Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Admiral International Pty Ltd v Insurance Australia Ltd [2022] NSWCA 277 Hearing dates: 26–27 September 2022 Date of orders: 20 December 2022 Decision date: 20 December 2022 Before: Bell CJ at [1]; Ward P at [274]; Macfarlan JA at [275] Decision: 1. Appeal in the CGU proceedings allowed in part. 2. Appeal in the Brightcity proceedings allowed in part. 3. In the CGU proceedings, set aside orders 1–3 of the orders made by the primary judge on 8 November 2021. 4. In the Brightcity proceedings, set aside order 5 of the orders made by the primary judge on 8 November 2021. 5. Direct that the parties file Short Minutes of Order consequent upon the reasons of the Court, together with any submissions (of not more than three pages) on the question of costs, with the Chief Justice's Associate by 4.00pm on 27 January 2023, with any outstanding questions as to orders and costs to be determined on the papers. Catchwords: APPEALS – from findings of fact – circumstantial proof – inferences from primary facts – where insurer denied claim on basis of insured's knowledge of and connivance in and consent to theft and arson – whether controlling mind and will of insured company had requisite knowledge – primary judge's reasoning circumstantial and based on inference – whether strands of primary judge's reasoning were capable of sustaining ultimate conclusion INSURANCE – property insurance – industrial and special risks cover – liability cover – fraud – theft from and subsequent arson of bonded warehouse – where insurer denied claim on basis of insured's knowledge of and connivance in and consent to theft and arson – whether controlling mind and will of insured company had requisite knowledge – primary judge's reasoning circumstantial and based on inference – whether strands of primary judge's reasoning were capable of sustaining ultimate conclusion – whether insurer's denial of indemnity and allegation of arson were a breach of insurer's duty of utmost good faith implied by s 13 of the Insurance Contracts Act 1984 (Cth) – whether insured was entitled to recover damages for consequential loss – whether insured had failed to take reasonable precautions to secure warehouse INSURANCE – measure of indemnity – loss – business interruption cover – where forensic accounting experts disagreed on whether insured company had positive revenue growth trend – where primary judge held that there was no such trend – where primary judge held that insured company had concrete prospects of procuring new customers – whether evidence supported finding that there was no positive growth trend in insured's revenue – where Court must do the best it can with the evidence available to assess damages Legislation Cited: Crimes Act 1900 (NSW) s 197(1)(b) Customs Act 1901 (Cth) ss 35A, 77G, 79 Evidence Act 1995 (NSW) s 140(2) Insurance Contracts Act 1984 (Cth) ss 13, 56 Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) r 25.1 Supreme Court Act 1970 (NSW) s 75A Trustee Act 1925 (NSW) s 69 (repealed) Uniform Civil Procedure Rules 2005 (NSW) rr 14.14, 15.3, 15.4 Cases Cited: Almona Pty Ltd v Parklea Corporation Pty Ltd (2021) 392 ALR 457; [2021] NSWCA 171 Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 Ballard v Multiplex [2012] NSWSC 426 Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Barrie Toepfer Earthmoving and Land Management Pty Ltd v CGU Insurance Ltd (2016) 75 MVR 108; [2016] NSWCA 67 Booksan Pty Ltd v Wehbe (2006) 14 ANZ Ins Cas 61-678; [2006] NSWCA 3 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Clancy v Plaintiff A (2022) 318 IR 31; [2022] NSWCA 119 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Comptroller-General of Customs v Zappia (2018) 265 CLR 416; [2018] HCA 54 ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 Fairfax Digital Australia & New Zealand Pty Ltd v Kazal (2018) 97 NSWLR 547; [2018] NSWCA 77 Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898 Gett v Tabet (2009) 254 ALR 504; [2009] NSWCA 76 Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 Globe Church Incorporated v Allianz Australia Insurance Ltd (2019) 99 NSWLR 470; [2019] NSWCA 27 Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 Jagatramka v Wollongong Coal Ltd [2021] NSWCA 61 John v Federal Commissioner of Taxation (1989) 166 CLR 417; [1989] HCA 5 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 Libke v The Queen (2007) 230 CLR 559; [2007] HCA 30 Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 Motor Accident Commission v Dinh (2015) 124 SASR 344; [2015] SASCFC 184 Mt Pleasant Stud Farm Pty Ltd v McCormick [2022] NSWCA 191 Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66 New South Wales v Hathaway [2010] NSWCA 184 Palmer v Dolman [2005] NSWCA 361 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10 President of India v Lips Maritime Corporation [1988] AC 395 Queensland v Commonwealth (1977) 139 CLR 585; [1977] HCA 60 Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22 Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262 Skelton v R [2015] NSWCCA 320 Sprung v Royal Insurance (UK) Ltd [1999] 1 Lloyd's Rep IR 111 Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 Versloot Dredging BV v HDI Gerling Industrie Versicherung AG [2017] AC 1; [2016] UKSC 45 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277 Worth v HDI Global Specialty SE (formerly International Insurance Company of Hannover SE) (2021) 393 ALR 93; [2021] NSWCA 185 Texts Cited: J D Heydon, Cross on Evidence (13th Australian ed, LexisNexis Butterworths, 2021) Category: Principal judgment Parties: In proceedings 2021/341356: Admiral International Pty Ltd (Appellant) Insurance Australia Ltd (Respondent) In proceedings 2021/341373: Admiral International Pty Ltd (Appellant) Insurance Australia Ltd t/as CGU Insurance (Respondent) Representation: Counsel: Mr A J Sullivan KC with Mr N J Olson (Appellant) Mr G M Watson SC with Mr M Kalyk (Respondent) Solicitors: LMI Legal Pty Ltd (Appellant) Lander & Rogers (Respondent) File Number(s): 2021/341356; 2021/341373 Publication restriction: N/A Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2021] NSWSC 1440 Date of Decision: 8 November 2021 Before: Fagan J File Number(s): 2018/343393; 2019/191443 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The Appellant, Admiral International Pty Ltd (Admiral) operated a customs warehousing business from premises at Alexandria (the warehouse). The majority of goods held by Admiral were imported alcohol and tobacco products, including a significant quantity of goods imported into Australia by Brightcity International Trading Pty Ltd (Brightcity). The controlling mind and will of Admiral was Mr Denis Fateev (Denis), who was the Managing Director of the company at all material times. Denis was assisted in the operation of the business by his father, Mr Dmitry Fateev (Dmitry), who worked part-time at the warehouse. Dmitry died on 8 January 2021 in Vladivostok, Russia, where he had resided since 15 April 2018. Admiral also employed Mr Artur Russkikh (Mr Russkikh) as its Operations Manager until July 2019. Admiral was insured by the Respondent, Insurance Australia Ltd t/as CGU Insurance (CGU), against both damage to the warehouse and business interruption, pursuant to an Industrial Special Risks Policy (the ISR Policy). Admiral was also insured against legal liability to third parties, pursuant to a General & Products Liability Policy (the Liability Policy). Both of Admiral's insurance policies were issued for the period of 12 months from 30 September 2017. In the early hours of the morning of Monday, 16 April 2018, the warehouse and its contents were destroyed by fire. At the time of the fire, neither Dmitry nor Denis was in Australia, as Denis had departed for a business trip to Hong Kong during the afternoon of Friday, 13 April 2018. The fire was preceded by the delivery of a considerable quantity of used tyres to the warehouse, and the theft of a sizeable quantity of alcohol and tobacco products from it, during the evening of 13 April and throughout 14 April 2018. The used tyres were delivered by Mr Maurizio Gazzara (Mr Gazzara), with Dmitry assisting to unload them into the warehouse. It was accepted that Dmitry was the last person to attend the warehouse prior to the fire, and that he had not armed the monitored alarm system at the warehouse. Later on 16 April 2018, Admiral notified CGU of a claim for indemnity under the ISR Policy. Almost one year later, on 9 April 2019, CGU advised that, following the conduct of an investigation into the facts and circumstances of the fire, it had declined to indemnify Admiral on the basis of arson fraud, concluding that "the fire was lit with the knowledge, consent or authorisation of Admiral" following a coordinated theft of its customers' goods. Admiral subsequently commenced proceedings against CGU (the CGU proceedings), seeking a declaration that it was entitled to indemnity under the ISR Policy, in addition to damages for breach of contract and for breach of CGU's duty of utmost good faith under s 13 of the Insurance Contracts Act 1984 (Cth). Brightcity also commenced proceedings against Admiral for breach of bailment (the Brightcity proceedings), in which Admiral brought a cross-claim against CGU, seeking indemnity for its liability to Brightcity pursuant to the Liability Policy. CGU defended that cross-claim, including on the basis that Admiral had failed to take "reasonable precautions" to protect Brightcity's goods from destruction. The CGU and Brightcity proceedings were heard together and, on 8 November 2021, the primary judge entered judgment for CGU in the CGU proceedings and dismissed Admiral's cross-claim in the Brightcity proceedings (the primary judgment). The primary judge held that Dmitry was the architect of the theft and subsequent arson, and that Denis had knowledge of and connivance in it, and consented to it. The primary judge's inferential analysis comprised a series of overlapping and cumulative "strands of reasoning", including the Fateev family's harmonious relationships; the practical necessity of Denis' cooperation in the arson fraud; the timing of Denis' trip to Hong Kong; Denis' failure to make contact with the company monitoring the warehouse alarm; Denis' failure to monitor the warehouse from Hong Kong, using a mobile phone app linked to the warehouse CCTV cameras (the CCTV app); and Denis' perceived failure to make relevant inquiries following the fire, including to Dmitry. These "strands of reasoning" formed the basis of Admiral's appeal from the primary judgment. It was not in dispute that the fire had been deliberately lit, and ultimately not in dispute on appeal that Dmitry was involved in the theft of goods from the warehouse and its subsequent destruction by arson. The principal issues on appeal were: 1. whether Admiral, through Denis, knew of and consented to the theft of goods from the warehouse, and its subsequent destruction by arson (the central issue); 2. whether Admiral failed to take "reasonable precautions" to protect Brightcity's goods from destruction in the fire (the reasonable precautions issue); 3. whether Admiral was entitled to damages for consequential loss arising from CGU's refusal of indemnity under the ISR Policy (the consequential loss issue); and 4. whether the primary judge erred in finding that there was no positive trend growth in Admiral's gross revenue, notwithstanding that Admiral had "concrete prospects of increasing its business" (the growth trend issue); The Court held (Bell CJ, Ward P and Macfarlan JA agreeing), allowing the appeals in each of the CGU proceedings and the Brightcity proceedings in part, setting aside the primary judge's orders 1–3 in the CGU proceedings, and setting aside the primary judge's order 5 in the Brightcity proceedings: As to the central issue Taking account of the application of the principles in Briginshaw, as reflected in s 140(2) of the Evidence Act 1995 (NSW), the gravity of the allegations, and having regard to the inferential nature of the reasoning, the primary judge erred in his conclusion on the central issue of knowledge and connivance. It follows that Admiral was entitled to indemnity from CGU under both the ISR Policy and the Liability Policy: [209]–[210] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Briginshaw v Briginshaw (1936) 60 CLR 336; [1936] HCA 34; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66, applied. There were multiple plausible explanations as to why Dmitry would not have told Denis of his criminal enterprise, even though the Fateev family appeared to be close knit: [123] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). It was plausible that the very fact of Denis travelling to Hong Kong on 13 April 2018 created the window of opportunity for the theft and arson to occur over the ensuing three days: [132] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Contemporaneous documentary evidence established that Denis had a legitimate reason to travel to Hong Kong from 13–17 April 2018, in order to meet with representatives of a prospective Chinese customer ahead of a board meeting on 18 April 2018. Further, the evidence did not support the primary judge's conclusion that there was a pressing need for Denis to be in Sydney during the weekend of 14 April 2018: [157]–[158] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Denis was able to be contacted by the alarm monitoring service while he was in Hong Kong, and he may not have checked the CCTV app either because he had no reason to do so, or because he was pre-occupied with his dealings with a prospective customer: [163]–[164], [170] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). The evidence given by Denis under cross-examination established that, contrary to the primary judge's conclusion, he had made contemporaneous inquiries of Dmitry following the fire, even after Dmitry had suffered a stroke, that he did not know and had never met Mr Gazzara, and that he had engaged in discussions with Mr Russkikh regarding theft from the warehouse: [184]–[185], [188] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). An appellate court is, generally, equally as capable as a trial judge of determining whether an answer given by a witness is substantially responsive to a question: [205] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Discussion by Bell CJ of the principles governing the standard of proof and the proper pleading of allegations of fraud, circumstantial proof in civil proceedings, and the appellate review of factual findings: [86]–[103]. Briginshaw v Briginshaw (1936) 60 CLR 336; [1936] HCA 34; Clancy v Plaintiff A (2022) 318 IR 31; [2022] NSWCA 119; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66; ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24; Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11; Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114; Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; Palmer v Dolman [2005] NSWCA 361; Ballard v Multiplex [2012] NSWSC 426; Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28; Mt Pleasant Stud Farm Pty Ltd v McCormick [2022] NSWCA 191; White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277, discussed. Compound questioning of a witness is objectionable in that it may confuse a witness and/or be unfair to the extent that it is apt to produce incomplete answers: [203]–[204] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Libke v The Queen (2007) 230 CLR 559; [2007] HCA 30; Skelton v R [2015] NSWCCA 320, applied. As to the reasonable precautions issue 4. In the absence of a basis to attribute knowledge of Dmitry's acts to Denis and/or Admiral, it was not established that Admiral had failed to take "reasonable precautions" so as to deny its entitlement to indemnity under the Liability Policy: [227] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898; Booksan Pty Ltd v Wehbe (2006) 14 ANZ Ins Cas 61-678; [2006] NSWCA 3; Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390, applied. As to the consequential loss issue 5. Admiral could not recover damages for consequential loss in its claim against CGU for breach of the ISR Policy, otherwise the principle precluding the award of "damages for non-payment of damages" would be offended: [237] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Globe Church Incorporated v Allianz Australia Insurance Ltd (2019) 99 NSWLR 470; [2019] NSWCA 27; Worth v HDI Global Specialty SE (formerly International Insurance Company of Hannover SE) (2021) 393 ALR 93; [2021] NSWCA 185, applied. 6. A breach of an insurer's implied duty of utmost good faith requires more than a simple denial of indemnity, provided that the insurer has a reasonably arguable basis for that denial, even if fraud is alleged. On that basis, Admiral failed to establish that CGU had not acted with the utmost good faith: [243]–[244] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). As to the growth trend issue 7. Although a court must do the best that it can with the evidence available to assess future loss, Admiral failed to present sufficiently concrete data to allow for the estimation of a quantum of trend growth in its gross revenue, notwithstanding that it had concrete prospects of increasing its business: [271] (Bell CJ); [274] (Ward P); [275] (Macfarlan JA). Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10, approved. Judgment BELL CJ: Introduction 1. These are two appeals from a decision of Fagan J (the primary judge) in which his Honour dismissed claims brought by Admiral International Pty Ltd (Admiral) against its insurer, Insurance Australia Ltd trading as CGU Insurance (CGU), following the destruction by fire early in the morning of 16 April 2018 of a warehouse at 1/64–66 Burrows Road, Alexandria (the warehouse), from which Admiral conducted its customs warehousing business: Admiral International Pty Ltd v Insurance Australia Ltd; Brightcity International Trading Pty Ltd v Admiral International Pty Ltd [2021] NSWSC 1440 (the primary judgment or PJ). 2. Admiral was permitted to receive and store bonded goods at the warehouse pursuant to two licences issued to it conjointly by the Australian Border Force (ABF) and the Australian Taxation Office. The first was a "depot licence", under s 77G of the Customs Act 1901 (Cth), which permitted Admiral's short-term storage of bonded goods in order to enable unpacking and consolidation for safe and secure management. The second was a "warehouse licence", under s 79 of the Customs Act, which generally permitted Admiral's indefinite storage of bonded goods in a specific section of the warehouse (the bond store) and subject to certain conditions, including that bonded goods were required to be kept intact, ordinarily through the application of wrapped sheet plastic to unloaded pallets of alcohol or tobacco products, until the outstanding duty had been paid on them. [1] 3. Admiral stored both duty-paid goods (free goods) and those on which customs duties were outstanding (bonded goods) at the warehouse in consideration of a specified sum calculated on a per unit per week basis and payable by a customer (ordinarily an importer of goods into Australia). [2] The majority of the goods held by Admiral were imported alcohol and tobacco products. [3] A significant delivery of tobacco products having a retail value of well over $6 million had been delivered to the warehouse in the business week ending Friday 13 April 2018, although the precise date of delivery was not apparent from the business records. 4. Neither Denis Fateev (Denis), the then 27-year-old Managing Director of Admiral who had been running the business for five years at the time of the fire, nor his father, Dmitry Fateev (Dmitry), who worked part-time in the business, was in the country at the time of the fire, which occurred in the early hours of 16 April 2018. Because of the frequency with which it will be necessary to refer to them in the balance of these reasons, Denis and Dmitry will be referred to by their first names. 5. Denis departed for Hong Kong early in the afternoon of Friday, 13 April 2018 and his father departed Sydney for Vladivostok, Russia at 7.45am on the morning of Sunday, 15 April 2018, some 17 hours prior to the fire. He suffered a stroke in June of that year and died in Vladivostok of natural causes on 28 January 2021, prior to the trial. He never returned to Australia following his departure from Sydney on the morning of 15 April 2018. It should be noted that Dmitry's mother lived in Vladivostok, and there was evidence that she was very ill at the time of Dmitry's trip (she later died) and that Dmitry had visited her in Vladivostok previously. 6. The primary judge held that Dmitry was the architect both of a theft of a valuable quantity of goods, including cigarettes, from the warehouse on the evening of Friday, 13 April 2018 and in the course of Saturday, 14 April 2018 as well as of the subsequent arson although, self-evidently due to his departure from Australia prior to the fire, he was not the arsonist. Police inquiries into the arson were still ongoing at the time of the trial and the hearing of the appeals. 7. The primary judge held that there was: [4] "clear proof that Dmitry Fateev facilitated the theft of many millions of dollars' worth of Admiral's customers' goods from the warehouse on 13 and 14 April 2018, that he deliberately caused motor tyres to be spread around the warehouse to provide fuel for a fire and that he left the premises unsecured to facilitate the entry, at about 12:24 am on 16 April, of an arranged arsonist." 1. The central issue before the primary judge, in terms of Admiral's claim for indemnity by CGU, was whether Admiral, through Denis, knew of and consented to the deliberate theft and subsequent arson of the warehouse and its remaining contents. [5] His Honour held that it did, meaning that Admiral's claim against CGU for indemnity was precluded by the "fraudulent or dishonest acts" exclusion clause in the relevant insurance policy, reproduced at [20] below. The primary judge held that: [6] "The 'fraudulent or dishonest acts' were those of Denis Fateev, attributed to the insured of which he was the directing mind and will; namely, the acts of consenting to and conniving at the deliberate destruction of the warehouse and its contents by fire. On the findings of fact that I have made the exclusion is engaged and CGU is entitled to refuse indemnity to Admiral under the policy." 1. On appeal, Admiral originally challenged the primary judge's findings as to Dmitry's role in the theft and arson, of which he held that Denis both knew and approved. Admiral abandoned that challenge in the course of the hearing of the appeal. 2. The central issue on appeal therefore concerned the primary judge's findings, based on circumstantial reasoning, as to Denis' knowledge of, consent to and connivance in the deliberate destruction of the warehouse and its contents by fire, which he held was designed to conceal the earlier theft of valuable goods. 3. Further issues on appeal concerned an alleged failure by Admiral to take "reasonable precautions" to prevent the destruction of a customer's goods in the fire, which CGU relied upon to refuse indemnity under Admiral's liability insurance policy, discussed below, as well as Admiral's claim for consequential loss beyond policy limits. 4. As noted above, in relation to the "reasonable precautions" issue, Admiral had brought a separate claim for indemnity against CGU arising from its liability to Brightcity International Trading Pty Ltd (Brightcity), a firm that operated a business importing alcohol and tobacco products from China into Australia, and which was a major (if not the largest) customer of Admiral, with its goods constituting 23% of the total goods in storage at the warehouse at the time of the fire. The entirety of Brightcity's goods in storage at the warehouse was destroyed in the fire. 5. It was agreed between the parties that Brightcity's goods were valued at $2,364,460.20, that Brightcity had incurred $967,393.80 in transport and duty costs on free goods prior to the fire, and that profit in the sum of $246,132.90 could have been earned on the sale of the destroyed goods. [7] 6. Brightcity sued both CGU and Admiral in relation to goods which had been destroyed in the fire, and those proceedings were heard concurrently with Admiral's claim for indemnity against CGU (the Brightcity proceedings). 7. In the Brightcity proceedings, judgment was entered for Brightcity against CGU in the sum of $3,337,854, with CGU to pay one-third of Brightcity's costs on its claim. In the present appeal, CGU did not challenge this decision. 8. Brightcity also obtained judgment against Admiral for $246,132.90 in damages for breach of bailment, together with two-thirds of Brightcity's costs of its proceedings. 9. Admiral's separate claim for indemnity from CGU, against its liability to Brightcity, had been brought as a cross-claim in the Brightcity proceedings pursuant to a General & Products Liability Policy issued for the period of 12 months from 30 September 2017 (the Liability Policy). Insurance 1. Admiral was insured by CGU pursuant to an Industrial Special Risks Policy (the ISR Policy) issued for a period of 12 months from 30 September 2017, as well as by the Liability Policy. By the ISR Policy, CGU agreed to indemnify Admiral in accordance with the following insuring clause: "In the event of any physical loss, destruction or damage … not otherwise excluded happening during the period of insurance at the Situation [defined in the Schedule as the property at 1/64–66 Burrows Road, Alexandria] to the Property Insured … the Insurer will, subject to the provisions of this Policy including the limitation on the Insurer's liability, indemnify the Insured in accordance with the applicable Basis of Settlement." 1. That insuring clause was qualified by a "fire and perils only endorsement", which was expressed as follows: "FIRE AND PERILS ONLY ENDORSEMENT Notwithstanding anything contained herein to the contrary, it is hereby declared and agreed that damage means physical loss, damage or destruction caused by or arising out of fire, lightning, thunderbolt, explosion, implosion, earthquake, subterranean fire, volcanic eruption, impact, the acts of persons taking part in riots or civil commotions or of strikers or locked-out workers or persons taking part in labour disturbances or malicious persons or the acts of any lawfully constituted authority in connection with the foregoing acts or in connection with any conflagration or other catastrophe, storm, and/or tempest and/or rainwater and/or wind and/or hail, water or other liquids or substances discharged overflowing or leaking from apparatus, appliances, pipes or any other system at the premises or elsewhere." 1. Exclusion 7 of the ISR Policy (the fraud exclusion), as modified by an endorsement, relevantly excluded indemnity for: "Physical loss, destruction or damage occasioned by or happening through: (a)(i) fraudulent or dishonest acts ... by the Insured or any employee(s) of the Insured acting alone or in collusion with any other person(s); Provided further that the term 'dishonest acts', in relation to any of the Insured's employees, shall not be deemed to mean acts of arson or vandalism for the purposes of Perils Exclusion 7". 1. The ISR Policy also contained an Interests of Other Parties Clause in the memorandum to s 1 of the policy wording (the IOP clause). The IOP clause provided that: [8] "The insurable interests of only those lessors, financiers, trustees, mortgagees, owners and all other parties specifically noted in the records of the Insured shall be automatically included without notification or specification; the nature and extent of such interest to be disclosed in event of damage. Where the insurance covers the interests of more than one party, any act or neglect of an individual party will not prejudice the rights of the remaining party/parties; provided the remaining party/parties shall, immediately on becoming aware of any act or neglect whereby the risk of damage has increased, give notice in writing to the Insurer(s) and on demand pay such reasonable additional premium as the Insurer(s) may require." 1. It was in reliance upon this clause that Brightcity successfully brought proceedings against CGU. As already noted, Brightcity also sued Admiral. In circumstances where it was an agreed fact that none of Brightcity's goods had been stolen from the warehouse prior to the fire, it was also agreed that the ISR Policy responded to Brightcity's claimed loss. [9] 2. Admiral sought indemnity from CGU in respect of its liability to Brightcity, pursuant to cl 1.1 of the Liability Policy, which provided that CGU: "will cover You for Your legal liability to pay all sums by way of compensation, and all charges, expenses and legal costs recoverable from or awarded against You in respect of: (a) Personal Injury (b) Property Damage (c) Advertising Liability happening during the Period of Insurance and caused by an Occurrence within the Territorial Limits in connection with Your Business and Your Products." (emphasis added) 1. The general wording of cl 1.1 was qualified by the definition of "occurrence" in cl 4.15 of the Liability Policy, as follows: "an event which results in Personal Injury, Property Damage or Advertising Liability, neither expected not intended from Your standpoint." (emphasis added) 1. The general obligation of CGU to indemnify Admiral under the Liability Policy was further qualified by cl 8.16, titled "reasonable care", which relevantly provided that Admiral must: "a) exercise reasonable care that only competent Employees are employed and take reasonable measures to maintain all premises, fittings and plant in sound condition; b) take all reasonable precautions to prevent Personal Injury and Property Damage, to prevent the manufacture, sale or supply of defective products, and to comply with and to ensure that Your Employees, servants and agents comply with all statutory obligations, by-laws or regulations imposed by all relevant public authorities for the: i) safety of persons or property; ii) disposal of waste products; and iii) handling, storage or use of flammable liquids or substances, gases or toxic chemicals". 1. The object of the reasonable care requirement in cl 8.16, namely "You, Your, Yours", was relevantly defined in cl 4.29 of the Liability Policy to mean: "a) the person(s), companies or firms named on the current Policy Schedule as the Insured [i.e. Admiral]; … c) every past, present or future director, executive officer, Employee, partner, shareholder or voluntary worker of the parties shown in definition 4.29 a. … (including the spouse or family member of any such person performing a designated role in connection with the Business) while acting within the scope of their duties in such capacity; … g) any director or senior executive or partner of the parties shown in definition 4.29 a. … in respect of private work undertaken by an Employee of those parties for such director or senior executive … However, You/Your does not include the interest of any other person other than as described in this definition." (emphasis added) Further background Admiral 1. As of 16 April 2018, all nine issued shares in Admiral were held by Admiral Corporate Group Pty Ltd, of which Svetlana Fateev (Svetlana) was the sole shareholder and director. Svetlana (who was Dmitry's wife and Denis' mother) had also managed Admiral's bookkeeping since it commenced operating. Dmitry had operated a predecessor freight carrying and courier business through Admiral Management Group Pty Ltd until 2013, when it went into liquidation. He thereafter worked part-time at Admiral assisting with the receipt, despatch and delivery of customers' goods. 2. At all relevant times, Denis was the de facto Managing Director of Admiral. He was 27 years old, married and had a young family when the warehouse was destroyed by fire. His unchallenged evidence was that he was: "the only person responsible for the management and operation of Admiral's business affairs, including but not limited to the practices and procedures utilised in the operation of the business, the entry into respective agreements with customers and service providers and the making of the insurance claim on CGU." 1. Denis' younger brother, Nickita, worked part-time at Admiral in a similar capacity to Dmitry and lived with his parents. [10] Admiral also employed a number of persons who were not members of the Fateev family, including Mr Artur Russkikh (Mr Russkikh), who served as Admiral's Operations Manager throughout 2018. Events preceding the fire 1. Admiral had occupied the warehouse for almost four years as at the date of the fire, having commenced occupation under a four-year lease on 1 May 2014, which was due to expire on 30 April 2018. An extension of three months had been negotiated as at the time of the fire. 2. On 9 March 2018, Denis had signed heads of agreement to lease a warehouse at Birnie Street, Lidcombe, with a floor area of over 2,000m2 for a term of five years commencing on 1 April 2018, with an option for a further five years. At about the same time a bond of $104,500, representing three months' rent, was paid by Svetlana. 3. On 9 April 2018, the landlord of the Alexandria warehouse foreshadowed giving Admiral notice under its current lease, to which Denis replied "we will need to relocate to a cheaper facility. 90 days will be more than enough time for us to vacate this unit". The landlord subsequently confirmed a handover date of 9 July 2018. The lease of the Lidcombe premises was executed on 9 April 2018 with a commencement date of 16 April 2018 (the Lidcombe lease). 4. There was evidence that, on 9 April 2018, Denis told Mr Stanislav Kozinets (Mr Kozinets), a sub-tenant at the Alexandria warehouse, that "it would be two to three months while [Admiral] moved all the stock over" to the Lidcombe premises. As shall be seen, this evidence is significant in view of one aspect of the primary judge's analysis. 5. Also of significance was that Denis was the guarantor under the Lidcombe lease, personally guaranteeing payment of annual rent of $380,000 plus GST in monthly instalments over the five-year term of the lease. Mr Gazzara, the booking of a delivery of auto parts and the actual delivery of used tyres 1. On Thursday 12 April at 12.43pm, Admiral received an email from Mr Maurizio Gazzara (Mr Gazzara) of Morris Automotive Pty Ltd, which read as follows: "Hi to the Logistics team. I would like to enquire if you would be able [to] store car parts and accessories on pallets for export in the next few weeks until I am ready to export What is you charge rate per pallet, per week." (emphasis added) 1. Mr Russkikh (of Admiral) replied to this inquiry at 1.26pm on the same day, indicating that the storage cost was $15 per pallet per week. Mr Gazzara responded at 2.14pm, acknowledging this reply and inquiring whether it would be possible to drop some pallets off "in the next few days". Further communication ensued with Mr Gazzara emailing Mr Russkikh at 1.19pm on Friday, 13 April 2018, asking whether he could start to drop pallets at the warehouse on Saturday morning, indicating that he had 20–30 pallets, and seeking confirmation that someone would be present at the warehouse to receive them. Mr Russkikh responded shortly thereafter as follows: "Yes, tomorrow is fine, but we will charge AUD 65 per hour due to weekend. PIC: name Dmitry, phone number … Please call at least 30 minutes before arriving to the warehouse." 1. The evidence, in the form not only of an Affidavit of Mr Gazzara but also CCTV footage, disclosed that the deliveries in fact commenced on the Friday evening and continued on the Saturday morning. 2. Although the initial inquiry received from Mr Gazzara referred to storage of "car parts and accessories", it appears that the actual delivery that was made comprised used tyres, which the primary judge found were spread around the warehouse and in effect used to fuel the fire when it was lit early on the Monday morning. The link between the delivery and the presence of used tyres was reinforced after the fire, when Mr Gazzara supplied Mr Russkikh with an invoice that referred to 318 mixed used tyres and 53 used vehicle batteries. This information was only supplied after Mr Gazzara had been chased up by Admiral on many occasions, seeking information relating to the goods delivered to the warehouse for the purposes of formulating an insurance claim. Mr Gazzara's covering email to Mr Russkikh on 22 June 2018 included the following: "Arthur I will attach only one invoice for a portion of the stock I had dropped off at the warehouse, I do not intend on claiming for additional stock as I cannot locate invoices to substantiate the claim and I do not want to delay your claim any further. It is unfortunate that this event has occurred and I hope you could assist me with at least recovering the amount on the invoice I have provided. Please let me know if this will suffice." 1. The primary judge noted that, following inspections of the warehouse on 19 April 2018 and then 16, 17, 18 and 20 July 2018, CGU's expert forensic fire investigator (Mr Pellegrino) issued a report in September 2020 showing that "he had found, spread through the warehouse, 19 pallets or remains of pallets on which there were used motor tyres, in some cases partially burnt or heat damaged, and/or remnants of radial steel tyre reinforcing consistent with tyres having burned away". [11] The report also noted that in the western half of the northern aisle of the warehouse, there were five pallets of used tyres and, halfway down the middle aisle, there were two more, with a further 12 distributed along the southern aisle. The report concluded that the tyres would have acted as an accelerant "because of their fuel load and high heat release rate". 2. Mr Gazzara was cross-examined extensively on an Affidavit he had made which was read on Admiral's behalf in the proceedings at first instance. That Affidavit purported to give, inter alia, Mr Gazzara's explanation of why and to whom he was proposing to export a cargo of used tyres, and the circumstances of their delivery. His account was squarely rejected by the primary judge, who described it as containing numerous contradictions and improbabilities. His Honour held that: [12] "The emails to Mr Russkikh of Thursday 12 April on Friday 13 April were a cover, to provide the appearance of a genuine commercial storage arrangement in case the tyres should not be completely consumed in the fire and in case questions should be asked about them. The emails also provided a pretext for Dmitry Fateev to attend the warehouse after hours on the Friday and on the Saturday." Significantly, the primary judge did not infer that Mr Russkikh knew of the pretextual nature of the emails and found that he was not involved in the subsequent theft of goods or arson. 1. Mr Gazzara also gave evidence (which the primary judge also did not accept) [13] that Dmitry told him after the second or third load had been delivered on the Saturday morning that all of the pallets that had been delivered on the Friday night and Saturday morning had to be reloaded and taken away for re-packing, which he says he then did by taking them either to Revesby (18km from the warehouse) or Rossmore (35km away) and then returning them to the warehouse. 2. His Honour also rejected Mr Gazzara's denial that goods belonging to Admiral's customers were removed from the warehouse in the trucks that he and his two associates drove. The primary judge found that "late on Saturday 14 April Mr Gazzara and his two associates delivered to the warehouse more than 300 used motor tyres on approximately 19 pallets, for the purpose of fuelling a fire that was to be ignited early on the Monday morning". [14] 3. Later in the primary judgment, his Honour rejected the evidence of Dmitry (who had sworn an Affidavit on 8 December 2020, just over a month prior to his death) and that of Mr Gazzara, to the effect that the three trucks captured on CCTV footage repeatedly attended the warehouse on the evening of 13 April and during the day on 14 April 2018 merely to deliver tyres, finding that this body of evidence had no credibility and provided no material support for any reasonable hypothesis alternative to the inference of a large-scale theft. [15] In other words, the primary judge held that the trucks driven by Mr Gazzara and his associates were used to deliver tyres to the warehouse for the purposes of fuelling the fire and also to convey the stolen goods from the warehouse. Denis' trip to China and Hong Kong 1. More than a month prior to the fire, on 9 March 2018, Denis travelled to Chongqing, China on business and arranged, on his way back to Australia on the afternoon of 4 April 2018, to meet in Hong Kong with a solicitor acting for Juhao Flavor (Hong Kong) Co Ltd (Juhao) with whom Admiral appeared to have been in discussions about the proposed storage of imported food products at Admiral's warehouse. The purpose of the proposed meeting was "purely to clarify the warehousing and logistic protocol and to understand Admiral's standard trading terms and conditions". 2. Denis cancelled the meeting shortly after midday on 4 April and returned to Australia shortly thereafter. 3. The primary judge then recorded that, on Thursday, 12 April 2018, Ms Debbie Fu (Ms Fu), a solicitor acting for Juhao, wrote to Denis requesting a number of documents relating to Admiral's business, such as insurance policies, audited accounts, a list of major contracts and an organisational chart. The letter included the following: "We have instructions from [the Vice President of Juhao] to contact [Admiral] for the purpose of the due diligence exercise to facilitate the preparation of a due diligence report for consideration by the Board. We also have instructions that the due diligence report should be ready for the Board's consideration no later than Wednesday, 18 April 2018." 1. On Thursday 12 April 2018, Denis booked a flight to Hong Kong departing Sydney at 2.20pm the next day, Friday, 13 April 2018. The booking included a return flight departing at 8.00pm on Tuesday, 17 April 2018, Hong Kong local time, and arriving in Sydney on the morning of 18 April 2018. That trip involved a meeting with Ms Fu in relation to the Juhao transaction. According to the evidence, the meeting occurred on Sunday, 15 April 2018. As shall be seen, the primary judge considered that this trip was designed to provide Denis with an alibi in relation both to the theft of goods and the subsequent arson in order to conceal the theft. 2. More detail of Denis' engagements in Hong Kong is considered later in these reasons, in the context of considering Admiral's attack on the primary judge's finding of alibi. Friday 13 and Saturday 14 April 2018 1. According to its inventory schedule entry for Friday, 13 April 2018 (being the last business day before the fire in the early hours of Monday, 16 April 2018), Admiral was storing approximately 609 pallets of goods for its customers (the approximation likely being the result of the presence of "part pallets"). Those 609 pallets included 18 intermediate bulk containers (IBCs), each of which contained 1000 litres of pure alcohol and were recorded by the primary judge as constituting a whole pallet. Of 609 pallets in total, 271 contained cigarettes and 129 contained alcohol. 2. As noted above at [47], Denis left for Hong Kong at 2.20pm on Friday, 13 April 2018. His evidence was that he thought that Dmitry drove him to the airport. 3. There was evidence of extensive movement of three trucks to and from the warehouse on the evening of 13 April 2018 and throughout the next day, which was captured on CCTV. There were five individual arrivals and departures by the trucks on Friday, 13 April 2018 between 6.16pm and 10.35pm, and a further 14 arrivals and departures on Saturday, 14 April 2018 between 6.21am and 11.11pm. CCTV footage showed that Dmitry was present at the warehouse at all of the relevant times over the Friday and Saturday, bar three periods totalling approximately three hours on the Saturday. He was also involved in the loading of the trucks by forklift. Dmitry had arrived at the warehouse at 5.52am on Saturday, 14 April 2018. He departed and returned on numerous occasions throughout the remainder of that day before departing for a final time at 11.11pm. 4. Mr Gazzara's discredited and disbelieved evidence as to what transpired between him and Dmitry to explain the movement of trucks on the Saturday has already been noted: see [40]–[41] above. 5. It was an agreed fact between the parties that Dmitry was the last person to have access to the warehouse prior to the entry of the anonymous arsonist in the early hours of 16 April 2018. Security at the warehouse 1. The warehouse was fitted with an alarm system, including motion sensors and reed switches on certain internal doors, which had been upgraded by Mr Peter Yammine (Mr Yammine) at some time prior to April 2015, from which time he subcontracted Securitas Australia Pty Ltd (Securitas) to provide back-to-base monitoring of the alarm system. 2. Mr Yammine gave evidence and was cross-examined before the primary judge. He deposed that Admiral's alarm system was working properly during March and April 2018 and that "if the alarm was in an armed condition early on 16 April 2018 before the fire started a person could not have forced entry into the warehouse without triggering one of the motion sensors" and causing an "alarm event" to be signalled to and recorded by Securitas. [16] 3. No such event, including the arming of the alarm system, was signalled or recorded following the activation of the internal office-to-warehouse door at 5.59pm on Saturday 14 April 2018, at which time Dmitry was present at the warehouse, until Securitas recorded a "direct wireless complete communications failure" at 12.28am on Monday, 16 April 2018. That final alarm event corresponded with the approximate timing of the fire taking hold of the warehouse. 4. On the basis of that sequence of events, the primary judge was satisfied that "Admiral's warehouse alarm was not armed at the time of the fire and had not been since Dmitry Fateev left the premises late on the preceding Saturday night". [17] 5. The primary judge described the overall security infrastructure at the warehouse as consisting of: [18] 1. a cyclone wire fence on the street boundary; 2. double gates at each vehicle entryway; 3. locks for the vehicle entry to the warehouse and the pedestrian entry to the adjoining office; 4. motion sensors at doorways and throughout the warehouse storage area, linked to a monitored alarm panel; 5. a data transmission unit for transmitting signals from the alarm system to a 24-hour monitored base; 6. CCTV within the warehouse and at the front of the building, displayed on monitors in the downstairs area of the office and in Denis' office upstairs; 7. a network video recorder (NVR) in Denis' upstairs office, which comprised a hard drive capable of recording up to 30 days of surveillance footage; and was connected to 8. a mobile phone application (the CCTV app) which allowed users to monitor the CCTV footage in real time. 1. His Honour observed that "these security devices were all disabled at the time when the fire was deliberately started shortly after 12:24am on Monday, 16 April 2018". [19] His Honour placed responsibility for these security failures with Dmitry, as the last person to have attended the warehouse prior to the fire, recording that "[o]n his last departure he failed to secure the door between the back of the office and the warehouse, to arm the alarm system, to lock the front door to the office or to lock the front driveway gates". 2. Crucially, the NVR was not recording footage from any of the various CCTV cameras mounted throughout the warehouse and at its entrance as at the time of the fire igniting, nor had it recorded footage since around 9.45am on Monday, 9 April 2018. [20] (It should be noted that on 9 April 2018, Denis had arranged for a technician to come to the warehouse to investigate a beeping noise made by the NVR. It transpired that the hard drive in the NVR had failed and, as it was still under warranty, a replacement hard drive was ordered which Mr Yammine expected would arrive in 2–4 days. It does not appear to have been delivered prior to the theft and the fire, although the NVR remained in place and capable of transmitting, though not recording, footage). [21] The difficulty with the NVR did not result in a complete absence of evidence comprising CCTV footage, as: [22] "movements at the front of the premises were continuously recorded by the CCTV surveillance system of a building directly across Burrows Road from the southern vehicle entrance to Nos 64-66. One CCTV camera at that location faced south east and covered the front facade of Admiral's Unit 1 and the southern vehicle entry. The other camera faced north east and covered both vehicle entries." 1. On the basis of this body of footage, the primary judge found that "[n]either entry was secured by the closing of the double gates at any time from 4:00 pm on Friday 13 April until the time when the arsonist drove in through the north vehicle entry, parked outside Unit 1, entered the warehouse, started the fire, returned to his car and drove away." [23] 2. In this context, the primary judge found that Dmitry had left the double doors to Admiral's office unlocked when the anonymous arsonist arrived, in circumstances where security of those doors "depended upon a heavy, lockable patio bolt on the external surface of the right-hand door". His Honour recorded that "[i]mmediately after the fire, the patio bolt was found to be unlocked" [24] and reasoned that this was the result of Dmitry's conduct, as follows: [25] "It is clear from the speed with which the arsonist did his work between about 12:24 am and 12:31 am on 16 April that access was gained through the office front door, without forcing. There was no time for forcing and there is no evidence of forcing. One or other … means of leaving the office front door so that it could be opened without impediment must have been adopted. Each of the alternative means depended upon Dmitry Fateev having failed to lock the patio bolt in the engaged position and also having either failed to lock the mortise latch, or issued a key, or deliberately held the latch open". The fire and following 1. As the primary judge recorded: [26] "A person entered the warehouse at about 12:24 am on Monday, 16 April 2018 and set it alight. A very destructive fire instantly took hold, with a powerful explosion at 12:31:35 am. The fire destroyed the warehouse building and Admiral's contents within, such as office equipment, forklift vehicles, pallet racks and pallet jacks." 1. The site of the fire became a crime scene and investigations were commenced not only by the police and the ABF but also CGU. There was no suggestion that Admiral, through Denis, did not give full cooperation to the investigating authorities and CGU. Indeed, there was evidence that he facilitated inquiries as he was no doubt obliged to do under the insurance policies. The warehouse was subsequently demolished, with the process of demolition and debris removal commencing on Monday, 16 July 2018. 2. As has already been noted, the primary judge accepted Mr Pellegrino's evidence [27] and held that the fire was fuelled by tyres located within the warehouse which had been brought onto the premises for that purpose, with the tyres acting as an accelerant "because of their fuel load and high heat release rate". [28] The tyres had been brought onto the premises by Mr Gazzara and two associates, outside of ordinary business hours, and there was no obvious commercial benefit to either party in moving the tyres into the warehouse. As noted at [40]–[41] and [52] above, Mr Gazzara's evidence that the tyres were intended for export was not accepted as plausible and was undermined by his inability to provide any satisfactory explanation in this respect. 3. It was also held, based upon the expert report of Mr Pellegrino, who had inspected the remains of the warehouse shortly after the fire in April and July 2018 but whose report was only served in September 2020, that the tyres were located around the floor of the warehouse in a configuration which could not be explained and which made no practical sense because they would have obstructed the ordinary use of the warehouse. It was also noted that other combustible items, including ethanol and toilet paper, were placed around and near the tyres. [29] 4. Denis arrived back in Sydney on 17 April 2018, having been informed of the fire whilst he was in Hong Kong. As noted above, he was originally scheduled to return home on the morning of the following day. Notification of claim and declinature of cover by CGU 1. Following the fire, Admiral's insurance broker notified CGU of a claim for indemnity under the ISR Policy on 16 April 2018. CGU had not notified Admiral of a decision on indemnity by 8 November 2018, on which date Admiral commenced proceedings in the District Court relevantly seeking a declaration that CGU was bound to indemnify it. These proceedings (the CGU proceedings) were subsequently removed into the Supreme Court and were heard concurrently with the Brightcity proceedings: see [14] above. 2. On 9 April 2019, CGU's solicitor wrote to Admiral and advised that, based on the facts and circumstances known to CGU following a professional investigation conducted by, amongst others, Mr Pellegrino, it had determined that Admiral was not entitled to indemnity and that CGU therefore declined its claim. 3. It was CGU's position that Admiral's claim was excluded by the ISR Policy Condition 7 (Fraud) (the fraud condition) so as to engage s 56 of the Insurance Contracts Act 1984 (Cth). The fraud condition was expressed as follows: "If any claim be in any respect fraudulent or if any fraudulent means or devices be used by the Insured or anyone acting on the Insured's behalf to obtain any benefit under this Policy, or if any destruction or damage be occasioned by the wilful act or with the connivance of the Insured, the Insurer, without prejudice to any other rights the Insurer might have under this Policy, shall be entitled to refuse to pay such claim." 1. Also relevant to CGU's decision to refuse indemnity was the fraud exclusion, the relevant terms of which have been noted above at [20]. 2. According to CGU, the fraud exclusion and condition were both engaged in circumstances where "the fire was deliberately started with the knowledge, consent or authorisation of Admiral and, in any case, Admiral has made fraudulent misrepresentations to CGU for the purposes of pursuing the Claim under the Policy" (emphasis added). 3. CGU provided the following particulars of its determination that Admiral had committed arson fraud: "(a) the Fire was deliberately lit; (b) the Fire was lit by a person entering the Premises at approximately 12.23 a.m. on 16 April 2018 and leaving the premises 8 minutes later at approximately 12.31am; (c) at the time of entry into the Premises by the person the security gates were open which allowed access to the Premises; (d) at the time of entry into the Premises by the person the security alarm system was not working or working properly; (e) at the time of entry into the Premises by the person the CCTV camera system was not working or was not working properly; (f) at the time of entry into the Premises by the person there was combustible material in the nature of tyres spread around the Warehouse; (g) the tyres had been delivered to Admiral at the Premises on 14 April 2018; (h) prior to 14 April the Warehouse was full of large quantities of stock to the approximate value of $14,000,000; (i) by the time of the Fire, the Warehouse was not full of stock and large quantities of stock had been removed from the Premises prior to the Fire; (j) the stock had been removed from the Premises in the 48 hours prior to the Fire and with the knowledge of Admiral; (k) according to Admiral, the last person on the Premises prior to the night of the Fire was Dmitry Fateev, who was formerly the director of Admiral, the father of the current director, a person working for Admiral, who left Australia the next day and has not returned; (l) the door to the Warehouse was not securely bolted when the last person was on the Premises; (m) Admiral has falsely asserted or implied that: (i) no stock had been removed from the Premises during the 48 hours prior to the Fire; (ii) the Premises were full of stock at the time of the Fire; (iii) it was unaware that either the security system or CCTV system was not working properly; and (iv) the tyres said to have been delivered and accepted by Dmitry Fateev on Saturday 14 April 2018 were stored in a specific area of the warehouse (and not spread around the Warehouse); and (n) in all the circumstances CGU considers the Fire was lit with the knowledge, consent or authorisation of Admiral." (emphasis added) 1. CGU also provided the following particulars of its determination that, in bringing the claim for indemnity under the ISR Policy, Admiral had made fraudulent misrepresentations: "(a) all of the customers' goods referred to in a series of documents describing the goods and their details (the stock reports) were in the Premises at the time of the Fire when in fact they were not in the Premises at the time of the Fire; (b) that there was no movement of trucks in and out of the Premises in the 48 hours prior to the Fire for the purposes of removing stock from the Premises; (c) that the estimated value of the contents in the Warehouse was $14M when in fact it was not and was known by the Plaintiff to not have that value; (d) that there were approximately 12 employees of the Plaintiff working at the premises up to Friday, 13 April 2018, and that the stock could not have been moved from the Premises without the knowledge and cooperation of the Plaintiff, when it was in fact so moved; and (e) that neither Denis Fateev nor Artur Russkikh had any knowledge of any movement of stock from the premises prior to the Fire when in fact such representations must be false." 1. Essentially, it was contended that Admiral had knowingly authorised or consented to the extensive theft of some of its customers' goods from the warehouse and, subsequently, had knowingly authorised or consented to an act of arson in the warehouse, presumably to conceal the earlier theft. 2. In response to CGU's refusal of indemnity, Admiral commenced the CGU proceedings by filing a Statement of Claim seeking a declaration that CGU was bound to indemnify it under the ISR Policy, and damages for breach of contract and for breach of the duty of utmost good faith as set out in s 13 of the Insurance Contracts Act. 3. The CGU proceedings at first instance, together with the Brightcity proceedings, were heard over nine days in September 2021, during which Denis was cross-examined at length and nine other witnesses gave oral evidence. As noted at [43] above, an Affidavit sworn by Dmitry on 8 December 2020, shortly before his death, was also admitted into evidence. Proceedings at first instance 1. In the proceedings at first instance, it was not in dispute between the parties that the fire had been deliberately lit. Admiral denied any knowledge either of the theft of any goods from its warehouse or the act of arson. It has already been noted that Dmitry had left the country early on the morning of 15 April 2018, prior to the fire having occurred. In addition, Denis was overseas at the time of the fire, having flown to Hong Kong some two-and-a-half days prior to the fire. 2. As noted above at [8], the primary judge framed the central issue for his determination as being "whether Admiral knew of and consented to the deliberate burning of the warehouse and its contents", [30] in circumstances where his Honour had found there to be: [31] "10 … clear proof that Dmitry Fateev facilitated the theft of many millions of dollars' worth of Admiral's customers' goods from the warehouse on 13 and 14 April 2018, that he deliberately caused motor tyres to be spread around the warehouse to provide fuel for a fire and that he left the premises unsecured to facilitate the entry, at about 12.24am on 16 April, of an arranged arsonist … 11 … Despite clear evidence that Dmitry Fateev took part in the massive theft of Admiral's customers' goods and that he enabled the staging of a fire to cover the stock deficiency, Admiral has actively disputed Dmitry Fateev's involvement. It tendered an implausible statement from him denying complicity and it adduced equally unimpressive evidence from Maurizio Gazzara, one of three truck drivers who helped remove the stock and who delivered the tyres that fuelled the subsequent fire." 1. The primary judge's finding that Dmitry orchestrated and participated in the theft of a significant quantity of goods stored at the warehouse by Admiral, during the weekend prior to the fire, was reached by inference from the following circumstances: [32] "(1) Admiral's stock records establish what was in the warehouse up to Friday 13 April. (2) I am satisfied from Mr Pellegrino's evidence that the fire debris was not materially altered between the time when the fire was extinguished and the dates upon which he examined and catalogued the debris. By 'not materially altered' I mean that no debris was removed, no additional debris was brought to the site and the material was not in any significant degree rearranged, so that Mr Pellegrino's conclusions are properly based upon the true remains of the fire. (3) Mr Pellegrino's examination was rigorous and it satisfies me that all or substantially all of the goods listed at [147] and [150] were removed between the Friday afternoon and the commencement of the fire. (4) The missing goods were of very great value, in the order of $34 million. The cigarettes, which represented most of the value, were marketable and easily transported. Hence, they would have been a target for theft. (5) The seizure by police, in August 2018, of significant quantities of ICT's Top Smoke cigarettes, that had been stored in the warehouse until 13 April, supports Mr Pellegrino's evidence concerning goods on Admiral's stock list of which there was no evidence in the fire debris and which must have been removed before the warehouse was set alight. (6) Between the late afternoon of Friday 13 April and the commencement of the fire there were 19 movements from the warehouse of trucks that had the capacity to remove stock of the description and quantities identified by Mr Pellegrino as missing from the debris. There were no other means by which and no other time at which the stock could have been taken. (7) Dmitry Fateev was present at the warehouse throughout the truck movements on 13 and 14 April 2018. (8) He departed for Vladivostok, on a one-way ticket, at 7:45 am on Sunday, 15 April 2018. I infer that that was either the first departure for the Far East, or one of the first departures, after the last truck movement from the warehouse late on the previous evening." 1. The primary judge's subsequent conclusion that Dmitry intentionally facilitated the lighting of the fire that destroyed the warehouse was established on the balance of probabilities, by inferential reasoning, from the following circumstances: [33] "(1) As captured on the CCTV, the arsonist drove straight to Unit 1 and immediately started the fire. Admiral's warehouse was a premeditated target. The company was not the victim of a random or coincidental attack. (2) Dmitry Fateev actively participated in the theft, as concluded above. He therefore had a compelling motive to have the warehouse burned down so as to reduce the remaining stock to unrecognisable rubble and thereby to conceal the shortfall. The evidence does not disclose any other possible motive of any person for this targeted arson. (3) At 11:11pm on 14 April Dmitry Fateev left the warehouse unsecured in that he did not close and lock the front gates; he did not lock the patio bolt of the front office door in the ground-engaged position; he did not close the door from the office into the warehouse so as to activate its electronic latch and he did not arm the alarm. (4) Dmitry Fateev's departure for Vladivostok early on the Sunday morning not only followed closely after the last of the truck movements by which stock was removed but was just 17 hours prior to the warehouse being set alight. (5) Dmitry Fateev knew that only he and his son Denis were listed contacts for notification of alarm signals received by the monitoring service engaged through Mr Yammine. By Friday 13 April, at the latest, Dmitry Fateev knew that Denis would be out of the country over the weekend and into the next week so that, upon Dmitry Fateev's own departure, there would be no one directly concerned in the business available in Sydney to be notified of alarm activation and to give authority for a patrol car to be sent. (6) Dmitry Fateev received 19 pallets of used tyres into the warehouse late on Saturday, 14 April and caused those pallets and individual tyres to be spread through the aisles. (7) He caused to be placed at the midpoint of the middle aisle an IBC of ethanol, side-by-side with a pallet of toilet paper, the two items together obstructing the aisle and abutted on both sides by pallets of tyres." 1. The primary judge rejected CGU's argument that Dmitry was relevantly the controlling mind and will of Admiral and that his actions were attributable to the company. [34] His Honour concluded that Dmitry's "role in the business of Admiral as a part time warehouseman and delivery driver, was far too limited to constitute him the directing mind and will of the company". [35] There is no cross-appeal from that conclusion. 2. Accordingly, CGU's entitlement to decline indemnity turned, in the primary judge's words, upon its ability to "establish that Denis Fateev, as the controlling mind and will of the insured company, connived at Dmitry Fateev's procurement and facilitation of the fire". [36] The primary judge reached a positive conclusion on that proposition, such that CGU was entitled to refuse indemnity, by a process of inferential reasoning, reflecting the fact that "[t]he evidence that the fire was deliberately lit with Admiral's knowledge and consent is entirely circumstantial". [37] 3. On the hearing of the appeal, Mr Sullivan KC, who appeared for Admiral with Mr Olson, focussed upon the primary judge's analysis leading to his conclusion that Denis knew of and connived in the arson. That analysis was contained in PJ [186]–[207] and is set out in full at [104] below, as it was the subject of close and searching critique in oral submissions and the focus of Admiral's various grounds of appeal and challenges to factual findings made by the primary judge. 4. Before turning to consider that critique, and the grounds of appeal by reference to which it was made, it is desirable first to set out the principles and authorities governing various aspects of the present case, namely the standard of proof, proper pleading of allegations of fraud, and the circumstantial reasoning employed by the primary judge in reaching his ultimate conclusion on the central issue, as well as familiar principles relating to appellate review. Applicable principles and authorities The standard of proof 1. First, the nature of the allegations, namely Admiral's connivance in acts of theft and arson, and a subsequent fraudulent insurance claim in light of its knowledge and connivance, engaged s 140(2) of the Evidence Act 1995 (NSW), which has been equated with the well-known observations in Briginshaw v Briginshaw (1938) 60 CLR 336 at 360–362; [1938] HCA 34 (Briginshaw); see also Clancy v Plaintiff A (2022) 318 IR 31; [2022] NSWCA 119 at [26], citing Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66 (Neat Holdings); Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 at [61], where it was said that "[i]t is well accepted that the test to be applied under s 140(2)(c) is the Briginshaw test"; and New South Wales v Hathaway [2010] NSWCA 184 at [263], where it was said that in a case involving allegations of serious misconduct with grave consequences, "clear or cogent or strict proof" is required. 2. In Briginshaw, a case involving a charge of adultery, Dixon J conceived of the principle that a "court should only make a finding of wrongdoing if satisfied to a standard that recognises the seriousness of what is alleged" (see Jagatramka v Wollongong Coal Ltd [2021] NSWCA 61 at [7]) in the following terms: [38] "Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue in on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency." Later in his Honour's judgment, Dixon J elaborated upon what is now referred to as the Briginshaw principle, in the context of a circumstantial case, as follows: [39] "[u]pon an issue of adultery in a matrimonial cause the importance and gravity of the question make it impossible to be reasonably satisfied of the truth of the allegation without the exercise of caution and unless the proofs survive a careful scrutiny and appear precise and not loose and inexact. Further, circumstantial evidence cannot satisfy a sound judgment of a state of facts if it is susceptible of some other not improbable explanation. But if the proofs adduced, when subjected to these tests, satisfy the tribunal of fact that the adultery alleged was committed, it should so find." (emphasis added) Pleading allegations of fraud 1. Secondly, it is a fundamental requirement of procedural fairness that allegations of fraud are pleaded with strict particularity: ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [172]. This principle is explicitly enshrined in r 15.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), titled "allegations of behaviour in the nature of fraud", which requires that "[a] pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies". Rule 15.3 operates in conjunction with r 15.4, concerning "allegations as to condition of mind", which is expressed as follows: "(1) A pleading that alleges any condition of mind must give particulars of the facts on which the party pleading relies. (2) In subrule (1), condition of mind includes … any fraudulent intention, but does not include knowledge." (emphasis added) 1. The significance of the requirement that fraud be specified and particularised clearly in pleadings is further indicated by the fact that it is expressly raised in the UCPR's "general rule as to matters to be pleaded specifically", in the following r 14.14: "(2) In a defence or subsequent pleading, a party must plead specifically any matter— (a) that, if not pleaded specifically, may take the opposite party by surprise, or (b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or (c) that raises matters of fact not arising out of the preceding pleading. (3) Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud". (emphasis added) 1. This requirement is well established and of long standing, as was noted by Mason CJ and Gaudron J (with whom Brennan and Toohey JJ respectively agreed) in Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 (Akhil), a case in which a party sought to defeat a limitation defence under the now-repealed s 69 of the Trustee Act 1925 (NSW) on the basis of a fraudulent breach of trust. Their Honours observed that: [40] "It has long been recognised that fraud may take a variety of forms and is, on that account, incapable of precise definition. See, e.g., Draper v Dean (1679) Finch 439 [23 E.R. 239]; Reddaway v Banham [1896] AC 199, at p 221; Allcard v Skinner (1887) 36 Ch. D 145, at p 183. The variety of matters which may constitute fraud prevents any construction of the proviso to s. 69(1) of the Act which would require a defendant to negate fraud. That variety effectively deprives a party who may or may not have acted fraudulently from ascertaining precisely what must be negatived. Indeed, it is this feature of fraud which underlies the rule of practice, now embodied in Pt. 15, r. 13 and Pt. 16, r. 2 of the Rules, that fraud must be pleaded specifically and with particularity. See Wallingford v Mutual Society (1880) 5 App. Cas. 685, at p. 701, per Lord Hatherley; Middleton v O'Neill (1943) 43 SR (NSW) 178, at p. 184, per Jordan CJ. And the same feature necessitates that the proviso be construed as requiring a plaintiff to establish fraud to defeat a limitation defence." (emphasis added) 1. In Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262 at [55]–[57], a case involving an allegedly fraudulent insurance claim, Beazley P (with whom Meagher JA and McDougall J agreed) cited Akhil at 285 in support of the observation that "[t]he seriousness of raising a question of fraud underlies the express pleading requirement that fraud be clearly pleaded and properly particularised: Uniform Civil Procedure Rules 2005 (NSW), r 14.14. The pleading must allege the acts involved and that they were done in a manner that involves fraud". [41] 2. In Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 (Nadinic), this Court considered the propriety of serious findings of fraud following a trial in which there were no pleadings nor any particularisation of dishonesty. At [110], Leeming JA (with whom Beazley P and Sackville AJA agreed) affirmed that, as an aspect of natural justice and procedural fairness (Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 at 344), a party is "entitled to be informed of the way in which it was said [he, she or it] had been party to [a] fraud", which evidently underpins the principle in Akhil and rr 14.14(3), 15.3 and 15.4 of the UCPR. However, his Honour also noted that "[i]n theory, it is possible that a party may forego that right, and may do so by acquiescence rather than express election, but such acquiescence is not easily inferred". 3. The necessarily high threshold to be met by the trier of fact before making such an inference of acquiescence was made clear by Leeming JA in concluding that the primary judge in Nadinic was not entitled to make findings of fraud in circumstances where: [42] "109 Mr Nadinic was both a witness and a party. As a witness, a finding of dishonesty could not be made without his first having been given an opportunity to deal with the criticism: Kuhl v Zurich Financial Services Australia at [67]. This is not a case where the pleadings or the affidavits or the openings put Mr Nadinic squarely on notice of the dishonesty which the primary judge ultimately found. In the absence of cross-examination on the point, fairness dictated that the primary judge refrain from making findings of dishonesty: Bale v Mills at [67]; State of New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47 at [32]–[44]. … 114 In the trial before the primary judge, there were no pleadings, and the statement of issues and opening written submissions did not come close to alleging, let alone particularising, dishonesty. The conduct of the hearing does not permit the conclusion that Mr Nadinic acquiesced in its expansion to include an allegation of dishonesty or fraud. 115 The single question asked of Mr Nadinic in cross-examination, which was not completed by the cross-examiner, and was immediately followed by statements by the primary judge to the effect that this was outside Ms Drinkwater's case, to which proposition her counsel acceded, did not come close to giving Mr Nadinic a fair opportunity to deal with the criticism. It corresponded to the 'bare and unparticularised assertion' held to be insufficient in [Akhil]. 116 As Mason CJ and Gaudron J observed in [Akhil at 287], it requires a clear case to conclude that the parties acquiesced in an expansion of a case so as to extend to fraud. That is not this case. That is best seen from the absence of an allegation of fraud in the statement of issues and opening, and, when the primary judge made it clear to Ms Drinkwater's legal representative, shortly before the evidence closed, that she could apply to amend, his response was to the effect that he accepted that he was 'bound by the statement of issues' and had 'nothing further to say'. The exchange between the primary judge and Mr Nadinic's counsel at the end of the trial as to dishonesty being 'the nub of the case', even if it is taken at its highest, is insufficient to sustain a conclusion of acquiescence in an expansion of a case of misleading and deceptive conduct to one based on fraud, given all that had previously occurred in this litigation." (emphasis added) 1. The above passage from Nadinic (at [109]) makes clear that even where, as in the present case against Admiral, fraud is pleaded and particularised, it is important that matters of that nature are also put to individual witnesses against whom they are alleged, in the course of cross-examination. Failure to do so may, in certain cases, result in the relevant pleading rising no higher than a "bare and unparticularised assertion" as described in Akhil. Circumstantial proof in civil proceedings 1. Thirdly, as the primary judge observed at PJ [169], the approach to be taken to circumstantial proof in a civil case was described in Bradshaw v McEwans Pty Ltd as follows: [43] "The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available, it is enough if the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise." (citations omitted) 1. In Palmer v Dolman [2005] NSWCA 361 at [41], this Court (Ipp JA, Basten and Tobias JJA agreeing) extracted the following principles from the relevant authorities which were said to have "become well-established in determining, in a civil case, whether circumstantial evidence leads to an inference of fraud": "(a) The jury [i.e. the tribunal of fact] must consider 'the weight which is to be given to the united force of all the circumstances put together' (per Lord Cairns in Belhaven & Stenton Peerage (1875) 1 App Cas 278 at 279 - quoted with approval by Gibbs CJ and Mason J in Chamberlain v The Queen (No 2) [(1984) 153 CLR 521 at 535; [1984] HCA 7]). (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' (per Winneke P in Transport Industries Insurance Co Ltd v Longmuir at 129). (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. These principles were applied by this Court in Worth v HDI Global Specialty SE (formerly International Insurance Company of Hannover SE) (2021) 393 ALR 93; [2021] NSWCA 185 at [208]–[210] (Worth), another appellate case in which the primary judge had upheld an insurer's refusal of indemnity by inferential reasoning to circumstantial proof. 2. Also to be noted is the decision of McDougall J in Ballard v Multiplex [2012] NSWSC 426 at [119], applying the decision of the Victorian Court of Appeal in Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125. His Honour relevantly said: "In my view, the judgments in Transport Industries set out clearly and appropriately the task of the court in considering a case built on circumstantial evidence … As the judgment of Winneke P in particular makes clear, the court is required to consider each piece of circumstantial evidence, or 'intermediary fact', on which the party propounding the circumstantial case relies, and to consider whether the particular intermediary fact is proved to the satisfaction of the court. Once that task is completed, the court is required to analyse the proved facts as a whole, and to consider whether, on the appropriate standard of proof, they raise the inference that is the subject of contention." 1. Obviously enough, in an appeal by way of rehearing under s 75A of the Supreme Court Act 1970 (NSW), such an approach should similarly be followed. Appellate review 1. Finally, in Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (citations omitted), it was said by the plurality that: "A court of appeal is bound to conduct a 'real review' of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint with respect to interference with a trial judge's findings unless they are 'glaringly improbable' or 'contrary to compelling inferences' is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts. Thereafter, 'in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge'." (citations omitted) 1. Lee v Lee made plain that earlier observations by the High Court in Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22 at [43] were not intended to undermine, still less overrule, what had been said by the High Court in Warren v Coombes (1979) 142 CLR 531 at 551; [1979] HCA 9. 2. It was stressed by Mr Watson SC, who appeared for CGU with Mr Kalyk, that the primary judge had made an adverse credit finding against Denis (see [164] and [205] below) and, in this context, he made reference to the recent judgment of Kirk JA in Mt Pleasant Stud Farm Pty Ltd v McCormick [2022] NSWCA 191 at [58]. His Honour, having referred to a portion of the passage from Lee v Lee extracted above, there said: "The impressions formed by seeing and hearing a witness are not limited to impressions of demeanour in some narrow sense of what is observed. What is heard, and the context of the evidence, is also important: note further, generally, White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277 at [104]-[109] per Bell P, [155]-[156] per White JA. The tone in which evidence was given may be important. Sarcasm, arrogance, humour or humility may not be conveyed to a subsequent reader of the transcript. Such a reader may not appreciate that an answer was given angrily in response to some provocation, such that its significance is not what might appear from the page. Nor may such a reader understand the impression formed by any pauses in answering a question. Pauses themselves might communicate a diligent care for truthfulness on the one hand, or a crafty search for a path through landmines on the other." 1. So much may readily be accepted, although it is important to note that credibility is a larger concept than demeanour, and the latter is not to be overemphasised in considering the former: see White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277 at [106] (White), referring to Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 at [16]–[27]. In White at [138], Leeming JA observed that "[t]he joint judgment in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] noted the limits upon the ability of judges to distinguish truth from falsehood accurately on the basis of the witnesses' appearance, and the tendency to limit judges' reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events." The primary judge's key findings on the central issue 1. The primary judge's key findings as to the central issue of Admiral's knowledge and consent regarding the theft and fire were set out at PJ [186]–[207]. Significantly, his Honour's ultimate conclusion as to Denis' (and therefore Admiral's) knowledge and consent was expressed to have been reached by "[t]aking together all of the circumstances considered above", [44] namely those discussed at PJ [186]–[206]. In light of this acknowledgment, the nature of the primary judge's inferential reasoning and the detailed attack on it in this appeal, that section of the primary judgment needs to be set out in full: "Knowledge and consent of Denis Fateev and therefore of Admiral 186 Dmitry Fateev's actions were necessarily preceded by planning and preparation. He had to arrange: a buyer for the goods that were to be stolen; an arsonist; trucks and drivers to remove stock and to deliver tyres to fuel the fire. Even if the plan should be implemented with complete success, by disposal of the stolen goods for a significant proportion of their wholesale value without detection of either the theft or the deliberate lighting of the fire, there was potential for collateral damage to Admiral's business. The claims of customers who did not have their goods independently insured against fire might exceed the $4 million sub-limit for Customer Goods in the ISR policy. Those customers might claim against Admiral for breach of bailment. The ATO might allege failure adequately to secure dutiable goods and might claim duty on the contents that were in bond, under s 35A of the Customs Act. There would necessarily be loss of income for Admiral during the delay before new goods could be deposited by customers at the replacement warehouse in Lidcombe. 187 Whether or not the plan was carried out successfully in the sense referred to above, Admiral would likely suffer some loss of custom. If the plan should meet with less than complete success, there was an obvious risk of very much greater detriment to Admiral. If the theft and the deliberate lighting of the fire were to be detected, the reputations of Admiral and of the Fateev family, including Denis as managing director, would be severely damaged. The company's goodwill and its standing as a licensee under the Customs Act would be destroyed. 188 Admiral operated as a family concern. All members of the Fateev family worked in the business and there is no evidence that any of them had any other gainful employment. The company was Denis Fateev's career and his future. The family held the entire proprietary interest in Admiral. As Svetlana Fateev was and is the sole shareholder and director of a holding company that has at all times owned all the issued shares in Admiral, I am satisfied that through that structure the beneficial ownership of Admiral lies with one or more or all of the Fateev family. Given those economic interests and the risks posed by Dmitry Fateev's plan, to be gambled on the possibility of a massive gain from selling stolen cigarettes, it is a very strong inference that he would not have proceeded without consulting his son and obtaining his agreement. 189 On the facts that I have found concerning Dmitry Fateev's involvement, the only alternative hypothesis is that he carried out the theft and arranged the arson without the prior agreement of his son. The only circumstance in which that hypothesis could be anything more than fanciful is if there had developed a deep rift between Dmitry Fateev and the other members of the family, in particular, Denis. Only under conditions of major disharmony and divergence of interests would it be plausible that Dmitry Fateev would have pursued illegal gains for himself by perpetrating these crimes, at such grave risk to his family's legitimate economic interests and to his son's business reputation and future. There is no evidence of any such disharmony or divergence of interests. To the contrary, the evidence is that all family members worked cooperatively in the business, that Svetlana Fateev controlled the holding company, that she and Dmitry Fateev lived together and that their younger son resided with them. Those circumstances all indicate harmonious family relationships. 190 Admiral has not even propounded the hypothesis that Dmitry Fateev took part in the theft and facilitated the arson but did so without consulting Denis and without his agreement. 191 It was essential to Dmitry Fateev's own interest of avoiding detection that Denis Fateev should be informed of the scheme and should cooperate. I infer that Dmitry Fateev's planning of the enterprise was in place by no later than Thursday, 12 April, when Mr Gazzara sent the first of his emails to Mr Russkikh to create the appearance of a commercial storage transaction and to provide a cover for Dmitry Fateev to attend the warehouse on Friday evening and Saturday: see [101]-[102] and [111] above. On the same day Denis Fateev booked his travel to Hong Kong. That timing supports the inference of collaboration. There was no pressing need for Denis Fateev to go to Hong Kong for the period 13 to 18 April. From the terms of Ms Fu's letter of 12 April 2018, it is not apparent that there had arisen by that date any requirement for Denis Fateev's presence in Hong Kong at all. The due diligence process of Ms Fu's client had not progressed beyond review of documents listed in her letter. They could have been provided to her by email. From the point of view of Admiral's business, there were good reasons for Denis Fateev to have remained in Sydney at this time, notably, to advance the arrangements for the company's impending move to Lidcombe. 192 It is extremely improbable that Dmitry Fateev would have accepted the heightened risk of detection that would arise if his son was not a party to the undertaking. If he acted behind his son's back, the latter might change his mind and not travel to Hong Kong; or he might return early and go to the warehouse on Sunday, where he might find half the stock missing; or he might phone his younger brother or Mr Russkikh or another employee from Hong Kong on the Sunday, to have a check made that the warehouse was secure after the departure of Dmitry Fateev for Vladivostok that morning. Unless Denis Fateev's approval was secured, he could become the principal informant against his father; or he could frustrate his father's attempt to leave the warehouse unprotected for the arsonist's entry. These considerations strengthen the inference that Denis Fateev acted in concert with his father. They are cumulative upon the other matters referred to, especially the timing of Denis Fateev's trip to Hong Kong that provided his alibi. 193 My observations at [181(5)] and [184] concerning Dmitry Fateev's failure to notify the alarm monitoring service of his impending absence overseas and to nominate a substitute contact apply equally to Denis Fateev. Denis Fateev's departure without nominating another contact supports the inference that he knew the security of the warehouse would be breached by someone who would start a fire and that he did not want the monitoring service to be able to reach anyone for approval to send a patrol car. I find it highly unlikely that Denis Fateev would have departed for Hong Kong, knowing that his father would also be out of the country from the following Sunday, without turning his mind to the fact that this would render the alarm system substantially ineffectual. His failure to nominate an alternative contact was not inadvertent. 194 I have rejected Denis Fateev's evidence that he did not have on his mobile phone the application for remote monitoring of the CCTV in the warehouse, which Mr Yammine had installed in September 2017. I am satisfied that remote monitoring was available to him and that he either he saw what was taking place in the warehouse on the Friday evening and/or the Saturday and did nothing about it, because he was complicit in the theft, or he did not look at the mobile phone application because he was aware that large quantities of goods would be removed. I find that he has denied having the ability to monitor the CCTV remotely in order to disavow knowledge of what occurred in the warehouse. I do not find it credible that the managing director of a business such as this would fail to utilise such a remote monitoring application over the whole course of a weekend while he was absent in Hong Kong, knowing that the warehouse was to be opened up for an after-hours delivery. Even if he did not look at the CCTV on his phone during the time when goods were being removed, having regard to the quantity that was stolen, if he had looked at any time on the Sunday he would have seen the warehouse half empty. Denis Fateev's lack of credibility 195 Denis Fateev denied that he had known in advance that the warehouse would be set alight or that he had agreed in such a plan. I do not accept his denial. He was not a credible witness. I found highly discrediting his evidence that after the fire, and especially in the context of CGU's refusal of indemnity, he did not make inquiries about inherently suspicious circumstances – circumstances that CGU has explicitly raised in defence of the insurance claim. 196 Denis Fateev acknowledged that it was exceptional for Admiral to open the warehouse after normal operating hours, which were 8:00am to 4:00pm Monday to Friday. He said that after-hours opening would be arranged 'when clients are running late or have an urgent shipment, especially if it's time sensitive cargo or it's bonded cargo and it's arriving from airport or port'. But when asked what was the urgency for which Dmitry Fateev opened the warehouse on the evening of Friday 13 April and the next day, he gave these answers: Q. When was this plan, to open the premises outside ordinary work hours, when was it made? A. On my understanding it was the Friday. Q. When on the Friday? A. I'm not aware of the time. Q. What was the urgency? A. My understanding is we had a client who would like to deliver cargo to our warehouse. […] Q. What was the urgency here? A. I am not aware. […] Q. I take it you've had enough interest to try and find out what happened? A. Yes. Q. What was the urgency which meant that this particular cargo would lead to the premises opening after 6pm on a Friday? A. I'm not sure, my assumption is that the client could have requested, that it was more convenient for him. […] Q. I'll move on to the Saturday. […] Q. And so, again, why was it that the premises were being open on a Saturday, well outside business hours? A. To receive a delivery. Q. Was it urgent? A. I'm not sure. Q. You've never looked into that? A. Into the urgency? […] Q. [In the] three and a half years [since the fire], haven't you asked about what the urgency was that led to the premises being opened on a Saturday? A. My understanding it was a request from our client. Q. Same client? A. Yes. Q. What was the urgency, why did the client want you to open on a Saturday? A. So he could make the delivery. It was his request. 197 These answers are banal and evasive. They do not identify any legitimate explanation, in Denis Fateev's understanding, for the after-hours opening. On Admiral's case that it had no knowledge of the theft or of the premises being set up to be burned, one would expect him to have pressed such inquiries in order to expose the deliverer of the tyres, and whoever cooperated with that person, as conspirators or accessories to the theft and arson. 198 Denis Fateev also claimed not to recall having made inquiries concerning the quantity of goods that were delivered after hours, or the background of the client who delivered the goods, or the client's intentions with respect to the goods. If he had made such inquiries, he did not recall any information he obtained. He answered questions about these matters as follows: Q. […] you must have asked your father, in case we get sued, what was there, was it 100 tyres or was it 10,000 tyres, Dad? Surely you asked him a question like that? A. It's possible but I don't remember, it's a long time ago. Q. How many tyres were there? A. I am not sure. Q Roughly, you must have a rough number, was it 100,000 or 100? A I'd have to go back and look at the paperwork from the client, because I don't remember. […] Q. I'll put it again. Surely, since the fire, you must have tried to find out who this client was? A. Not really, no. I haven't. Q. You've been sitting here for a few days while evidence has been given? A. Yes. Q. You would have heard evidence given that the tyres in the premises added to the fuel load, were extremely difficult to extinguish and apparently were responsible for a lot of damage done to your family business. A. Yes. Q. Where did the tyres come from? A. From my client who was intending to export them, as far as I'm aware. Q. And the name of the client please? A. As I said before, it was Morris and I don't remember the second half of – […] Q. You haven't bothered to find out the name of the man who delivered the tyres, is that what you're telling us? A. Well, there was a lot of cargo, from my understanding, in the warehouse and I would have had to have called everyone in to identify but I understand that the fire ..(not transcribable).. but I did not call the clients, like I didn't many others to find out. I don't understand what that would have given me. […] Q. Morris what? A. Like I say, I've never had the pronunciation of second one but it was G something. Q. Have you ever spoken to him? A. I have not. Q. The cargo was principally tyres delivered by this Morris, correct? A. Tyres but I believe there was other goods as well, [batteries] or something. Q. Let's focus on the tyres for a moment, I think you said that they were going to be exported? A. I think that was the initial request from the client. Q. Who told you that? A. I think I saw it in emails. Q. So you saw emails between the client and Admiral? A. Yes. Q. To where were they to be exported? A. I'm not sure, would have to ask Arthur who was looking after this one. HIS HONOUR Q. Haven't you asked him? A. No, I have not. 199 If Denis Fateev was not complicit in approving the theft from this warehouse and the burning of it, one would naturally expect him to have made thorough inquiries – of his father, of Mr Russkikh and of Mr Gazzaro – into the background of the client and the transaction. What was the client's name and the name of his business? Was he bona fide? Did he have a genuine commercial reason for storing his tyres at the warehouse and for delivering them on the Friday evening and Saturday? Could he have introduced this cargo with sinister intent? Given the notable coincidence between the unusual after-hours opening of the warehouse and the deposit of an odd cargo of used motor tyres and the conflagration that followed, such inquiries would naturally occur to a managing director in the position of Denis Fateev and would be pursued, long before the insurance company refused the claim. In the interests of greater security for future operations and to assist police with their investigation into whether crimes had been committed against the company and its customers, and if so by whom, the above questions would be asked. When the insurer's allegation of fraud was made on 9 April 2019, these obvious inquiries became more pressing. 200 Cross-examination by CGU's counsel did not establish whether Denis Fateev had some plausible reason for regarding such enquiries as unimportant. I therefore raised this with him myself in order to ascertain whether he had a perception of the case that may have rendered his failure to inquire into the circumstances of the fire less significant than it might otherwise appear. On the first occasion I asked him about this, he provided no sensible answer, as follows: HIS HONOUR Q. Mr Fateev, are you aware of the report of Mr Pellegrino for the insurer in this case in-- A. Yes, I am. Correct. Q. Yes, and particularly the report in which he described where he considered the tyres had been placed within the warehouse on pallets at various points distributed around the warehouse, have you seen all of that? A. Yes, I have, your Honour. Q. Were you aware that CGU is making an allegation in the case that the tyres were deliberately placed at points around the warehouse in order to provide fuel for a fire and to encourage fire? Did you realise that that was part of the case that they're making to-- A. Yep. Yes, your Honour. Q. With that knowledge, have you not made full inquiries to ascertain what were the origins of the dealing with Mr Morris that brought about the introduction of this quantity of tyres that the insurer says was deliberately used in that way? A. I'm sorry, your Honour, I didn't understand the question. Q. The tyres were delivered into the property possibly to some extent on the Friday afternoon, but according to other evidence on the Saturday, just within 48 hours before the fire, and CGU is alleging that they were deliberately then placed around the building in order to encourage fire that would destroy stock. Given that that seems to be, as the argument is presented to me, a significant part of the dispute between yourself or your company and the insurer, have you made inquiries to ascertain how it came about that your company [took] a delivery of tyres just at that point, and what is the background of this person Morris, and such things as that? A. Yes, your Honour, I understand now, but my understanding is that we would receive the cargo for export on the Friday and on the Saturday, and it was placed where we had space available, but I don't know if that's suspicious or not. 201 On a second occasion I gave Denis Fateev an opportunity to explain why he had not inquired into the circumstances of the delivery of tyres to the warehouse shortly before the fire. I find his answers, as follows, fatuous and unsatisfactory: Q. Let me just point out to you, it seems to me quite apparent on the documents and the papers that have been given to me, as the judge, to explain to me what this dispute is all about, that it's quite central to the very serious allegation of fraud that CGU is making that it is asserting that these tyres were all received into the premises in dishonest circumstances and that they were then placed about the premises in circumstances that were designed to cause a fire to proceed and to do a lot of damage. Now, in that situation, as it seems to me, this would be, this question of the tyres and how they came to be there and how long they were going to be there and what was the origin of this arrangement, it seems to me to be quite a central thing in the dispute. Is that how you have understood the place of this question about tyres in the case? A. Yes, I do, your Honour, but I just can't treat it differently to any other clients that had delivered cargo on the Friday or the Thursday of just I really don't understand what more we could have done or Q. I suppose part of Mr Watson's questions is directed to just querying why you are not more familiar now, with all the opportunity for inquiry about this to have been made since CGU refused your claim, why you are not more familiar with the detail of this transaction, to be able to answer the questions that he's putting to you about the nature of this transaction and whether its features may or may not indicate dishonesty on somebody's part. Is there a reason why you haven't made more detailed inquiry and gathered more detailed information about this? A. Well, your Honour, there's just been a lot of really information for me to adapt and adopt into and my understanding that there was something that I was to be made reference to would be in the Court books which were provided yesterday afternoon but that's my understanding of it. 202 In the absence of any coherent, plausible alternative explanation from Denis Fateev, the only possible reason for him not having sought answers to questions such as those referred to at [196]-[199] above is that he already knew the warehouse had been opened after hours for the purpose of being plundered and stuffed with fuel for a destructive fire and he either knew that Mr Gazzara was the operative who deposited the tyres and drove off with the stolen goods or he did not wish to confirm the name of whoever filled that role, or the number of tyres, or any other detail. 203 Despite Denis Fateev's admitted failure to make pertinent inquiries, Admiral's solicitors obtained the affidavit of Dmitry Fateev of 8 December 2020 and that of Morris Gazzara of 21 August 2021. When questioned on the circumstances of the after-hours opening of the warehouse and the delivery of tyres, Denis Fateev did not even demonstrate familiarity with those affidavits. Both of them are central to Admiral's denial that stock was stolen and to its denials that the tyres were placed so as to encourage a fire and that Dmitry Fateev left the premises unsecured. 204 A notable weakness of Dmitry Fateev's affidavit is that it contains no acknowledgement of his presence at the warehouse on the Friday evening, nor any description or explanation of his actions there at that time. Denis Fateev said that he had never asked his father about the events of the Friday night, although he had known from when Ms Garvin's report was served on 17 September 2020 that the same three trucks that attended the premises on the Saturday made five visits on the Friday evening when Dmitry Fateev was present. Denis Fateev gave the following evidence when questioned about the omission from his father's affidavit of any reference to the Friday evening: Q. But your father doesn't refer at all to the events of Friday 13 April. A. Possibly. Q. What do you mean 'possibly? Have you read the affidavit? A. I have but I don't I can't memorise every piece of evidence. Q. […] He doesn't refer to doing anything on Friday 13 April. A. Okay. Q. Can you explain that? A. I can't. Q. Did you ask him? A. Possibly but I can't remember now. I haven't spoken to him for a while. […] Q. Now, how many truckloads came from Morris to Admiral on the Friday and Saturday? A. I don't know. […] A. I can't say because I wasn't there. […] Q. You must know that the police extracted CCTV footage from across the road. A. I do. Q. It showed three different trucks attending the premises; you know about that, don't you? A. I don't recall how many trucks but I have seen the footage. […] Q. Who hired the Hertz trucks? A. I don't know that. Q. It was the third truck apparently not from Hertz but unbranded, and who owned that truck? A. I don't know. Q. Why don't you know? A. We have hundreds of trucks come into our premises and out during the week, and I don't know any of the owners. […] Q. [Those] other trucks are pretty irrelevant compared to the importance of these trucks, aren't they, Mr Fateev? A. I guess. Q. I want you to tell us why you wouldn't know where the trucks had come from? A. Because I was never told. Q. Did you ever ask? A. I did not. 205 CGU did not challenge the evidence that Dmitry Fateev suffered a stroke in Vladivostok in July 2018 and that he was medically unfit to fly back to Australia during the remainder of his life up to January 2021. The evidence does not suggest that after July 2018 he was unable to communicate with his son about the fire in the warehouse or about this litigation. The making of his affidavit on 8 December 2020 shows that he was well able to communicate on those subjects at least up to that date. The point made at [202] above is reinforced: in the absence of any alternative explanation from Denis Fateev, the inescapable inference from his failure to ask his father about events on the Friday evening and in particular about the trucks that attended the warehouse at that time is that he already knew they were the same trucks that attended again on the Saturday, as he would have seen from the CCTV, and he knew that what took place on both occasions was of the same character, namely, stealing from the warehouse and delivering tyres for fuel. 206 I infer that Denis Fateev did not make inquiries of his father concerning the Friday because he did not wish to confirm details of the perpetration of the crimes. Even before Mr Gazzara's affidavit was sworn, throwing up conflict between his account and that of Dmitry Fateev, Dmitry's affidavit was self-evidently deficient for want of explanation of the Friday night and for the absurd story about re-loading tyres and sending them away to be re-packed. An honest innocent person in Denis Fateev's position would have made the further inquiries of his father that counsel suggested in cross-examination and would not have endeavoured to pass off Dmitry Fateev's implausible evidence on the Court, unquestioned. 207 Taking together all of the circumstances considered above, I am satisfied on the balance of probabilities that Denis Fateev knew in advance of his father's plan to steal from the warehouse and to have its remaining contents destroyed by fire. I am satisfied that, in his capacity as the controlling mind and will of Admiral, he agreed to the execution of the plan and that he cooperated in it by absenting himself on a trip to Hong Kong for the critical weekend." 1. Mr Sullivan identified and attacked what he described as a number of often overlapping "strands of reasoning" in the primary judge's analysis, by reference to particular paragraphs or conclusions at PJ [186]–[207]. In this context, there were numerous grounds of appeal and challenges to findings which were in effect condensed into a critique of these strands of reasoning, and it is convenient to deal with the parties' contentions on appeal by reference to those strands of reasoning and the attacks thereon. Because of their overlapping nature, some of these strands are addressed together. 2. It should also be noted that, for the most part, Mr Watson appeared content to rely heavily on the primary judge's analysis in order to engage directly with Mr Sullivan's critiques of his Honour's reasoning. Consideration regarding the central issue Strands 1 and 2 — family harmony 1. The first two impugned strands of the primary judge's reasoning identified by Mr Sullivan are contained in PJ [188]–[189], reproduced at [104] above and, in particular, the primary judge's observation that: [45] "Only under conditions of major disharmony and divergence of interests would it be plausible that Dmitry Fateev would have pursued illegal gains for himself [and without consulting his son] by perpetrating these crimes, at such grave risk to his family's legitimate economic interests and to his son's business reputation and future." (emphasis added) 1. Having set up the initial premise of a syllogism, the primary judge noted that there was no evidence of family disharmony or divergence of interests, from which his conclusion as to Denis' knowledge and acquiescence in the criminal activity followed. 2. The danger of syllogistic reasoning lies in the integrity of the initial premise. 3. Essentially, his Honour was positing that it was not plausible that Dmitry, who the primary judge had concluded was a serious criminal, viz. one who conceived and/or facilitated the multi-million dollar theft and then arranged for the arson to occur, would act without reference to his eldest son given the close family relationship. 4. This was not an hypothesis predicated upon or influenced by an assessment of Dmitry's character or demeanour in the witness box, as Dmitry had died in January 2021 and did not give evidence in the proceedings. His Honour enjoyed no advantage over this Court in that regard. 5. With great respect to the primary judge, and contrary to his initial premise, there are any number of reasons why a criminal, such as Dmitry was found to be by his Honour, may have acted without his son's knowledge of and consent to the arson, notwithstanding or even because of their close family relationship. These include: 1. arrogance on Dmitry's part, including a belief that he could conceal his own involvement from his son and the authorities; 2. avarice on Dmitry's part, such that he did not wish to cut his son in on any part of the potential fruits of the criminal enterprise; 3. concealed selfishness or indifference to his family, notwithstanding apparent family harmony; 4. a desire to protect his family by not tainting his wife and children with knowledge of his criminality, or what Admiral described in its submissions as "the real probability that a criminal father would try to insulate his son from conviction"; 5. a fear or concern about his criminal enterprise being pre-empted or thwarted by his son, either practically or by notifying police; 6. a belief that his innocent son would secure the benefit of an insurance payout without any involvement being attributed to him; 7. Dmitry's knowledge that his son would be overseas at the time of the theft; or 8. any combination of the above. 1. None of these matters provides an implausible explanation as to why Dmitry may not have told his son of his planned criminality. Mr Watson provided no real answer to this range of possible explanations in the alternative to that adopted by the primary judge, other than to assert that they had not been put to his Honour. 2. The primary judge used the verb "gamble" in PJ [188] to describe the risk to the Fateev family entailed by the theft and arson of the warehouse. It is notorious that gamblers regularly act without due consideration of the interests of their closest family. 3. Whilst the primary judge was correct to observe that "the only alternative hypothesis [to the knowledge and complicity of Denis] is that [Dmitry] carried out the theft and arranged the arson without the prior agreement of his son", [46] the various reasons for keeping Denis in the dark, detailed above, negative the primary judge's conclusion that "[t]he only circumstance in which that hypothesis could be anything more than fanciful is if there had developed a deep rift between Dmitry Fateev and the other members of the family, in particular, Denis" (emphasis added). [47] 4. As to the fourth matter noted in [112] above, if the family relationship was harmonious (as it was accepted to be), it is no less plausible that Dmitry would deliberately not expose Denis and his young family to the consequences of involvement in his criminal enterprise in the event of it going wrong. 5. As to the fifth matter posited in [112] above, there was a host of reasons why Denis would not readily have acquiesced in the criminal enterprise had he known about it in advance. 6. First, Admiral was Denis' business, and one which he was evidently planning to grow. As the primary judge observed, "[t]he company was Denis Fateev's career and his future". [48] As was submitted on behalf of Admiral, Denis was intent before the fire on continuing to grow its business, as demonstrated by the planned move to new premises in Lidcombe to which Denis had committed, including by way of a personal guarantee, just over a month before the fire (when heads of agreement were signed) and, again, just under a week before the fire (when the Lidcombe lease and guarantee were executed). [49] 7. Secondly, in addition, Denis had been seeking to develop the business through his negotiations in Asia, including those that had seen him in mainland China as recently as 12 days prior to the fire and in Hong Kong on the weekend prior to the fire, from which he returned on 17 April 2018. In this context, the primary judge accepted that "Admiral had concrete prospects of increasing its business by providing bonded warehouse services to Pegasus Supply Solutions Pty Ltd and by handling food products to be imported from Juhao". [50] 8. Thirdly, involvement and/or acquiescence in the theft and arson also carried huge risk for Denis in terms of Admiral's reputation and an inevitably adverse impact on its custom and prospects of expansion, even if he avoided prosecution and the denial of indemnity. As the primary judge himself said: [51] "If the plan should meet with less than complete success, there was an obvious risk of very much greater detriment to Admiral. If the theft and the deliberate lighting of the fire were to be detected, the reputations of Admiral and of the Fateev family, including Denis as managing director, would be severely damaged. The company's goodwill and its standing as a licensee under the Customs Act would be destroyed." 1. Fourthly, and needless to say, there was also the risk of criminal liability, with the offence of "dishonestly destroying or damaging property by means of fire or explosives" attracting a maximum penalty of 14 years' imprisonment under s 197(1)(b) of the Crimes Act 1900 (NSW), together with the commercial risk of Admiral losing its licence to operate a bonded warehouse, as in fact occurred after the fire. 2. Admiral called in aid the "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": Neat Holdings at 171 (citation omitted). 3. In my view, taking into account Neat Holdings, s 140(2) of the Evidence Act and the other authorities referred to at [86]–[103] above, I reject the first two strands of the primary judge's reasoning. There were multiple "not improbable explanations" as to why Dmitry would not have told Denis of his plans even though the family appeared close knit. It is also significant in this regard that his Honour's conclusion was not based upon any advantage he had of assessing Dmitry in the witness box. 4. It was also submitted that another reason why Denis would not have been complicit in the arson was that Admiral would be liable to pay duty in the order of $31,246,030.80, pursuant to s 35A(1) of the Customs Act, if the "missing" cigarettes were stolen, regardless of the thief's identity or whether Admiral was at fault, that it stood to have its assets applied to that debt and, most significantly for this aspect of the argument, that Denis might be personally liable to pay duty pursuant to the same provision. 5. Although, as already noted, I consider that the matters rehearsed in [112]–[123] above strongly undermine the first and second strands of the primary judge's reasoning on the central issue, I do not accept the argument based upon s 35A(1) of the Customs Act and, in particular, the proposition that Denis may have been made personally liable to pay any outstanding duty and would have been cognisant of this risk. 6. Section 35A(1) of the Customs Act provides: "(1) Where a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control: (a) fails to keep those goods safely; or (b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with section 37; that person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demand was made." 1. Although Admiral was the "person" relevantly "entrusted with the possession, custody or control of dutiable goods which are subject to customs control", Mr Sullivan developed a detailed submission by reference to the decision of the High Court in Comptroller-General of Customs v Zappia (2018) 265 CLR 416; [2018] HCA 54 (Zappia), in which the plurality held that the subject of s 35A(1) is "a person" and that, "[c]onsistent with the section's purpose of protecting the revenue, the operation of s 35A(1) is wider than that of a section dealing with, for example, the 'holder of a warehouse licence'." [52] As such, it was held that "[s]everal persons may each possess power or authority to the requisite degree within a chain of command or hierarchy of responsibility." [53] On the facts of that case, it was held that "the fact that the goods were stolen from the warehouse during a period in which [the Respondent] continued to have [the authority to direct what was to happen to the goods in the warehouse on a day-to-day basis] was sufficient to establish that he failed to keep the goods safely." [54] 2. One reason for rejecting the argument based on Zappia is that the decision was not handed down until November 2018 and it reversed the previous state of the law. The majority of the Full Court of the Federal Court had held that an employee of the holder of a warehouse licence could not meet the statutory description of a "person" in s 35A(1). This represented the state of the law at the time of the theft and arson at Admiral's warehouse and therefore bore upon the likelihood of the risk on which Mr Sullivan relied coming to pass. His argument assumed that Denis not only knew of s 35A of the Customs Act but was also apprised of a potential interpretation of the section which had not yet been given by the High Court. Those assumptions are somewhat far-fetched and, with respect, bear all of the hallmarks of a lawyer's construct. The argument also assumed that the ABF could demonstrate that there had been a failure to keep the goods safely. 3. Before leaving the first two strands of the primary judge's reasoning, something should be said of his Honour's observation that: [55] "Admiral has not even propounded the hypothesis that Dmitry Fateev took part in the theft and facilitated the arson but did so without consulting Denis and without his agreement." This observation, with respect, overlooks the basic point that the onus lay at all times upon CGU to prove a positive case of knowledge of and connivance in the theft and arson, in conformity with the requirements of s 140(2) of the Evidence Act. It was not a matter of Admiral needing to propound a positive case of its own. Strand 3 — the necessity of Denis' knowledge and cooperation 1. The third strand of reasoning challenged on appeal was the primary judge's finding that "[i]t was essential to Dmitry Fateev's own interest of avoiding detection that Denis Fateev should be informed of the scheme and should cooperate." [56] Admiral attacked this strand of reasoning as "pure speculation", based on "unconvincing reasoning". The primary judge's reasoning was set out as follows: [57] "It is extremely improbable that Dmitry Fateev would have accepted the heightened risk of detection that would arise if his son was not a party to the undertaking. If he acted behind his son's back, the latter might change his mind and not travel to Hong Kong; or he might return early and go to the warehouse on Sunday, where he might find half the stock missing; or he might phone his younger brother or Mr Russkikh or another employee from Hong Kong on the Sunday, to have a check made that the warehouse was secure after the departure of Dmitry Fateev for Vladivostok that morning. Unless Denis Fateev's approval was secured, he could become the principal informant against his father; or he could frustrate his father's attempt to leave the warehouse unprotected for the arsonist's entry." 1. As to the first matter, which is expressed in terms of the risk of Denis changing his mind and not travelling to Hong Kong or returning home early, in one sense, it is obvious that there would have been a heightened risk of detection by an innocent Denis were he in the country at the time of the theft and arson, but that observation at least equally points to Dmitry capitalising on Denis' absence overseas to perpetrate the theft and arson without his knowledge or consent. This hypothesis was conceded by Mr Watson during the course of the argument on appeal to have been "a possibility, but it's barely a possibility". He submitted that it was only a "bare possibility" because "the timing is just too bad", pointing to what he characterised as Denis' unnecessary trip to Hong Kong. That response, in turn, however, depended upon the Hong Kong alibi theory. That is a matter taken up and considered as part of the fourth strand at [136]–[159] below. As will be seen, contrary to the primary judge's conclusion and Mr Watson's submission, there appeared to be an entirely legitimate reason for the Hong Kong trip and its timing. 2. In my view, it may fairly be put as a matter of supposition no less plausible than that accepted by the primary judge that it was the very fact of Denis going to Hong Kong that created the window for the theft and arson to occur. There was no evidence one way or another as to the duration of time over which the theft and arson had been planned, or as to whether the timing was particularly critical in the sense that it may be assumed that the warehouse regularly contained extensive quantities of tobacco that could be stolen and re-sold whenever the opportunity arose. And, as shall be seen below, there was an apparently plausible reason for Denis travelling to Hong Kong which explains the timing of his trip, contrary to Mr Watson's submission noted above. 3. If Denis had changed his mind and decided not to travel to Hong Kong, there was no obvious or apparent reason why Dmitry could not call off the theft and arson. Once Denis had gone to Hong Kong, however, the prospect of his returning early on what was only ever planned to be a four-night trip would appear to be remote or at best speculative. 4. The last two reasons stated by the primary judge at PJ [192], namely the risk of the criminal enterprise being thwarted by Denis either by informing on Dmitry or physically frustrating the planned theft and arson, were reasons not to tell or involve Denis in the criminal enterprise. The analysis at [117]–[121] above applies equally here. 5. With respect to the learned primary judge, it was no more likely that Dmitry would only have acted with his son's knowledge and concurrence of the planned theft and arson than that he would not have done so. As with the first two strands of reasoning, the primary judge's reasoning at PJ [192] did not benefit from any observations of Dmitry in the witness box, and his Honour was in no superior position to this Court in addressing this aspect of the circumstantial case. Strand 4 — was the timing of Denis' Hong Kong trip a coincidence or an alibi? 1. At PJ [192], the primary judge referred to the timing of Denis' trip to Hong Kong as providing an alibi in respect of the theft and arson. Earlier, the primary judge had said that "[t]here was no pressing need for Denis Fateev to go to Hong Kong for the period 13 to 18 April". [58] His Honour also observed in the same paragraph that "[f]rom the point of view of Admiral's business, there were good reasons for Denis Fateev to have remained in Sydney at this time, notably, to advance the arrangements for the company's impending move to Lidcombe." 2. There were two elements of the primary judge's reasoning in this respect: first, that there was no legitimate or pressing need for Denis to be in Hong Kong at the time; and, secondly, that there were good reasons for him to have been in Sydney. Both of these elements were challenged on appeal. 3. As to the first matter, namely that the Hong Kong trip was a deliberate alibi, although it was never particularised as an element of the alleged fraud (see [73]–[74] above), it was put to Denis briefly in cross-examination: "Q. You organised it so that you'd be overseas to give yourself an alibi? A. No, that's not true." However, no attempt was made by the cross-examiner to explore the legitimacy or otherwise of the trip to Hong Kong. It was never put to Denis in terms (or at all) that there was no pressing need for him to be in Hong Kong over the critical weekend of 14 April 2018. That was, perhaps, a somewhat surprising stance for the cross-examiner to take in seeking to establish that the trip was planned as an alibi, and no case was developed by CGU that the Hong Kong trip was a sham or had no legitimate purpose. 1. A consideration of such evidence as there was in relation to Denis' trip to Hong Kong on 13 April 2018 suggests that there was an entirely legitimate and indeed a pressing reason for it. 2. As already noted, Denis travelled to Hong Kong on Friday, 13 April 2018 at 2.20pm, prior to the first delivery of used tyres to the warehouse later that day and the related theft and arson across the following three days. His flight was booked at some unspecified time on 12 April 2018. The evidence disclosed that Denis attended a meeting in Hong Kong on Sunday, 15 April 2018 with a solicitor, Ms Fu, who was a consultant to Cheng & Co, the firm of solicitors acting for Juhao, with whom Admiral was in some commercial negotiations at the time. That was the same person with whom Denis had planned to meet in Hong Kong on 4 April 2018, but that meeting was not able to take place: see [44]–[45] above. 3. Evidence of the meeting on Sunday, 15 April 2018 was contained in an email of 18 April 2018 set out in full at [155] below. That email referred to the meeting as a "preliminary due diligence exercise" in relation to some apparent commercial proposal between Admiral and Juhao. A letter from Cheng & Co of 12 April 2018 (see [154] below) indicated that the due diligence exercise was to be undertaken "to facilitate the preparation of a due diligence report for consideration by the board" of Juhao no later than 18 April 2018. The date of this letter, namely 12 April 2018, was the very same day that Denis arranged to travel to Hong Kong. 4. These matters did not support, and indeed tended to contradict, the primary judge's conclusion that "[t]here was no pressing need for Denis Fateev to go to Hong Kong for the period 13 to 18 April". There was, and is, no suggestion that the interactions between Denis, Cheng & Co and Juhao, including the proposed commercial transaction, related correspondence and the 15 April 2018 meeting, were a sham or contrived or part of any elaborate and deliberate alibi. 5. The analysis informing this conclusion is reinforced by a detailed consideration of the course of communications and interactions between Denis, Cheng & Co and Juhao leading up to the fire. 6. The evidence in relation to Denis' trip to Hong Kong begins with an email from Ms Fu on 29 March 2018 at 12.52pm, which was as follows: "Dear Denis, I am instructed by Mr Jimmy Chow of Juhao Flavor (Hong Kong) Limited that you will contact me this morning. I am available this morning but will be engaged in meetings from 2 pm onwards. My Hong Kong mobile is … or my Hong Kong office number is … Our office is in Admiralty (at Admiralty MTR station) and our address is Unit 2204, 22/Floor, Tower Two, Lippo Centre, 89 Queensway, Admiralty, Hong Kong. I look forward to meeting you then. Debbie FU". 1. On 29 March 2018, Denis wrote to Ms Fu, presumably in response to her email set out above, as follows: "Good morning Debbie, I wont have enough time to visit your office this morning. Please send me a list of information you require about my company, so you can begin drafting the agreement. If it is necessary, I can make time to visit your office next Wednesday (4th of April) on my way back to Sydney. Please advise." 1. At 2.15pm on the same day, Ms Etta Chung (Ms Chung) of Cheng & Co emailed Denis, copying both Mr Jimmy Chow (Mr Chow; the Vice President of Juhao) and Ms Fu, in the following terms: "Dear Mr Fateev, Please kindly find attached our letter dated 29 March 2018 for your urgent attention. Best regards, Etta Chung". 1. The email attached a letter dated 29 March 2018, but that letter did not find its way into evidence. 2. Later that day, Denis replied by email to Ms Chung, copying Mr Chow, Ms Fu and Mr Samuel Cheng (Mr Cheng) of Cheng & Co in the following terms: "Dear Etta, I am currently travelling to Chongqing to visit Mr Chow. My staff have been advised to prepare this information, but unfortunately Australia is on public holidays (Easter holidays) until next Tuesday. So [we] will only be able to send you this information next week. Thank you & Best Regards, Denis Fateev". 1. From this reply, it may be inferred that the letter of 29 March 2018, which had been attached to Ms Chung's covering email, contained a request for information in relation to Admiral's business. 2. On 2 April 2018, Ms Fu emailed Denis, copying Mr Chow, in the following terms, in response to the email set out at [145] above: "Dear Denis, Our meeting is purely to clarify the warehousing and logistic protocol and to understand Admiral's standard trading terms and conditions. I will make myself available for meeting you and please give me an indication as to the time you are available. Our office is in Admiralty and our address is … My HK mobile is … if you need further clarification." 1. Later on 2 April 2018, Denis emailed Ms Chung to advise that he would be in Hong Kong on "Wednesday afternoon" (4 April 2018) and to ask whether she would be available to meet him. On the following day, Ms Chung responded, advising that "our Ms Debbie Fu will be available to meet you on Wednesday (4 April 2018) between 1pm to 3pm in our office. Please kindly confirm your attendance." 2. Soon after, in the early hours of 4 April 2018, Denis emailed Ms Chung, copying Ms Fu and Mr Chow, to confirm that he would "visit your office during this time frame tomorrow". Ms Chung advised, later in the morning of 4 April, that Ms Fu had "not received the standard terms and conditions and a copy of the bill of lading of Admiral International". It may readily be inferred that these documents had been requested on behalf of Juhao in the letter of 29 March 2018. 3. Later still on 4 April 2018, Denis contacted Ms Chung, copying Ms Fu, Mr Chow, Mr Cheng and Ms Anna Yang (of Admiral) and indicating that: "Unfortunately I won't have enough time in HK to visit your office this trip. Anna from our Sydney … office will send you the required documents." Five minutes after that email was sent, Ms Chung sent an email to Denis saying: "We would appreciate it if you could arrange a telephone conversation with our Ms Debbie Fu this morning at around 11am at … to clarify some issues. Please kindly confirm". Ms Fu sent Denis a PDF copy of her business card later that same day. 1. The evidentiary record in relation to Denis' dealings with Ms Fu and Ms Chung in Hong Kong was then silent until 12 April 2018, on which date an unsigned copy of a letter was addressed to Denis from Cheng & Co under the subheading "Re Juhao Flavor (Hong Kong) Co Limited". The letter commenced: "We have instructions from Mr Jimmy Chow, Vice President, of Juhao Flavor (Hong Kong) Co Limited to contact Admiral International for the purpose of a due diligence exercise to facilitate the preparation of a due diligence report for consideration by the Board. We also have instruction that the due diligence report should be ready for the Board's consideration no later than Wednesday, 18 April 2018. In the premises, we would appreciate it if you could let us have the following documents as soon as possible [there were then some 15 documents listed, including "the carrier's insurance policy for 2018–2019"]. We attach herewith a copy of the non-disclosure agreement for your signature. Please kindly let us have a scanned copy of the agreement by email and the original signed agreement to be couriered or post[ed] to us at the address herein above. Kindly take note that nothing herein shall bind our client unless and until the agency agreement has been approved, agreed and signed by our client." The letter was copied to Mr Chow. 1. On 18 April 2018 at 4.02pm, Ms Chung emailed Denis, copying Mr Chow and Ms Fu, in the following terms: "Dear Mr Fateev, We attach herewith our letter dated 18 April 2018 in respect of the preliminary due diligence exercise at our Hong Kong office between your goodself and our Ms Debbie Fu on Sunday, 15 April 2018. The letter detailed copies of documents required by us for the preparation of our due diligence report for consideration by the Board of Juhao Flavor (Hong Kong) Co. Ltd. [W]e would appreciate it if you could expedite dispatch of these documents to us and to let us have a signed copy of the non-disclosure agreement as soon as possible. Should you require further clarification, please feel free to contact our Ms Debbie Fu at … Etta Chung". This email contained two attachments: a letter to Admiral dated 18 April 2018 and described in parentheses as concerning "DD Dox" (which is, presumably, an abbreviation of "due diligence documents"); and a document with the file name "Non-Disclosure Agreement – Juhao + Admiral + ACG – 18 April 2018.pdf". Neither the attached letter nor the non-disclosure agreement was in evidence. 1. Although Denis swore a number of affidavits in the CGU proceedings, those affidavits did not explain why he needed to be in Hong Kong from 13 to 18 April 2018. That is probably to be explained by the fact that the particulars of fraud upon which CGU relied (see [73]–[74] above) did not assert that the Hong Kong trip was deliberately undertaken to provide Denis with an alibi, and the case was not opened by Mr Watson at first instance on that basis. 2. In any event, such documents as found their way into evidence, the authenticity of which was not questioned, established a seemingly legitimate reason for Denis to have been in Hong Kong during that time, namely, to meet with representatives of Juhao to facilitate the "preliminary due diligence exercise", ahead of the company's board meeting on Wednesday, 18 April 2018. More generally, there was evidence that in and since 2014, Admiral had expanded its business into the Asia-Pacific region and was importing "building materials, home appliances and everyday accessories from all over China to Australia". 3. As to the second element of the primary judge's observations regarding the timing of Denis' trip, namely that there were "good reasons for [him] to have remained in Sydney at this time, notably, to advance the arrangements for the company's impending move to Lidcombe", this conclusion overlooks the evidence that, although it was technically to expire shortly, the Alexandria lease was to be held over for 90 days following its formal expiry (see [32] above). Further, on 9 April 2018, Denis told Mr Kozinets, a sub-tenant at the Alexandria premises, that "it would be two to three months while [Admiral] moved all the stock over" to the Lidcombe premises. Mr Kozinets was not challenged as to this evidence, which was corroborative of Denis' unchallenged evidence to the same effect. The primary judge's conclusion that Denis had a pressing or strong need to be in Sydney over the course of the weekend in question in order to facilitate the move of premises was not supported by the evidence. 4. It follows that the two bases identified by the primary judge in support of his adverse characterisation of Denis' trip to Hong Kong as being an alibi were not supported by the facts. It was at least equally possible that, far from providing an alibi for Denis, his Hong Kong trip provided an occasion or opportunity for Dmitry to execute the theft and arson. Strand 5 — alarm monitoring 1. The fifth strand of reasoning related in particular to the primary judge's observations at PJ [193], regarding Denis' failure to notify Securitas, the alarm monitoring service, "of his impending absence overseas and to nominate a substitute contact" in the event that the alarm was triggered and Securitas needed to contact someone associated with the business. 2. To put this aspect of the argument in context, the monitoring service had three contacts: Dmitry, Denis and Mr Yammine (the technician who had first installed the monitoring system and subcontracted Securitas). 3. The primary judge's central statement at PJ [193], that: "Denis Fateev's departure without nominating another contact supports the inference that he knew the security of the warehouse would be breached by someone who would start a fire and that he did not want the monitoring service to be able to reach anyone for approval to send a patrol car", has, as its unspoken premise, that Denis was not able to be contacted by the monitoring service when outside of Australia. This was confirmed by his Honour's statement in the following sentence of PJ [193] that Denis' absence overseas, together with that of his father, "would render the alarm system substantially ineffectual." 1. The difficulty with this premise is that the evidence demonstrated that Securitas had the mobile phone numbers of both Denis and Dmitry and indeed rang them, while both men were overseas, following the triggering of the alarm at the time of the fire. Whilst it is true that neither Denis nor Dmitry answered the call (which in Denis' case was made in the late evening in Hong Kong), this is not relevantly to the point. The point is that Denis did not need to "nominate an alternative contact" in order for the monitoring service to be able to obtain instructions while he was overseas. So much was also plain from the following exchange between the primary judge and Denis: "Q. Why didn't you contact the security company to give another number of somebody who could be called if there was a break-in or a fire? So that someone who also had an interest in the proper conduct of this company's business could react? A. Your Honour, because generally I - even when I travel, apart from being on the plane I still have - I still receive my calls, and the majority of the time if there was an alarm activation I do receive those calls and I do respond." 1. The primary judge concluded PJ [193] with the forceful observation that Denis' "failure to nominate an alternative contact was not inadvertent", a statement which carried a highly adverse character judgment, namely that Denis had engaged in a deliberate strategy to defeat the efficacy of part of Admiral's security system. For the reasons given above, however, Denis' absence overseas did not defeat his ability to be contacted by mobile phone, and the highly adverse suggestion of deliberateness ("not inadvertent") on his part was not warranted once the absence of any need to nominate a substitute was appreciated. Moreover, this highly adverse finding, namely that Denis deliberately put himself out of contact with the alarm monitoring service, was not put to him by CGU's senior counsel and was contradicted by the evidence. 2. As well, even though Denis and Dmitry were overseas on 16 April 2018, there was a third nominee, Mr Yammine, who was present in Australia and able to be contacted by the monitoring service. Again, Securitas' log showed that he had been telephoned following the fire, just as Dmitry and Denis had been. 3. For the above reasons, this strand of the primary judge's circumstantial reasoning was, with respect, flawed and did not support the inferential conclusion in PJ [193]. Strand 6 — Denis' failure to consult the CCTV app to monitor the warehouse from Hong Kong 1. The primary judge found that in August or September 2017, Denis and Dmitry requested that Mr Yammine replace the Digital Video Recorder which was installed in a cabinet in Denis' office at the warehouse, and which would receive feed from various CCTV cameras around the premises. His Honour found that Mr Yammine duly installed a later model NVR (see [58(7)] above), which had a single hard drive capable of recording up to 30 days of CCTV footage, with the CCTV system operating continuously and not just when the premises were unoccupied. The primary judge also held that, at the same time, Mr Yammine installed the CCTV app on each of Denis and Dmitry's mobile phones (see [58(8)] above), "by means of which they could view live feed from the premises' CCTV cameras, remotely, at any time." [59] 2. This sixth strand of reasoning relates to the primary judge's observation at PJ [194], that: "I am satisfied that remote monitoring was available to him [Denis] and that he either saw what was taking place in the warehouse on the Friday evening and/or the Saturday and did nothing about it, because he was complicit in the theft, or he did not look at the mobile phone application because he was aware that large quantities of goods would be removed. I find that he has denied having the ability to monitor the CCTV remotely in order to disavow knowledge of what occurred in the warehouse. I do not find it credible that the managing director of a business such as this would fail to utilise such a remote monitoring application over the whole course of a weekend while he was absent in Hong Kong, knowing that the warehouse was to be opened up for an after-hours delivery. Even if he did not look at the CCTV on his phone during the time when goods were being removed, having regard to the quantity that was stolen, if he had looked at any time on the Sunday he would have seen the warehouse half empty." 1. To the extent that the primary judge held that Denis either saw what was taking place in the warehouse "on the Friday evening … and did nothing about it, because he was complicit in the theft, or he did not look at the mobile phone application because he was aware that large quantities of goods would be removed" (emphasis added), this finding overlooks the fact Denis was on an international flight to Hong Kong for that whole period, having left Australia at 2.20pm on the Friday afternoon, which would not have seen him arrive in Hong Kong until approximately midnight on 14 April 2018, Sydney time, with the last of Mr Gazzara's trucks departing the warehouse at 10.35pm on the Friday night. It was not put to Denis that he could access his mobile device whilst flying and indeed, Denis had answered a question posed by the primary judge by stating that he could receive mobile phone calls when travelling overseas, "apart from being on the plane" (see [163] above). 2. As to his Honour's findings that, on the Saturday, Denis either deliberately did not look at the CCTV app on his mobile phone, or alternatively looked and remained silent, because he already knew what was happening, namely the theft of goods, Mr Sullivan submitted that there was a third, non-sinister, possibility, namely that Denis simply (but innocently) did not remotely monitor the warehouse (via the CCTV app) as he knew that both his father and brother were in Sydney, that there were security measures in place in the forms of alarms and locks, and that he was not aware of any untoward activity which would have caused him to check the CCTV footage, on the hypothesis that he had no reason to suspect his father of misconduct. A fourth possibility is that he simply did not check the CCTV app because he was pre-occupied with his meetings in Hong Kong in relation to the Juhao due diligence exercise. 3. Although the conclusions drawn by the primary judge in relation to the CCTV app are possibilities, they were to my mind no more than that, and were, in any event, only a part of the primary judge's overall circumstantial analysis which, for reasons already canvassed and for further reasons given below, I would reject. Strands 7 and 8 — lack of inquisitiveness by Denis 1. These strands of reasoning are conveniently dealt with together as they are really the obverse of one another. They relate to PJ [196]–[202] and concern what the primary judge considered to be Denis' telling failure to ask questions of each of his father, Mr Russkikh and Mr Gazzara about the delivery of tyres and surrounding circumstances following the fire and, in particular, following CGU's allegation of arson fraud on 9 April 2019. This posited failure was central to the primary judge's finding, expressed at PJ [195], that Denis "was not a credible witness". The primary judge said in that paragraph that he "found highly discrediting his evidence that after the fire, and especially in the context of CGU's refusal of indemnity, he did not make inquiries about inherently suspicious circumstances – circumstances that CGU has explicitly raised in defence of the insurance claim" (emphasis added). 2. The reasoning from PJ [195] ff culminated in the primary judge's conclusion at PJ [202] that: "In the absence of any coherent, plausible alternative explanation from Denis Fateev, the only possible reason for him not having sought answers to questions such as those referred to at [196]-[199] above is that he already knew the warehouse had been opened after hours for the purpose of being plundered and stuffed with fuel for a destructive fire and he either knew that Mr Gazzara was the operative who deposited the tyres and drove off with the stolen goods or he did not wish to confirm the name of whoever filled that role, or the number of tyres, or any other detail." 1. Before turning to Mr Sullivan's detailed attack on this aspect of the primary judge's reasoning, two points should be noted. First, neither of the propositions contained at the end of the above passage, namely that Denis "either knew that Mr Gazzara was the operative who deposited the tyres and drove off with the stolen goods or he did not wish to confirm the name of whoever filled that role, or the number of tyres, or any other detail" was ever put to him by Mr Watson. 2. Secondly, insofar as PJ [202] draws upon PJ [196]–[199], I would respectfully take issue with the primary judge's description in PJ [197] (see [104] above) of Denis' answers to the questions set out at PJ [196] as "banal and evasive" and as providing no "legitimate explanation, in Denis Fateev's understanding, for the after-hours opening" of the warehouse. First, the quoted passage at PJ [196] stopped short of the following question and answer: "Q. So I'm going to ask you again, what was the urgency which would warrant opening the premises on a Saturday? A. It was requested by our client, that it was convenient for him." (emphasis added) It also made no reference to a later question and answer on the same topic: "Q. Why take in a little contract on an urgent basis from somebody you didn't know? A. Because that's the service we provided. If the client is willing to pay for it then." (emphasis added) 1. Admiral operated a customs warehousing business and made money by making space available for goods to be stored. It had a client that apparently wanted to deliver goods for storage on a Saturday and was prepared to pay a premium for that opportunity (see [35]–[36] above). This evidence supplied a sensible and obvious answer to the question in relation to after-hours opening. It was a source of revenue for the business. I fail to see why the explanation given by Denis was either "banal", "evasive" or "illegitimate", especially when one has regard to the fact that the questions being asked of him frequently called for speculative answers in the sense that Denis was being asked to say why the warehouse would have been opened on the weekend in circumstances where he was not there, had not been directly involved in the inquiries for storage and, not knowing that the goods in fact being delivered were used tyres, had no apparent reason for suspicion. 2. Reference should also be made to the following series of questions and answers in relation to Dmitry's failure to refer to the events of the evening of 13 April 2018 in his Affidavit. The primary judge included this series of questions and answers in the lengthy extract at PJ [204]: "Q. Well, to save you time reading it [Dmitry's Affidavit], I'll tell you. He doesn't refer to doing anything on Friday 13 April. A. Okay. Q. Can you explain that? A. I can't. Q. Did you ask him? A. Possibly but I can't remember now. I haven't spoken to him for a while. [He had in fact died about eight months earlier]. Q. We're here and running your company's case. Can you offer any reason why your father would have omitted these apparently important facts from his affidavit? Do you have any idea? A. He may have forgotten but I can't answer for him. Q. Now, how many truckloads came from Morris to Admiral on the Friday and Saturday? A. I don't know. Q. Just a rough idea, please, Mr Fateev? Two, ten, 20? How many truckloads? A. I can't say because I wasn't there. Q. How many pallets were brought in? A. From my memory of the email correspondence from Morris Automotive they mentioned 20 to 30. Q. Where did the trucks come from? A. I don't know." 1. Denis' answers to these questions could not, in my opinion, fairly be criticised. For the most part, he was being asked in this series of questions why his late father, in an Affidavit settled by a solicitor, did not address particular topics. As Denis said, "I can't answer for him", referring to his father. Similarly, he could not answer questions about what happened on the Friday evening and Saturday as he was not physically at the warehouse or indeed in the country at the time. 2. The primary judge at PJ [204] described as a "notable weakness" of Dmitry's Affidavit that it did not refer to the events at the warehouse on the evening of Friday, 13 April 2018, and then was critical of Denis not questioning his father about the omission of details of events of the Friday night in his Affidavit. Apart from the questionable propriety of taking this course had he done so (as to which, see [198] below), CGU's pleaded case, as Admiral pointed out in its written submissions, restricted the allegations in relation to the delivery of the tyres to the deliveries on 14 April 2018, and the trial appears to have proceeded, at least until final submissions, on that basis. Admiral submitted that "[i]f Denis had been challenged with the proposition that he knew the affidavit to be false because no mention was made of events on Friday 13 April 2018, the matter would have been resolved by reference to the pleadings – it is, after all, a fraud case." 3. Turning to other aspects of Mr Sullivan's attacks on the primary judge's conclusion reproduced at [173] above, first, he pointed out that, contrary to his Honour's reasons, it was not the case on the evidence that Denis had not asked his father any questions. Mr Sullivan pointed to the following passage from questions asked of Denis by the primary judge: "Q. Have you made inquiries about that? A. Have I asked for value of the cargo? To be honest, I'm not sure exactly how much or what was delivered. Q. You understand that your father was there to take the delivery, is that so? A. Yes. Q. Did you make inquiries of him what was the delivery, why was it coming in at this hour? A. It was automotive parts, I think tyres and there was-- Q. Just to answer my question, have you made inquiries of your father about it, did you make inquiries of him while he was alive? A. I think we discussed it several times but it was nothing extraordinary." (emphasis added) 1. Secondly, and again contrary to the primary judge's conclusion that Denis had not asked his father any pertinent questions after the fire, Denis gave an affirmative answer to Mr Watson's question as to whether he had asked his father (after the event) "for his notes or what was in his head" as to the amount of goods delivered on 13 and 14 April 2018. The fact that he said, some three and a half years later, that he could not remember "all these details" does not negative the fact that he said that he did make inquiries of his father. 2. Also to be taken into account is an answer given by Denis to the primary judge when asked why he did not ask his father about the layout of the tyres, according to CGU's expert report, in the warehouse. That answer was "my father wasn't well and I tried not to ask him more than required". In this context, it was common ground that Dmitry had suffered a stroke in Vladivostok in July 2018 and died in January 2021, and that Mr Pellegrino's expert report, which detailed his evidence about the layout of the tyres in the warehouse, was not served until September 2020. 3. Thirdly, Mr Sullivan pointed to the following question by the primary judge, and Denis' answer, with regard to whether he made inquiries of his father and Mr Russkikh as to whether they had had any prior contact with Mr Gazzara before 12 April 2018, when Mr Gazzara contacted Mr Russkikh about storage at the warehouse: "Q. Have you made any inquiry of Mr Russkikh or of your father concerning whether there might have been any prior or additional conversation, for example, by phone? A. I would have but I don't remember them telling me otherwise." (emphasis added) 1. In relation to Mr Gazzara, Mr Sullivan pointed to Denis' evidence that he had never met or spoken to him. In this context, it is to be recalled that Mr Gazzara's communications were with Mr Russkikh and not Denis, although Denis was, on Mr Russkikh's evidence, asked about what price to charge for storage of the automotive parts. Mr Russkikh had not worked for Admiral for around two years prior to the trial. 2. In relation to Mr Russkikh, and Denis' interactions with him after the fire, the primary judge's adverse conclusions about the latter's failure to make inquiries appear, with respect, to have overlooked some passages of evidence emerging from the cross-examination of Denis, of which the following is an example: "Q. When you have become aware that your insurer is alleging that these volumes of cigarettes were taken out of the store with your company's knowledge and consent and authorisation prior to the fire, and you're contesting that, did you go to Mr Russkikh and say look, they are alleging that 35 pallets of EURO Tobacco's product was taken. Now, they say they can't find any evidence of their products in the rubble. Tell me where that stock was, which shelves was it on, which aisle? Did you ask him about any of that? A. I - we had lots of discussions, but I don't remember this in particular and I'm not sure if he was working with us at the time. Q. But when he has ceased to work for you he has gone to work for Moss Beverages? A. That's correct. Q. You've been able to contact him? A. Yes. Q. Just let me be clear about this: Is it the case that you have never asked him, you've never put it to him that the insurer is saying that this stock just wasn't there at the time of the fire. Now, our records say there were 35 pallets. Arthur, where were those 35 pallets? Let's ask them to look again. Have you ever asked him that? A. I don't remember the exact conversation but it's definitely a possibility that we would have discussed it. I just cannot remember it off the top of my head. Q. You don't recall ever having ascertained from him where it is that he recalls those 35 pallets or any part of them having been stored in the warehouse? A. No, we always assumed that it must have been destroyed in the fire." (emphasis added) 1. This was not evidence that Denis had never discussed such matters with Mr Russkikh (as the primary judge appears to have concluded), but simply evidence that he did have discussions with him but that he could not remember the exact conversation or discussion. 2. Fourthly, and perhaps most significantly in light of the primary judge's adverse conclusion that Denis did not engage with his father as to what had occurred at the warehouse over the weekend preceding the fire, are the following questions by the primary judge and answers by Denis: "Q. But if those trucks were coming in and stopping for some period, perhaps long enough to load them up with goods and then leaving, other trucks coming, again stopping for some time and then leaving, did you not consider it important to ask your father who says he was there on the day what were they doing? What can you say, Dmitry, about what these trucks were doing that would answer the insurance company's allegation that they were taking away stock; did you not ask him? A. I did. I did ask him but he said they were delivering cargo and there was an issue with the way they were palletised or something, and that he asked them to bring them back when they are rewrapped and restacked so they could be stored adequately, from my memory. He did not tell me of anything in relation to stock being removed. Q. Cargo, was he talking about the tyres? A. Yes." (emphasis added) 1. These questions and answers appear to have been overlooked by the primary judge in expressing his adverse conclusions about Denis, and the inferential reasoning leading to those conclusions. They are not referred to in his Honour's reasons and are flatly inconsistent with the primary judge's statement that Denis did not ask his father important questions following the fire. 2. Next, when challenged in cross-examination by Mr Watson, Denis maintained that he had "taken a lot of interest into understanding what caused the fire" but said that he did not see any utility in having a conversation with Mr Gazzara, whom he did not know and had never met. In this line of cross-examination in relation to the cause of the fire, he said that he was "assuming that there would be an investigation and we would get some answers from that". 3. As to the security at the warehouse following the delivery of what were in fact the tyres over the weekend preceding the fire, Denis gave evidence that, as far as he was aware, "my father said he'd turned on the alarm", a response that implies an inquiry by Denis, who evidently accepted his father's explanation at the time. In hindsight he was wrong to do so, but the fact that he accepted the explanation is not necessarily a basis for concluding that he knew or even should have known that the explanation was false. 4. It may also be noted that the following exchange occurred between Mr Watson and Denis: "Q. Look, Mr Fateev, we all know there was a big fire in your family business, don't we? A. Yes. Q. I take it you've had enough interest to try and find out what happened? A. Yes." (emphasis added) Again, this sequence of questions and answers is quite inconsistent with the primary judge's inferential reasoning as to Denis' suggested lack of interest or inquiry. 1. As to Denis' suggested failure to have asked the questions set out at PJ [199] (see [104] above), especially questions in relation to the tyres, Mr Sullivan pointed out, correctly, that "[t]here was no suggestion until, at the earliest, when the particulars were given on 9 April 2019 that the tyres were involved". The reference to 9 April 2019 — almost a year after the fire — was to CGU's letter declining cover and particularising the alleged fraud: see [73]–[74] above. As will be recalled, Mr Gazzara's initial inquiry about storage was in relation to "car parts and accessories" and it was made to Mr Russkikh. The connection between the tyres and the fire was the result of the investigations by CGU's fire investigator. 2. Mr Sullivan also submitted that, in addition to CGU's investigator, the ABF was investigating the fire as were the police. Denis had authorised and apparently given full cooperation to the investigators and full access to Admiral's records, providing a letter of authority to CGU on 16 May 2018, including for the release of any documentation, information and CCTV footage pertaining to the matter. 3. By the time indemnity was declined, and indeed before it was, and by no later than October 2018, Admiral had also retained its own solicitors who were taking the lead in the claim and related investigation. Indeed, in a letter of 22 October 2018 to a Detective Sergeant Peebles at Redfern Police Station, Admiral's solicitors, LMI Legal, wrote that they had "been advised that both Denis and Nickita [Fateev], as well as another solicitor on behalf of Admiral, have sought updates from New South Wales Police since the fire." 4. This is not consistent with what the primary judge characterised, adversely to Denis, as a telling lack of curiosity and solicitude about the origins of the fire. And, as was submitted, the solicitors who he retained made inquiries of each of Dmitry, Mr Gazzara and Mr Russkikh, preparing affidavits of all of them. That the primary judge did not believe Dmitry and Mr Gazzara is not relevantly to the point. The relevant point for present purposes is that inquiries were made of them by solicitors that Admiral, through Denis, had retained. 5. It was also submitted that there was a strong element of hindsight in the primary judge's critique of Denis' behaviour. There was no obvious connection between the goods delivered after Denis had left for Hong Kong on Friday, 13 April and the fire on the morning of 16 April 2018 until expert reports were filed more than two years later. Further, there was no obvious connection between the fire and Dmitry, who had left for Russia on the morning of 15 April 2018, prior to the fire having occurred, at least until some point after indemnity had been denied and fraud had been alleged by CGU. 6. Once lawyers had become involved, there was also the constraint which it may be assumed the lawyers had advised Denis of, namely that he should not have contact with other potential witnesses of fact in any legal proceedings that it may become necessary to bring. In that context, the primary judge said: [60] "Despite Denis Fateev's admitted failure to make pertinent inquiries, Admiral's solicitors obtained the affidavit of Dmitry Fateev of 8 December 2020 and that of Morris Gazzara of 21 August 2021. When questioned on the circumstances of the after-hours opening of the warehouse and the delivery of tyres, Denis Fateev did not even demonstrate familiarity with those affidavits." (emphasis added) 1. With great respect to the primary judge, it would have been improper or at the very least imprudent for Denis to have been given access to the affidavits of other witnesses of fact in the proceedings. That would have been akin to witnesses of fact, in a case where allegations of fraud had been made, conferring before giving evidence — something they would have been rightly criticised for and which, if done with the complicity of Admiral's solicitors, would have been in breach of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW), r 25.1 of which provides: "A solicitor must not confer with, or condone another solicitor conferring with, more than one lay witness (including a party or client) at the same time— 25.1.1 about any issue which there are reasonable grounds for the solicitor to believe may be contentious at a hearing, and 25.1.2 where such conferral could affect evidence to be given by any of those witnesses, unless the solicitor believes on reasonable grounds that special circumstances require such a conference." 1. When considering what have been described as the seventh and eighth strands of the primary judge's inferential reasoning, it is also necessary to consider his Honour's description of Denis' responses to the questions set out at PJ [200]–[201] (see [104] above) as providing "no sensible answer" and as "fatuous". 2. The question asked at PJ [200] and leading to the ultimate answer by Denis (described as "no sensible answer" by his Honour) was in fact three questions which were as follows: "Given that that seems to be, as the argument is presented to me, a significant part of the dispute between yourself or your company and the insurer, have you made inquiries to ascertain how it came about that your company [took] a delivery of tyres just at that point, and what is the background of this person Morris, and such things as that?" The answer given was as follows: "Yes, your Honour, I understand now, but my understanding is that we would receive the cargo for export on the Friday and on the Saturday, and it was placed where we had space available, but - I don't know if that's suspicious or not." 1. This was an answer at least to the first question and probably also an attempt to answer the third and non-specific of the rolled up three questions asked of Denis. Denis, by saying that he did not "know if that's suspicious or not", was simply making the point he had made earlier in his cross-examination, namely that there was nothing inherently suspicious about a customer making arrangements for a delivery of goods to the warehouse for storage pending export, and being prepared to pay a premium to do so. I would not characterise the answer in the same way as the primary judge did. 2. Nor would I have described as "fatuous" Denis' answer to the two questions set out at PJ [201] (see [104] above). The answer given by Denis was: "Well, your Honour, there's just been a lot of really information for me to adapt and adopt into and my understanding that there was something that I was to be made reference to would be in the Court books which were provided yesterday afternoon but that's my understanding of it." By that answer, the witness sought to convey that a great deal of information had been assembled for him "to adapt and adopt", by which he presumably meant "absorb". 1. Multiple or compound questions are objectionable in that they have the vice of potentially confusing a witness and/or may be unfair insofar as they are apt to produce what may subsequently appear to be incomplete answers. It was observed in Libke v The Queen (2007) 230 CLR 559; [2007] HCA 30 at [127] that: "'A compound question simultaneously poses more than one inquiry and calls for more than one answer. Such a question presents two problems. First, the question may be ambiguous because of its multiple facets and complexity. Secondly, any answer may be confusing because of uncertainty as to which part of the compound question the witness intended to address'. But compound questions have additional vices. It is unfair to force a witness into the position of having to choose which questions in a compound question to answer and in which order. … To place witnesses in the position of having to reformulate a compound question and answer its component parts bit by bit is unfair to them in the sense that it prevents them from doing justice to themselves." 1. Similar observations as to the vices of compound questions were made in Skelton v R [2015] NSWCCA 320 at [38] and [58]; see also J D Heydon, Cross on Evidence (13th Australian ed, LexisNexis Butterworths, 2021) at [17505]. The vices of compound questions are themselves compounded when such questions are put to a witness by the judge, as they were in the present case, in circumstances where counsel may feel coy about raising objections to them. 2. Mr Watson made the submission that where the primary judge referred to some of Denis' answers as "banal" or "fatuous", such characterisation was informed by "the subtle influence of demeanour". I disagree with this submission. His Honour was describing the content of the answers given. An appellate court is generally as well able to judge whether an answer is in substance responsive to a question as a trial judge. 3. The seventh and eighth strands of the primary judge's inferential reasoning were not strong, for the reasons explained above. The arguments advanced on appeal by Admiral were persuasive and, when all of the evidence is considered and allowance is made for the compound nature of some of the questioning, the answers to which the primary judge found wanting, I do not consider that the primary judge's inferential conclusions at PJ [196]–[203] were justified. Strand 9 — absence of further inquiries by Denis 1. The final strand of reasoning attacked on appeal was that contained in PJ [206], which is convenient to reproduce: "I infer that Denis Fateev did not make inquiries of his father concerning the Friday because he did not wish to confirm details of the perpetration of the crimes. Even before Mr Gazzara's affidavit was sworn, throwing up conflict between his account and that of Dmitry Fateev, Dmitry's affidavit was self-evidently deficient for want of explanation of the Friday night and for the absurd story about re-loading tyres and sending them away to be re-packed. An honest innocent person in Denis Fateev's position would have made the further inquiries of his father that counsel suggested in cross-examination and would not have endeavoured to pass off Dmitry Fateev's implausible evidence on the Court, unquestioned." 1. The point has already been made in relation to the previous two strands that it was not the case, on the evidence, that Denis did not make inquiries of his father concerning the fire. That those inquiries did not yield a confession from Dmitry as to his involvement was not to the point. Secondly, it may be that a more diligent or forensically experienced person may have put further questions to his father than did Denis, but a lack of diligence and/or forensic experience does not self-evidently translate to dishonesty and complicity. Moreover, relying on experts and legal representatives to make inquiries may well have been just as, if not more, appropriate as conducting his own inquiries. Much of the reasoning in PJ [206] relates to Dmitry's Affidavit and its deficiencies, but those deficiencies were apparent to the primary judge after reviewing the whole corpus of the evidence before him and would not necessarily have been apparent to Denis, a 27-year-old with no legal or forensic experience. Insofar as the criticism in PJ [206] relates to the events of Friday, 13 April 2018, it has already been pointed out that the fraud as particularised by CGU made no allegations in relation to what had transpired on the Friday night as opposed to the following two-and-a-bit days. The significance of this in the context of the primary judge's criticism of Denis has already been pointed out at [179] above. Conclusion in relation to finding of knowledge and connivance 1. As the primary judge explained, his conclusion that Denis had knowledge of the theft and arson, and connived in it so as to engage the fraud condition and the fraud exclusion under the ISR Policy was based upon his Honour's reasoning at PJ [186]–[207] and "[t]aking together all of the circumstances considered" in those paragraphs. His Honour's conclusion that Denis "agreed to the execution of the plan [to steal from the warehouse and have the remaining contents destroyed by fire] and that he cooperated in it by absenting himself on a trip to Hong Kong for the critical weekend" was based entirely on circumstantial reasoning, with a number of different strands of argument forming part of that reasoning. For the reasons set out in detail above, and in light of the gravity of the allegations made, in my respectful view, the primary judge's conclusion on the critical question of knowledge and connivance cannot be sustained. This has the consequence that Admiral's entitlement to indemnity from CGU under the ISR Policy was not excluded. 2. It also follows that his Honour's dismissal of Admiral's cross-claim against CGU in the Brightcity proceedings, on the basis that there was no relevant "occurrence" under cl 4.15 of the Liability Policy as the warehouse fire was both expected and intended from Admiral's standpoint (see PJ [277]), similarly cannot be sustained. 3. This conclusion leads to a consideration of whether CGU's obligation to indemnify Admiral for its liability to Brightcity was nonetheless excluded under cl 8.16 of the Liability Policy, relating to the failure to take reasonable precautions: see [25] above. Reasonable precautions 1. The provisions of the Liability Policy relevant to this aspect of the appeal have been set out at [23]ꟷ[26] above. 2. In respect of the "reasonable precautions" issue raised by Admiral's appeal in the Brightcity proceedings, PJ [270]–[272] and [280] should be noted, bearing in mind that PJ [270]–[272] were principally directed to Brightcity's claim against Admiral for breach of bailment, which Admiral did not challenge on appeal: "270 Admiral has failed to disprove that the destruction of Brightcity's goods was the result of negligence on its part. Reasonable steps that could have been taken to protect the contents of the warehouse, and that were not taken from when the premises were last attended by an Admiral employee, Dmitry Fateev, at about 11:00pm on Saturday, 14 April 2018, include the following: (1) Locking the front gates to the warehouse forecourt. (2) Locking the patio bolt of the front office door, with the bolt engaged in the threshold. (3) Closing the electronically latched door from the office into the warehouse and not leaving any readable card key in the vicinity. (4) Arming the alarm. (5) Notifying the alarm monitoring service, Securitas, of one or more persons in Sydney, additional to Denis and Dmitry Fateev, who could be contacted in the event of an alarm signal being received during the absence of those two persons overseas. (6) Maintaining the capability to monitor CCTV within the warehouse remotely and ensuring that that capability was at all times in the hands of someone present in Sydney and nominated to Securitas as a contact. 271 The first three of these measures, alone, would have been capable of preventing the arsonist from gaining access to start the fire by which Brightcity's goods were destroyed. At the least, those three basic steps could have impeded the arsonist to such a degree that he would not persist with trying to force entry for fear of being discovered. The impediment and deterrent would have been further increased by the addition of steps (4), (5) and (6), pursuant to which a patrol car may have been dispatched to the warehouse before entry could have been forced. The failure to take any of these steps has been clearly established and Admiral has not disproved that they were causative of the arsonist gaining entry to ignite the fire. 272 On the findings that I have made, Admiral's failure to take reasonable care to preserve Brightcity's [goods] went well beyond the omissions referred to above. I have found that Dmitry Fateev deliberately left the premises in a state that would permit ready access and that he arranged for and consented to the attendance of the arsonist. Further, I have found that he caused combustible motor tyres to be distributed through the warehouse aisles in order to fuel the fire and promote its destructiveness. … 280 CGU also invoked Condition 8.16 of the Liability policy, pursuant to which Admiral was obliged to 'take all reasonable care to prevent … Property Damage'. Admiral argued that breach of this condition, if proved, does not warrant refusal of indemnity. It relied upon ss 52(1) and 55 of the Insurance Contracts Act. There most certainly was a breach of Condition 8.16, constituted by the aspects of neglect referred to at [270] above and by the deliberate actions identified at [272]. It is unnecessary for me to determine the consequences of the breach of Condition 8.16, pursuant to relevant sections of the Act, because of the more fundamental objections to Admiral's claim for indemnity, arising from its knowing concern in and approval of the arson." (emphasis added) 1. The primary judge's reasoning linking PJ [270] and [280] created a considerable overlap between the "reasonable precautions" issue and the "central issue" of knowledge and attribution such that, prima facie, the disposition of the central issue could be determinative of the "reasonable precautions" issue. However, Mr Sullivan candidly conceded that the "reasonable precautions" grounds of the appeal had work to do independent of the central issue. That concession emerged in the following exchange during the appeal hearing: [61] "BELL CJ: Do you say that it follows that if you succeed on the Denis argument [the central issue], you succeed on this [reasonable precautions issue]? Or is it a separate analysis? SULLIVAN: Strictly speaking, in our respectful submission, it's not an inevitable consequence of us succeeding on the [question of] … Denis not knowing [about Dmitry planning and carrying out arson fraud]. Because it's conceivable that your Honours could find that, insofar as the claim for the loss of the customer's goods – Brightcity's goods – was concerned, that Admiral was responsible for such gross security breaches that … BELL CJ: [Denis] didn't know, but he was reckless as to security. SULLIVAN: Yes. So, however, once it is recognised that Admiral did not know – was not involved – and once it is recognised that this was a deliberate theft, we say that the test in Fraser articulated by Lord Justice Diplock at the time is nowhere near satisfied. There's no evidence of reckless disregard. … BELL CJ: And is there any further relief consequential upon you succeeding in this argument? SULLIVAN: Yes, your Honour. There's a separate and independent costs argument which follows … There is separate relief because, at the moment, we have been ordered to pay Brightcity's loss and damage. And so we would be seeking an order that we'd be indemnified in respect of that by CGU." 1. That exchange was followed by Mr Sullivan clarifying that the "reasonable precautions" issue was introduced by ground 15 of the appeal in the Brightcity proceedings. [62] It was subsequently elaborated upon in grounds 20 and 21. Those grounds were formulated as follows: "15 The trial judge erred at J270(1) to (6) both inclusive, and at J280 when he found neglect by the appellant, and further found that such neglect engaged condition 8.16 of the Liability policy no. 19M 7679161 (Liability Policy), being the 'reasonable precautions' condition. … 20 The trial judge erred at J 280 in failing to apply the principles identified and applied by Diplock LJ in Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898 at 905–906 and McHugh JA in Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390, 397 in finding that a breach by the appellant of Condition 8.16 of the Liability Policy was constituted by: a. the aspects of neglect referred to at J 270; b. the deliberate actions identified at J 272. 21 The trial judge erred at J 280 in finding disentitling conduct by Dmitry Fateev and in attributing the conduct found against Dmitry Fateev as described at J 270 and J 272 to the appellant." 1. As is clear from ground 20 and Mr Sullivan's submission extracted at [214] above, Admiral advanced its argument on the "reasonable precautions" qualification in cl 8.16 of the Liability Policy in reliance upon the principles set out by Diplock LJ (with whom Willmer and Winn LJJ agreed) in Fraser v B N Furman (Productions) Ltd [1967] 1 WLR 898 (Fraser). That case concerned a provision similar to cl 8.16 of the Liability Policy, albeit that it was contained in a policy of employer's liability insurance. The specific passage upon which Admiral relied appeared at 905–906, where Diplock LJ wrote: "The first point to consider is the question of construction of that condition. It must be construed, of course, in the context of a policy of insurance against specified risks. The risks so specified, which are 'liability at law for damages', are liability for breach of statutory duty, for which the owner or occupier of the factory would always be personally liable, negligence at common law of the employer, for which he would be personally liable, and also the negligence of his servants, for which he would be vicariously liable. Therefore, when one approaches the construction of the condition, one does so in this context, and applies the rule that one does not construe a condition as repugnant to the commercial purpose of the contract. There are three considerations to be borne in mind on the wording of this condition. (1) It is the insured personally who must take reasonable precautions. Failure by an employee to do so, although the employer might be vicariously liable for the employee's negligence or breach of statutory duty, would not be a breach of the condition. That was established in, and was the ratio decidendi of, Woolfall & Rimmer Ltd v Moyle [1942] 1 KB 66. (2) The obligation of the employer is to take precautions to prevent accidents. This means in my view to take measures to avert dangers which are likely to cause bodily injury to employees. (3) The third word to be construed in this context is 'reasonable'. 'The insured shall take reasonable precautions to prevent accidents …' 'Reasonable' does not mean reasonable as between the employer and the employee. It means reasonable as between the insured and the insurer having regard to the commercial purpose of the contract, which is inter alia to indemnify the insured against liability for his (the insured's) personal negligence. That, too, is established by the case which I have cited. Obviously, the condition cannot mean that the insured must take measures to avert dangers which he does not himself foresee, although the hypothetical reasonable careful employer would foresee them. That would be repugnant to the commercial purpose of the contract, for failure to foresee dangers is one of the commonest grounds of liability in negligence. What, in my view, is 'reasonable' as between the insured and the insurer, without being repugnant to the commercial object of the contract, is that the insured should not deliberately court a danger, the existence of which he recognises, by refraining from taking any measures to avert it. Equally, the condition cannot mean that, where the insured recognises that there is a danger, the measures which he takes to avert it must be such as the hypothetical reasonable employer, exercising due care and observing all the relevant provisions of the Factories Act, 1961, would take. That, too, would be repugnant to the commercial purpose of the contract, for failure to take such measures is another ground of liability in negligence for breach of statutory duty. What, in my judgment, is reasonable as between the insured and the insurer, without being repugnant to the commercial purpose of the contract, is that the insured, where he does recognise a danger should not deliberately court it by taking measures which he himself knows are inadequate to avert it. In other words, it is not enough that the employer's omission to take any particular precautions to avoid accidents should be negligent; it must be at least reckless, that is to say, made with actual recognition by the insured himself that a danger exists, and not caring whether or not it is averted." (emphasis added) See, also, Booksan Pty Ltd v Wehbe (2006) 14 ANZ Ins Cas 61-678; [2006] NSWCA 3 (Booksan), which concerned "General Condition 2" of a "Business Cover Policy", which was expressed in similar terms (and operated in a similar manner) to cl 8.16 of the Liability Policy. At [188], Ipp JA (with whom Giles and Tobias JJA each agreed) stated that: "The insurers accepted that an employer's vicarious liability to a third party for the negligence of an employee is not relevant to the obligation of an insured [to take reasonable precautions to avoid personal injury and property damage]. Thus, the fact that [the insured's] employee … was negligent did not establish a breach of General Condition 2 by [the insured]: Fraser v Furman [1967] 1 WLR 898 at 905–906; Legal & General Insurance Australia Ltd v Eather. The insurers accepted that General Condition 2 would only not be satisfied if the conduct of [the insured was] such that it amounted to a deliberate decision to expose persons to a risk of injury, or recklessness on their part." (emphasis added) 1. This summary of principle, regarding the inquiry into whether an insured has taken "reasonable precautions" against liability, made reference to the judgment of McHugh JA (with whom Glass JA agreed) in Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 (Eather). The insured in Eather was indemnified, pursuant to a multi-risks policy, against "accidental loss or damage". According to McHugh JA (at 407), it followed that: "the indemnity covered any unexpected or unintended loss or damage to the jewellery: Robinson v Evans Bros Pty Ltd [1969] VR 885. It, therefore, covers any loss or damage which is the result of negligent conduct on the part of the insured. It would defeat the commercial purpose of the contract of indemnity if the wording of the condition operated so as to take away an important part of the basis of the indemnity itself. The approach to the words 'all reasonable precautions' in liability policies is in my opinion equally applicable to the present policy." (emphasis added) See, also, Barrie Toepfer Earthmoving and Land Management Pty Ltd v CGU Insurance Ltd (2017) 75 MVR 108; [2016] NSWCA 67 at [51]–[53] per Meagher JA (Ward JA and Sackville AJA agreeing); Motor Accident Commission v Dinh (2015) 124 SASR 344; [2015] SASCFC 184 per Gray ACJ (Sulan and Lovell JJ agreeing). 1. The relevance and application of the Fraser line of authority, as developed in Eather, was not contested by Mr Watson (for CGU). [63] On that basis, it was essentially common ground that this Court's determination of the "reasonable precautions" issue turned upon whether Admiral (as opposed to Dmitry) had "deliberately courted" the destruction of Brightcity's goods in the fire, or was reckless as to the risk of such destruction. In this context, "recklessness" involved an actual recognition by Admiral that the risk of arson existed, accompanied by a deliberate or knowing failure to take reasonable steps to protect against that risk, which in turn evinced a lack of care as to whether the risk was managed. It followed that mere negligence on the part of Admiral as to the risk of arson (or, for example, vicarious liability for the negligence of an employee such as Dmitry) would not suffice to found a breach of cl 8.16 of the Liability Policy, lest the commercial purpose of cl 1.1(b) of the Liability Policy, that is, to indemnify Admiral against liability for negligence, be undermined to a significant extent. 2. The security failures particularised at sub-paragraphs (1)–(6) of PJ [270] and described in the context of Brightcity's claim in bailment as negligent are not, in and of themselves, capable of sustaining a conclusion that Admiral failed to exercise "reasonable precautions" to protect Brightcity's goods and was therefore in breach of cl 8.16 of the Liability Policy. 3. On the application of the Fraser test, Admiral would only be in breach of cl 8.16 if it had "deliberately courted" the risk of fire or was reckless as to that risk. The standard established by that test requires a positive (or actual) recognition (or awareness) of the risk by Admiral, through Denis as its controlling mind and will. [64] That in turn required the attribution of knowledge of Dmitry's deliberate conduct to Denis or, alternatively, the attribution of Dmitry's deliberate conduct to Admiral. 4. In light of the rejection of the primary judge's inferential conclusion that Denis knew of and consented to the arson, Denis and therefore Admiral cannot be fixed with Dmitry's deliberate acts and knowledge. 5. At PJ [49], the primary judge held that: "It is common ground that the last person to have access to the warehouse prior to the entry of the person who started the fire was Dmitry Fateev. He came and went from the premises at various times between 5:52am and 11:11pm on Saturday 14 April. On his last departure he failed to secure the door between the back of the office and the warehouse, to arm the alarm system, to lock the front door to the office or to lock the front driveway gates." 1. At PJ [58], the primary judge held that: "It is clear from the speed with which the arsonist did his work between about 12:24 am and 12:31 am on 16 April that access was gained through the office front door, without forcing. There was no time for forcing and there is no evidence of forcing. One or other of the above means of leaving the office front door so that it could be opened without impediment must have been adopted. Each of the alternative means depended upon Dmitry Fateev having failed to lock the patio bolt in the engaged position and also having either failed to lock the mortise latch, or issued a key, or deliberately held the latch open by tying the inside handle down in the open position." 1. Dmitry's acts, as found by the primary judge, and his Honour's finding that he was the architect of the theft and arson had the consequence that the security breaches were plainly not acts done within the course of his authority as an employee of Admiral, and indeed would have been wholly contrary to his responsibilities. The point was not that Admiral did not take reasonable precautions or have reasonable means and layers of security but that, on the primary judge's findings, those measures were deliberately disabled by Dmitry to facilitate the arson in the early hours of Sunday 16 April 2018. 2. In the course of submissions on this issue, the following exchange occurred: "WATSON: What we are saying is that for reasonable precautions, they are something a company does when it courts a specific risk which appears under the insurance. BELL CJ: So it has a whole series of security devices, locks, et cetera. WATSON: Which are not put in place. WARD P: That's because you say that [Dmitry's] conduct can be relied upon. WATSON: Yes, that's the point. That's the difference. WARD P: And attributed to the company. MACFARLAN JA: It would render the cover to a significant extent ineffectual, wouldn't it? WATSON: No, with respect, because the work or things done - and your Honour Ward [P] is quite right. The real point of difference here is that this is an instance where we say Dmitry's conduct can be attributed to the company for the purposes of a reasonable precautions provision. WARD P: And Dmitry's conduct was deliberate. WATSON: Yes. WARD P: You need both, don't you? WATSON: Yes. WARD P: Because if it was negligent, then you wouldn't be able to say that the company had deliberately courted [the risk]. WATSON: Exactly, and may I adopt that, your Honour to answer your Honour Macfarlan JA's question? BELL CJ: But why would you attribute— WATSON: That's why it wouldn't render it redundant or worthless." (emphasis added) 1. In his oral reply, Mr Sullivan rebutted Mr Watson's submission as follows: "We only wish to address one point in reply – and that is the reasonable precautions submission my learned friend made in following up upon your Honour the President's comments. And, as we understand, his submission is that somehow or other – and despite the test set out in Fraser – that Dmitry's deliberate conduct is attributable to Admiral because he was in charge of the relevant security devices. That is inconsistent with the language of the policy … The reasonable precautions clause in the liability policy … starts with the words … 'you must'. And then it says, 'take reasonable precautions'. Emphasising, for the moment, the word 'you' – and, of course, that is defined in the policy … 'You', 'your', 'yours', 'insured' means – subparagraph (c) – 'every past, present or future director, executive, office, employee, partner, shareholder', voluntary worker of the partner shown in the definitions, including 'the spouse or family member of any such person performing a designated role in connection with the business while acting within the scope of their duties and in such capacity'. … As your Honour, the Chief Justice, said, [it's a] principle of agency that acts of agents acting outside the course of their authority are not attributable to the principal. And, likewise, here, presumably drawing upon those principles, the policy expressly defines 'you' so that if – as appears to be the case – Dmitry was acting unlawfully, criminally in disabling these security devices, he was not acting within the scope of his employment duties. And so that his conduct cannot be attributed to the company for the purpose of the policy". (emphasis added) 1. In the absence of a basis to attribute knowledge of Dmitry's acts to Denis and/or Admiral, it was not established that Admiral failed to take reasonable precautions so as to deny it cover under the Liability Policy for the purposes of its cross-claim against CGU. Admiral's claim for consequential loss under the ISR Policy 1. In its Amended Statement of Claim in the CGU proceedings (ASOC), Admiral brought claims for damages reflecting its alleged consequential losses, in accordance with the terms of the ISR Policy, on two bases. First, it sought damages for breach of contract. Secondly, in the alternative or in addition to the breach of contract claim, it sought damages for breach of CGU's duty of utmost good faith as set out in s 13 of the Insurance Contracts Act. 2. That section relevantly provides that: "(1) A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith. (2) A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection (1) is a breach of the requirements of this Act. (2A) An insurer under a contract of insurance contravenes this subsection if the insurer fails to comply with the provision implied in the contract by subsection (1)". 1. In the ASOC, Admiral particularised its pleaded consequential losses as follows: "33 … without the Defendant accepting and paying its claim the Plaintiff has been unable to and will continue to be unable to: a. operate its business; b. return to its pre-fire trading capacity; and c. reach the increased level of trading and profitability it expected to achieve. 34 Had the Defendant accepted the Plaintiff's claim and the claims of the Plaintiff's customers, the Plaintiff: a. Would have continued operating its business; b. Would not have lost its customers; and c. Would have increased its trading and profitability to the level it expected to achieve at the time of the fire. 35 The Plaintiff thereby suffered loss as a result of the Defendant's breach of the Policy. 36 The said losses may fairly and reasonably be considered as arising naturally from the Defendant's breach of the Policy. 37 Further and in the alternative, at the time the Policy was entered into, the Defendant should, or a reasonable insurer in its position would, have realised that such losses were likely to result from its breach of contract in failing to pay under the Policy. 38 The Plaintiff claims its consequential losses arising from the Defendant's wrongful refusal to indemnify." 1. The primary judge addressed the issue of an alleged want of good faith on the part of CGU on a contingent basis as follows: [65] "281 I have found that CGU's refusal of Admiral's claims under the two policies is contractually justified. Against the eventuality of this finding being displaced on appeal, it may be said that the damages that would be assessed against CGU for wrongful refusal to pay Admiral's claim would be the amount of the contractual indemnity, as assessed in relation to Issue 4 (see [236]) and Issue 5 (see [239]). Admiral contends that in declining the claim CGU also breached its obligation of utmost good faith, implied by force of s 13 of the Act. Particulars of breach of the obligation of good faith, going beyond the refusal of indemnity, are alleged to the following general effect: (1) failure to make a decision on Admiral's claim for indemnity with a reasonable time; (2) alleging that the fire was deliberately lit and (3) declining claims for indemnity made by Admiral's customers, including MOS and Brightcity. 282 Quantification of damages under the cause of action for breaches of CGU's duty of good faith in any of these respects would be inextricably bound up with the question of what causative effect any established breach of that implied duty may have had. The first aspect of Admiral's case on causation concerns its inability to secure variation of its Customs Act licences to enable it to undertake bond store operations at Lidcombe. The circumstances are referred to at [247]–[251] above. Admiral contends that its inability to obtain the variation has been caused by CGU's refusal of the claim and its allegations of fraud. That contention is founded upon the following statement by investigating police in a letter dated 17 March 2021: 'Police have not finalised the investigation and are awaiting the outcome of the civil matter between Admiral International Pty Ltd and CGU which may impact the criminal investigation'. 283 I do not accept, on the basis of this letter or otherwise, that CGU's contest of the insurance claim has caused the police investigation to remain open. Although the letter states that police are 'awaiting the outcome of the civil matter', it does not state that that is preventing finalisation or that there are no other lines of inquiry that remain to be pursued. Irrespective of the outcome of this case the police may continue to regard their investigation as open indefinitely. There may never be a 'completed police report' as required by the ABF and the ATO. As a result of suspicious and unresolved circumstances of the fire, the Commonwealth authorities may therefore never be satisfied to grant Admiral's application for variation of its licences to enable it to resume bonded warehouse operations. In those circumstances it cannot be said that CGU's denial of the claim has caused there to be no 'completed police report' and thereby caused the ABF and the ATO to refuse to vary the licences to the Lidcombe warehouse. 284 Secondly, Admiral claims that each of the above breaches, or a combination of two or more of them, caused damage to Admiral's reputation amongst customers who, otherwise, might have utilised free and/or bonded warehouse services provided by the company at the new location. This loss of reputation is said to have caused ongoing loss of revenue, well beyond the 12 months Indemnity Period. It is not practical to determine on a contingent basis this aspect of Admiral's case on causation of loss. It depends upon precisely what findings might be made, contrary to my own conclusions, as to respects in which CGU may have departed from its obligation of good faith. 285 If CGU is entitled to refuse Admiral's claim, as I have held, none of the particulars of want of good faith, including that regarding delay in reaching a decision, could be sustained. If the finding that Admiral knew of and consented to the arson should be disturbed, then the question whether CGU's refusal of the claim lacked good faith would still have to be determined. I cannot ponder alternative findings regarding particulars of bad faith or their causative effect and it would therefore be futile to attempt a contingent assessment." (emphasis added) 1. The relevant grounds of appeal on this issue were as follows: "16 The trial judge erred at J 283 in failing to find that: a. rejection of the appellant's claim under the policy, b. the propounding of allegations of arson fraud, c. declining claims for indemnity made by Admiral's customers including MOS Beverages and Brightcity, by the respondent were wrongful and entitled the appellant to indemnity under the policy and for damages for breach of the obligation of utmost good faith implied by section 13 of the Insurance Contracts Act 1984 (Cth) and for breach of contract. The trial judge should have found that in declining the claim the respondent breached its implied obligation of good faith (S. 13 ICA) and was causative of the inability of the appellant to obtain licences from federal authorities resulting in significant financial loss to the appellant. … 18 The trial judge erred at J 281 in finding that any claim for damages for breach of contract or the obligation of utmost good faith for wrongful refusal would be the amount of the contractual indemnity as assessed at J238 and J263. The trial judge should have found that the damages available to the appellant for such breaches, included: a. The amount of the contractual indemnity to which the appellant was entitled; and b. An amount payable in respect of the appellant's loss of expectation and reputation." 1. In Globe Church Incorporated v Allianz Australia Insurance Ltd (2019) 99 NSWLR 470; [2019] NSWCA 27 at [209] (Globe Church), the majority (Bathurst CJ, Beazley P and Ward JA; Meagher and Leeming JJA dissenting) held that an insurer's promise to indemnify is to be understood as a promise "to hold harmless against loss", as opposed to a promise to make a payment reflecting loss actually suffered by the insured upon the occurrence of an insured event. On that basis, an insured's claim on a policy is a claim to unliquidated damages which arises immediately on the occurrence of the insured event, "albeit that the amount necessary to make good the loss is to be calculated in accordance with the basis of settlement clause in the policy". [66] 2. The position adopted by the majority in Globe Church corresponds to the English position at common law: see, for example, Sprung v Royal Insurance (UK) Ltd [1999] 1 Lloyd's Rep IR 111; Versloot Dredging BV v HDI Gerling Industrie Versicherung AG [2017] AC 1; [2016] UKSC 45. 3. Globe Church was followed in Worth at [189]. In that case, Meagher JA (dissenting in the result, but with whom Macfarlan and McCallum JJA agreed on the damages issue) observed at [180]: "The issue in Globe Church was whether the plaintiff insured's action had been commenced outside of the relevant limitation period. The relevance of Globe Church to this case is as raising a question whether the conception of an insurer's obligation preferred by the majority is inconsistent with the recovery of damages for loss consequential on the insurer's failure to make payment in accordance with the policy. On the majority view, an insurer is liable in damages the instant loss is suffered, and any payment made in accordance with the policy is in satisfaction of that liability for damages. The English authorities have accordingly refused to countenance claims to damages for loss caused by an insurer's late or non-payment on the basis that the common law does not recognise claims to 'damages for late payment of damages': President of India v Lips Maritime Corp [1988] AC 395 at 425 … applied in eg Apostolos Konstantine Ventouris v Trevor R Mountain (No 2) [1992] 2 Lloyd's Rep 281 at 292; Sprung v [Royal] Insurance at 115; Mandrake Holdings Ltd v Countrywide Assured Groud Plc [2005] EWCA Civ 840 at [7]–[14]". (emphasis added) 1. The Court in Worth answered the question posited by Meagher JA at [180] in the affirmative by applying the "indemnity principle" as formulated by the majority in Globe Church, such that the insured could not recover damages for consequential loss said to arise from the insurer's breach of contract in failing to indemnify the insured. 2. On the authority of Globe Church and Worth, damages for consequential loss were not "legally available" to Admiral in its claim against CGU for breach of the ISR Policy, lest the principle precluding the award of "damages for non-payment of damages" be offended: see, for example President of India v Lips Maritime Corporation [1988] AC 395 at 425. 3. Admiral formally submitted that Globe Church and Worth, to the extent that the Court applied the majority's judgment in Globe Church, were wrongly decided and therefore ought not to be followed by this Court. However, as was properly conceded by Mr Sullivan, Admiral did not advance submissions formally and directly addressing the factors governing whether an appellate authority is "plainly wrong" or "clearly wrong": see, for example, Gett v Tabet (2009) 254 ALR 504; [2009] NSWCA 76 at [294]; John v Federal Commissioner of Taxation (1989) 166 CLR 417; [1989] HCA 5; Queensland v Commonwealth (1977) 139 CLR 585; [1977] HCA 60. 4. In the absence of submissions addressing those matters, and where the Court has not convened a bench of five judges specifically to address the correctness of the impugned decisions, Globe Church and Worth should be applied. On that footing, Admiral's claim for consequential loss must fail insofar as it was based upon a failure to indemnify upon a claim for indemnity being made. 5. In Worth at [191], Meagher JA observed that "[t]he English authorities recognise that the limitation may be circumvented if the loss can be characterised as consequential on 'some other and separate breach of contract': see Sprung v [Royal] Insurance at 116". Having acknowledged that qualification, Meagher JA referred to the insured's plea of a claim for breach of the insurer's duty of utmost good faith in s 13 of the Insurance Contracts Act. 6. Mr Sullivan sought to argue, by analogy, that Globe Church and Worth did not stand in the way of Admiral's claim for breach of CGU's duty of utmost good faith, implied by s 13 of the Insurance Contracts Act, as that claim was "a distinct and separate claim to the claim for wrongful declinature … of indemnity". [67] 7. Admiral's case against CGU alleging breach of the duty of utmost good faith, which was said to have occurred by virtue of CGU's refusal to indemnify Admiral under the ISR Policy, was only particularised in the ASOC in a very general way (see PJ [281] extracted at [231] above) and, as advanced in written argument, was not articulated with particular clarity. It did not appear to go beyond an allegation that the wrongful refusal to indemnify, accompanied by allegations of fraud, was a breach of the duty of utmost good faith. 8. A breach of an insurer's duty of good faith requires rather more than a simple failure to grant indemnity. An insurer may have a reasonable (in the sense of reasonably arguable) basis for denying indemnity, including on grounds of alleged fraud, even if, as in the present case, it may not ultimately be successful. 9. Nothing advanced on behalf of Admiral sustained the argument that CGU breached its implied duty of good faith so as to permit the recovery of damages for consequential loss. This aspect of the appeal should be dismissed. Growth trend in gross revenue 1. The final issue for determination relates to ground 17 of Admiral's appeal in the CGU proceedings. 2. By this ground, Admiral appeals from the primary judge's finding that "on the balance of probabilities there has [not] been established any trend of growth in [Admiral's] Gross Revenue that should be applied in respect of the indemnity period": PJ [259]. 3. The primary judge considered the growth trend of Admiral's gross revenue as an aspect of the contingent inquiry into the quantum of Admiral's claim for business interruption under s 2 of the ISR Policy, titled "Consequential Loss", notwithstanding that his Honour had found that "CGU is entitled to refuse indemnity to Admiral under the [ISR] policy". [68] 4. The indemnity clause in that section provided that, during the "indemnity period": "In the event of any building … used by the Insured at the Premises for the purpose of the Business being physically lost, destroyed or damaged during the period of insurance by any cause or event not hereinafter excluded (loss, destruction or damage so caused being hereinafter termed 'Damage') and the Business carried on by the Insured being in consequence thereof interrupted or interfered with, the Insurer(s) will, subject to the provisions of the Policy including the limitation on the Insurer(s) liability, pay to the Insured the amount of loss resulting from such interruption or interference in accordance with the applicable Basis of Settlement." The "indemnity period" was defined as spanning 12 months, commencing with the occurrence of the Damage, such that it ran from 16 April 2018–15 April 2019. 1. The Basis of Settlement, referred to at the conclusion of the indemnity clause and modified by endorsement GREVNCC4, relevantly provided as follows: "Item No. 1 – Loss of Gross Profit The insurance under this item is limited to actual loss of Gross Profit due to: (a) Reduction in Turnover, and (b) Increase in Cost of Working, and the amount payable as indemnity thereunder shall be: (a) in respect of Reduction in Turnover: The amount by which the Gross Revenue during the Indemnity Period shall, in consequence of the Damage, fall short of the Standard Gross Revenue. (b) in respect of Increase in Cost of Working: The additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the loss of Gross Revenue which, but for that expenditure, would have taken place during the Indemnity Period in consequence of the Damage but not exceeding the amount of the reduction in Gross Revenue thereby avoided, less any sums saved during the Indemnity Period in respect of such charges and expenses of the Business as may cease or be reduced in consequence of the Damage." 1. The following definitions of terms applicable to the Basis of Settlement were as follows: "Gross Revenue: The money paid or payable to the Insured for services rendered … in the course of the Business at the Premises. Standard Gross Revenue: The Gross Revenue during that period in the twelve months immediately before the date of the Damage which corresponds with the Indemnity Period. Annual Gross Revenue: The Gross Revenue earned during the twelve months immediately before the date of the Damage. Such adjustments shall be made [to the Standard Gross Revenue and Annual Gross Revenue] as may be necessary to provide for the trend of the Business and variations in or other circumstances affecting the Business either before or after the Damage or which would have affected the Business had the Damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which, but for the Damage, would have been obtained during the relative period after the Damage". 1. Thus, it was necessary to calculate Admiral's "standard gross revenue" for the period from 16 April 2017–15 April 2018, being "twelve months immediately before the date of the Damage". In calculating this figure to ensure that it "corresponds with the Indemnity Period", it was necessary to account for the growth trend of Admiral's gross revenue. The expert evidence 1. Expert forensic accounting reports were tendered by Admiral and CGU respectively. Admiral relied upon three reports of Mr David Bleasdale (Mr Bleasdale), a forensic accountant, dated 1 June 2020, 26 April 2021 and 23 July 2021 respectively. CGU relied upon three reports of Mr Neil McPhee (Mr McPhee), also a forensic accountant, respectively dated 17 September 2020, 13 August 2021 and 16 August 2021. In light of some differences between the experts' calculations, Messrs Bleasdale and McPhee conferred and prepared a "Joint Statement of Experts" dated 2 September 2021. The joint report "significantly reduced the areas of disagreement" between the experts: PJ [242]. 2. Nonetheless, there remained some variation in the experts' conclusions as expressed in the joint report, which was summarised by the primary judge as follows, with the material difference as to trend growth emphasised in bold text: [69] Component of calculation Mr Bleasdale (Admiral) Mr McPhee (CGU) 1 Standard Gross Revenue $1,405,385 $1,405,385 2 Trend +19.32% 0% 3 Adjusted Standard Gross Revenue $1,676,665 $1,405,385 4 Actual Gross Revenue during indemnity period $486,615 $486,615 5 Reduction in Gross Revenue $1,190,250 $925,274 6 Rate of gross profit 66.99% 62.28% 7 Loss of gross profit $797,348 $576,353 8 Increased Cost of Working $65,555 $65,555 9 Saved costs $222,147 $222,147 10 Claim preparation costs $22,816 $22,816 11 Total consequential losses $663,572 $437,569 1. In his first report, under the heading "trend", Mr Bleasdale opined that, on the basis of Admiral's monthly profit and loss statements from March 2017–March 2018: "8.1 The weighted average trend for the Insured is calculated at 6.5% … 8.2 The trend percentage used to assess the claim represents the trend for the 9 months prior to the loss. 8.3 The annual trend for the year prior to the month the loss occurred is lower at -0.24%. However, the 3-month and 6-month trend percentages show strong double-digit growth at 38% and 22%. This reflects growth in the business through sales development work that had been occurring over a lengthy period of time. 8.4 Furthermore, at the time of the fire the owners had been in negotiations to commence contracts with new overseas customers wishing to employ an Australian importer for their products. If the fire had not disrupted the ability for Admiral International to serve new customers, these new business opportunities would have further grown the future turnover for the business. 8.5 Accordingly, we believe that a trend of 6.5% is conservative and reasonable considering the trend for the business in the nine months preceding the fire, and in view of likely new business opportunities." The "new overseas customers" referred to by Mr Bleasdale were Pegasus Supply Solutions Pty Ltd and Juhao respectively. [70] 1. Mr McPhee did not accept Mr Bleasdale's opinion as to the growth trend of Admiral's gross revenue, nor his methodology, which calculated the trend "based on the actual growth achieved in the 9 months before the date of the loss", adjusted to take account of a "one-off unusually large revenue transaction" in the March 2018 quarter, notwithstanding that "Mr Bleasdale acknowledged that for the full 12 months to March 2018 Admiral's Gross Revenue showed no growth relative to the previous 12 month period". [71] 2. Mr Bleasdale adopted this methodology on the basis that a comparison with the 12-month period from March 2017–March 2018 did not provide a holistically accurate account of the improvement in Admiral's financial performance up to the "indemnity period", in circumstances where "[t]he historic growth rate in turnover for 6 months before the fire was 12.5% and for the 3 months before the fire was 19%", which "show a clear trend of significant and rising rate of growth in Admiral's business". 3. The methodology adopted by Mr McPhee to conclude that it was not appropriate to apply a growth trend (i.e. applying a growth trend of 0%) to calculate Admiral's expected turnover corresponded to that which was eschewed by Mr Bleasdale, namely, "highlighting that the twelve months prior to the loss show a growth percentage close to zero". The following data informed that conclusion: 12 months ending 31 March Average yearly change 2017 2018 2019 (expected) Adjusted turnover $1,396,517 $1,349,169 $1,405,385 $8,868 0.63% Average turnover per month $116,376 $112,431 $117,115 $739 0.63% Rate of gross profit 67% 62% 62.29% 0.29% As noted at [255] above, and recorded by the primary judge at PJ [252], Mr Bleasdale accepted the foregoing analysis of the 12 months prior to the fire, albeit that he did not consider it to provide a fair representation of Admiral's financial performance, in light of a more recent upturn in gross revenue to March 2018. 1. Mr McPhee provided further justification for his longer-term methodology in the joint report, stating he considered it "more appropriate to use the actual historical annual turnover achieved by the Plaintiff when considering whether to apply a trend, because the Plaintiff's historical monthly turnover during the 24 months prior to the Incident fluctuates … from around $193,000 in September 2016 through to $69,000 in June 2017". 2. In the joint report, Mr Bleasdale revised his initial calculation of a 6.5% growth trend in Admiral's gross revenue, increasing the applicable figure to 19.32%, in order to "reflect the growth shown by Admiral in the three months before the fire (38%) and for the six months before the fire (22%) as well as the expectations communicated to me by Mr Denis Fateev of sales growth opportunities" (emphasis added). Mr Bleasdale had previously described those "opportunities for growth in turnover" in his second report, dated 26 April 2021, as follows: "2.10 Since submitting our report dated 1 June 2020, we have given further consideration to the statements made in the affidavit of Mr Denis Fateev dated 5 June 2020 … In doing so it is appropriate that we revisit the growth rate used in our previous report. We now consider that growth rate was understated and a higher rate of 15% from May 2018 to October 2018, and 20% from November 2018 to 15 April 2019 is justified and is supported by the results of the business in the nine months prior to the fire and by its future plans. 2.11 The expected growth advised by Mr Denis Fateev was a key reason for Admiral's decision to move to larger premises at Lidcombe. The move to Lidcombe would have provided twice the amount of storage space for customers goods. 2.12 The expected growth is also supported by two new business opportunities being negotiated by Denis Fateev at the time of the fire. 2.13 The first of these was with an existing customer, Pegasus Supply, whom Admiral provided bond storage to as well as deliveries to cruise ships in Sydney. This customer was planning to increase their business volume with Admiral and significantly increase the bonded warehouse storage they required. 2.14 A second opportunity arose whereby Admiral was in negotiations with a Chinese manufacturer to handle the importation of their products to Australia and New Zealand and to manage the distribution of the manufacturer's products once the goods were in Australia/New Zealand. Mr Denis Fateev was in Hong Kong at the time of the fire for the purpose of continuing these negotiations. 2.15 Taking the recent high growth rates and the new growth opportunities into account we consider that a reasonable forecast for growth in turnover, had the fire not occurred, would be 15% during the first 6 months after the fire, and 20% for the second six months". 1. The prospect of opportunities for growth in Admiral's gross revenue was attributed by Mr Bleasdale to "statements made in the affidavit of Mr Denis Fateev dated 5 June 2020" in the CGU proceedings. It appears that Mr Bleasdale was referring to the following passages of Denis' evidence: "Fire Damage to Admiral's Premises 16 On 16 April 2018, there was a fire at the Premises. … 18 At the time of the fire, I was in Hong Kong on a business trip. A copy of my travel documents is at pages 106 to 136 of Exhibit DF-1. … Consequential Loss 31 As a result of the fire, Admiral's business has been interrupted and interfered with. Admiral has suffered, and continues to suffer, losses as a result. … 33 Prior to the fire, Admiral operated a logistics, storage and distribution business, which included the handling of both bonded and unbonded goods. Admiral was in the process of expanding its business internationally and had secured a customer overseas as part of that expansion. … 35 To accommodate Admiral's growing business, Admiral sought alternate warehousing premises. 36 Prior to the fire, I began negotiating with the landlord of a warehousing premises located at 42 Birnie Avenue, Lidcombe (Lidcombe Warehouse). … 57 Had the fire not occurred, I fully expect that Admiral would have been granted the depot licence for the Lidcombe Premises". (emphasis added) It is clear from this extract that Denis' Affidavit of 5 June 2020 failed to provide any evidence (whether calculated or estimated) of the value or quantum of Admiral's "new growth opportunities". Consideration regarding the growth trend in gross revenue 1. In the course of oral argument in this Court, Mr Sullivan attempted to identify evidence that better particularised the "two new business opportunities" presented to Admiral by Pegasus and Juhao respectively, with specific reference to the primary judge's finding that Admiral had a "concrete prospect" of increasing its gross revenue by "handling food products to be imported from Juhao" (emphasis added). [72] To that end, Mr Sullivan drew the Court's attention to the following matters deposed to by Denis in his Affidavit in the CGU proceedings, dated 28 June 2021: "At least one aspects of Admiral's new business venture (importing products from China/Hong Kong) did not require a bonded warehouse and otherwise we do not have any evidence as to whether and to what extent Admiral's business after the fire requires a bonded warehouse 30 While it is correct that the new business venture in relation to the importation of food products from China and Hong Kong would not require a bonded warehouse, I disagree with this insofar as it attempts to infer that Admiral's business could have operated without the requisite licences. … Lost Business Opportunities 64 As a result of CGU's failure to indemnify Admiral, Admiral has lost business opportunities which had the potential to substantially increase Admiral's business operations. 65 One such business opportunity which Admiral lost was with a company known as Pegasus Supply. 66 For many years prior to the fire, Pegasus Supply used Admiral for provision of transport services. Pegasus Supply was interested in using Admiral to handle its bonded goods, however the Alexandria premises were unsuitable due to its size. 67 Prior to the fire, I had completed negotiations with Pegasus Supply, and Pegasus Supply had agreed for Admiral, to commence providing bonded warehousing services shortly after Admiral began occupying the Lidcombe Warehouse. 68 Those services involved the storage, distribution and logistics of the entirety of the bonded goods being handled by Pegasus Supply. 69 I expected that the agreement with Pegasus Supply, in addition to Admiral's existing customers, would enable Admiral to operate the Lidcombe warehouse at its full capacity. 70 I expect that based upon that agreement alone, had CGU indemnified Admiral in respect of its claim, Admiral could have operated the Lidcombe Warehouse at its full capacity: a) Realistically, by October 2018; or b) Conservatively, by April 2019. 71 In December 2018, Pegasus Supply opened its own bonded warehouse and, as such, Admiral has lost the opportunity to provide those services to Pegasus Supply and to operate the Lidcombe Warehouse at full capacity." (emphasis added) 1. Two features of this evidence should be noted. First, it fails to provide any detail or basis for assessing the pecuniary value or unit quantum of Admiral's prospective commercial arrangements with Juhao and/or Pegasus. This is especially relevant in circumstances where Denis had deposed, in his Affidavit of 28 June 2021, to having entered into an agreement with Pegasus which would, presumably, have included terms in the nature of consideration or cost per unit. Secondly, the evidence post-dated Mr Bleasdale's second report, in which he referred (both expressly and by implication) to Juhao and Pegasus as "two new business opportunities" and which formed the basis of his opinion that annual trend growth of 19.32% should be applied to Admiral's gross revenue. 2. Those features were also recognised by Mr McPhee in formulating his response to Mr Bleasdale's opinion in the joint report, which was as follows: "1.27 I consider Mr Bleasdale's methodology of applying an overall growth trend of 19.3% to his calculation of expected turnover to be inappropriate. I consider the assertions of Mr Denis Fateev … that Mr Bleasdale has relied upon to arrive at these trends to be general and unsupported. I consider these unsupported trends to materially overstate the expected turnover of the Plaintiff and therefore the losses sustained as a result of the incident. 1.28 Noting the monthly fluctuations observed in the Plaintiff's historical turnover, I also consider a period shorter than 12 months, like the three to six months Mr Bleasdale has relied upon in order to arrive at his assumed growth trend of 19.3% to calculate the expected turnover trend, to be inappropriate. A period shorter than 12 months may be skewed by the monthly turnover fluctuations observed and therefore would not accurately reflect the true expected performance of the Plaintiff but for the Incident. 1.29 … it is unclear to me why Mr Bleasdale has now increased his trend so materially, given that no new information has been provided since his earlier reports." (emphasis added) 1. These criticisms were sound and there was no reasoned basis justifying Mr Bleasdale's methodology of applying an overall growth trend of 19.3% to his calculation of Admiral's expected turnover. The primary judge did not err in finding that, on the balance of probabilities, a positive growth trend should not be applied to Admiral's expected gross revenue during the indemnity period. 2. His Honour gave concise consideration to the question of whether to apply positive trend growth. In coming to the ultimate finding on this question, the primary judge said: "254 I regard Mr Bleasdale's methodology, relying on comparison of nine-month periods, as unsound, even when the adjustment for the unusual revenue item is made. The Gross Revenue figures for Admiral show very large fluctuations from month-to-month in each of the 12 month periods ended 31 March 2017 and 31 March 2018. In the first of those periods, the high point was $193,277 in September 2016 and the low point was approximately half of that, namely, $87,971 in December 2016. In the second period, the variation was between $143,886 in September 2017 and $69,071 in June 2017. Across the two years there was no consistency of the months in which Gross Revenue was relatively high and those in which it was relatively low. Comparing the two years month by month, half of the months in the year to March 2018 had a lower Gross Revenue than in the corresponding months of the preceding year and half had higher gross revenue. In light of that variability I consider it necessary to take each12 month period as a whole in order to remove the arbitrary influence of such significant and unpredictable variations from month-to-month. A comparison of the two years does not establish any upward trend in Gross Revenue that should be projected beyond March 2018. … 256 I accept that Admiral had concrete prospects of increasing its business by providing bonded warehouse services to Pegasus Supply Solutions Pty Ltd and by handling food products to be imported from Juhao, the Chinese entity with which Denis Fateev was in discussions through solicitors in Hong Kong. I also accept that the Lidcombe premises are significantly larger than the warehouse Admiral occupied in Alexandria and that the company therefore had the capacity to expand. However, the volume of such potential new business has not been quantified in the evidence and its potential impact on Gross Revenue can only be the subject of crude estimation. Of themselves, these possibilities of additional business provide no justification for Mr Bleasdale's adoption of 6.5%. 257 In his second report of 26 April 2021 … in reliance upon Denis Fateev's evidence regarding prospects for expansion of the business, as deposed in his affidavit 5 June 2020, Mr Bleasdale opined that for the first six months of the Indemnity Period, Standard Gross Revenue should be adjusted upwards by 15% relative to the corresponding period in the year before the fire and for the second six months the adjustment upward should be 20%. I do not find in the evidence any breakdown, calculation or itemisation that would justify quantifying a projected increase in Gross Revenue by these very substantial margins. 258 In the forensic experts' joint report, following their conclave, Mr Bleasdale states that he now adopts 19.32% as the trend of increase in Gross Revenue … This opinion involves Mr Bleasdale reverting to the erroneous calculation for the three and six months periods, as originally carried out before the agreed adjustment for the one-off revenue transaction in March 2018, and adopting a speculative component for 'expectations' of a very general and unquantifiable nature. 259 Although I have accepted that Admiral had prospects of expanding its business in the new premises, it appears unlikely that this could have occurred any earlier than three months into the Indemnity Period, allowing for the transition to the new premises that was to occur irrespective of the fire. Some allowance would have to be made for the possibility of reduced capacity to handle business during the transition period. None of these considerations are capable of being sensibly quantified on the evidence before me. I am not satisfied on the balance of probabilities that there has been established any trend of growth in Gross Revenue that should be applied in respect of the Indemnity Period." (emphasis added) 1. The emphasised portion in PJ [256], set out above, formed the basis of Admiral's attack on the primary judge's finding with respect to the trend in Admiral's gross revenue. 2. The argument raised by Admiral on this issue boiled down to the proposition that the primary judge's finding that "Admiral had concrete prospects of increasing its business by providing bonded warehouse services to Pegasus Supply Solutions Pty Ltd and by handling food products to be imported from Juhao", [73] in addition to capitalising upon the increased size of the Lidcombe premises, was incompatible with his Honour's determination that the body of evidence failed to establish a positive trend of growth in Admiral's gross revenue. [74] 3. It is important to note, however, that the finding as to "concrete prospects" of increased business was immediately qualified by a material observation that "the volume of such potential new business has not been quantified in the evidence and its potential impact on Gross Revenue can only be the subject of crude estimation. Of themselves, these possibilities of additional business provide no justification for Mr Bleasdale's adoption of 6.5%". [75] Of course, the figure of 6.5% was subsequently increased by Mr Bleasdale without justification. 4. Admiral relied upon the principle that "the Court must do the best it can with the evidence available to assess damages", [76] and submitted that the primary judge did not do so when assessing damages with respect to the contingent payments under the insurance policy. 5. In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10 at [38], Hayne J (with whom Gleeson CJ, McHugh and Kirby JJ agreed) said that there is a distinction to be drawn between "cases where a plaintiff cannot adduce evidence of what has been lost (in which 'estimation, if not guesswork, may be necessary in assessing the damages to be allowed') and cases where, although apparently able to do so, the plaintiff has not adduced such evidence". According to Hayne J, references to "mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can" are more applicable to the former class of case, where a plaintiff cannot adduce evidence of its loss, as opposed to the latter, where the plaintiff has (either deliberately or inadvertently) failed to adduce such evidence, which was available to the plaintiff on reasonable inquiry. 6. The present case is, in my opinion, an example of the latter category in that Admiral did not equip the experts, and ultimately the Court, with sufficiently concrete data that may have made the estimation of a quantum of trend growth possible. It follows that this ground of appeal must also be dismissed. Conclusion and orders 1. It follows that the appeal in the CGU proceedings must be allowed in part and the appeal in the Brightcity proceedings should also be allowed in part. 2. The parties should bring in short minutes of order to reflect these reasons by 27 January 2023, together with any submissions (of not more than three pages) as to costs and any dispute as to orders by that same date, to be determined by the Court on the papers. 3. WARD P: I agree with Bell CJ. 4. MACFARLAN JA: I agree with Bell CJ. ********** Endnotes 1. PJ [24]. 2. PJ [4]. 3. PJ [2]. 4. PJ [10]. 5. PJ [9]. 6. PJ [212]. 7. PJ [5], [233], [273]. 8. PJ [217]. 9. PJ [4], [234]. 10. PJ [15]–[16]. 11. PJ [88]. 12. PJ [111]. 13. See, for example, PJ [109]. 14. PJ [110]. 15. PJ [179]. 16. PJ [68]. 17. PJ [73]. 18. PJ [48]. 19. PJ [49]. 20. PJ [76]. 21. PJ [76]–[78]. 22. PJ [50]. 23. PJ [50]. 24. PJ [57]. 25. PJ [58]. 26. PJ [2]. 27. PJ [185]. 28. PJ [89]. 29. PJ [181(7)]. 30. PJ [9]. 31. PJ [10]–[11]. 32. PJ [178]. 33. PJ [181]. 34. PJ [175]–[177]. 35. PJ [177]. 36. PJ [11]. 37. PJ [169]. 38. Briginshaw at 361–362. 39. Briginshaw at 368–369. 40. Akhil at 285; see, also, 290 per Brennan J, 295 per Dawson J and 301–302 per Toohey J. 41. See, also, Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 573; [1995] HCA 68; Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 at 203–204; Fairfax Digital Australia & New Zealand Pty Ltd v Kazal (2018) 97 NSWLR 547; [2018] NSWCA 77 at [185]; Almona Pty Ltd v Parklea Corporation Pty Ltd (2021) 392 ALR 457; [2021] NSWCA 171 at [53]. 42. Nadinic at [109], [114]–[116]. 43. (1951) 217 ALR 1 at 5 per Dixon, Williams, Webb, Fullagar and Kitto JJ. 44. PJ [207]. 45. PJ [189]. 46. PJ [189]. 47. PJ [189]. 48. PJ [188]. 49. See [31]–[32] above. 50. PJ [256]. 51. PJ [187]. 52. Zappia at [37]. 53. Zappia at [37]. 54. Zappia at [41]. 55. PJ [190]. 56. PJ [191]. 57. PJ [192]. 58. PJ [191]. 59. PJ [75]. 60. PJ [203]. 61. T 111.20–112.18. 62. T 113.5. 63. See T 163.50–164.15. 64. PJ [207]. 65. PJ [281]–[285]. 66. Globe Church at [209]. 67. T 109.7. 68. PJ [212]. 69. PJ [243]. 70. PJ [256]. 71. PJ [252]. 72. PJ [256]. 73. PJ [256]. 74. PJ [259]. 75. PJ [256]. 76. Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80, 138 and 153–154; [1991] HCA 54. 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: 20 December 2022