and because Mr Voitenko's claims do not appear, on their face, to be credible, I prefer Mr Hughes' evidence in this respect. Process of Adjusting the Claim 1. Following the stocktake, Mr Voitenko prepared a claim submission in the form of a spreadsheet ("the claim submission") (see Key Documents Bundle Vol 2, Tab 46). 2. On 7 October 2010, Mr Voitenko hand delivered the claim submission to Mr Pecar, employed by Crawford which had been engaged by Zurich to adjust the claim. 3. Mr Voitenko's evidence was that it took him two to three weeks to complete the claims submission. He agreed he did it as carefully as he could. 4. Mr Voitenko's claim submission was not structured to match the numbers reported to Mr Hughes and his team during the stocktake. 5. Prior to the commencement of Day 2 of the hearing, Mr Voitenko was provided with a copy of the claim submission on which Zurich's solicitors had highlighted the items claimed that remained the subject of challenge (which document was marked Ex 10). 6. Although the plaintiffs were not cross-examined on every item that has been challenged, Zurich correctly contended: 1. That it is sufficient for the purposes of s 56 of the ICA that the Court is satisfied that the claim has been made fraudulently and that the parts of the claim that are fraudulent are more than "minimal or insignificant". 2. The evidence of double-counting of items and exaggeration of the cost of items casts significant doubt on the entirety of the claim that remains unpaid, and the Court would not be satisfied that the plaintiffs have proven their loss in respect of the unpaid portion of the claim. 1. The first page of the claim submission was titled "List of Quotations for Equipment Replacement". It listed a series of quotations (for which a subtotal was not provided, but which adds up to $432,734.70). 2. It then added a sum of $945,182.75, which was stated to be derived from the following 11 pages of the claim submission and said to be an "itemised list of replacement equipment of Access Party Hire and Russtyle Production not included in quotations above". 3. It is apparent from those 11 pages that items which were included in the "List of Quotations" were also included in the detailed list but without a dollar value attributed to them. 4. Mr Pecar, met with Mr Voitenko on 30 November 2010. 5. Mr Pecar made a record of the matters he discussed with Mr Voitenko in a file note of that date. At the meeting, Mr Voitenko was informed that indemnity had not been granted at that stage. The file note recorded that Mr Voitenko was not satisfied that indemnity had not been granted. The file note recorded that Mr Pecar advised Mr Voitenko that he would provide Mr Voitenko with an updated schedule with a request for additional information. 6. Following the meeting, Mr Pecar sent Mr Voitenko a copy of the adjustment spreadsheet by email dated 2 December 2010, which took the information from the claim submission and added various columns to identify further information that Mr Pecar required from Mr Voitenko to assess the claim. 7. For each of the items for which supporting documentation had been provided (which was not custom made), Mr Pecar accepted the documentation that had been provided. 8. The adjustment spreadsheet did not include the air dancers, marquees or dumpling machines. 9. Between 2 December 2010 and 20 June 2011, Mr Pecar produced further iterations of the adjustment spreadsheet, which were sent by email to Mr Voitenko. The iterations accompanied emails from Mr Crawford to Mr Voitenko dated 2 December 2010, 29 March 2011, 7 April 2011, 14 April 2011, 16 June 2011 (attaching the final adjustment spreadsheet in respect of Mr Voitenko's business (see Key Documents Bundle, Vol 2, Tab 47) to which the Court was referred during the hearing) and 20 June 2011. 10. In his email, Mr Pecar noted that there were a number of significant differences in the number of items claimed as having been damaged or destroyed in the Abacus Stocktake Report when compared to Mr Voitenko's claim submission. He stated that he would have expected that more invoices and proof of cost would have been available, particularly in the case of Mrs Voytenko's business, which had only been running for approximately two years. 11. Mr Pecar identified in the adjustment spreadsheet where further information was required from Mr Voitenko stating: 1. a tick or a cross in the column headed "Invoice" identified those items for which a tax invoice had been provided to substantiate the claim, and those items for which a tax invoice had not been provided; 2. a tick in the column headed "Custom Made" indicated whether the item was one which had been made by him; and 3. Mr Voitenko was requested to provide further information about the items claimed in the columns headed "When", "Where" and "Cost"; and 1. Mr Voitenko was reluctant to provide the additional information Mr Pecar had requested, principally on the basis that damaged or destroyed property had already been noted and photographs taken. In substance, Mr Voitenko was, in my view, advocating that Zurich should confine its response to the claim based on the information given to Abacus during the stocktake. 2. Mr Pecar requested that Mr Voitenko input further information in the adjustment spreadsheet for items for which an invoice had not been provided. The further information Mr Voitenko was asked to provide was: 1. for items that Mr Voitenko claimed he had purchased - the date or approximate date of purchase, the name of the supplier and the purchase price; and 2. for items that Mr Voitenko claimed he had made - a brief description of the item, the date or approximate date it was made and the amount or approximate amount Mr Voitenko had paid for the materials used. 1. The effect of the amendments to the adjustment spreadsheet was, firstly, to add a column to identify items that had been accepted and paid by Zurich and, secondly, to include additional items claimed by Mr Voitenko which had not been recorded by Abacus in the stocktake. The total assessed as at 14 April 2011 was $285,117. 2. Between 13 December 2010 and 21 April 2011, Zurich made payments totalling $284,917 in respect of items that had been accepted in the adjustment spreadsheet. The difference between the total calculated by Mr Pecar ($285,117) and the amount paid by Zurich ($284,917) was explained by Ms Regina Hall in an email to Mr Pecar dated 17 June 2011 as a difference in calculation of the total. 3. As earlier mentioned, the plaintiffs did not make any significant adjustments or amendments to their claim submission during this adjustment process and have maintained each item up to the date of the hearing of these matters. I will turn now to the specific claims with respect to air dancers, marquees and dumpling machinery. Air Dancer Claim 1. The claim for the 540 air dancers appears from items 1 to 12 of the claim submission. Different kinds of air dancers had been listed, such as "Inflatable Road Sign (Slow Down)", "Inflatable Sign with Arms" and "Inflatable Tube". 2. The numbers appearing in the quantities column (the third column) add up to 540. 3. The unit prices claimed in the fourth column range from $396 for an inflatable tube to $950 for a 1100 watt air dancer with light. 4. The total of the costs for each line item in the fourth column add up to $344,424. 5. No purchase records had been provided by Mr Voitenko to support the claim. 6. The air dancers are not recorded as assets of the business for depreciation purposes in either the 2009 or 2010 income tax returns. 7. Mr Hughes' evidence was that during the stocktake on 26 and 27 August 2010, Mr Voitenko told him there had been 31 air blowers in the warehouse. 8. In the claim submission (Ex 13, 2-46-808 and 811), Mr Voitenko claimed 7 air blowers. The air blowers appear at items 123, 134, 136 and 137 (4 air blowers) and item 41 (3 air blowers). The claim submission does not distinguish between air blowers purchased as part of the air dancer transaction and air blowers used for jumping castles. 9. At par 43 of his witness statement dated 4 June 2018 (Ex 6), Mr Voitenko quantified the number of air blowers at 20. He did so in the context of putting forward an explanation as to why the combined weight of 540 air dancers and 20 air blowers would be consistent with the weight recorded in customs documents to which I shall return. 10. Mr Hughes' evidence was that, during the stocktake on 26 and 27 August 2010, Mr Voitenko told him there had been 120 air dancers in the warehouse prior to the fire. On the handwritten stocktake sheet, the number originally written down was "60", which was crossed out and replaced with "120". The unit value was recorded to be $200 per air dancer. In the claim submission, Mr Voitenko increased the unit costs to $396 to $935. 11. It is reasonably apparent that Mr Voitenko's case was that the number of air dancers recorded in the stocktake (120 dancers) was the number of air dancers in the area that was being inspected at the time, and that additional air dancers (totalling 420 air dancers) had been stored on the mezzanine floor. That area of the premises collapsed. In cross-examination, Mr Voitenko stated that Mr Hughes and his team physically counted 120 air dancers on the first floor of the warehouse. 12. I accept Mr Hughes' evidence in cross-examination to the contrary. His evidence was that his instructions were that if he saw two items, he recorded two items but if he was told two items would be claimed he should accept what he was told. His evidence was that was what he did. He said that he would not recognise an air dancer but accepted Mr Voitenko's word that the remnants were fire-damaged air dancers. 13. I also accept Mr Hughes' evidence that he and his team had not physically counted the air dancers. That evidence was consistent with the contemporaneous record of the quantity of air dancers recorded at the time of the stocktake. His task was to provide a report as to the goods that were in the warehouse and their estimated value based on information provided by the insured, and that is what he did. I agree with the submission advanced for Zurich that there is no apparent reason for Mr Hughes to misrepresent or minimise the number of air dancers he reported. The process he engaged in was to record what he saw and what he had been told. If Mr Voitenko had told him an additional 420 air dancers had been in the warehouse, it is highly unlikely that Mr Hughes would not have recorded it. 14. Considerable attention was placed, in the parties' cases with respect to the air dancers, upon the arrangements for the importation of those goods. 15. Mr Voitenko was clear in his evidence that the air dancers had been acquired in the one transaction in September 2008. 16. An invoice from the Chinese manufacturer, Guangzhou Carnival, numbered 2008-08-19, was found by Mr Kelly after the fire in the office area of the warehouse. The quantity is stated to be "28 pieces". The unit price ranged from USD $135 to USD $220 per unit, which is consistent with the estimate of AUD $200 recorded in the Abacus stocktake sheet. The Australian Customs Entry Print 13-559-4868, records that the exchange rate as at 5 September 2008 was USD $1 = AUD $0.8327. 17. The Guangzhou Carnival invoice bears a fax header stamp indicating it had been faxed by Mr Voitenko to Matzen Cargo, his customs agent, on 24 September 2008. I accept that this was the invoice Mr Voitenko received from the manufacturer. (see Ex 11, 5-156-1370 (fax header page), Ex 11, 5-140-1304 (Gaunzhou Carnival invoice) and Ex 11, 5-141-1305 (Chinese Inflatable Inc invoice dated 19 August 2008 for an inflatable boat). 18. The total purchase price for the 28 air dancers stated in the Gaunzhou Carnival invoice was USD $4,540, which is also the valuation recorded in the Australian Customs Entry Print (USD $4,540 less freight of USD $300 shown on the manufacturer's invoice). The Customs Entry Print records that 29 cartons were received. Of those, 28 were supplied by Guangzhou Carnival, the supplier of the air dancers. The supplier of the 29th carton was Chinese Inflatable Inc. 19. Zurich contended that it is probable that, consistent with the quantity of 28 air dancer pieces recorded on the Guangzhou Carnival invoice, each of the 28 cartons supplied by Guanzhou Carnival contained an air dancer and an air blower. It may be inferred that each air dancer would be supplied with an air blower to supply the blown air as that device was required to make the air dancer "dance". 20. An Arrival Notice and Tax Invoice issued by Vanguard Logistics Services (Aust) Pty Ltd ("Vanguard Arrival notice"), which was engaged to arrange the importation by Matzen Cargo, dated 24 September 2008, records the receipt of 29 cartons with a total weight of 750 kg. Mr Voitenko called this document a "bill of lading". He said in cross-examination that he had received it when the shipment was on its way. 21. Mr Voitenko contended that the total weight of the consignment recorded in the Vanguard Arrival notice (750 kg) was consistent with his case that the shipment was of 540 air dancers and 20 air blowers, on the basis each air dancer weighs 0.5 kg and each air blower weighs 18 kg. 22. However, mathematically, that does not follow because: 1. 540 air dancers weighing 0.5 kg each would weigh a total of 270 kg; 2. 20 air blowers weighing 18 kg each would weigh a total of 360 kg; and 3. the total weight would therefore be 630 kg, not 750 kg. 1. However, it is unnecessary to resolve this issue on that relatively slender basis. That is because Mr Voitenko did not adequately explain in the proceedings how a consignment which (he stated) he paid $60,000 for in 2008 can have a replacement cost of $344,424. Even if, as Mr Voitenko stated, the Chinese supplier understated the value of the goods for export purposes, if it were assumed a payment of $60,000 were made, then there is no proper basis established in Mr Voitkenko's case as to why the replacement cost of more than five times that amount can be made. 2. I attach little or no weight to resolving whether Mr Voitenko acquired 540 air dancers in 2008 to a document relied upon by Mr Voitenko, allegedly produced by the Chinese manufacturer after the fire and, more importantly, after the plaintiffs' claim submission, which stated that there was a "mistake" in the invoice used by Mr Voitenko to import goods into Australia and that the actual goods supplied were precisely those stated in the claim submission. To accept this "mistake" would involve the acceptance of a mistake of enormous proportions – from about $5,000 to nearly $350,000. There are no contemporaneous records from 2008 supplied to support the allegation that there was such a "mistake". There is no reference to how much was paid by Mr Voitenko. The author of the document was not called, unlike other overseas witnesses who have supplied statutory declarations to the plaintiffs. The production of the document does, however, undermine the credibility of the plaintiffs. 3. I accept the contention by Zurich that the likely cost of the air dancers was the cost shown on the manufacturer's invoice and reported to Australian Customs through Mr Voitenko as the value of the goods. It follows the claim with respect to the air dancers has been deliberately and significantly inflated. Marquee Claim 1. Mr Voitenko claims the sum of $353,731.40 to replace 10 marquees he claims he lost due to the fire. 2. The amount claimed is based on a quotation Mr Voitenko obtained after the fire from Baytex, the manufacturer from whom he had acquired marquees and components of marquees prior to the fire. 3. When he met with Mr Pecar on 30 November 2010, Mr Voitenko told him that he had 10 marquees in the warehouse: 1. two 3 m x 15 m marquees; 2. six 6 m x 15 m marquees; and 3. two 9 m x 15 m marquees. 1. Nine marquees are recorded in the depreciation schedules to the 2010 income tax return as having been acquired by the business. 2. Mr Voitenko's explanation for the disparity between the value of the marquees supported by the invoices and the amount claimed in the Baytex quotation he obtained after the fire was that a substantial proportion of the equipment was made by him. However, despite claims to this effect made during his evidence, there was no substantiation of this proposition such as specific details of what components he made, when he made them, from what materials or when those materials were purchased. In the result, there is no proper evidentiary basis to accept the claim as formulated on this basis. 3. There is a further difficulty within the claim in this respect, namely, the issue of betterment. Zurich contended that, even if it is accepted that Mr Voitenko had himself made half of the components appearing in the Baytex quotation he obtained after the fire, the true replacement cost of the hand-made components are likely to be less than the cost of obtaining replacement components from a commercial supplier. Zurich correctly submitted that it is not possible to assess what the difference in cost might be, because Mr Voitenko did not identify, with any precision, what the marquees he had custom made, or had partially purchased and partially made himself, were comprised of. I accept that submission, upon the stated bases for the contention advanced by Zurich. 4. The Baytex quotation Mr Voitenko relied on to support the marquee claim was dated 24 August 2010 (see Ex 11, 9-362-2987). The date of the quotation was the Tuesday after the fire on Saturday 21August 2010, and two days before Mr Hughes and his team attended to undertake the stocktake on Thursday 26 and Friday 27 August 2010. 5. The quotation was structured by size of marquee. 6. The first marquee quoted for was for two (denoted by the number after the square root symbol) 3 m x 15 m marquees. The quotation then lists framing components and then lining components. The same structure is followed for six 6 m x 15 m marquees and two 9 m x 15 m marquees. 7. The quotation did not provide a subtotal for the cost of each type of marquee. However, if the prices in the "Total Price" column for each of the sizes of marquee quoted are added, the costs quoted equate to the following: 1. two 3 m x 15 m marquees: the quoted cost is $38,862 for two marquees, or $19,131 per marquee; 2. six 6 m x 15 m marquees: the quoted cost is $141,787 for six marquees, or $23,631.17 per marquee; 3. two 9 m x 15 m marquees: the quoted cost is $140,925 for two marquees, or $70,462.50 per marquee. 1. Mr Voitenko's evidence in cross-examination that "I just rang the Baytex and they just provided for me … I asked him for the replacement on 10 marquees, 3 metres wide, 6 metres wide and 9 metres wide, completed with the silk lining" and that Baytex produced the rest of the detail in the quotation themselves was unconvincing. 2. There are a number of bases upon which the claim for marquees on the basis of the Baytex quotation may be rejected. First, I do not accept the Baytex quotation accurately reflects the marquees and components that were in the warehouse at the time of the fire. The fact that Mr Voitenko obtained a quotation after the fire for this amount does not prove the loss claimed. I have earlier referred to flaws in Mr Voitenko's evidence. Secondly, there are a number of discrepancies between the claim and contemporaneous documents. I will now turn to that consideration, commencing with the Baytex invoices. 3. Baytex produced invoices to Court in response to a subpoena issued at Zurich's request on 30 October 2015. Zurich accurately summarised the invoices that were produced (by reference to the evidence) as follows: 1. Ex 11, 2-41-523: invoice dated 22 December 2000 (9 m x 15 m Clipframe marquee, NZ $23,269.50 (AUD $30,665.92)); 2. Ex 11, 2-42-525: invoice dated 22 December 2000 (6 m x 6 m Clipframe marquee, NZ $2,100.00 (AUD $2,647.55)); 3. Ex 11, 2-43-526: invoice dated 22 December 2000 (6 m x 6 m Clipframe marquee, NZ $2,400.00 (AUD $3,025.77)); 4. Ex 11, 2-47-541: invoice dated 5 April 2002 (3 m x 3 m roof section, NZ $2,369.00 (AUD $2,870.73)); 5. Ex 11, 3-81-880: invoice dated 10 November 2006 (5 m roof section with components, AUD $5,998.41); 6. Ex 11, 3-90-940: invoice dated 10 May 2007 (6 m x 2.1 m fitted wall, AUD $2,000.02); 7. Ex 11, 3-91-942: invoice dated 14 May 2007 (Clipframe 6 m MKI components, $1,419.00); 8. Ex 11, 3-99-967 & Ex 11, 3-102-974: invoices dated 18 June and 16 July 2007 (these appear to be versions of the same invoice issued on different dates) (9 m x 15 m marquee, $22,727.27); 9. Ex 11 16-715-5591: invoice dated 20 July 2007 (4 x CFF Base Rail, AUD $156.20); 10. Ex 11, 3-107-982: invoice dated 26 September 2007 (CF 9 m MKII Components, $1,487.20); 11. Ex 11, 4-115-1008: invoice dated 29 November 2007 (6 m CF MKI Lining Pr Ends, $1,100.00); and 12. Ex 11, 7-281-2269: invoice dated 28 April 2010 (6 m x 9 m Clipframe marquee, $7,095.00). 1. The total of these invoices comes to $81,193.07. 2. Mr Voitenko said in cross-examination that the Baytex invoices come to a higher total, "more than $100,000", however that is not what is shown on the documents produced by Baytex under subpoena or the information submitted by Mr Voitenko for the purposes of preparing his income tax returns (to which I will return below). 3. The amount claimed is approximately 5 times the amount shown in the Baytex invoices that have been produced. I accept the submission of Zurich that this is more than can be explained by Mr Voitenko making some parts himself, even if his own work comprised fifty percent of the marquees in stock as he claimed (a number of marquees for which invoices have been produced were smaller than the marquees quoted in the Baytex quotation). 4. It is also to be noted that each of the invoices for the two 9 m x 15 m marquees Mr Voitenko actually purchased (the invoices dated 22 December 2000 and 16 July 2007 at Ex 11, 2-41-523 & Ex 11, 3-102-974 respectively) were for almost a third of the cost quoted ($2,3269.50 and $22,727.27, plus GST, respectively). 5. I will next turn to the depreciation schedule. Depreciation schedule 1. The depreciation schedule in Mr Voitenko's 2010 income tax return records 9 marquees acquired between 15 August 1998 and 14 May 2010 (summarised below by date of acquisition, acquired cost shown in brackets). Zurich accurately summarised that record as follows: 1. 15 August 1998: marquee ($27,648.00); 2. 14 May 1999: marquee 60 x 90 ($5,241.00); 3. 3 January 2000: free standing 3 x 6 marquee ($1,500.00); 4. 21 October 2000: free standing marquee ($19,413.00); 5. 3 January 2001: free standing 6 x 6 marquee ($5,400.00); 6. 1 October 2002: marquee 6 x 6 (2,131.00); 7. 6 October 2006: marquee ($3,108.00); 8. 7 July 2007: marquee ($27,773.00); and 9. 14 May 2010: Baytex tent maker ($6,450.00). 1. The total acquired costs for the 9 marquees comes to $98,664.00. 2. It may reasonably be inferred that, in preparing his 2009 and 2010 tax returns, Mr Voitenko sought to maximise (within permissible limits) the number of items and the cost of those items in the depreciation schedules, as well as to deduct the cost of any non-depreciable materials used in the business. Mr Voitenko's evidence was that he expected the business to become profitable. Three of the marquees referred to in the depreciation schedule were of smaller dimensions than the marquees in the Baytex quote obtained after the fire: the free standing 3 x 6 marquee acquired on 3 January 2000, the free standing 6 x 6 marquee acquired on 3 January 2001, and the 6 x 6 marquee acquired on 1 October 2002. 3. The amount claimed is approximately 3.5 times the cost of acquiring the 9 marquees shown in the depreciation schedule in the income tax return 4. Reference should be made to the Baytex quotation dated 16 August 2010. Documents were produced by Baytex under subpoena which included three quotations for marquees Mr Voitenko obtained five days before the fire, on Monday 16 August 2010. 5. The quotations were as follows: 1. A 9 m x 9 m marquee with a translucent roof and plain PVC walls. The price quoted was $15,916 plus GST (Ex 11, 8-314-2520). 2. A 9 m x 9 m marquee with translucent roof and walls. The price quoted was $16,996 plus GST (Ex 11, 8-315-2522). 3. A 6 m x 6 m marquee with translucent roof and walls. The price quoted was $10,606 plus GST (Ex 11, 8-316-2524). 1. These quotations are for amounts that are substantially less than the amounts appearing in the Baytex quotation of 24 August 2010 (only 8 days later). 2. When the price quoted for the 9 m x 9 m marquee in the quotation at Ex 11, 8-315-2520 above was put to Mr Voitenko in cross-examination, he stated that "that must be to look after me, put them on special". When asked the reason he had obtained quotes from Baytex on 16 August 2010, his answer was that he had been asked by a customer "to sell them the marquee", but he did not know and could not remember the customer, and that "this quotation did not go through because I can't afford it". 3. When the quotation at Ex 11, 8-315-2522 was put to him, Mr Voitenko said that this quote had also been discounted by Baytex because he was a regular customer. When it was pointed out that no discount was shown on the quotation, his answer was "Well, here, they may not put a discount, but they discounted inside their invoice". 4. When the quotation for the 6 m x 6 m marquee at Ex 11, 8-316-2524 was put to him, Mr Voitenko's explanation was that he needed more equipment "because I was expecting huge season in 2010". I do not consider this to be an acceptable explanation, particularly when seen in the light of the entirety of the evidence as to Mr Voitenko's business as discussed below. 5. When asked in cross-examination about the discount, Mr Voitenko's evidence was that each invoice was different. He said that in one invoice he got a discount of 10% and in another 25%. This does not adequately explain the disparity between the prices shown and the Baytex quotation of 24 August 2010. 6. Further, no discount appears in the Baytex quotation Mr Voitenko obtained after the fire. If it is accepted that Mr Voitenko would, in practice, obtain discounts of up to 25% on the prices quoted by Baytex, I agree with Zurich that it follows that the cost claimed to replace the marquees should be discounted by a similar percentage. 7. Zurich contended that the marquee claim had been deliberately and significantly inflated. It carefully advanced that submission on the following basis. 8. In 2010, Mr Voitenko knew the marquee business. As part of his case, he asked the Court to accept that he knew the stock that was in his warehouse. He knew Baytex and the process by which it provided quotations. He knew the dimensions of the marquees he needed to put to Baytex. He knew the options that were available that may affect the price, such as PVC as opposed to translucent roof and wall. The more probable explanation for the disparity between the Baytex quotation of 24 August 2010 and what is shown in the Baytex invoices that have been produced, the depreciation schedule in the 2010 tax return and the Baytex quotations of 16 August 2010, is that the marquee claim has been deliberately and significantly inflated. 9. There is considerable force in that submission having regard to the aforementioned analysis of the Baytex quotations and the depreciation schedule. 10. In any event, in the light of the conclusions I have reached as to the claim, Mr Voitenko's explanations for the difference in cost between the Baytex quotations of 16 August and 24 August 2010 must be rejected. 11. Further, on the same basis, I am not satisfied that the Baytex quotation of 24 August 2010 is a fair and accurate representation of the replacement cost of the marquees that were in the warehouse at the time of the fire. Dumpling Machinery Claim 1. The three items of dumpling machinery that are the subject of this aspect of the claim submission are items 42 (Flour Mixer, 25 kilo, 380 volt), 43 (Mince Mixer, 35 - 50 kilo, 380 volt) and 44 (Dumpling Machine Maker, Tech Line Production) at Ex 13, 2-46-813. 2. Mrs Voytenko gave evidence that she obtained the dumpling machinery in 2007, after travelling to Russia, where she visited a small food manufacturing plant which used Chinese dumpling equipment. 3. In cross-examination, she stated that she paid for the equipment in cash, which she gave to the director of Russian business she visited, who acted as the "middleman" in arranging the purchase of the equipment from the Chinese manufacturer. 4. When she returned to Australia, she "made an order" for the equipment from China. She said Mr Voitenko assisted her in purchasing the equipment. 5. After the equipment arrived, she started her business, Russtyle Productions, which produced Russian dumplings. 6. The evidence proffered in the claim submission in support of the claim was three links to webpages of a business known as "Sydney Supply" and a quotation from "Billabong Factor" addressed to Mrs Voytenko's business, Russtyle Production, obtained after the fire, on 3 September 2010. 7. The Sydney Supply webpages were obtained by Mr Campey, an IT consultant engaged by Zurich, and annexed to his report dated 12 May 2019. The relevant archived webpages were: 1. BWL50 Stuffing Mixer (referred to in the claim submission as the Mince Mixer); 2. JGL1-6A Stainless Steel Commercial Dumpling Maker; and 3. HHWT25 Flower Mixer (that is, the Flour Mixer). (collectively "disputed webpages"). 1. Zurich did not dispute that this machinery was in the warehouse at the time of the fire. Rather it disputed the replacement cost of the equipment. Mrs Voytenko claimed replacement costs of $11,000, $16,400 and $38,200 for the flour mixer, mince mixer and dumpling maker respectively (that is. a total of $65,200). Zurich contended that the true cost was significantly lower, in the order of USD $1,750 for the flour and mince mixers and USD $2,170 for the dumpling maker. 2. Zurich contended that the true value of the claimed dumpling machinery was 30% of the value of the Russtyle claim. 3. It advanced that contention on the basis of two evidentiary propositions: 1. No weight should be attached to the disputed web pages. 2. The Customs record and depreciation schedule should be taken as the true value of the machinery destroyed in the fire. 1. Zurich contended that the webpages were likely created, not for the purposes of Sydney Supply's business, but for the purpose of giving the appearance that the values of the dumpling machinery was the value claimed by the plaintiffs. 2. Mr Voitenko contended that the Court consider the claim in the light of an acceptance of the disputed webpages. 3. I shall commence with the challenge to the disputed webpages. Zurich relied principally in that respect upon a report prepared by Mr Campey. 4. Mr Campey in his report outlined that the appearance and content of a webpage is determined by the underlying source code (in this case, Hyper Text Markup Language ("HTML")) which uses a series of standard elements which structure the data of a webpage and allows for all Internet browsers to display the webpage. A user wishing to "visit" a website uses their internet browser to contact the server that hosts the website. The server supplies the HTML source code for the webpage to the user's browser. The browser then requests the elements that make up the webpage (for example, text, images, links) to related web pages on the website and code that informs the user's browser how the text, images and links are to be displayed. The user's web browser then assembles the contents into the web page that is seen by the user. 5. The main page for the Sydney Supply website was accessed by the URL "http://www.sydneysupply.com/site_map.html" ("Site Map Webpage"). The function of the Site Map Webpage was to act as a directory to all of the other webpages on the website. Mr Campey observed that none of the disputed webpages are linked from the live website Site Map Webpage. That is, a member of the public wishing to view the products displayed on web pages forming part of the Sydney Supply webpage website would first be directed to the Site Map Webpage, from where they navigate to other pages by clicking on links on the Site Map Webpage. 6. The Sydney Supply website contained a secondary general navigation page which presented a catalogue of the catering equipment supplied by the business ("Catalogue Webpage"). The URL for the Catalogue was http://www.sydneysupply.com/catering_equipment_catalogue.html. The function was to serve as "a central hub for users to find information on the various [catering equipment] products available from Sydney Supply". The Catalogue Webpage was arranged in a table format and contained images and brief descriptions of the equipment available for purchase. These images and text acted as links to the individual webpages for each piece of equipment. 7. From 28 March 2010 (the first archive copy available) to some time between 30 April and 25 August 2010, the Site Map Webpage contained a link leading from the Site Map Webpage to the Catalogue Webpage. 8. On 25 August 2010, the link to the Catalogue Webpage was replaced by a link to a different web page, a "Meat Processing Equipment Catalogue", URL http://www.sydneysupply.com:80/catering_equipment_catalogue.html ("Processing Webpage"). The link on the Site Map Webpage to the Processing Webpage remained thereafter. 9. The effect of replacing the link on the Site Map Webpage to the Catalogue Webpage with a link to the Processing Webpage meant a member of the public could still access the Catalogue Webpage directly by typing its URL in the address field of their browser, however in order to do so the user would have to know the precise URL. 10. In his report, Mr Campey confirmed that each of the Sydney Supply webpages were still available on the "sydneysupply.com" website at the time he prepared his report on 3 June 2019. 11. Mr Campey examined the source code for both the live and archived disputed webpages and found very few "code comments". He found the information contained in the comments that did exist provided no meaningful information regarding the author of the webpages or the dates on which they were created and updated. He noted that this information, namely, when the code was written, updated and by whom was common information that appears in a source code. 12. The archive copies of the Sydney Supply website taken by the "Wayback Machine", an internet archiving tool, showed that links from the main webpages to the disputed webpages were only active for a short period after the fire. The timing and duration of the active links coincided with the making of claim by the plaintiffs. 13. Zurich contended that websites are not designed to be used in that way - they are designed to direct the user to webpages within the website through the user clicking on the relevant links from one page to another. Otherwise it would be necessary for the user to know the precise URL for each individual webpage on the website. 14. Mr Campey analysed successive iterations of the Processing Webage in the Wayback Machine archive. These showed that: 1. the first available archive copy of the Processing Webpage, taken on 24 August 2010 (3 days after the fire), contained no links to the disputed webpages; 2. the next available archive copy of the Processing Webpage, taken on 24 September 2010 (during the time Mr Voitenko was preparing the claim submission) contained links to the disputed webpages; 3. the links to the disputed webpages were still present in the next archive copy of the Processing Webpage, taken on 24 October 2010 (approximately 3 weeks after Mr Voitenko provided the claim submission to Crawford on 7 October 2010); and 4. the links to the disputed webpages had been removed by the time the next archive copy of the Processing Webpage was taken, on 27 November 2011 and did not appear in any subsequent archive copy thereafter. 1. Mr Voitenko responded to Mr Campey's report by producing in cross-examination of Mr Campey, a Google search result showing that it was possible to navigate to the disputed webpages by typing "dumpling machine Sydney" into Google. Further, Mr Voitenko produced a Wayback Machine report for the Sydney Supply Site Map Webpage from 2009 to 2020. 2. Mr Campey accepted in cross-examination that it was possible to find the disputed webpages as Mr Voitenko contended, by typing "dumpling machine Sydney" into Google. However, Mr Campey explained that the results Mr Voitenko obtained when he undertook that search were dependent on whether the user undertaking the search had previously undertaken similar searches using Google, the number of times the user had undertaken such searches and if the user had repeatedly gone to a website Google will increasingly show links from that site. Further, when Mr Campey was asked whether he believed that the disputed webpages could be found by a Google search using "other names", he responded "potentially, yes". 3. A number of conclusions as to the disputed webpages may be drawn from this evidence 1. The disputed webpages were only accessible on the Sydney Supply website to a member of the public, who did not know the specific URL of the webpages, for a period of roughly three months over September, October and November 2010, the period which coincides with the delivery of the claim submission by Mr Voitenko to Crawford on 7 October 2010 and Mr Pecar's initial assessment of the claim submission on the 6 September 2010. Otherwise, the website could only be accessed by a specific knowledge of the URL. It is relevant to note that Mr Voitenko's first meeting with Mr Pecar to discuss the claim took place on 30 November 2010. At this meeting, Mr Voitenko learned that indemnity had yet to be granted, and that he would be required to produce further information to substantiate the claim. (On 26 November 2010 Zurich confirmed to the plaintiffs' broker that the plaintiffs had provided insufficient information to confirm indemnity of the claim. On the 2 December 2021, Mr Pecar provided the plaintiffs with his adjustment of the claim submissions.) 2. As to the Sydney Supply website it may be observed: 1. the Catalogue Webpage contained no links to the disputed webpages prior to 16 December 2010, when they appear in an archive copy of the Catalogue webpage; 2. the Catalogue Webpage by that time was no longer "live" in the sense that it was not accessible from the Site Map Webpage by clicking on a link; 3. the links from the Catalogue Webpage to the disputed webpages were then removed in the next available archive copy of the Sydney Supply website taken approximately a month later, on 20 January 2011. 1. In substance, Zurich's case was that the disputed webpages do not disclose the true value of the machinery lost in the fire and further, that the webpages were created to give the impressions of a legitimate business source when the reality was otherwise. 2. On the evidence, there is real force to Zurich's contention in this respect for the following reasons: 1. Mr Voitenko had the knowledge and means to initiate the creation of the disputed webpages. In his own words, he was "a little bit familiar with" the Wayback Machine and website construction. He had knowledge of PHP as opposed to HTML source coding. He had established two internet businesses, in 2009 and 2010 respectively ("Craft Rush" and "Yellow Cat"), one of which (Yellow Cat) is a web development and internet hosting company which is still operating; 2. Although it was not apparent from the claim submission, both Billabong Factor and Sydney Supply, which hosted the disputed webpages, have a common owner, Mikhail Tiourikov (also spelt "Tyurikov") ("Mr Tyurikov"). Billabong Factor is a business name registered to Mr Tyurikov. According to the NSW Business Register, the business is involved in the "export of exotic Australian products, eg boomerangs, and [the] import of catering equipment and other [products]". Mr Tyurikov is also one of two registered owners, with Serguei Fotanov, of the business name, "M & S Sydney Supply". Mr Tyurikov is the registrant of the internet domain name "sydneysupply.com", which was registered in July 2007. Mr Tyurikov was a customer of the plaintiffs and is a friend. 3. When preparing the claim submission, Mr Voitenko did not "shop around" to obtain quotes from other suppliers. Both the Billabong Factor quotation and the Sydney Supply website links ultimately led back to a business operated by a friend of his, Mr Tyurikov. Mr Voitenko's evidence in cross-examination was that he did not know that Mr Tyurikov happened to supply the very same models of machinery that Mrs Voytenko had to go to Russia to find and purchase in US dollars for cash ("I just find him on the internet, and I did not know he had that - that he traded with the similar equipment"). That explanation strains credibility. 4. In the claim submission itself, Mr Voitenko did not put in the link to the main page (the Site Map page) of the Sydney Supply website nor the Processing Webpage which, from 25 August 2010, catalogued the meat processing equipment that Sydney Supply sold, but put in the specific URL addresses for the individual subject webpages he wished Crawford to go to in support of the claim. Mr Voitenko stated that the reason he provided specific URL addresses was that he was trying to help the insurance company locate the items and compare prices. 5. That explanation may have some attraction at face value, and there is theoretically the potential of a coincidence between Sydney Supply website and the preparation of the claim submission, but a close examination of the surrounding context gives a much different impression. The Sydney Supply website coincided with the preparation of the claim and the disputed webpages were incapable of being accessed (without specific knowledge of the URL) soon after the time of the claim submission contrary to ordinary business practices associated with a webpage of this kind in linking a webpage advertising a product to be sold with the main pages in its website. 6. Mr Voitenko did not call Mr Tyurikov, despite Mr Campey's report being served the same day it had been received by the defendant's solicitors, 3 June 2019. Zurich submitted that as Mr Tyurikov was a friend of the plaintiffs, he was a witness the plaintiffs might have been expected to call. Zurich correctly submitted that the inference may be drawn that his evidence would not have assisted the plaintiffs' case. 1. It is unnecessary in finding resolve with submissions of Zurich that the Billabong factor quotation and the disputed webpages are not what they purport to be. For the above reasons the weight that may be given to the disputed webpages and Billabong factors is significantly reduced. 2. I turn then to consider countervailing evidence as to the value of the destroyed machinery. 3. In the Australian Customs record dated 7 November 2007 for the importation of the equipment specifies that the manufacturer as Heilongjiang Machinery & Equipment Import Export Co, the owner as Russtyle Production, and the date the equipment was discharged in Sydney as 6 December 2007. 4. The first item in the record concerns a "Dumpling Maker", the invoice price of the dumpling maker being $2,170. The second item concerns "Mixing Machinery, Stuffing/Flour", the invoice price of the mixing machines to be $1,750. 5. The record shows a total of 3 packages were received. The invoice price was in US dollars and equated to AUD $4,203.75 at the exchange rates current as at 7 November 2007. 6. Further, the depreciation schedule in Mrs Voytenko's 2009 income tax return recorded the acquisition of "Dumpling Machine" on 1 July 2008 at an acquired cost of $4,844. 7. In cross-examination, Mrs Voytenko stated that she had "never in [her] life" attempted to deceive the Taxation Office. She then gave, as an explanation for the inconsistency between the amount claimed and the amount appearing in the tax return, that "the only documents I could provide were those that I still had. The receipt for moneys paid in cash, I could not present that" and that the invoice for $4,844 was "what the Chinese sent me". Conclusion: Dumpling Machinery Claim 1. Overall, I accept that the more reliable contemporaneous evidence is that contained in the Australian Customs entry and the depreciation schedule to Mrs Voytenko's 2009 income tax return, which record a cost of between $4,203 and $4,844 for the three items of dumpling machinery. 2. The disparity between the values recorded in the Australian Customs entry and the depreciation schedule on the one hand and the values claimed (a total of $65,200) on the other hand is very significant and represents approximately 30% of the value of the Russtyle claim. It is clearly more than a "minimal or insignificant" part of the Russtyle claim, for the purposes of s 56(2) of the ICA. Conclusion Regarding Fraud in the Claim 1. In turning to my conclusion as to this aspect of the fraud defence, it may be observed that I do not accept Mr Voitenko's submission to the effect that Zurich undertook or committed unauthorised entry to the premises or that any such entry could have materially affected the conclusion I have reached. In my view, Zurich has demonstrated on the balance of probabilities to the requisite standard (having regard to the seriousness of the allegations made against the plaintiffs, as earlier discussed), the plaintiffs deliberately and significantly exaggerated the value of the stock and equipment claimed by them. ARSON Submissions of the Parties Zurich 1. In summary, Zurich contended that Mr Voitenko had the means, opportunity and the motive to start the fire. Those contentions were asserted based on the following: 1. The fire occurred within months of obtaining fire insurance in the only year which Mr Voitenko had contents insurance in the fifteen years his business had been operating. 2. The cover obtained substantially exceeded the likely value of the contents of the business. Zurich contended that it is unlikely a prudent businessperson not anticipating actually making a claim would pay for more than they needed. 3. The cover only provided for loss caused by one of the defined events in the Policy, namely, fire, lightning or explosion. 4. All of Mr Voitenko's stock except for 55 chairs were in the warehouse the night of the fire- none of it was out on hire at the time. Mr Voitenko's van was also parked in the warehouse. 5. There is an inherent implausibility that a stranger lit this fire after making a hole in a place which was difficult to access and which was located precisely opposite the stairs at the bottom of the sauna gaining access to the premises. 6. That Mr Voitenko had opportunity as he was at the premises on three occasions on the day of the fire. 7. The warehouse had an alarm however it was not turned on the night of the fire. Further, security cameras had been purchased had not been installed. 8. All of the items used to create or spread the fire, namely, the jerry can, petrol tins, timber table tops, chairs and the clothing all belonged to the plaintiffs and were known to be in the warehouse. It is unlikely a stranger would have known in advance that there was sufficient material inside the warehouse to start the fire and achieve the necessary spread of fire. 9. Mr Voitenko's business had made a loss each financial year between 2007 and 2010. Further, Mrs Voytenko's business recorded losses in 2009 and 2010 (the only years that tax returns had been provided). Mr Voitenko's business around the middle of 2010 was struggling to pay bills and had incurred debts. The public liability insurance cover Mr Voitenko obtained when renewing his public liability policy with QBE in May 2010 was renewed for a period of four and a half months to 20 September 2010. Zurich contended that the inference that should be drawn is that, around the middle of 2010, Mr Voitenko's business was struggling to pay its bills and he was winding down his business. The Plaintiffs 1. I should commence with an examination of the plaintiffs evidence on this topic before turning to the submissions advanced by the plaintiffs on this issue. Mr Voitenko's Evidence 1. During cross-examination, Mr Voitenko gave the following evidence with respect to the arson claim: 1. The reason why insurance was only taken out in May 2010 and not prior was "we did not realise how dangerous the area was". Since they had moved in they had made four police reports and there was "a lot of burning cars in that area". 2. As to the type of insurance that was taken out, after discussions with Mrs Voytenko, the plaintiffs decided to only take out cover for fire as "it's only one issue for me". His evidence, in this respect, is extracted below: We don't keep the money at the premises and we been discussed with my wife what type of insurance we would have to take after I've been contacted the Action Insurance Brokers in regard to content insurance we took, and our decision was about my business to steal something from us, or take equipment out of the factory, you need at least 5 to 6 men and three or four trucks working three or four days just to empty my factory to get away with my equipment. Only I thought about probabilities because an example of the burning cars outside of the areas, I was accepting that possibility that would be, it's only one issue for me, cover from the fire all my content and damage, all my content and equipment of my wife from the fire. 1. He denied having taken out insurance with the intent to set a fire in the premises. That evidence is extracted below: Q. Mr Voitenko, you obtained property damage insurance cover alone and did not obtain business interruption or theft for electronic equipment or motor vehicle insurance because you had no concerns about a break in, but were intending, by May 2010, to set a fire in these premises, correct? A. No. 1. He explained that his business reported a loss in tax returns in the financial years leading up to the fire as he was growing the business and had been purchasing new equipment. Although, it may be noted, Mr Voitenko did not point to any investment in equipment or anything else that would be likely to lead to increase in future income. He said: … the business was loss every year because I was growing the business and as far as know to hire something out, you have to buy something to hire, which is we hire for the less than maybe 10 per cent of the cost of the goods and that's why my business always been in the loss because we use all our money to just going after business. Simple as that. 1. In relation to struggling to pay bills, he said: Q. The proposition I was putting to you, Mr Voitenko, is that you were struggling to pay quite small amounts to various creditors in 2010? A. I haven't been struggling. Q. I'm sorry, what was the answer? A. I haven't been struggling. In fact, in that time, I purchased the tickets for my mum in law, I purchased the tickets for my wife to go overseas. Everything was okay. And initially, because it was preparation for the season 2010, which was started after August and continued to the Christmas Eve, I was spending a lot of money for the preparation for that season. 1. Turning to the topic of security cameras Mr Voitenko said that he could not remember when had purchased the security cameras and gave evidence that there was not enough time for him to install them. His evidence, in that respect, is extracted below: I can't remember when I purchased the cameras, and I think during the conversation with your fire investigator, I probably said that was maybe a year, but, I mean, it only may be a month, because I really don't remember when I purchased them, but it wasn't enough time for me to install it. 1. As to Mr Voitenko's clothes that were found at the premises, he gave two accounts; 1. When first questioned on the clothes, he stated that he was working on the fridge. In response, Mr Sexton played audio from the police interview dated 24 August 2010, whereby, Mr Voitenko had stated that he had laid out the clothing in preparation to fix the van. After hearing the audio he gave the following evidence: Q. Do you agree that assuming that audio is 24 August 2010, on that occasion you told the police that you had laid out the clothing because you were getting prepared to fix the van? A. Yes, and I also use this clothing for washing the fridge as well. 1. Following Mr Voitenko's response, Mr Sexton played an audio-visual recording from the police interview, dated 20 December 2020, whereby, Mr Voitenko said that he had worn the clothes while he was washing the fridge that morning and left them out because they were wet. Mr Voitenko's then expanded on what he said earlier, stating: Q. If you didn't forget, why did you not tell the same story on both occasions? A. I reckon I didn't bring anything extra to that, just excepting that I told the police that I used these – my clothing for different - on different occasions. Q. Is that your explanation? A. Well, I would say so, because as I said before, I was greasing the truck in that clothes, I was fixing the van in that clothes, I was cleaning the fridges in that clothes, I was moving my equipment inside the factory in these clothes. So I can't understand the problem of that. 1. In relation to the finding of an accelerant on his clothes, Mr Voitenko stated: Did you agree if somebody went to my factory without the knowledge, they can sort of splash some liquid on my clothing which I left behind, without my knowledge? 1. As to Mr Voitenkos movements and attendance at the premises on the day of the fire he explained that he was at the premises three times on the day of the fire, however was not there at the time of the fire. He stated he left the premises at about 9.30pm, and on the way home he filled up his car. He then saw his wife walking towards Roselands shopping centre, he arrived home and took the bicycle to join his wife at the shopping centre. After shopping they then walked home and arrived there between 10.30pm to 11pm. His evidence in relation to the accounting of his movements on the night of the fire was that the police could account for his movements. That evidence is extracted below: Q. I will ask you for the third time, Mr Voitenko. You can't account for your movements by saying that you were in a shop or at a petrol station or anywhere else, where there is a record of your movements, can you? A. Well, I believe the police does. Q. What do you believe that "the police does"? A. Well, they done a full investigation and they dismissed that investigation on 11 November 2010 - 2011. Since then, nobody from the police chased me up for any further inquiries, and I receive from the police officers all the evidence which was taken from my factory and give it back to me, and it says, "Your case is closed." 1. As to backing up his files on the day of the fire, his evidence was that he backed up his files from his computer daily. He said: Q. You see, what I want to put to you is that because you hadn't done anything in relation to your own business on that day, there was no need for you to back up the business software, was there? A. Well, not specifically on that day. Maybe I did something else - I mentioned to the police that I do a back-up of my computer system every day. Q. Well, that means you would have done it the day before, on the Friday? A. Yes, and I've done it on the Thursday and I've done it on the Wednesday and I've done it every day. And on the Saturday, I figured out that I forgot to do that, and when I pick up the camera I just quickly make the back-up of my computer files and just go home. Plaintiffs Submissions 1. In written submissions Mr Voitenko submitted that he and Mrs Voytenko had nothing to do with the fire. He addressed the arson claim, by reference to Zurich's intention throughout the claim process, illegal criminal entry by Zurich's Forensic Investigators, the withholding of evidence, and submissions about the means of entry, 2. With reference to the illegal criminal entry by Zurich's Forensic Investigators and the withholding of evidence related to the arson claim. He submitted: During the proceedings (including the interviewing of witnesses presented to support the Insurer's case), the Court heard testimony of numerous illegal acts committed by the Insurer's agents (on behalf of the Insurer and with their approval), including but not limited to illegal criminal entry by the Insurer's Forensic Investigators to my premises, withholding of "evidence" allegedly related to the arson attack by the Insurer's solicitors (as plead in the 2019 proceedings but not included in these proceedings)… 1. Mr Voitenko made specific reference in respect to withholding evidence to an ignition device that he contended was never provided to the police: … in the 2019 proceedings, the Insurer's Solicitors stated that they had evidence of an ignition device that supported their allegation that I could have been involved in setting the fire… In cross-examination in these proceedings, Greg Kelly confirmed that the ignition device "evidence" was never provided to NSW Police. The ignition device evidence has also not been introduced into these proceedings. The ignition device is not referenced in any Police report, despite allegedly being collected by GKA during their illegal entries in August and September 2010. Without any support for the assertions made by the Insurer and their Solicitors, the Insurer have made statements and presented "evidence" to the Court in the 2019 proceedings which they knew, or should have known, was both inaccurate and obtained following criminal acts of burglary and property theft. In the course of these proceedings, those inaccuracies have been identified and the "evidence" presented in these proceedings has been materially changed with the removal of any reference to a ignition device which they stated in the 2019 proceedings was used by me (or with my knowledge) to initiate the fire which damaged the building and my property. 1. Mr Voitenko submitted that Zurich's intention was to elongate and frustrate the claim process: The ongoing changes in the Insurer's position on this claim has occurred with the clear intention of elongating and frustrating the claim process, including when this matter was originally being prepared for hearing (when I was represented by Boyd Partners) the Insurer's Solicitors suddenly finding "evidence" allegedly supporting the Insurer's assertions of my involvement in the fire (which was not presented in the 2015 case) and then accusing me of the criminal acts of Arson and Fraud for which they have not provided evidence of in these proceedings. 1. In relation to the way that the wall had been broken in order to gain entry to the premises, he submitted: … the Defendant's assertion that the wall had been broken outwards by the arsonist (the hole was made by a person on the inside of the building) was repeatedly made (with the insinuation that I was the person who had broken open the wall), when they had in their possession photographic evidence of the wall being broken inwards (the hole was made by a person on the outside of the building) – the facts contradicted their allegations. 1. In the Joint Memorandum, Mr Voitenko appeared to make the submission that the alarm was not working and that he had complained to the owner of the warehouse several times, however no action was taken. 2. On the final day of hearing, Mr Voitenko advanced the following submissions with respect to particular aspects of the evidence and the allegations concerning the arson claim: 1. First, he raised issue with the "cannister" which was found at the premises. He said: … It wasn't my cannister at all. The cannister was seized by the police to take the fingerprints and analyse DNA on that cannister. They couldn't find any evidence that we somehow was in possession of this cannister, and it definitely wasn't mine, so they brought in the factory by the arson. 1. Secondly, he further denied the plaintiffs' involvement with the fire and contended that the police investigation was over in 2011. He emphasised, in that respect, that neither of the plaintiffs had been charged: I believe the police investigation was over in 2011, and they still used the - us, everybody involved in that case, as a suspect, I guess, but on the balance of probabilities they provided, they couldn't find any reason for us to be involved in that case, and that's, I guess, we haven't been charged for anything, because, as far as I believe, if police have any doubts about our behaviour at that time, we will be immediately charged with something. 1. Finally, he sought to cast doubt on the defendant's interpretation and use of the police and fire reports referred to throughout the proceedings. He submitted: I can't understand how can Wotton + Kearney use the police report and the fire report in different meanings and put that meanings as an accusation in my case….For example, they put on that 10, 15 tables was put under my small van to provide the fire fuel for the factory, and in the fire brigade's report it's clearly stated that they moved the tables during the fire to stop spreading the fire in the factory. How can they change that police report and just accuse me on what the firefighters did during the fire? I can't understand that either. Consideration: Arson 1. The starting point is to consider the circumstantial evidence bearing upon this question, bearing in mind the Court must consider the weight which should properly be given to the unified force of all of the circumstances put together. Was the Fire Started by an Arsonist? 1. The evidence before the Court firmly established that the fire at the premises was caused deliberately. Two fire experts, Ms Salmon and Mr Kelly, concluded that the fire was the result of arson. The experts' conclusion is consistent with the observations of the NSW Fire officers who attended immediately after the fire. 2. That conclusion was not the subject of dispute. What was strongly contested by the plaintiffs was the contention by Zurich, in its fraud defence, that Mr Voitenko had deliberately lit the fire. I will examine that proposition below, mindful of the discussion of relevant principles earlier in this judgment. That will involve a consideration of the factors relied upon by Zurich when considered in the light of the case advanced by Mr Voitenko (both in his case and his wife's evidence and submissions) as has been outlined above. 3. A submission was advanced by Mr Voitenko that the police investigation into the fire had been terminated. That submission was based upon a COPS entry. Detective Senior Constable Glasson was surprised by that entry. There was evidence of a brief being prepared in 2015 but no prosecution was commenced. This issue does not directly affect the fraud in the claim contention of Zurich, but is relevant to the arson defence, although represents one part of the Court's consideration of the defence in the context of the present civil proceedings. It was not clear whether Mr Voitenko suggested that Zurich knew the police proceeding had been terminated at the commencement of these proceedings, but there is little evidence to support that proposition. Means of Entry 1. The doors to the warehouse were found to be locked when the fire brigade and police attended. The plaintiffs were the only people with keys to the premises. 2. A sledgehammer or mallet had been used to break through the downstairs brick wall, ostensibly to gain entry. Mr Voitenko used sledgehammers to erect marquees in the course of his business. Police found a small metal mallet adjacent to the hole. A sledgehammer was found inside the premises following the fire, where Mr Voitenko had left it. As previously mentioned a mallet was found near the hole in the downstairs brick wall, but it is unclear whether it was found inside or outside the wall. 3. I do not consider the evidence of brick fragments either side of the downstairs wall or marks on the outside of that wall add significant weight to Mr Voitenko's case for the reasons earlier given. 4. Zurich contended that it is improbable a stranger would go to the trouble to make a hole in the area of wall where the hole was made. To do so involved entering the void area underneath the building from the rear of the premises and following the external brick lower ground wall a distance of approximately 8 metres in one direction, turning a corner, then proceeding for another 4 metres. The location of the hole was, therefore, difficult to access. 5. Photographs taken by Mr Kelly shortly after the fire show that the ground in the void under the building was covered with various kinds of objects and debris belonging to the landlord (building materials, pieces of timber, tyres, and a discarded axle, amongst other things). There is little, if any, clear space to walk as seen in the photographs. I accept that, on the photographic evidence, it would have been difficult, and potentially hazardous, to traverse in the dark at night, particularly if carrying a sledgehammer and container of fuel. It would be more sensible simply to smash a hole in the wall at the back of the building or immediately inside the void. 6. The hole was made in the area of wall that was at the bottom of the stairs leading from the downstairs sauna up to the warehouse. A stranger would need to have some knowledge of the structural layout of the premises to know that that area of wall would provide access to the interior of the warehouse, or be very lucky to pick that particular spot. 7. Mr Voitenko's evidence was that the hole was not there when he came back to the warehouse around midday. Unless the hole had been made during the afternoon, to avoid being detected the arsonist would have had to have made the hole either side of the time Mr Voitenko was in the warehouse collecting his camera and backing up his computer. 8. It was not suggested by Mr Voitenko that he had received threats to the business. It was stated that someone may have ascertained that location when the premises was being sold by the landlord. However, that contention is implausible, because not only would the arsonist have been required to go down stairs and walk through the sauna but the arsonist would have had to have established (with a reasonable degree of precision) where the access point was on the other side of the wall (under a verandah and in the midst of rubbish). 9. The police reported that the hole was 50 cm in diameter. There was a drop from the hole to the floor on the inside of the wall. If the fire had been lit by a stranger, the accelerants including the 20 litre canister found at the premises after the fire which Mr Voitenko says did not belong to him) would have had to be taken through the hole inside the warehouse by the arsonist. The arsonist would then have had to exit the warehouse by the same route, in the dark, in time to avoid being caught by the fire. Mr Voitenko, on the other hand, purchased a small quantity of fuel on the day of fire (and had also purchased fuel a couple of days beforehand). 10. These considerations raise significant questions as to the plausibility of the proposition a stranger may have made the hole and gained access to the premises in order to start a fire. On Mr Voitenko's case, a stranger made the hole at a very point consistent with access to the building, took with him/her the ingredients to start the fire at a location that was difficult to traverse (rather than accessing via a window or the roller door) and used a sledgehammer to break bricks presumably causing considerable noise. Mr Voitenko said the rear of the building would have had very few people around on the day and time in question but that assumes some knowledge by the stranger as to that state of affairs. (Whether Mr Voitenko knew or did not know of the presence of neighbours before the fire is unclear). 11. Even accepting that Mortdale is a 'bad area', there is no evidence which suggested a reason as to why a person would deliberately or randomly start a fire on these premises. Nor does it seem likely that an arsonist would break through a brick wall in a difficult to reach section of the building rather than smashing through a window. Another question is why a stranger would know that there were materials on the premises to start a fire. 12. The means of entry (smashing a hole in the brick wall in the void beneath the building) is a great deal of effort to go to in order to commit an act of destruction that would be of no apparent benefit to a stranger. Although Mr Voitenko has attempted to portray the area as dangerous and himself as the victim of a previous break-in attempt, he did not point to anyone with a motive to cause his business harm. 13. I accept Zurich's submission that a stranger would also have had to have been very lucky or knowledgeable, in terms of picking the location of wall to break into and knowing that there would be sufficient fuel and accelerants on the premises to start the fire. Notwithstanding Mr Voitenko's evidence that potential purchasers of the premises from the landlord could have seen the wall beyond the sauna, that theory involves a person with a clear intention to plan ahead to start a fire on the premises. There was no evidence of any third party with a motive to plan ahead. As mentioned, the theory also involves a person who, having seen the inside of the wall beyond the sauna, could accurately estimate the location on the outside of the wall within the cluttered void. 14. Further, a stranger would also have had to be lucky in terms of the timing of the break-in to avoid being discovered by Mr Voitenko when he happened to be at the premises to collect his camera and back up his computer. A stranger would have needed to be confident that he or she would be able to find his or her way out of the premises once the fire had started, in the dark, down the stairs, through the hole in the wall and across approximately 12 metres of rubble, discarded timber and other items that were under the building. No Alarm or Security Cameras 1. As previously discussed, the warehouse had an alarm, however it was not turned on at the time of the fire. According to Mr Voitenko, it was not working, that he had complained about it and the owner of the premises had taken no action. 2. Although Mr Voitenko had purchased security cameras some time before the fire, he had not installed them as he "did not have time to do it". In cross-examination he said he could not remember when he purchased the security cameras. He believed he had told Mr Solberg that he had purchased them maybe a year before the fire. He said in cross-examination that it may have been a month before the fire. Use of Accelerants 1. Two seats of fire were identified following the fire, with evidence that a liquid accelerant (petrol or diesel) had been used at each. 2. The first seat of fire was situated under a supporting structural beam that, in the opinion of the investigating police officers, would optimise the chance of a complete collapse of the building. 3. The second seat of fire was in an area where a significant amount of other fuel (tables and chairs) were situated. The second seat failed to ignite. 4. There was evidence that a liquid accelerant (petrol or diesel) had been used at each seat of fire. An empty packet of firelighters and a jerry can were collected by the Fire Brigade following the fire, along with a wet cloth. The wet cloth was found to have traces of accelerant, which was identified to be a heavy petroleum distillate, either kerosene or diesel. The jerry can was also found to contain traces of heavy petroleum distillate. 5. There were numerous holes in the wooden floor around the point of origin indicating liquid accelerant had been splashed around the interior of the building. 6. Diesel was a fuel readily available to Mr Voitenko. His truck was a diesel truck. He had filled his truck up with diesel four days before the fire, on 17 August 2010. Items Used as Fuel 1. All of the items used to create or spread the fire (the jerry can, petrol tins, the timber table tops, the clothing) belonged to the plaintiffs and were known by them to be in the warehouse. 2. Clothes belonging to Mr Voitenko, a blue denim jacket, gloves, trousers, and socks, were found on the premises during a police walkthrough on 24 August 2010. Zurich contended that the fact Mr Voitenko's clothes were found in the vicinity of the fire is consistent with Mr Voitenko changing his clothes after applying accelerant. 3. Mr Voitenko gave inconsistent evidence about the reason the clothes were in the warehouse. He told the police during the walkthrough of the premises on 24 August 2010 that he had laid out clothes in preparation for working on his van. He told police at a second police interview on 20 December 2010 that he had worn the clothes while washing a fridge that morning and left them out because they were wet. He adhered to this second version in his affidavit and in cross-examination. 4. The van was parked in the warehouse on the night of the fire. The explanation given by Mr Voitenko was that he planned to change the oil and brake pads while Mrs Voytenko was away. On Zurich's case, the significance of the van being in the warehouse was that it was a source of petrol, which could be siphoned from the petrol tank, and that the van and the contents of its fuel tank were a further source of fuel that would likely have contributed to the fire had the material around the second seat ignited. 5. It is also put to Mr Voitenko that he knew that the Zurich policy covered the van as an asset of the business and there was only CTP motor vehicle insurance for the van. In that regard, he claimed not to know the details of the Zurich cover. I do not consider any previous reliance by Zurich upon an "ignition device" materially affects the conclusions I have reached. Whatever may have been the case theory earlier developed by Zurich, it played no part in the final hearing of this matter. Motive Insurance 1. The plaintiffs had taken out contents insurance for the first time approximately three months prior to the fire, despite Mr Voitenko having apparently operated his business without any such insurance for up to 15 years and Mrs Voytenko having operated her business since 2007. 2. Based upon the earlier discussion of fraud in the claim in this judgment, and Mr Voitenko's concession in cross-examination, I accept the contention of Zurich that the cover that was sought and obtained as to contents for Mr Voitenko's business ($900,000) and Mrs Voytenko's business ($200,000) substantially exceeded the likely value of the contents. 3. As mentioned, the only cover for contents that was taken out was for loss of Business Property, which provided cover for loss caused by one of the defined events namely, "fire, lightning or explosion". 4. I accept Zurich's contention to Mr Voitenko's explanation for not taking out cover for theft, namely, that it would require 5 to 6 men and three or four trucks working three to four days "just to empty my factory to get away with my equipment" lacks credibility. On the plaintiffs' claim, there were items of significant value to the plaintiffs, such as cameras, televisions as well as air dancers and marquees worth in excess of $700,000. The air dancers in particular were readily transportable, weighing (on Mr Voitenko's case) at half a kilogram each yet were (on the basis of the claim submission) worth $396 to $935 per air dancer. 5. Nor does his assertion that the plaintiffs had taken out Public Liability Insurance over 3 years or insured their vehicles and that the subject insurance had been taken out when the plaintiffs realised Mortdale was a dangerous place diminish the significance of the insurance taken out by the plaintiffs shortly before the fire. Whether or not that is objectively true, three of the four Mortdale incidents to which Mr Voitenko referred concerned motor vehicles. He claimed to have insurance for these items. The fourth concerned a break in attempt but the plaintiffs did not take out insurance under the Policy for theft. 6. On the night of the fire, the plaintiffs' van was parked in the premises. Mr Voitenko's evidence in relation to this step is inconsistent. 7. In the Joint Memorandum, Mr Voitenko stated that he had left the van at that location to change the oil and brake pads of the car which Mrs Voytenko was driving (presumably a short time after the car was parked at the location). In cross-examination, Mr Voitenko stated that he parked the car at the premises after, in 2009, his "truck" was stolen from outside the premises. Yet in cross-examination he did not deny that, when interviewed by police, he had stated that the car was not usually parked at the premises - rather providing unconvincing evidence (when presented with the contrary evidence) that he had a double garage at home and would variously park one of his four cars at the premises. Attendance at the Warehouse on the Day of the Fire 1. Mr Voitenko was at the warehouse, on his evidence, on three occasions on the day of the fire. He went the first time during the morning of the fire to clean out the fridge. He went the second time around midday to move the fridge back into the warehouse. He went a third time at approximately 9 or 9:30 pm (one to two hours before the fire) to collect a camera and backup his accounting software to a USB drive. 2. Mr Voitenko stated that he backed up his accounting software on the night of the fire because it was something that he did every day and he had figured out that he had forgotten to do it on the day of the fire. 3. Mr Voitenko did not adequately explain why the accounting software required back up again on Saturday, 21 August given that it had been backed up on the previous day, Friday, 20 August 2010. The day of the fire was a Saturday. There was no trading activity on the day of the fire. 4. There is equally no independent evidence confirming that he was at home when the fire started at approximately 11.15 pm. The plaintiffs' house was a 15 minute drive from the warehouse. There was ample time for him to return to the warehouse to start the fire after, on his account, he returned home from the shopping centre with Mrs Voytenko and her mother. 5. There is no independent evidence (that is, evidence other than the statements of the plaintiffs) confirming the time at which Mr Voitenko left the warehouse on the night of the fire. His evidence is that the police investigation supports his case. I note my earlier observations as to Mr Voitenko's unsatisfactory evidence. There is an absence of records of his whereabouts either in shops or petrol stations. Plaintiffs' Financial Difficulties Access Party Hire 1. Mr Voitenko said in evidence that the information in his tax returns was correct. He said that he had put all of the expenses of the business in his tax returns and that he had disclosed all of his income to the tax authorities. 2. Although Mr Voitenko was keen to present Access Party Hire as a growing business, Mr Voitenko's income tax returns show that his business made a loss each financial year from 2007 to 2010. There is no evidence that the business had ever made a profit in the 15 years it had been operating. 3. Mr Voitenko's explanation, that losses were incurred each year because he was "growing the business", is contrary to the evidence. The tax returns demonstrate a business that was making a loss each year because its expenses, apart from equipment acquisitions, exceeded the income. The tax returns do not show any investment in new assets that could support the assertion, and do not support Mr Voitenko's evidence, that he was "growing" the business. 4. Mr Voitenko's did not provide evidence, beyond his assertion, that his business was growing. He did not point to any investment in equipment or anything else that would be likely to lead to increase in future income. A reliance on family and friends for financial assistance tends to supports a conclusion that his business was in financial trouble. 5. Zurich is correct to submit, in my view, that the evidence points to the Access Hire Business being wound down. 6. When it was put to him in cross-examination that the tax returns did not support an investment in new equipment, Mr Voitenko's explanation was to the effect that the new equipment in 2009/ 2010 was equipment he made from products "which I bought a long time ago and it cost me nothing and I cannot depreciate it". However, there was no evidence adduced to support this assertion. The tax returns show no claim for a deduction of the cost of making new equipment. I do not accept Mr Voitenko's evidence as a credible one. Russtyle 1. Mrs Voytenko's tax returns for the 2009 and 2010 financial years (the only years for which tax returns were provided) show that her business made losses in each of those financial years. 2. She made a loss of $13,418 in the 2009 financial year. Her total declared income that year was $7,400. 3. She made a loss of $10,883 in the 2010 financial year. Her total declared income that year was $27,200. Prior Inconsistent Statements as to Value of Assets Access Party Hire 1. The total value of the depreciated assets of Mr Voitenko's business represented in both the 2009 and 2010 tax returns was $110,733 in the 2009 financial year and $127,183 in the 2010 financial year. 2. The depreciation schedules forming part of the tax returns show items acquired over the period from 5 May 1997 to 14 May 2010. The 2010 tax return was prepared on 20 August 2010, the day before the fire. It is improbable that there were substantial assets acquired by the business not recorded in the depreciation schedule. 3. A note produced by Rinkaz Finance dated 2 February 2010 recorded that Mr Voitenko's business equipment was worth $300,000. 4. On 12 March 2010, Mr Voitenko's finance broker, Rinkaz Finance, stated that the value of the plant and equipment owned by Mr Voitenko's business was $100,000. 5. The values declared in the income tax returns and in the Rinkaz loan application are substantially less than the amounts claimed, and are substantially less than the insurance cover taken out by Mr Voitenko in the amount of $900,000. Russtyle 1. The total value of the depreciated assets of Mrs Voytenko's business in her 2009 income tax return was $10,679, and $19,305 in her 2010 tax return. 2. As with Mr Voitenko's claim, the values declared in the income tax returns are substantially less than the amounts claimed, and are substantially less than the insurance cover taken out in respect of Mrs Voytenko's business in the amount of $200,000. Debts 1. The plaintiffs had effectively no savings and had incurred credit card debts of approximately $50,000 by the middle of 2010. 2. Mr Voitenko had borrowed money through a hire purchase agreement to acquire a 9 m x 15 m marquee (one of the two largest marquees claimed in the claim submission) from Baytex in 2007. He paid $10,000 and borrowed the balance of $15,000, which he was to repay by monthly instalments of $419 per month over 48 months (that is, 4 years). At the time of the fire, he had approximately 12 months of repayments still to make. He used his credit card to make the monthly repayments. 3. Mr Voitenko applied for further finance of $12,000 to purchase a 6 m x 9 m marquee (costing $25,000) in March 2010. However, he did not proceed with that application. When asked in cross-examination why he did not proceed, his answer was, "Well, maybe changed my mind. Maybe something else". A record produced by Rinkaz finance indicated the Rinkaz Record Manager spoke to Mr Voitenko on 13 April 2010. The record states: Spoke to Andrew. Not proceeding at the moment – but won't cancel LL [Little Lease] approval for $12,000. Will contact in May 2011. 1. On 20 March 2010, Westpac issued a notice of default due to the minimum payment of $507 on the Westpac MasterCard not being made. Mr Voitenko's explanation in cross-examination was to state that he was not in default, "I just maybe forgot to pay it, and then I just fix it up". 2. There is evidence a number of bills were not paid on time between the time the plaintiffs took out insurance with Zurich and the date of the fire. On 26 May 2010, AGL, the gas supplier, issued a disconnection warning. Mr Voitenko's evidence in cross-examination was that he "just forgot to pay the bill and then I fixed it". On 26 July 2010, Telstra issued an overdue payment notice requiring immediate payment of an unpaid balance of $367.63. A Telstra invoice issued after the fire, on 25 September 2010, again showed an unpaid balance that was overdue. 3. I do not accept Mr Voitenko's explanation for non-payment, namely, that he was simply forgetful. Some of the bills were part paid, an indicia of inability to pay, not of forgetfulness. 4. Zurich contended that the inference that should be drawn is that around the middle of 2010, Mr Voitenko's business was struggling to pay its bills. In cross-examination Mr Voitenko denied that this was the case. He stated "Why should I? The factory was - in fact they send me the wrong bill …" This explanation is unconvincing. 5. I consider the evidence does demonstrate that the plaintiffs were experiencing financial difficulties in their businesses in the period immediately preceding the fire. No other source of income 1. When asked in cross-examination whether he had any other source of income other than his business, Mr Voitenko said that his family and friends helped him and his wife financially. There was no evidence of the financial support that was provided, save for a loan from a friend of $60,000 in 2000. No family members were called to give evidence. Evidence Businesses Were Being Wound Down 1. The documentary evidence is not suggestive of Mr Voitenko purchasing new equipment. According to the depreciation schedules in his 2010 income tax return, he had purchased only one marquee (described in the depreciation schedule as a "Baytex Tent Maker") since 2007. Most of the marquees had been acquired between 1997 and 2001. 2. There is no evidence that the sales of the business were increasing. The accounts data that Mr Voitenko claims he went to back up on the night of the fire were not produced. 3. Mr Voitenko did not proceed with the Rinkaz loan application for the purchase of the new marquee. This reflected, in my view, a reluctance to take steps to grow the business given its financial position. 4. As earlier mentioned, in 2009 and early 2010 Mr Voitenko started two other businesses, trading as "Craft Rush" and "Yellow Cat" with Leonid Tsvetkov. Craft Rush was an online business selling craft materials. It was unsuccessful and the website for the business was shut down. Yellow Cat was a web development and internet hosting company. Mr Voitenko's evidence was that it is still operating. 5. The public liability insurance cover Mr Voitenko obtained when renewing his public liability policy with QBE in May 2010 was renewed for a period of only 4.5 months (to 30 September 2010). 6. The plaintiffs' lease on the premises was due to expire on 10 October 2010. The plaintiffs had an option to extend the lease for a further year. However, they had not given notice exercising that option prior to the fire. CONCLUSION: ARSON 1. Overall then, what weight should be given to the factors constituting the circumstantial case? 2. Zurich submitted that Mr Voitenko had the means, opportunity and the motive to start the fire. I agree. 3. Based upon the preceding discussion, I also accept Zurich's submission that the plaintiffs' contention that a stranger was responsible for the fire was implausible. The circumstantial case advanced by Zurich has, having regard to the onus falling upon it, and the application of the requisite standard (applying, the principle stated in Briginshaw), to use the expression employed in Cook, "foreclosed the doubts that have been raised [by the plaintiff], and might otherwise have existed, on the evidence". 4. Without diminishing from my earlier analysis of the issues relating to arson some overarching observations may be made. 5. There are many coincidences for which the plaintiffs have attempted to give explanations which were not satisfactory. The fire occurred within months of obtaining fire insurance in the only year in which Mr Voitenko had contents insurance in the fifteen years he had been operating his business. The contents of both businesses were substantially over-insured. It is unlikely a prudent businessperson, not anticipating actually making a claim, would pay for more cover than they needed. All of Mr Voitenko's stock, except 55 plastic chairs, was situated or placed in the warehouse on the night of the fire. None of it was out on hire at the time. The van happened to be parked in the warehouse that night. The fire took place days before Mrs Voytenko was due to leave for Russia. Mr Voitenko left his clothes near the second seat of the fire, which happened to have traces of accelerant on them. 6. Whilst it is theoretically possible a stranger could have started the fire, for the reasons earlier discussed, it is very unlikely. Further, the respective businesses of the plaintiffs were not growing but were being wound down. They were experiencing financial difficulties and their lease on the premises was due to expire. 7. Weighing the realistic possibilities as to who committed the arson, as distinct from possibilities that might be regarded as implausible or fanciful, I accept that Zurich has established, on the balance of probabilities, to the relevant standard as (I have earlier discussed), that the fire was started by Mr Voitenko for the purposes of the plaintiffs' making a claim under the Policy. The evidence did not establish that Ms Voytenko knew or was involved in the arson. CONCLUSION: FRAUD 1. Having regard to the aforementioned conclusions, I find that, pursuant to s 56 of the ICA, Zurich is entitled to refuse to pay the claim advanced by Mr Voitenko. Further, Mr Voitenko was never entitled to receive payments already made by Zurich, which payment was therefore, made by mistake. The same conclusion is applicable to Mrs Voytenko although only with respect to her claim being fraudulently exaggerated. PROOF OF LOSS 1. Whilst it is strictly unnecessary to consider whether, fraud aside, the plaintiff has proven the loss claimed, I shall briefly consider that question. 2. The starting point is the discussion already undertaken with respect to the air dancers, marquees and the dumpling machinery. However, there are many other areas where the plaintiffs have failed to demonstrate loss. Double Counting and Inflation of Claim 1. Naturally, there is some detail involved in the resolution of this issue. It was important, therefore, to ensure that the plaintiffs were equipped to state their cases in this respect. My assessment is that Mr Voitenko, who appears for himself and his wife, was fully cognisant of the issues in the proceedings and the Court processes put in place to resolve them. 2. Further, Mr Voitenko was put on notice on the morning of the second day of the hearing that one of the issues that would be put to him was that there had been double-counting of items in the claim submission. Zurich emphasised particular examples of double-counting or the inflation of claims by Zurich were the claims for the air dancers, marquees and the dumpling machinery. 3. In response to a question from the Court as to whether he wished to lead additional evidence responding to the issues raised by the defendant in opening in this respect, Mr Voitenko informed the Court that there had been double-counting, but only in relation to the claim for kids' tables. He told the Court: I did put two times kids' tables, and I eliminated straight away and I said this is personally my mistake because I was in a hurry to typing, and we just mark it off this one. But there is only one time, one time as I remember, there was. … I promise it's all goods was at the factory, excepting 55 chairs which were sitting on my truck during the fire that occurred at my factory. Apart from that, all my equipment was in there. 1. A total of 43 custom-made kids' tables had been claimed in the claim submission, at items 46 (7 tables), 46 (13 tables) and 47 (3 tables) on p 806 and item 27 (20 tables). 2. There is no contemporaneous evidence before the Court that Mr Voitenko did eliminate, or correct, the mistake he had made in double-counting the number of kids' tables claimed. He did not provide Mr Pecar with an amended claim submission. There is no note in evidence from Mr Pecar of Mr Pecar having been informed by Mr Voitenko that he had made an error in calculating the number of kids' tables claimed. 3. However, the documentary evidence shows that, contrary to Mr Voitenko's submission on the second day of the hearing, there were numerous instances of double-counting or the over inflation of claims in the claim submission in respect of items other than the children's tables, both in relation to items claimed by Mr Voitenko and Mrs Voytenko. Other Illustrations of Double Counting or Over Inflations in the Claims by the Plaintiffs Camera 1. A Pentax camera costing $1,499.95 has been claimed twice: once in the first page summary ("Ted's Camera Store: $1,499.95"); and again on page 812 of Ex 13 ("3. Photo Camera Pentax, [Qty] 1, [Cost] $1,499.95, Ted's Camera Store Quotation see Attachment"). 1. In the quote from Ted's Camera Store (Ex 11, 11-446-3957), the product description is "Pentax K7 DSLR/ Pentax DA 18-55 mm II WR". The price is $1,499.95. It is clearly the same item. 2. Mr Voitenko's evidence in cross-examination was that he had "at least two cameras in there". Mrs Voytenko had told Detective Senior Constable Glasson during the police interview on 27 October 2919 that Mr Voitenko had only one camera. In any event, in Mr Voitenko's evidence, he stated that he collected one of the two cameras on the night of the fire; so there can have been only one other camera in the warehouse when the fire started. White Alfresco Chairs 1. Zurich contended that quantities of White Alfresco plastic chairs have been claimed twice: 609 White Alfresco chairs were claimed at item 27 at page 806 of Ex 13; the amount of $52,503 claimed in respect of the Ergodesk Lifetime quotation on the first page of the claim submission included 800 Pipee White chairs, as can be seen from the Ergodesk quotation at Ex 11, 11-418-3830. 1. The description in the Ergodesk quote ("Chair - Pipee White") is, according to Mr Voitenko, the same product. 2. Zurich also contended that this is another instance of a claim that has been exaggerated, as the quantity of white plastic chairs recorded by Abacus during the stocktake was 400 ("Chair, Alfresco White, Plastic"). I accept those submissions. Kid's Chairs 1. I have earlier mentioned this issue and the concession made by Mr Voitenko. Zurich contended that the quantities of plastic children's chairs have been claimed twice as follows: 150 multicoloured kids' chairs were claimed at item 49 on p 806 of the claim submission. The supporting evidence referred to in the sixth column is the Ergodesk quotation; a further 200 multicoloured kids' chairs were claimed at item 21 on p 811 of the claim submission. The supporting evidence referred to was again the Ergodesk quotation. 1. The Ergodesk quotation was for white chairs ("Chair - Pipee White Children's"), not multi-coloured. The quantity of chairs quoted was 200. The whole of the Ergodesk quotation was claimed on the first page of the claim submission. 2. A total of 550 children's chairs (item 49 on p 806 (150), item 21 on p 811 (200) and the Ergodesk quotation (200)) claimed was a substantially greater number than was recorded as having been in the warehouse by Abacus during the stocktake (40 chairs, described as "Chairs, Children's Party, Plastic"). 3. Mr Voitenko said in cross-examination that the 50 kids' chairs claimed at item 48 on p 806 of the claim submission was a mistake. I agree with the submissions of Zurich that no amount should be allowed for this item. 4. Other examples of double-counting involve essentially the same issue, whereby items claimed in the body of the claim submission also included the quotations for which a total amount is claimed on the first page of the claim submission. 5. Mr Voitenko was taken to those instances in cross-examination. The cross-examination revealed the deficiencies in the claim as follows: 1. the radio cassette player claimed at item 73 on p 807, which was claimed as part of the Harvey Norman AV/IT Superstore quotation listed on p 803. The quotation is at Ex 11, 11-415-3822.1. The relevant entry is the third line from the bottom of the document, "CD Radio Cassette Player"; 2. the oil heater claimed at item 87 on p 807, which was claimed as part of the other Harvey Norman ("Harvey Norman Store") quotation on p 803. The quotation is at Ex 11, 11-415-3824. The relevant entry in the quotation is the third asterisked item from the top, "Heatwave/ Column Heater"; 3. the DVD player claimed at item 95 on p 807 (described in the claim submission as "Panasonic DVD Player"), which was also claimed as part of the Harvey Norman Store quotation on p 803. The relevant entry in the quotation is the second item from the bottom of p 3822 (Ex 11, 11-415-3822), "Blu-ray DVD Recorder". 1. Similar issues arise with other aspects of the Russtyle claim. 2. The claim for the meat grinder ($1,000) in the claim submission appears at item 8 on p 812 ("Mit Graynder"). The supporting document listed in the sixth column was the Billabong Factor quotation. 3. The Billabong Factor quotation was also claimed separately on p 803 in a total amount of $76,946.55 (see at Ex 11, 11-420-3833). The meat grinder is the fourth item in the quotation ($997). 4. A similar machine, described as a "meat mincer" appears in the AGC Catering quotation (Ex 11, 11-417-3829), which is also claimed on p 803 in a total amount of $78,677.50. The meat mincer is the seventh item from the bottom on p 3829 ($1,000). The meat mincer cannot be the same machine as the mince mixer claimed at item 43 on p 813, because that machine was one of the machines imported from China which is said to be supported by the quotation obtained from Sydney Supply. 5. This inconsistency was put to Mr Voitenko in cross-examination. His response was, "Okay, then - then she could have two mixers in her kitchen". I accept the submission of Zurich that that response was inconsistent with the Abacus Stocktake Report, which recorded one meat grinder, and with the claim submission, which claimed one meat grinder. 6. Two flour mixers were claimed in the claim submission (Ex 13, 2-46-813). The first, at item 41, was said to be supported by the AGC Catering quotation. The second, at item 42, was one of the three machines imported from China (addressed separately below under the heading "Dumpling Machine Claim"). 7. No dollar amount was claimed for the flour mixer at item 41, so there was no double-counting of the cost in that sense. However, as to the AGC Catering quotation (Ex 11, 11-417-3829), the relevant item is described as a "Dough Mixer", and two machines have been included, one for $6,000 and the other for $17,210. Other Examples of Costs which have been Inflated Rear Projection Televisions: Access Party Hire Claim 1. Two 100 cm televisions were claimed at items 92 and 93 of the claim submission at Ex 13, 2-46-807. 2. In the claim submission (Ex 13, 2-46-807), at items 92 and 923, Mr Voitenko claimed $4,299 and $3,099 respectively based on quotations from Bing Lee and Harvey Norman. The Bing Lee quotations that were provided do not refer to a television. The Harvey Norman quotation Ex 11, 11-415-3822 lists two televisions, a 46 inch Sony LED television ($3,099) and a Panasonic plasma television ($1,499). 3. The Abacus Stocktake Report at Ex 11, 10-393-3363 recorded the estimated costs for these items were $1,500 each. 4. The depreciation schedule in Mr Voitenko's 2010 income tax return records one television acquired for business use on 1 April 2001 at a cost of $2,635. 5. At 46 inches (116.84 cm), the Sony LED television is a larger television than the 110 cm televisions that were destroyed in the fire. The televisions that were lost were recorded in the Abacus Stocktake Report at Ex 11, 10-393-3363 to be rear projection televisions, an older product than the flat-screen models now available on the market. Mr Voitenko's evidence was that he had purchased them approximately 20 years ago (T 277.9) and they were "old equipment" (T 276.23). 6. Zurich correctly contended that Mr Voitenko put forward as claimed replacement items products that were substantially better and more expensive than the items he had lost. Chest Freezers: Russtyle Claim 1. The claims for two chest freezers at items 25 and 26 at Ex 13, 2-46-812 were quantified at $375 and $1,294 respectively. The supporting document listed in the sixth column was a Bing Lee invoice. 2. Screen prints of sales records of Bing Lee at Ex 11, 3-53-803 and Ex 11, 3-55-806 indicate that Mr Voitenko purchased the freezers for $375 and $1,294 in March and December 2004 respectively. 3. However, two chest freezers were also claimed as part of the AGC Catering quotation for $4,000 and $8,000 respectively, at Ex 11, 11-417-3829, third and fourth items from the bottom. 4. When the apparent disparity between the cost claimed in the claim submission and the costs appearing in the AGC Catering quotation was put to Mr Voitenko in cross-examination, his response was to assert that the purpose of the quotation "is just to show you the current market value of the goods we lost in the fire". 5. If that was the purpose, the quotation did not present a fair or accurate representation consistent with the plaintiffs' duty of utmost good faith of the true market value of the goods. The plaintiffs' own documents show that the freezers were purchased for $375 and $1,294 respectively yet the plaintiffs proffered a quotation for substantially higher amounts of $4,000 and $8,000. CONCLUSION 1. In the circumstances, the plaintiff's further amended statement of claim must fail. The defendant's amended statement of cross claim must succeed on either of the substantive bases for that claim. 2. No submissions were made as to the question of interest by Zurich or costs. 3. Given the conclusion reached by the Court, it would be appropriate for Zurich to have an order for costs on an ordinary basis. 4. If interest or a special order for costs is sought then Zurich should state any application it proposes to make in that respect in short minutes of order filed in accordance with the Court's direction together with any timetable to resolve issues with respect to the same. ORDERS: 1. The Court directs that Zurich should file and serve short minutes of order reflecting this judgment within 21 days of the judgment. ********** 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: 09 November 2021