Suncorp Metway Insurance Ltd v. Blat
[2007] QDC 2
•11 January 2007
DISTRICT COURT OF QUEENSLAND
CITATION:
Suncorp Metway Insurance Ltd v Blat [2007] QDC 002
PARTIES:
D2755/04
SUNCORP METWAY INSURANCE LIMITED
(ABN: 83 075 695 966)
Plaintiff
vAARON BLAT (trading as ENVIROSPRAY)
DefendantM5941/04
AARON BLAT (trading as ENVIROSPRAY)
Plaintiffv
SUNCORP METWAY INSURANCE LIMITED
(ABN: 83 075 695 966)
DefendantDIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
11 January 2007
DELIVERED AT:
Brisbane
HEARING DATE:
27, 28, 29, 30 November 2006 and 1 December 2006
JUDGE:
Ryrie DCJ
ORDER:
Both the plaintiff’s claim and the defendant’s claim are dismissed
CATCHWORDS:
CLAIM – CONTRACT OF INSURANCE – money paid under insurance policy – whether defendant’s claim was fraudulent – whether defendant involved in deliberate burning the machine
CLAIM AND COUNTERCLAIM – money paid under insurance policy as full discharge of chattel arrangement – whether amount paid by plaintiff to financier was ‘market value’
Insurance Contracts Act 1984 (Cth)
COUNSEL:
Mr W Campbell for Suncorp Metway Insurance Limited
Mr D Kent for Mr Blat
SOLICITORS:
HBM Lawyers for Suncorp Metway Insurance Limited
Cranston McEachern for Mr Blat
Introduction
By notice of claim filed in the Magistrates Court Brisbane on the 10th June 2004, the plaintiff, Aaron Blat trading as Envirospray, (‘Mr Blat’) sought relief for breach of contract for the sum of $40,000 (plus interest).
Mr Blat had received the benefit of a certificate of insurance with the defendant, Suncorp, (‘Suncorp’) in respect of a commercial motor vehicle (a 1998 model Rogator 854 spray unit hereinafter referred to as ‘the rig’) for the period 14th March 2001 to 14th March 2002.
On or about the 15th February 2002, that rig was totally destroyed by fire.
Mr Blat subsequently made a claim against his insurance policy in respect of that event.
That policy (Exhibit 11) included a term that in the event of total loss or damage to the rig, Suncorp may settle any claim in that regard by paying to the Mr Blat an amount for the loss or damage to the rig, but not exceeding its ‘market value.’
That contract also included a term that if any ‘other interested party’ was noted on the certificate of insurance, then Suncorp could elect to make such payment to that other named party in full discharge of its obligations.
On the 11th September 2002, the financier, the National Australia Bank Limited (the ‘other interested party’ noted on the certificate of insurance) executed a discharge whereby it accepted the sum of $159,000 from Suncorp in settlement for the total loss of the rig (Exhibit 19).
The figure of $40,000 which Mr Blat is now seeking represents the shortfall which he says is the difference between what Suncorp considered was the rig’s pre-fire ‘market value’ and what Mr Blat says was its’ pre-fire ‘market value’ at the relevant time.
By notice of claim filed in the District Court on the 3rd August 2004, the plaintiff, Suncorp sought relief for breach of contract and/or damages for deceit for the sum of $159,000.00 (plus interest).
As a consequence of that claim being filed, the defendant, Mr Blat counterclaimed for the sum of $40,000.00 (the subject of the earlier Magistrates Court claim).
Sensibly by consent, both claims were subsequently amalgamated and transferred to the District Court in order that they could be heard together.
The Issues
The issues revealed by the pleadings may be summarised as follows:
(i)Was Mr Blat involved in any way with the deliberate burning of ‘the rig’, thereby entitling Suncorp to the return of the sum of $159,000.00?
(ii)If not, is Mr Blat entitled to recover damages in the amount of $40,000.00, being the shortfall between the amount settled upon between Suncorp with National Australia Bank Limited (hereinafter referred to as ‘the financier’) and the rig’s true pre-fire ‘market value’?
(iii)If yes, is Suncorp entitled in any event to rely upon certain terms under its policy in order to resist Mr Blat’s claim for damages on the basis that the discharge which it received from the financier completely discharged Suncorp’s obligations under the policy, whatever the rig’s true pre-fire ‘market value’ might have be.
The hearing
Both parties agreed that Mr Blat should commence his case first and would call further witnesses (in rebuttal) if necessary after Suncorp had completed its case.
Over the course of the hearing, it was necessary to observe all of the witnesses who gave evidence and who were cross-examined over a period of 4 days.
In particular, I carefully scrutinised Mr Blat, Mr Baker, Ms Castles and Mr Bartz while each of them were giving their evidence in order that important findings of credit could be made.
Documentation was received during the hearing and this was subsequently marked by me as exhibits in the proceedings. Those documents were carefully looked at both generally and more particularly with a view to determining whether or not any of those documents provides independent support in a material way in respect of the oral evidence which was given by the witnesses called on behalf of Suncorp.
Helpful Outlines of Submissions were received from both Counsel which were marked as Exhibits 24 and 25 respectively which I have considered.
In order that this judgment may be more readily understood, I intend to deal with the issues in order as set out above.
Issue (i): “deliberate burning”
The respective positions of the parties on this issue were as follows:
(a) Suncorp maintains that it is entitled to the return of the $159,000 paid by it to the financier because Mr Blat had been involved, either directly or indirectly, in the deliberate burning of the rig in question. In other words, Mr Blat had committed ‘insurance fraud’ by his conduct and as such, was not entitled to receive any monies under the terms of the relevant policy of insurance in those circumstances. That position is also given support by the relevant legislation, the Insurance ContractsAct 1984.
(b) Mr Blat, on the other hand, emphatically denied that he was involved either directly or indirectly in the burning of the said rig.
Proof of fraud or arson in civil proceedings
Where an insurer is denying liability in respect of a claim because of the fraud or arson of the insured, the onus of proof is always upon the insurer to establish that allegation.
In either case, it would be trite to say that the standard of proof required to be met in either of those situations is high. (Briginshaw v Briginshaw (1938) 60 CLR 336)
While it is true that the standard of proof in civil proceedings is always on the balance of probabilities, it is also true that if the matter involves an allegation of criminal conduct or fraud, then the strength of the evidence required to discharge that burden is commensurate with the seriousness of the allegation.
Accordingly, where a grave accusation of a criminal nature is made, the weight of evidence must be correspondingly heavier to tip the scales, and suspicion is not enough to meet the civil standard required.
The evidence at hearing
Suncorp called five witnesses and tendered certain documentation in support of its case.
In presenting its’ case, Suncorp relied heavily on the testimony given by three of those witnesses namely Mr Baker, Ms Castles and Mr Bartz and has impressed upon me in submissions to find each of them witnesses who are worthy of belief.
If worthy of belief, then it would be trite to say that the case for Suncorp would be strong indeed, as there would then be direct evidence available for me to accept which would directly implicate Mr Blat in the deliberate burning of the rig on or about the 15th February 2002.
Two other witnesses also gave evidence at hearing on behalf of Suncorp, Mr Stoltenburg (bus driver) and Mr Ford (tyre service business owner) both impressed me as credible witnesses.
I had no reason to doubt the veracity of their evidence and accordingly, I accept the evidence given by both of them.
Suncorp also relied on certain documentation (tendered as exhibits) in support of its case which it submits, if accepted, is evidence capable of independently supporting the testimony given by Mr Baker and to a lesser degree, the evidence of Ms Castles and Mr Bartz.
Accordingly, as in any case such as this, an assessment was required in respect of each of the witnesses’ veracity for the truth. A consideration of all the available evidence is also necessary, in order to make a proper determination in respect of this first issue.
Credibility of witnesses
Mr Baker
Mr Baker gave evidence and was cross examined. He had been an employee of the Mr Blat’s.
In effect, his evidence was that Mr Blat had offered to pay him $6000 if he would ‘torch’ the rig which Mr Blat had left beside the roadway on the 10th February 2002 for that purpose. He also says that he was present when Mr Blat then ‘torched’ the rig on or about the 15th February 2002.
He stated that he had spoken with Mr Blat in late 2001 regarding spraying work and ‘another job,’ however Mr Blat would not talk about the ‘other job’ over the phone at that time.
They subsequently spoke about that ‘other job’ after Mr Baker had returned to work for Mr Blat in early 2002 and a plan was then hatched between them for Mr Baker to burn the rig while Mr Blat was away up in Bowen. Mr Baker gave evidence that Mr Blat had told him that he would stake a tyre on the rig in order to leave it abandoned on the roadside.
Mr Baker gave evidence that he had travelled up to Bowen with Mr Blat sometime after the 5th February 2002 but prior to the evening of the 11th February 2002 (when the ‘unsuccessful’ attempt to burn the rig by the roadside was made by Mr Baker). Mr Blat was moving up there permanently to his (QLD) ‘Bloombury’ property.
On their way back from Bloombury to Narrabri (NSW), Mr Blat had bought some oil at a service station and told Mr Baker to mix it with the petrol in order to ‘make the petrol stick’.
In the afternoon of the 11th February 2002, Mr Baker gave evidence (supported by the evidence given by Ms Castles) that both him and Ms Castles had gone into Narrabri to collect a hired utility which Mr Blat had left at a friends’ place for him.
He then returned with Ms Castles to his residence at Burren Junction (west of Narrabri, Exhibit 3) to pick up the petrol and oil. Later that evening, both he and Ms Castles drove to the site of the rig (marked as the large X on Exhibit 3), where he attempted to ‘torch’ the rig.
His attempt was unsuccessful because he had not taken a knife to cut the fuel and hydraulic lines (in accordance with what he had been told to do by Mr Blat) and he apparently only managed to ‘scorch’ the grass around the rig notwithstanding that he poured petrol into the cabin. (Evidence of burnt grass surrounding the rig was confirmed by Mr Stoltenburg in his evidence when he noticed it on the morning of the 12th February 2002 on his bus run).
Mr Baker gave evidence that he and Ms Castles then drove home to Mr Blat’s rented property ‘Whispering Pines’ (south of Narrabri) and slept the night. Mr Baker then says he returned the hired utility to the hire company in Narrabri before travelling with Ms Castles in Mr Blat’s white work utility (a fact confirmed by Ms Castles in her evidence) to a spraying job at the Auscott property. He and Ms Castle then returned to Burren Junction together in the white work utility after the job was completed.
Mr Baker gave evidence that he then received a phone call from Mr Blat, he thought the next day, who was abusive towards him for having failed in respect of the burning of the rig. (Ms Castles in her evidence says that while she did not hear the conversation she could hear a raised voice from the other end).
On the 14th February 2002, Mr Baker gave evidence that he then received another phone call from Mr Blat that evening, who told him he was coming out to pick him up that night in order that they could do ‘the job’ properly. He said Mr Blat told him to tell Ms Castles that he needed to pick him up that evening as he wanted to go out with Mr Baker in order to fix the tyre on the rig very early the next morning.
After returning with Mr Baker to Narrabri, Mr Blat and Mr Baker then went to bed. Mr Baker gave evidence that after a couple of hours he was woken by Mr Blat. They drove out to the site of the rig in Mr Blat’s red Landcruiser. Mr Blat then used firelighters (which Mr Bartz said in evidence he had bought for Mr Blat on the morning of the 14th February 2002) and fuel to burn the rig.
He gave evidence that he saw a large fire ball and Mr Blat returned to the vehicle that Mr Baker was driving and they left to return to Narrabri.
The following morning Mr Baker said he then travelled out to the rig again with Mr Blat at approximately 7am. The rig had been totally destroyed by fire. They then returned to Narrabri to report it to the Police.
Mr Baker gave evidence that within a week after that event, Mr Blat, Ms Castles and himself travelled to Bowen in the red Landcruiser (a fact confirmed by Ms Castles in her evidence).
Mr Baker gave evidence that things did not go well up in Bowen for him and Ms Castles (a fact confirmed by Ms Castles in her evidence) as there was no real employment there for him which he said had been promised to him by Mr Blat.
Mr Baker gave evidence that both him and Ms Castles left Bowen not long after and returned south together. After returning south, Mr Baker confirmed that he had rung Mr Blat numerous times to get his money for ‘the job’. He gave evidence that he received sums of monies from Mr Blat after he left Bowen. He confirmed that Mr Blat had paid for the moving costs regarding his furniture $500 some ‘months’ after he had left Bowen. He also confirmed that Mr Blat had paid $4,000 into Ms Castles bank account for him in September 2002. (confirmed by Ms Castles in her evidence). He gave evidence that Mr Blat had also paid $828 in respect of a fine enforcement order in July 2003.
He stated that Mr Blat had also sent by express money order the sum of $500 about two weeks after 14th October 2003 and that he also paid phone bills in the order of $500 each for him around late October or early November 2003 and July 2004 respectively.
Mr Baker confirmed that he had provided receipts to Mr Blat in respect of a trailer (Exhibit 8) and a chainsaw (Exhibit 9) however gave evidence that he had only done so because Mr Blat had wanted to ‘cheat the taxman’.
He also gave evidence that the receipt for the chainsaw was just another way of Mr Blat ‘covering up’ the money he was going to pay him for having done the rig job.
He gave evidence that he had not owned a trailer to sell to Mr Blat and had in fact stolen a chainsaw for him for which he received $200 from Mr Blat, and the receipts regarding those items which he had given to Mr Blat were therefore false.
On the 14th October 2003, Mr Baker participated in a pretext call (arranged by the Police) with Mr Blat. (Exhibit 6). Mr Baker said that the conversation, as recorded, was about the burning of the rig and the money which was still owing to him for the ‘job’ namely $1,500 being the balance still outstanding to him from Mr Blat (as he had only received $4,500 at that point). When spoken to initially by Suncorp Investigators (19th March 2002) and the Police (12th August 2002 – Exhibit 17), Mr Baker admitted that he had not made any admissions regarding his involvement in either fire at that stage. Mr Baker admitted however that the admissions which he had made to Police subsequently when spoken to in October 2003 was only because he was given two choices: ‘either you take the fall for it, you go to jail, you won’t have your brother any more, or you finally come through with the truth and tell us what’s happened’ (page 230 T). It is only at that point that Mr Baker implicates Mr Blat and agrees to subsequently take part in the pretext call.
While observing Mr Baker give evidence before me, I found him to be a most unimpressive witness.
During his evidence under cross-examination, he struck me as a person who was prepared to ‘trivialise’ the proceedings (page 231, 232 T com line 15) and was reluctant to admit to lying even in circumstances where he had in fact, on his own admission, lied both to the insurance investigators and the police when spoken to initially by them.
When pressed in cross examination why he had in fact lied initially to them, he was quick to make excuses, which in my view, did not sit well together. For example, he initially gave evidence that he had only lied to the insurance investigators because Aaron (Blat) did not want him to let them know anything about it. Yet, later on in his evidence he was quick to maintain that he had only lied to the police subsequently because ‘it was either that or worry about having my head shot off by one of Aaron’s Israeli mates’.
That latter statement flies in the face of his own admission (at committal) that he had in fact had never been threatened by Aaron at any stage.
His attempt to place before me a ‘threat’ which had apparently been made to him outside the court by Mr Blat during the course of the proceedings also did little to impress me. Indeed, even if any such words were uttered between the parties, it is clear that Mr Baker did not feel threatened to the extent he tried to suggest to me that he felt, in light of what he recalls was said ‘money talks and bullcrap walks’. (p 258 T) and his own statements in reply to any threat made, namely ‘bring it on’ (p 81 T).
Mr Baker also gave unimpressive evidence regarding the reason behind why he had provided police with a second statement which ultimately implicated Mr Blat at that point.
His evidence that he did not feel that the police had put pressure on him to co-operate at that point was in direct conflict with the evidence which he gave in chief regarding the two choices he was faced with. (p 230 T)
I also considered it curious that when giving his evidence regarding that issue, he then went on to refer to the Investigating Officer by his first name as ‘Andrew being a real nice bloke who wasn’t pressuring him; just letting him know what was going to happen’ (if presumably he didn’t co-operate at that point).
I was also less than impressed with Mr Baker’s answers regarding his understanding of what he thought might still happen to him even after he had given an ‘induced’ statement to police (which attached indemnity from prosecution for the fire). (p 242 T)
His efforts to put before the court any evidence which he considered may be unhelpful in respect of Mr Blat’s character was also unimpressive . For example, Mr Baker was quick to try to make the point that in his view Mr Blat did not, in reality, actually have any ‘buyer’ for the rig prior to even his first attempt to burn it (page 244 T), yet concedes later that he had always known that Mr Blat had always had someone interested in looking at it. (p 259 T)
Another example of Mr Baker’s efforts to discredit Mr Blat included his attempt to place before the court evidence of a ‘stolen’ Mazda 626 which was apparently in the possession of Mr Blat.
At best, that evidence can only be described as gratuitous without real foundation particularly in view of the evidence later given by Mr Baker on the point (p 205 and 206 T, and compare p 265 T).
He was also evasive in his evidence as it related to his signature on the receipt for the trailer (Exhibit 8) particularly in his attempt to deny that it was in fact his signature (p 248-252 T).
He was also keen to point out to me that his life had only ‘gone down the drain’ only from the time he had met Aaron yet on the evidence available it is clear that he was happy to accept the offer of employment from Mr Blat and stayed in that employment, choosing only to leave that employment because his girlfriend (Ms Castles) was leaving the district.
On his own admission, it is clear that even after he left the district, he started to have problems of his own, in no shape or form related to Mr Blat, for example regarding his relationship with Ms Castles.
Indeed, he was happy to return to the Narrabri district and work for Mr Blat upon being asked to do so in late 2001.
It was submitted by counsel for Suncorp that it was open to find Mr Baker a credible witness for a variety of reasons.
Those reasons are set out in Exhibit 24 at page 10.
In order to accept those reasons, I would have to accept Mr Baker’s version of events. I am unable to do so.
In arriving at that conclusion, the following matters are relevant:
·my general assessment of Mr Baker as a witness in the proceedings;
·the other competing reasons available regarding why Mr Baker implicated Mr Blat to the police when spoken to on the 2nd occasion namely the offer of an indemnity from prosecution for arson; and the fact that he would be the one who would be going to jail if he did not co-operate;
·the fact that Mr Baker lied initially to both the insurance investigators and the police when interviewed in relation to the fire;
·his unsatisfactory explanation given in evidence for failing to tell the truth to those parties on those occasions;
·the other competing reasons which may explain why Mr Baker decided to ‘dob’ Mr Blat in at the time he did, (other than the one proposed in submissions, that is, to get back at him for not having paid him his money for the ‘job’), namely the fact that his hopes and dreams for Bowen employment had not come to fruition, he had through his own doing lost employment with another employer in the same district; the fact that he felt he had been ‘promised the world’ by Mr Blat but that he had never came through for him, that he blamed Mr Blat for his whole ‘life having going down the drain’ even before he had left to go up with him to Bowen in late February 2002, the latter of which provides another explanation why Mr Baker may have chosen to implicate Mr Blat at the point he did or indeed had chosen to burn the rig himself upon his own volition;
·the fact that there is not, in my view, any sufficient independent evidence either from the witnesses called or the documentation tendered, which supports in a material way on crucial issues, the version given by Mr Baker.
At this juncture, it is now convenient to deal with that last point.
Independent evidence which is said to lend support in a material way, to the version given by Mr Baker
It was submitted by counsel for Suncorp that the versions given by Ms Castles and Mr Bartz, if accepted, would lend support to the version given by Mr Baker.
I cannot accept that submission. After viewing both Ms Castles and Mr Bartz while they gave their evidence, I am unable to accept either of their versions as credible particularly as it relates to the version given by Mr Baker on crucial issues.
Ms Castles
Ms Castles did not impress me as a credible witness.
She admitted on oath before me that she had been prepared to lie (for Mr Baker) in front of the magistrate sitting on the committal proceedings in New South Wales in May 2005.
That ‘lie’ was in relation to the said ‘stolen’ chainsaw which Mr Baker says was the one which Mr Blat had in fact asked him to steal for him, yet Ms Castles on oath told the magistrate that she had sold it and not Mr Baker.
She later tried to state to this court that her reason for lying to the magistrate on that occasion was because she did not want Mr Baker to get into trouble.
Secondly, her evidence regarding the receipts which had been prepared as they related to the trailer (Exhibit 8) and the chainsaw (Exhibit 9) was at best ‘vague’ as she could not even recall Exhibit 9 but accepted she must have wrote it because it looked like her writing notwithstanding that Mr Baker was of the view that she did write it and ‘must have also signed it’ as he was sure he had not.
Indeed, she could not even remember seeing Exhibit 8 until it was shown to her in court and attempted to pass that vagueness away because of her state of mind at that time.
She was also quick in her evidence to point out that the receipt for the chainsaw was just another of Mr Blat’s excuses for the money.
She also attempted to suggest in her evidence that Mr Baker would not have written (typed) the words contained in Exhibit 8 because she considered Mr Baker more ‘articulate’ than that, yet Exhibit 7, which also contained spelling mistakes (blackmale) had been accepted by Mr Baker as his own writing.
It was also clear from her evidence that she has had ample opportunity to speak with Mr Baker in great detail regarding the events which occurred over the course of the relevant period, particularly in light of their continuing relationship throughout that time.
Accordingly, it is not difficult to accept that some of the details which might ‘support’ Mr Baker’s version of events would indeed be somewhat similar, if not the same, in those circumstances.
Mr Bartz
Likewise, Mr Bartz did not impress me as a credible witness. The explanation which he gave during evidence regarding his failure to implicate Mr Blat when he provided his initial statement to the Police in March 2003 was less than unimpressive. (p 325 T)
Indeed, his reluctance in the witness box to explain that failure was extraordinary considering at that point, Mr Blat had apparently made admissions to Mr Bartz up at Bowen that he had deliberately burnt the rig, he had seen parts which Mr Blat had apparently taken off the rig before he had burnt it and he had been asked by Mr Blat to buy the firelighters for him at the Narrabri Woolworths store on the morning of the 14th February 2002.
Mr Bartz, while admitting in evidence that he had gone to the police as an act of revenge against Mr Blat, was reluctant to concede that he had also told an employee of Mr Blat’s solicitors ‘that he would be going to jail’, the very same day he had later spoken to police implicating Mr Blat.
Suncorp has submitted that I should find both Ms Castles and Mr Bartz credible witnesses.
I cannot accept that submission.
In arriving at this conclusion, the following matters are relevant:
·my general assessment of these witnesses while they gave evidence during the proceedings;
·the fact that both Ms Castles and Mr Bartz had an ‘axe’ to grind with Mr Blat.
For example, in respect of Ms Castles, she only complained to the police a year after the two fires had occurred, on her own admission, as ‘payback’ to both Mr Baker and Mr Blat, which she subsequently withdrew, she then later prepared a false receipt in relation to the chainsaw (and even in relation to the trailer according to Mr Baker) notwithstanding her earlier complaint to police and the withdrawal of it; she was clearly not happy with Mr Blat as she had high expectations regarding moving to Bowen and starting a new life with Mr Baker and it had failed miserably.
In respect of Mr Bartz, the fact that he failed to tell Police in March 2003 what he knew at that point about Mr Blat’s alleged involvement in the fires, the competing reasons regarding why he only gave a further statement to police implicating Mr Blat namely that he had received notice of judgment having being entered against him by Mr Blat and was incensed at him because of it; and his stated need on oath for revenge.
Additionally, Mr Baker conceded that both he and Mr Bartz had spoken about the case prior to and even at the committal proceedings in NSW heard on the 24th November 2004 and 15th February 2005 respectively (p 246 and 247 T) and significantly about the alleged purchase of the firelighters.
It is convenient now to set out Mr Blat’s evidence at this juncture in order that my reasons which follow may be more readily understood.
Mr Blat Jnr
Mr Blat gave evidence that he had been a spraying contractor since 1996. That business was called ‘Environspray’.
In 2002 when working in the Wee Waa Narrabri area NSW he was living at a property called (‘Whispering Pines’). He had engaged two employees Joshua Baker and Jeffrey Bartz.
He owned two spraying machines, a Rogator 854 (‘the rig’) and a Hardie Alpha 2000 at that time. The latter machine was also under a lease arrangement with the financier National Australia Bank Limited.
The Rogator (‘the rig’) had been brought new in 1998. He had initially paid $300,000 and it had been insured with Suncorp (for $400,000 or its ‘market value’). It was financed by National Australia Bank Limited (NAB) and he stated that he paid about $70,000 per annum ($77,000 inclusive of GST) under chattel lease arrangement. That annual payment was due in April 2002. He had also installed on the rig a Hardie Twin Force Air Boom on it and it had cost he thought about $75,000.
He initially gave evidence that he had not had any problems paying the lease payments since the time he had the machine and his business leading up to 2002 had been going well.
He confirmed that he had put the rig up for sale about 6 months prior to February 2002. It had been advertised in Farm and Farm Machinery magazine. He said he thought it had been initially put up for sale at $220,000, however conceded in cross examination that in a police statement 16th February 2002 he had said that initial price was $200,000. He had then reduced that price to $180,000 as wanted to sell it. It had about 3750 hours on the ‘clock’.
He initially gave evidence that he had wanted to sell it as he decided to down size business in order to use only 1 machine up at Bloombury. His intention was that his employees would work the spray machine, and he would work his mango farm. He did however later concede under cross examination that he had also put the rig up for sale on the market because at that time he was not sure if he was going to be able to make the lease payment on it due in April 2002, and that one of his major contracts had indicated to him that their farm no longer required the use of that machine.
He gave evidence that John Irvin had entered into a verbal agreement to purchase the rig, subject to him obtaining finance, but that transaction had not been completed at that point (mid February 2002).
On 10th February 2002, Mr Blat gave evidence he had got a flat tyre late at night after he was returning from a spraying job at a property called Lannamore. He therefore parked it on roadside on his way back to Narrabri. He removed the two way radio and left the cabin unlocked which was his normal practice. He denied removing spotlights, battery or any parts off the stainless steel boom. He stated that the only thing he noticed after the fire which occurred on or about the 15th February 2002, was that the foam making tank was missing.
He stated he had told both Mr Bartz and Mr Baker that he had got a flat tyre and had described the location of it to them.
The next morning, he went to the tyre service company (Mr Ford’s business) in order to speak to the Manager Graham (Ford). He was on holidays so just left it until he got back to sort the tyre.
At that time, Mr Blat said he had purchased a farm north of Mackay called Bloomsbury and was in the process of moving there.
In order to do that, he stated he was hiring vehicles for that purpose.
On the 5th February 2002, he recalled hiring a Mitsubishi dual cab Utility (Thrifty Car Hire) but could not remember if 2 round trips were involved before he returned it on the 9th February 2002.
On the 11th February 2002 he agreed he had also hired a Thrifty 6 tonne Isuzu Pantek Truck in order to travel to Bloomsbury. On that occasion he went up with Mr Bartz, Peter Page and a female person and returned to Narrabri on 13th February. He recalls dropping the hire truck back before going to a friend’s house (Nimrod Moore) at Narrabri to stay that night. That evening, he remembers ringing Mr Baker to see how the job at Auscott property had gone. He denied abusing him over the phone regarding the alleged arson attempt. He recalls that he had hired a Thrifty Utility also on the 11th February 2002, the purpose he said was so that Mr Baker could carry out the spraying job for him at the Auscott property the next day. He stated that both of his own vehicles were unavailable at that time for that purpose. He initially gave evidence that he believed his white work utility was up at Bloomsbury at that point however later conceded in cross examination that Mr Bartz took it up north for him on the 14th February 2002. His other vehicle, the red modified station wagon was in the workshop at Narrabri getting fixed, thus the need for the hire utility for Mr Baker.
On the morning of the 14th February 2002 he went to collect Mr Bartz from the Pages’ residence, where Mr Bartz had stayed the night before. He recalled both of them going out to the Whispering Pines property and Mr Bartz left in the white work utility towing a water trailer to head up north. He denied saying to Mr Bartz in conversation on that morning ‘you can’t rely on Josh. If you want something done, you have to do it yourself.’
On the evening of the 14th February 2002, he stated that he had rung Mr Baker, (who was out at Burren Junction at the time) to give me a hand to shift the flat tyre off the rig the next morning in order to take it back to Narrabri so that it could be repaired if possible and then take it back out. He stated that if it could not be repaired he was going to get them to order it in. He conceded under cross examination that he knew they had a 24 hour call out service but he had only called them through the day. He agreed he had used them to repair wheels before for him.
He denied telling Mr Baker during the conversation of the evening of the 14th February, 2002, ‘to tell Terry Castles that you’re going to change the tyre tomorrow and that you’d need his help tonight to jack up the rig.’ He stated he had driven his red station wagon out to Burren Junction to pick him up He said he arrived about 10.30 and it was about 11.30pm when he and Mr Baker drove past the rig on the side of the road. He stated it looked okay to him though he did not pull up to look at it.
He gave evidence that they both then went to bed at Nimrod’s place. He denied the suggestion that he then woke Mr Baker up after a couple of hours after going to bed so that they could then return to the site of the rig in the red station wagon to burn it.
He denied the suggestion that he had asked Mr Bartz to purchase firelighters for him from Woolworths and denied the suggestion that he had taken the firelighters and fuel and deliberately set fire to the rig while Mr Baker was present waiting in the red station wagon.
He recalls at about 7am on the morning of the 15th February 2002, he went out with Mr Baker to change the flat tyre as planned and saw that the rig had been totally burnt. He stated he drove back to the police station to report it and they advised him they already knew as the fire brigade had already attended at the site.
He recalls travelling up to Bloomsbury some days later with Mr Baker and Ms Castles in his red station wagon.
He stated that he had not promised Mr Baker certain employment but knew someone who should be able to give him employment. He recalls giving Mr Baker some work initially before he went to work at the tomato farm.
He remembers travelling to Israel for a pre-planned holiday shortly after his arrival in Bloomsbury. He recalls he was there for several months. He recalls receiving numerous phone calls from Mr Baker after he returned from overseas over the course of 2002 and 2003 and stated that Mr Baker was constantly asking him for the money.
He recalls he brought items from Mr Baker including a trailer and a chainsaw. He denied the suggestion that he had asked Mr Baker to steal the chainsaw and paid him $200 for it.
He also denied the suggestion that the receipts which he received in respect of those items were false and were created (at his insistence) by Mr Baker or Ms Castles in order to cover his tracks for the money he was to pay Mr Baker ($6000 in total) for the ‘rig job’.
He was cross examined at length about what he understood the pretext call (Exhibit 6) and what the conversation recorded meant to him. He gave evidence that Mr Baker had been always ringing him asking him for money and that he understood that most of that conversation was about the post office break in (where money had been taken) and that he believed that Mr Baker had been involved in it. He stated that the police had interviewed him as the employer of Mr Baker, regarding Mr Baker’s wages etc. He stated that he had been told by Mr Baker and Ms Castles on the way up to Bloomsbury together that they had been involved in the post office break in shortly before they had all left to go north.
Mr Blat gave evidence and was cross examined over a period of 1 ½ days. During that time I had the opportunity to carefully observe Mr Blat, particularly under lengthy cross examination. Mr Blat gave his evidence at all times in a forthright manner. He was however prepared to make concessions.
For example, regarding the reasons behind him having put the rig on the market for sale, the fact that he admitted he had cheated the hire company by disconnecting the odometer on the vehicle simply in order that he might save himself some money and his concessions regarding dates and times in respect of matters that had occurred over many years ago.
His evidence regarding the events leading up to the 15th February 2002 is, in my view, capable of acceptance and my assessment of him in the witness box does not lead me to conclude otherwise.
I also accept his evidence regarding the events subsequent to the 15th February 2002. That evidence included the creation of the receipts as it relates to the chainsaw and trailer and his understanding regarding the context of what he and Mr Baker where talking about in the pretext call of the 14th October 2003.
In arriving at those conclusions, the following matters are relevant:
·my general assessment of him while giving evidence during the proceedings;
·the fact that his version of the events is capable of belief;
·the fact that there is no forensic evidence which shows that the fire on or about the 15th February 2002 was deliberately lit by him or any other person;
·the fact that his version of events is supported by independent evidence in a material way, the following of which is as follows:
Re flat tyre
Mr Stoltenburg confirmed in his evidence that he had recalled seeing a flat tyre on the rig when it was parked by the roadside.
Mr Ford confirmed that machines such as the rig do get flat tyres all the time and that Mr Blat had used his service before for that purpose on many occasions.
Mr Ford also confirmed that the removal of a tyre from the rig would be possible if indeed the beading (which attaches the tyre to the rim) was broken, then the tyre could be removed in those circumstances without the need for hydraulic equipment.
That evidence confirms Mr Blat’s evidence that he was intending to go out to remove the tyre himself with Mr Baker early on the 15th February 2002 in order for him to bring it back into town so that it could be repaired by Mr Ford’s company if possible.
Mr Ford’s evidence is also consistent with Mr Blat’s belief that because the beading might be broken, like had happened before in respect of the back tyres, he would be able take the tyre off himself and take it into town.
Therefore it is difficult to accept the submission made by Suncorp that the flat tyre was deliberately caused by Mr Blat (by staking it) so that he could then leave the rig by the roadside so that Mr Baker could torch it for him while he was away up north (which provided him a alibi).
Nor do I accept the submission made by Suncorp that he could have had the tyre service fix it for him had he wanted to even before he had left to go up north on the morning of the 11th February 2002.
That submission ignores the uncontested evidence available which was that Mr Blat had already purchased a property up north and was in the process of not only shutting his business down, but was moving his personal effects (and business) at that particular time up north and in fact subsequently did so.
Re the purpose of the hire utility for Mr Baker
It has been submitted by Suncorp that the real purpose of the hire utility on the 11th February 2002 by Mr Blat for Mr Baker’s use was so that he could use it (rather than use any of Mr Blat’s recognisable work vehicles) to burn the rig that evening rather than to perform any spraying job at Auscott on the 12th February 2002.
As no documentary evidence was tendered in respect of any of the vehicles hired during the relevant period for my assistance, it was therefore essential to examine the evidence given in the proceedings.
Both Mr Baker and Ms Castles maintained that before heading out to do the spraying job at Auscott on the 12th February 2002, they had returned the hire utility first before taking the white work utility (which had been at Whispering Pines where they had stayed the night before) out to Auscott. Their collective evidence was that they had then travelled in the white work utility directly from there out to Burren Junction after the spraying job was completed.
There was no suggestion by either of them in their evidence that they returned that white work utility at any stage to either Nimrod Moore’s place in Narrabri or the Whispering Pines property after they both returned to Burren Junction late on the 12th February 2002.
Indeed, Mr Bartz confirmed in his evidence that he in fact drove the same white work utility up north at 1.30pm on the 14th February 2002 after loading it up with chattels at Whispering Pines . (p 309 and 310 T)
That evidence does little to assist Suncorp’s submission that the hire utility had only been hired to provide cover for Mr Baker on the evening of the 11th February 2002 as is equally open on the evidence available, in my view, with Mr Baker and Ms Castles having driven the hire utility out the perform the spraying job before returning it back to Narrabri before making their way out to Burren Junction at some time.
The evidence of Mr Bartz in my view does not support the inference that the white work utility was in fact the vehicle which Mr Baker and Ms Castles say they travelled in to the Auscott property in order to carry out the spraying job (and then onto Burren Junction) as asserted.
It follows that evidence which was given on this point is more consistent with the version given by Mr Blat, that he had in fact hired a utility for Mr Baker on the 11th February 2002 in order that he could do a spraying job out at Auscott property for him on the 12th February 2002.
The trailer and chainsaw receipts (Exhibits 8 and 9)
It has been submitted by Suncorp that these documents provide independent support in a material way consistent with the versions given by Mr Baker and Ms Castles which support the conclusion that those documents were false and had only been created at Mr Blat’s instigation in order to cover up the $6000 payment to be made for the ‘rig job’.
Having accepted Mr Blat’s evidence regarding the purchase of these items in preference to the versions given by Mr Baker and Ms Castles, it is my view that these documents lend support to Mr Blat’s case.
The evidence available, which I have accepted, is that Mr Blat did in fact purchase these items from Mr Baker during the course of 2002 and that the documents created at Mr Blat’s instigation was because he had wanted receipts for the things which he had purchased from Mr Baker.
The uncontested evidence from both Mr Baker and Ms Castles was that they had in fact created the documents and indeed Mr Baker had signed them which they had given to Mr Blat.
The depreciation schedules of Mr Blat’s (Exhibits 20 to 23 inclusive)
Suncorp submits that these documents lend further support to the submission that the receipts for the chainsaw and trailer were in fact false.
It is difficult to accept that submission. The criticism made regarding Mr Blat’s claim in the depreciation schedules for GST in respect of the Chainsaw receipt (Exhibit 9), namely that it not being a Tax Invoice, loses force when no such claim for GST has been made by Mr Blat in respect of the Trailer receipt (Exhibit 8) which is headed ‘Tax Invoice’.
Indeed, both exhibits show that the respective amounts were inclusive of GST.
I accept Mr Blat’s evidence when he stated under cross examination, that he was not totally familiar with the tax rules, his Accountant had always prepared the schedules for him and had made errors himself regarding the date of acquisition of the chainsaw.
I also accept Mr Blat’s evidence where he stated that even though he had disposed of the chainsaw, he conceded he had not written it off entirely as he had in the past also claimed on work equipment which had been well passed its use by date. (p 381 T)
The Pretext Call (Exhibit 6)
Suncorp submits that the evidence given by Mr Blat regarding this phone conversation was unsatisfactory and ought to be rejected.
Suncorp also submits that this exhibit independently supports in a material way the version given by Mr Baker regarding Mr Blat’s involvement in the fires and the payment of money which was to exchange hands.
On any reading of that document, it cannot be said that it contains any direct admissions of guilt by Mr Blat in respect of either fire.
Mr Blat’s explanation regarding what he understood to be the main context of that conversation was about is, in my view, equally plausible with the alternative explanation which is relied upon by Suncorp (namely that the conversation was all about the rig fire and their respective involvement including the money still owing to Mr Baker from Mr Blat).
Mr Baker confirmed in his own evidence that he had been investigated by the Police regarding the Burren Junction Post Office break in. He also confirmed that Mr Blat had been spoken to by the Police regarding his wages as the Post Office had been robbed and he and others (those closest to Terry Castles’ mother who was in charge of it) were under suspicion. (p 225 T)
Mr Baker also confirmed in his own evidence that even while he was working for Mr Blat as his employee, the arrangements for his payment of wages were erratic in so far as Mr Blat would either pay him by cheque, or he would have to ring him up to get it or Mr Blat would give him money over his credit card and ‘stuff to put on his phone.’ (p 202 T)
That evidence is consistent with Mr Blat’s explanation that it wasn’t uncommon for Mr Baker to ring and request money which he believed Mr Blat still owed him. Nor is it inconsistent with the payments which were made by Mr Blat to Mr Baker which were stated in evidence.
Accordingly I cannot accept the submission made by Suncorp on this point.
The ‘blackmail’ letter written by Mr Baker (Exhibit 7)
Mr Blat gave evidence, which I accept, that he had asked Mr Baker to provide him this letter after he had got sick of Mr Baker ringing him up all the time and demanding money.
Mr Baker confirmed in his evidence that he had been demanding money from Mr Blat and had in fact been receiving money from him for payment of his fines, his moving fees, phone bills and the like.
Accordingly, this reliance on this letter does little, in my view, to advance Suncorp’s case.
Mr Blat’s Motive
It is submitted by Suncorp that Mr Blat’s motive for burning the rig on or about the 15th February 2002 was ‘obvious’
The various reasons to support that submission are set in pages 4, 5 and 6 of Exhibit 24.
I cannot accept those reasons. In arriving at that conclusion, the following matters are relevant:
(a) Suncorp complains that no evidence was given by Mr John Irvin in the proceedings, the proposed purchaser of the rig and that the only evidence regarding any proposed deal between Mr Blat and Mr Irvin came from Mr Blat himself. Indeed, Suncorp submits that Mr Blat’s solicitors letter dated 11th September 2002 (Exhibit 5) supports the conclusion that that there was no such agreement at all between the parties. Those submissions ignore however the evidence which was given by Mr Blat (which was not challenged) that he had in fact a purchaser for the rig, they had agreed on the price ($180,000) and that the parties were simply waiting for approval to be given in respect of Mr Irvin’s finance so that the deal could be then be finalised. It also was put in cross examination to one of Mr Blat’s witnesses, the expert valuer called in his case, that ‘only one person had expressed an interest in buying it and appears that there was certainly at least negotiations or a price had been struck at $180,000.’ (p 182 T). There was also the evidence given by Mr Blat, which I have accepted, that he and Mr Irvin had a verbal agreement. Finally, had Suncorp wished to challenge whether there was any agreement to purchase at all between the parties (verbal or otherwise), then Suncorp could have called Mr Irvin in its own case particularly when it bears the onus of proof in respect of Issue (i).
(b) Suncorp also submits that because Mr Blat knew he was not going to meet the $77,000 lease payment in April 2002, coupled with the loss of contract work for that machine at Auscott, that supports the conclusion of motive. That submission ignores however the evidence available which was that Mr Blat had only put the machine up for sale 6 months earlier (prior to the 15th February 2002 fire occurring) because of those reasons but had subsequently secured a purchaser for it which was to be finalised even prior to the lease payment falling due.
(c) Suncorp further submitted that Mr Blat was clearly hoping to secure more money from Suncorp (if he made an insurance claim against a burnout rig) than he would receive if indeed any sale had gone through. I cannot accept that submission. The evidence which Mr Blat gave, which I accept, was that he had not expected to ever receive more than the ‘market value’ for the rig even if an insurance claim was made for it. His evidence was that he only found out from Mr Maloney (a witness called in his case) after the fire that his rig was probably worth more than what he had intended to sell it for. The evidence available also shows that Mr Blat had initially put the rig up for sale at $200,000 in order to sell it and had subsequently secured a purchase price for it at $180,000 which he was prepared to accept in order to dispose of the rig in line with his belief at that time, which was that he would not be needing that machine up at Bloomsbury.
Attempts to discredit Mr Blat generally
Suncorp submits that because Mr Blat has admitted to disconnecting odometers in the past on certain hire vehicles then it follows his credit is blemished.
While it is accepted that Mr Blat has admitted to carrying out unlawful acts on occasions (for which he has not been prosecuted) it does not follow that those acts in themselves would cause me to reject the whole of Mr Blat’s evidence as not worthy of belief.
Involvement in other alleged insurance frauds
Suncorp has submitted that I would find that Mr Blat has been involved in other insurance frauds. (page 12 of Exhibit 24)
That submission however relies on the acceptance of Mr Baker and Mr Bartz as truthful witnesses, both of whom I have rejected as unreliable.
Indeed, there was no evidence at all to support the allegation which was made during cross examination, namely that Mr Blat had taken a motor vehicle (which he had apparently reported as stolen) over to Israel in order that he could then claim insurance on it.
Conclusion
Accordingly, because of the reasons stated, I am not satisfied that Suncorp has discharged its burden of proof in respect of Issue (i) and accordingly, I dismiss Suncorp’s claim for the return of $159,000.00.
Issue (ii)
The onus of proof in respect of this issue lies with Mr Blat, on the balance of probabilities.
Mr Blat called Mr Maloney (self employed) and Mr Whelan (Expert Valuer) as witnesses in his case. He also gave evidence on this issue.
My assessment of Mr Blat, Mr Maloney and Mr Whelan was that each provided evidence on this issue to the best of their respective belief and knowledge.
Mr Blat stated that he had initially placed the rig up for sale at $200,000 however had subsequently reduced the price in order to secure a purchaser. He gave evidence that he had eventually found a purchaser (Mr Irvin) and they had then struck a deal for the agreed price of $180,000. He also stated he was prepared to sell it for that price.
It is undisputilityd on the evidence that the sale of the rig had been advertised nationally in a number of reputable magazines for at least over a period of 6 months before a purchaser was secured.
Mr Blat gave evidence that it was only after the fire had occurred on or about 15th February 2002 that he had spoken to Mr Maloney who had advised him that the pre-fire ‘market value’ for the rig was more likely about $220,000. Prior to that, he did not know himself what the true market value of the rig was. I accept Mr Blat’s evidence on this point.
As a consequence of that advice, Mr Blat issued proceedings in the Magistrates Court in order to recover what he believed was the shortfall between what Suncorp considered what the rig’s pre-fire value and what he had been told. ($40,000.00).
Mr Maloney gave evidence which was of no real assistance to me on this issue even though he did his best to assist the Court. It must be remembered that he was not called as an expert to provide evidence regarding the ‘market value’ of the said rig as such.
It is submitted on behalf of Mr Blat that after Mr Maloney confirmed the condition of the machine, its features and their value prior to the fire that supported his view that the machine was worth $220,000 (page 12 of Exhibit 25).
That submission ignores however the fact that the figure nominated by Mr Maloney had been given in the context of a trade-in on a new machine ‘possibly’ in 2001 (as he could not exactly remember if it was in 2001 or not). It also ignores the fact that Mr Maloney did not know what the operating hours on the machine even were at that time, a point that Mr Whelan who also gave evidence considered important.
Mr Maloney also conceded that he was not familiar with the maintenance of the particular machine in question as he had only sold them rather than maintained them mechanically, again a point that Mr Whelan considered important.
Mr Whelan also gave evidence and provided a Report for my consideration (Exhibit 15) on behalf of Mr Blat’s case.
Mr Whelan’s evidence regarding what he considered to be the market value of the rig was clearly based upon a wrong premise to begin with namely that the rig had only done 2,500 hours and not close to the 4,000 hours which it had done by the material time.
In particular, he also conceded under cross examination that 500 or even another 1000 hours on a machine such as the rig which has about a total life of about 10,000 hours would be significant in determining its true market value.
Indeed, Mr Whelan was frank enough to admit that had he known the operating hours of the rig was closer to 4,000 hours his valuation may well be defective particularly if he had known what any of the deleterious effects that 4,000 hours may have had on the said machine. (p 186 T)
He also conceded that a machine’s maintenance would also be an important consideration in respect of judging a machine’s true market value.
His concession, even on his own definition of ‘market value’, that a sale that was advertised in major publications with an Australia wide distribution over a period of 6 months resulting in only one interested purchaser at the advertised price of $180,000 would be satisfied, was not a concession I can ignore. (p187 T).
Conclusion
Accordingly, I am not satisfied that Mr Blat has discharged his burden of proof in respect of this Issue and I therefore dismiss his claim for damages in the amount of $40,000.
Issue (iii)
Having determined Issue (ii) in the manner I have, I do not consider it necessary to deal with this Issue.
Orders
The plaintiff’s claim and the defendant’s claim are dismissed1.
The parties are given leave to make submissions in writing on costs within 28 days, failing agreement between the parties2.
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