Angus v Ace Insurance Limited
[2014] NZHC 258
•24 February 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-463-475 [2014] NZHC 258
BETWEEN DENNIS WILLIAM ANGUS AND BRIAN ERSKINE-SHAW
First Plaintiffs
SHERYL ELEANOR ANGUS AND BRIAN ERSKINE-SHAW
Second Plaintiffs
DENNIS WILLIAM ANGUS AND SHERYL ELEANOR ANGUS Third Plaintiffs
ANDACE INSURANCE LIMITED First Defendant
CERTAIN UNDERWRITERS AT LLOYDS AS PER POLICY CHG090466
Second Defendant
Hearing: 4, 5, 6, 7, 8, 11, 12, 13, 14, 15, 18, 19, 20, 21, 28 and 29
November 2013
Appearances: K M Quinn and S M Thompson for Plaintiffs
D P H Jones QC and M L Evans for Defendants
Judgment: 24 February 2014
JUDGMENT OF COOPER J
This judgment was delivered by Justice Cooper on
24 February 2014 at 1.00 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors:
Lance Lawson, Rotorua
DLA Phillips Fox, Auckland
Counsel:K M Quinn, Auckland
ANGUS v ACE INSURANCE LIMITED [2014] NZHC 258 [24 February 2014]
TABLE OF CONTENTS
Introduction ............................................................................................................[1] The plaintiffs ..........................................................................................................[6] The onus and standard of proof............................................................................[14] The Pinelands Hotel .............................................................................................[22] The account given by Mr Angus at the trial .........................................................[28] The principal issues ..............................................................................................[54] The alarm .............................................................................................................[61]
The significance of the issues concerning the alarm system in the main building ........................................................................................................[61] The alarm system .........................................................................................[67] Evidence given by Mr Angus ........................................................................[79] Evidence given by Ms Peka ..........................................................................[83] Evidence given by Ms Bennett......................................................................[90] Evidence given by Mrs Angus ......................................................................[93] The Chubb records .......................................................................................[99] Discussion ..................................................................................................[105]
Other issues with the account given by Mr Angus.............................................[130]
Initial encounter with the robbers ............................................................... [131
A planned robbery and arson, but who were the robbers? ........................[140] The taping of the wrists ..............................................................................[165] Bags carried by the robbers .......................................................................[171] A trail of items left by the robbers ..............................................................[174]
Accelerant on Mr Angus’s clothing....................................................................[182] Accelerant on the vest, shirt, shorts and shoes ..........................................[182] More about the vest ....................................................................................[205] The vest and the sequence ..........................................................................[218] Conclusions about the accelerant on Mr Angus’s clothing ........................[222]
The fire ...............................................................................................................[223] Timing ................................................................................................................[266] Did Mr Angus have a motive to set the fire? .....................................................[278] The attempted sale of the business .............................................................[281]
The valuation evidence...............................................................................[292] The accounting evidence ............................................................................[300] The defendants’ right to require reinstatement...........................................[326] Conclusion on motive .................................................................................[334]
Conclusions and result .......................................................................................[336]
Introduction
[1] In the early morning of Friday 2 July 2010, the main building of the Pinelands Hotel in Kawerau was destroyed by fire. There is no dispute that the fire was deliberately lit.
[2] The plaintiffs, who were the proprietors and operators of the hotel, seek to recover money allegedly owing by the defendants as a result of the fire under two policies of insurance. The first, the “material damage policy”, indemnified the insured in respect of any unintended and unforeseen physical loss or damage to the insured property. The second, the “business interruption policy”, indemnified the insured in respect of interruption or interference with the hotel business.
[3] The plaintiffs’ case is that there was a robbery in which Mr Angus was doused with petrol and compelled to hand over money before the robbers set the hotel on fire. However, when the plaintiffs made claims under the insurance policies, the claims were declined. The defendants say there was no robbery, and that the fire was set by Mr Angus. They plead as an affirmative defence that Mr Angus made a false claim on the policies inasmuch as he deliberately “in person or otherwise” started the fire. The defendants’ pleading alleges that his wife, Mrs Sheryl Angus, was also involved but allegations against her were not explicitly pursued at the trial.
[4] The defendants say that the alleged robbery and assault of Mr Angus was simply a dishonest cover for Mr Angus having started the fire by igniting accelerant which he had poured in up to six separate areas of the main building. He did so because the business was faring badly, he had tried unsuccessfully to sell it, and he wanted to be free of it. It is said that claims made under the insurance policies were fraudulent, and a breach of the policy holders’ duty of utmost good faith, which entitled the defendants to forfeit all benefit under the policies.
[5] The issue on which the case turns is whether the fire was set by Mr Angus. The police carried out their own investigation and concluded that he was responsible for setting the fire. That was a view that appeared to have been significantly influenced by input from experts advising the defendants, and I have not been
influenced in my determination of the issue by the conclusion that the police reached.
The plaintiffs
[6] The first plaintiffs are the trustees of the Dennis William Angus Trust. The second plaintiffs are the trustees of the Sheryl Eleanor Angus Trust. Mr Erskine- Shaw is a chartered accountant who for many years has provided accounting advice to Mr and Mrs Angus.
[7] When the fire occurred in July 2010, two mirror trusts, the DW Angus Trust and the SE Angus Trust, each owned a one-half share in the three titles which together comprised the property known as the Pinelands Motor Hotel.
[8] Mr and Mrs Angus are named as the third plaintiffs. The statement of claim describes them as the owners and operators of the hotel business.
[9] There was an issue raised by the defendants as to whether or not any of the plaintiffs were the parties actually insured. The insurance policies describe the insured as “Dennis & Sheryl Angus Partnership Trust T/as Pinelands Motor Hotel”. It appears that in a strict sense that is an entity which does not exist. In fact, the business was run by Mr and Mrs Angus as a partnership; the mirror trusts referred to above owned the land and buildings. On this basis, the statement of defence denied pleadings in the statement of claim that the plaintiffs had entered into the relevant contracts of insurance.
[10] However, Mr Quinn also noted that the definition of “the insured” was expanded later in the schedule, in the case of both policies. In respect of the material damage policy the expanded definition provided:
As detailed above but also including all other Entities in which the Named Insured has more than half of the equity or over which management control is exercised and all Principals, Directors, Employees and Employee Social Clubs and Family Trusts of the Entities Insured not otherwise insured.
[11] A similar expanded definition applied under the business interruption policy. This read:
As named Insured but also including all other entities in which the Named Insured has more than half the equity or over which management control is exercised and all Principles, Directors, Employees and Employee Social Clubs and Family Trusts of the Entities Insured not otherwise insured.
[12] Mr Quinn pointed out that the two mirror trusts had for many years had their financial statements prepared together as a partnership, identified as “DW & SE Angus Trust’s Partnership”. He submitted that the name was very similar to that actually inserted on the schedule as the “insured”, the only real difference being transposition of the words “Partnership” and “Trust”.
[13] In the end Mr Jones QC conceded that the named plaintiffs were able to mount the claims under the policies and this issue does not need further discussion.
The onus and standard of proof
[14] There is no dispute about the law to be applied. It is for the defendants to prove on the balance of probabilities the affirmative defence raised that Mr Angus started the fire and that in those circumstances, his claim under the policy was dishonestly made and properly declined.
[15] The standard of proof in a case such as this was discussed by the Court of Appeal in AMI Insurance Ltd v Devcich.1 That case involved a fire that caused extensive damage to a house in Auckland and, as here, it was not disputed that the fire was the result of arson. The house was insured by the appellant, AMI, but it declined cover, being of the view that Mr Devcich, a beneficiary of one of the trusts that owned the house, had set the fire. The owners succeeded in the High Court,2 but the judgment was overturned on appeal. The Court of Appeal noted that in the course of a detailed judgment Lang J made many factual findings adverse to the owners, but at the end of an exhaustive analysis he held that AMI had not established its claim to the required standard, that the evidence left him in a state of “genuine
uncertainty” and that he was not “sufficiently sure” that Mr Devcich started the fire.3
1 AMI Insurance Ltd v Devcich [2011] NZCA 266.
2 Devcich v AMI Insurance Ltd HC Auckland CIV-2009-404-5567, 20 July 2010.
[16] In discussing the requisite standard of proof, Lang J noted that AMI had a reasonably heavy onus, because it had to establish that Mr Devcich had been guilty of conduct that was criminal in nature, and involved allegations of fraudulent conduct.4 He described that standard as not as high as the criminal standard of proof beyond reasonable doubt, but not far removed from it.5 He considered that AMI was required to adduce “clear and convincing evidence” that its allegations, were correct.
The Court of Appeal thought that this was to suggest that because of the nature of the allegations the standard of proof required was more exacting than the ordinary balance of probabilities test in civil cases. This was incorrect, and there is no intermediate test between the criminal and civil standards, as was held by the Supreme Court in Z v Dental Complaints Assessment Committee.6
[17] The Court quoted what was said in that case by McGrath J, who wrote also for Blanchard and Tipping JJ:7
The civil standard has been flexibly applied in civil proceedings no matter how serious the conduct that is alleged. In New Zealand it has been emphasised that no intermediate standard of proof exists, between the criminal and civil standards, for application in certain types of civil case. Balance of probabilities still simply means more probable than not. Allowing the civil standard to be applied flexibly has not meant that the degree of probability required to meet this standard changes in serious cases. Rather, the civil standard is flexibly applied because it accommodates serious allegations through the natural tendency to require stronger evidence before being satisfied to the balance of probabilities standard.
(Footnotes omitted.)
[18] I consider this means that in a case such as the present, where the crucial issues turn on the credibility of Mr Angus, the assessment of the evidence must take into account the seriousness of the allegations and the fact that there is no evidence he has previously acted dishonestly. These are considerations which mean that there needs to be strong evidence that supports the defendants’ allegations in order to meet
the balance of probabilities standard.
4 At [11].
5 At [12].
6 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.
[19] The ultimate issue is whether or not Mr Angus started the fire or whether there was a robbery, and the robbers started the fire before they left the premises. In order to resolve that issue it is necessary to examine in some detail the accounts given by the witnesses as to what happened on the night. For many of the most significant events, the only witness called was Mr Angus. The robbers, if they existed, have not been identified or located.
[20] The evidence given by Mr Angus in this Court followed interviews that he gave to the police at the scene on 2 July and later that morning at the Whakatane Police Station, a video reconstruction interview at the site on 5 July and a further police interview on 27 August 2010. In addition, he discussed what had occurred with a loss adjustor instructed by the defendants, Mr Hall, also on 2 July; with an investigator appointed by the defendants, Mr Bourgeois, on 5 July and 16
September; and with Mr Noble, a fire expert appointed by the defendants, on 3 July
2010. Reference is made to those interviews at various points in the discussion below.
[21] Before turning to the evidence that Mr Angus gave about the key events at the trial, it is appropriate to say something about the Pinelands Hotel.
The Pinelands Hotel
[22] The hotel was situated on the corner of Tamarangi Drive and Parimahana Drive in Kawerau. It comprised three buildings. The largest of these (which I will call the main building) contained bars, a restaurant and kitchen, lounges, and storage areas. The layout of the main building was depicted on a plan that was prepared by Mr Noble, the defendants’ fire investigator. This plan (the “Noble plan”) had acknowledged inaccuracies, but no other plan was produced, and the Noble plan was referred to by both parties during the trial. One of the lounges (called the “Gaming Lounge” on the Noble plan) contained poker machines. There was a substantial storage room (called the “Workroom” on the Noble plan), which gave access to a yard to the rear of the main building. The yard was fenced and had a wire mesh gate that was kept locked unless vehicular access was needed through it.
[23] Behind a wall at the rear of the Workroom were stairs that led up to a mezzanine floor. That floor comprised four rooms, in one of which was a safe and a considerable quantity of stored alcohol. It is common ground that accelerant was poured on these stairs in preparation for the lighting of the fire. At the base of the stairs was the control panel or keypad for the alarm system, which was the focus of much evidence at the trial.
[24] The hotel property included a substantial parking area located to the west of the main building. Hotel patrons would enter the premises through the doors that faced the car park. Truck drivers staying in the hotel on the night of the fire parked their vehicles on the southern side of this parking area.
[25] Sleeping accommodation for travellers was provided in two other buildings located roughly to the south and east of the main building.8 The southern accommodation building was orientated at right angles to the main building, to which it was linked by a covered walkway. The covered walkway joined the southern block at a point where the office and reception area for the hotel were located. The southern block contained, proceeding in an easterly direction, the
manager’s office, (adjacent and with access to the hotel office and reception area) and accommodation units one to five. There was a manager’s unit adjacent to the office at the western end of the southern accommodation block.
[26] The eastern end of the southern block was linked by a covered walkway to the eastern accommodation block, which was orientated parallel to the main building. The eastern block contained accommodation units numbered (from south to north) six to 15. To the east of the eastern block was vacant land. A yard beside unit 15 led to a boundary fence between the hotel property and the vacant land.
[27] Other parts of the premises will be discussed below in the context of particular issues to which they are relevant.
8 The evidence about the orientation of the buildings was unclear, and I was told from the bar that the Noble plan showed an incorrect compass point. I have nevertheless taken north as shown on that plan for the purposes of describing the relative location and orientation of the buildings on the site. The actual orientation does not matter once the relative position of the three buildings is understood.
The account given by Mr Angus at the trial
[28] Mr Angus gave oral evidence at the trial in relation to the robbery and arson that he claimed had occurred, in the manner contemplated by r 9.10(3) of the High Court Rules in recognition of the fact that his credibility would be crucial. Surprisingly, the defendants opposed his evidence being given in that way, expressing a strong preference that he read from the brief that had been served. After hearing argument on this issue prior to the trial I made an oral evidence direction as had been sought by the plaintiffs. The order allowed those aspects of his evidence that contained his account of the robbery and fire to be led in the traditional manner, and not read from his brief.
[29] I record that the defendants have made no suggestion that any prejudice arose as a result of that order during the trial. In fact, Mr Jones has addressed various discrepancies between the evidence that Mr Angus actually gave at the trial and what was contained in his written brief, contending that they assist the defendants. The following is based on the evidence that he actually gave.
[30] After referring to events earlier in this evening, Mr Angus was asked about the presence outside the hotel during the evening of Thursday 1 July of members of the local Mongrel Mob:
Q. So Mr Angus these Mongrel Mob guys are gathered out the front, about how many of them would you say?
A. Between probably six to 10.
Q. Did they have vehicles with them? A. Yes they had vehicles, yes.
Q. How many?
A. Probably two or three vehicles, yeah, may have been a few more because there was patrons cars parked around as well.
Q. Did you speak to any of them or did any of them speak to you? A. No.
Q. Was a call made to the police that night? A. Yes.
Q. Who made that?
A. Um, I think Sheryl made the call to the police, I’m actually not sure,
I think Sheryl did.
Q. What was the reason for the call to the police?
A. Because the guy had punched one of the regulars in the bar and he’d
been refused service and we thought that it could have been an issue
‘cos it looked like he could have been coming back inside wanting to come back inside. We noticed when he was out in the carpark he
kept putting his patch on and then he’d take it off and he’d put it on
and at that stage Sheryl and I were on the front doorstep and she pointed him out, number 16 out to me, the guy that had number 16 on and he was the one that kept putting his patch on and off and they were making abusive comments to us both standing on the doorstep, they were calling out things like, “Seig heil you fuckin bitch.” They mainly made comments like that to Sheryl.
[31] Later he said:
Q. Were you there at the front steps when the police arrived?
A. Um, I don’t think I was, I think I might have been in the bar.
Q. What time did the live music finish up that evening?
A. The live music finished at 1.00 am sharp. Might have been just a bit before sorry, because of the problems we knew we were going to have outside we sort of cut the evening off to a short.
Q. How many patrons approximately did you still have in the bar at 1
o’clock?
A. It was still quite a full house still and once the music goes off we put the juke box on and it’s generally older type music to wind the bar scene down and people just exit pretty smartly.
Q. Were the Mongrel Mob guys still outside at that point? A. Yes they were, yes, they were floating around, yes.
Q. So you put the juke box on and things start to wind down? A. Yes.
Q. How long does it take for people to leave the bar?
A. Generally it takes, we normally have 30 minutes to clear the bar.
Once the bar’s closed, so we close the bar and flick the bar lights down and they all know that they can’t be served after that so they generally just drink up what they’ve got left and go. But we do encourage them to move on after that, after we close the bar.
Q. What time do you think it was when the last patron left that night? A. Pretty quick actually, I think it was about 1.15, 1.20 maybe, 1.15.
Q. So when the last patron’s gone, there would be just the four of you
left there at that point?
A. Yes but that particular night there was one lady who was stuck for a ride home, I think she was on our front doorsteps and Sheryl called her back inside and I think one of the bar staff ran the courtesy van because he’d sort of taken the last load and she rang the courtesy car and he came back to pick her up soon after that.
[32] The four persons left at that point were Mr and Mr Angus and their employees Jackie Peka and Casey Bennett. Mr Angus regularly stayed in the manager’s unit on Thursday evenings, but Mrs Angus would return to their home in Whakatane. On the night of 1 July she left at 1.30 am, exiting via the back door of the Workroom, marked as Door 5 on the Noble plan. Normally Mr Angus would unlock the wire mesh gate that was kept locked, so as to let her drive out. On this occasion, the evidence of them both was that she took the key, which was on a chain in the vicinity of Door 5, unlocked the gate, then returned the key to the place where it was kept, drove out and then closed the gate and padlocked it.
[33] Mr Angus’s evidence continued by noting that Ms Peka had “sorted the TAB out” and put the money in a canvas bag, as normal. Next they together cleared the gaming machines, taking all the notes out. The three then had their customary supper of toasted sandwiches and a soft drink.
[34] Mr Angus said:
A. Um, while we were sitting down having our sandwiches I noticed that, um, the front doors are very visible from where we sit that’s why we sit there 'cos you can look right through to the front doors which is Door 1. And I noticed that there was someone that walked past there and I said to the girls, “Oh, there’s someone just gone past the door.” And that’s not abnormal because people often come to the doors when we’re closed and they’ll either want us to sell them some late liquor or if they even think that the pub is still open. They still sometimes they’re rolling into the pub after one, our licence was till two but they would still, no our licence was till one it used to be at two but they would still come to the pub. 1.30 or 2 o’clock if we were late closing. So it wasn’t anything abnormal.
[35] Following that, they tidied up, took the money, turned the lights off in the bar and went through to the Workroom. Mr Angus said:
A. … From there I walked around past all the metering, all the meter boards and I just went to the alarm panel pressed the alarm as normal, and walked away and the girls were sort of milling around where work room is written in this diary. I think Casey had walked to the door and opened the door, and –
Q. Which door Mr Angus? A. Ah, Door 5.
Q. Thank you.
A. And as we walked out I noted that the alarm, um, made a different beeping to what it normally would do and it was Jackie that said to me, “Oh, that doesn’t sound right Den.” And, um, I said, “Oh, maybe.” And I went back and had a look and it was still beeping and I said, “Oh, no it’s showing armed.” And she, by then she had walked back partially with me and she looked over my shoulder sort of thing and she just said, “Oh, yeah it’s sweet.” So we just turned around and walked out really fast. As –
Q. Where’s the, where is the keypad for the alarm?
A. Ah, the keypad is, um, just at the bottom of the stairwell.... Q. So you went back over to the keypad?
A. Yes.
Q. Did you touch the keypad again? A. No, I didn’t, no.
Q. Did the alarm appear to be set to you? A. Ah, yes it did, yes.
Q. So what happened next?
A. Oh, Jackie just said to me, “Oh, it’s sweet.” And we both just walked out promptly. The door was open so we just slammed our back door, and that locks and we proceeded to walk on to the, um, office.
[36] The three then made their way towards the hotel office. Mr Angus unlocked the office and he and Ms Peka went inside while Ms Bennett waited in the foyer of the office. Mr Angus opened the safe and put the tills on the top shelf, and the bags of money on the bottom shelf. He then locked the door and Ms Peka said goodnight
and left. Using a key that he kept in the office, Mr Angus then set the office alarm, walked into his own office and stood observing as the women drove off from the car park. After they had gone Mr Angus walked through into the manager’s unit, relieved himself in the toilet, filled a hot water bottle and sat on the bed, retuning the radio to a talkback station to which he liked to listen. He recalled that on the talk back station there was a discussion about obese people which he had found quite interesting.
[37] It was at that point that he heard a knock on the door. He was unsure whether the door was the door to his office or the motel office. He walked into another bedroom in the manager’s unit and looked out to where he could see a person standing with a bag. He placed the person by reference to a photograph that was produced in evidence. His evidence proceeded as follows:
Q. Well when you look out your window and see this man, what do you see?
A. I just see a guy there that he had sort of curlyish hair, clean shaven, just a normal looking person really. He had black clothes on and he was carrying a black sort of like an older type of sports bag.
Q. Was he holding it? A. Yes he was, yes.
Q. Having seen that what did you do?
A. I just thought, oh, it’s someone wanting a late sale of beer or maybe accommodation, I didn't know, so I just proceeded to walk out of our flat into my office and then went into Nancy’s office, deactivate the alarm and before I did that I called out to the guy and I said to him, “Oh, how can I help you mate?” And I just kept walking, just turned the alarm off and he just said, “Oh, I’ve got a bag here for Mike from K & S.” And at that stage I knew that I didn't have a Mike in from K & S. I think we have about three or four Mikes from different companies that come and stay with us and there is, I think there was two Mikes from K & S that stay with us and I just proceeded to the door, when he said that I proceeded to the door thinking nothing of it and I just opened the door, and I said, “Oh, there’s no Mike staying here tonight mate.” And I happened to glance at our accommodation book which is always left open on the desk right by the door and I could see that there was no Mike anyway, and he just said, “Oh, no, no, no, no, he’s going to pick it up tomorrow.” And I said, “Oh, that’s okay, I’ll just take it and leave a note on it for when Paula gets in in the morning, she will know that it’s for Mike when he comes in to collect it.” And as I bent – by then I had walked, like I had one foot on the door because the door would
spring back because it’s got a spring on it and I went to bend, by then I had walked like I had my foot one foot on the door because the door would spring back 'cos it’s got a spring on it and, um, I went to bend down to pick up the bag he’d moved forward to talk to me and I had absolutely no idea to be – no reason –
Q. No first of all where was the bag at this stage?
A. – um, he’d put it down on the floor – on the ground and I had absolutely no reason to be suspicious of the guy I mean he was just I think I was just sort of like chatting normally to him. So there was just no reason for me to be suspicious of the guy because this was, this would happen on a regular occurrence. Like if they’ve changed drivers they would leave a bag or swap over so, um, at that stage, um, I said, “That’s fine I’ll put it in the office and leave it for Paula.” I bent down to pick the bag up and as I stood up that’s when I felt, um, something freezing poured all over me and at first I thought it was, um, a water pipe that had broken which runs parallel to where the gas line is. Um, and then I smelt petrol and that was when the guy that had obviously thrown it from behind me came up put his hand around and he just said, “Where’s the fuckin money you bald head cunt we want the fuckin money?” Um, sort of pushed me a bit on the shoul – just touched me on the shoulder pushed me around and by the time I looked up the guy that had the bag had pulled his hoodie down and he’d pulled what I thought was a black scarf up covering his face so all I could see was that area of their face, of his face. And I looked around as I was pushed around and pushed down onto the ground, um, pushed semi into the office, um, the guy behind me that was threatening – or they both started threatening me then just kept saying, “Give us the fuckin money cunt, give us the fuckin money you bald head cunt.” He had pulled his hoodie down and, um, he had a red scarf, um, in the same area across his nose and just their eyes showing. Um, and from there it was all on they just kept abusing and swearing calling me a bald head cunt and for those that don’t know what a bald head cunt means that means a Pakeha, or European that’s what mobsters call Pakehas. I’ve been called that many a time in the pub if they’d been kicked out. Um, I made my way slowly to the safe they kept saying, “Open the fuckin safe I want the fuckin money.” So I did that and I took particular note of, um, their footwear and what they were actually wearing roughly from the waist down I didn’t want to look them in the eye – in the face.
Q. What made you think to concentrate on their footwear?
A. Oh, we had been to a, um, a seminar and put on, made by Icon through our gaming machine trust and we’d also done one through the breweries on, on robbery, armed robbery. Um, and, um, the guy that took us told us that footwear is the last thing that robbers usually change they might change their clothes or take their tops off but the footwear is something that you should always take note of. And that’s something that sort of comes to you when something like this happens. It’s never happened to me before, um. And that’s what I did I took particular notice of their footwear and the bottom half of what they were wearing.
Q. All right, so what did you notice about the footwear?
A. I noticed that the guy that was holding the bag had, um, dark green and black shoes they were like sports shoes and he had black sweats on and obviously I’d seen what they had on top they had black sweat shirts with a hood. The other guy had, um, sort of like a dirtish white shoes and they had an obvious big red tongue in the shoe and that was hanging out over the shoe and he had black sweats on as well with a black hoodie.
[38] Mr Angus gave further evidence that immediately prior to being doused with accelerant he had been holding the hotel office door open with his left foot (the door was on a spring, as he said above)9 and bending down to pick up the bag that the man with the black shoes had left on the ground. He felt the accelerant on the back of his neck, partly in his hair, but mainly on the right side of his body and back. It had been propelled onto him from some sort of receptacle (which he did not at any
stage see) held by the man in the red and white shoes. That man then presented a red
and yellow lighter and demanded “the money”.
[39] Mr Angus proceeded to describe events that then occurred in the hotel office, including him being pushed to the ground and crawling towards the safe, which he opened. At first he gave the robbers coins, but they demanded the “real stuff”. He began emptying canvas bags in which notes were stored, and one of the robbers threw him a plastic bag in which to put them. He described the bag as a “milky coloured plastic” bag with no handles, “the size of a shopping bag that you’d get from any grocery store”. He estimated that he handed over about $9,000 to $10,000 in notes of various denominations from $5 to $50. He did not empty the till drawers that had been placed in the safe’s top shelf, calculating that the robbers would not be able to see they were there from where they were standing.
[40] When he handed over the plastic bag with the money in it, Mr Angus said that he noticed that the two men were wearing latex rubber gloves. The robbers then allowed him to stand and pushed him into his (the manager’s) office. Once there they took a roll of tape from his desk and said that they were going to tie him up. He went to put his hands behind his back, but they pulled his arms forward and
proceeded to tie him up with his left hand over his right, in front. He thought this
9 As will emerge, Mr Angus subsequently corrected this evidence, claiming to have kept the door open with a rock that was kept near the door for the purpose.
was strange, but was not too worried by it, because he knew that it was a cheap tape that he had purchased at a two dollar shop, and he knew that he would be able to stretch and loosen it.
[41] They then pushed him back into the hotel office, insisting that there was more money. According to Mr Angus:
… they’d kept insisting there was more money and I said, “Yes, it’s at the hotel,” and they just said to me, “Well fuckin move it, we’re going over there. We want the rest of the money.” They kept demanding the rest of the money, so I thought well, the best thing I can do is maybe give it to them, so we walked out of my office and that door slammed, ‘cos it’s got, as we walked out it just slammed shut and —
[42] He continued:
I started to walk across to the main hotel. All this time they were threatening me, telling me that they were going to fuckin fry me and so I, I mean I just moved it but I — walking across to the hotel it went through my mind that I should try and slow them down because I actually noted that there were bathroom lights on in the accommodation units and I knew that the truckies were, or one or two of them may come out and would be ready to go or that the lights were on in the bathroom and at that stage I sort of walked with a limp, making out I sort of had a sore hip, sore leg, trying to slow it down and one kept pushing me and just kept saying, “move it cunt, fuckin move it or we’ll fuckin fry you,” so I just kept going at that pace, hoping that someone would come out by [sic] they didn’t.
[43] Mr Angus had the keys to the hotel in the right pocket of his shorts. Although his hands were taped together he was able to remove the key using his right hand, and he opened Door 5 and entered the hotel. The robbers were pushing him. He said he walked directly to the alarm panel and he pressed in 1919 to deactivate the alarm. As he did so the robbers were moving around behind him. He described them as “jittery”.
[44] He then moved up the stairs to his right, pushed by the robbers. He said that at the time he thought this was strange, because they appeared not to be surprised by the fact that there was a stairwell. Strange, because given that the back of the hotel was “strictly out of bounds”, there were not many people who knew there were two
storeys.10 The three then entered a room where there was a safe, Mr Angus turning
10 I note that the fact there were two storeys would not have been apparent to patrons viewing the
on the light. They pushed him down in front of the safe and told him to open it. He proceeded to do so.
[45] At this point the robbers noticed a wall lined with shelves carrying alcohol. According to Mr Angus:
… they happened to notice I had flicked the light on when we walked in there and they happened to notice a whole back wall full of liquor stacked with liquor, um, and they just I think they couldn’t believe how much liquor was there and they were just going, “oh, fuckin hell look at all this fuckin shit here.” And that’s when they proceeded to — I don’t know where the bags came from but they — I noted that they started filling bags up they opened bags like a backpack and they started filling the, their bags up with alcohol and saying to me, “get the fuckin money, get the fuckin money.”
[46] Mr Angus described these bags as being “like an old fashioned gear bag with a pull cord” and like an “army bag”. They were black with a white cord coming up to “little loops at the top that would pull tight”. They were particularly focused on Jagermeister (a strong pre-mixed spirit), and Jim Beam. At one stage one of the robbers dropped a 325 ml bottle of Heaven Hill or Jim Beam11and told him pick it up and “put his fingerprints” on it. Seeing they were apparently engrossed in stacking
their bags with the liquor, Mr Angus said that he grabbed the folded bag that was in the safe which contained money for banking and slipped it into the front of his shorts. The robbers did not notice that he had done this.
[47] He then told them that there was not money there, saying “She must have done the banking”. After a period during which they abused and pushed him they then “for some reason … seemed happy with what they had.” Mr Angus stood up and they pushed him down the stairs telling him to “move it”. As he arrived at the alarm panel he asked one of them whether he wanted him to set the alarm again. He was told not to be smart and pushed towards the other end of the Workroom in the vicinity of the freezers. One of them asked Mr Angus where the key to the back gate was. As he was near where the key was kept, Mr Angus was able to grab hold of the
key chain. He described this as a light chain about a metre long. It was on a hook,
hotel from the car park, or from public areas within the main building.
11 Mr Angus said that he assumed the bottle was Heaven Hill or Jim Beam. Both are bourbons. As will be explained later, bottles of these spirits were later found next to Unit 15.
and he was able to reach up and flick it to the robbers, notwithstanding that his hands were still taped together.
[48] Just after doing that he was hit on the side of the head, and he “went down”. He was unable to say for how long he was down. He said that when he was hit he was still inside the Workroom, between a freezer and Door 5. Photographs were produced in evidence, taken by the police later that day, which showed Mr Angus had an abrasion on the right side of his forehead. He said he was stunned, and just lay on the ground. He was conscious of the robbers shuffling around on either side of him and he said he “started shuffling myself” and was pushed down again. He thought he lay there “for a little while”. After that he was able to go out the door, but was pushed on to a table and knocked it over. He lay in that position for a “wee while” and then crawled to a position half way under a veranda covering adjacent to the workroom roller door. At that stage he had just rolled over onto one of his elbows when he heard a very loud noise. He continued:
The whole building shook, all the windows in the kitchen were rattling, the roller door was rattling and I just happened to see flames shooting out of the top door of the mezzanine floor and flames were coming out of the very right of the building and they were browny orange colour. That’s what I noticed most about the smoke and the flames, they were a very unusual colour, they were sort of like a browny orangey colour. I will never forget the sight.
[49] He could feel the heat coming out of the back door (Door 5), which was open. He thought he should move away and he “semi-crawled” on his hands and feet, but during this process he was again pushed down by one of the robbers. He arrived at a pile of wood in the yard, and lay on it. He decided to retrieve his phone from the left hand pocket of the shorts he was wearing. However he was observed doing this, and one of the robbers grabbed the phone and also pulled his glasses off.
The robber threw them away; Mr Angus did not see where the glasses went.12
[50] After a further period lying down Mr Angus said he heard the robbers discussing the whereabouts of a female person who was expected but had not
arrived. He described the two as “skitterish” at this point. Then one said to the other
12 They were subsequently found in a covered area behind the woodpile.
“Come on dog, move it dog, move it”.13 One of them then opened the yard gate, and went through it. The other walked out through a door between the yard and the barbeque area of the hotel. Mr Angus said that neither appeared to be in a hurry.
[51] At this stage he retrieved the bag of money from inside his pants and flicked it into the woodpile. He said that by this point he had managed to free his hands by biting and pulling on the tape: however, the tape remained attached to his left hand. He tried to crawl further way from the heat of the fire, but he was feeling exhausted, and ended up only about three or four metres from the woodpile. Near the position he said he had reached, a piece of tape was subsequently located and photographed by the police.
[52] In the meantime he could hear truck drivers who had been staying in the hotel calling out about moving their vehicles. He could hear the sound of things exploding and there was a lot of smoke billowing about. He saw a fireman approaching and was eventually noticed by him. He told him that he had been doused in petrol and robbed, and the fireman assisted him to walk away. He sat him down under a
banksia tree near the property boundary, and returned to the fire.14 Mr Andrews said
that he sat there for some time, on his jacket. It was “freezing cold”. He
remembered putting his hand out and feeling frost on the ground.
[53] He then walked towards an ambulance that had arrived at the scene. An ambulance officer15approached him and he went to the ambulance with her. He did not get into the ambulance, but sat on its back step. She took his jacket from him and gave him a sheet to wrap around his shoulders. She checked him over, including his head, and according to Mr Angus, said “oh, you seem to be talking ok”. He then went off to talk to a Mr Reuben Southee, the owner of a motel located opposite the
Pinelands hotel who was present at the scene. He arranged for him to call
Mrs Nancy Pickering, the Pinelands hotel administration assistant and receptionist.
13 The term “dog” is apparently used by members of the Mongrel Mob when addressing each other.
14 The fireman was Mr Neil Patrick who was called by the defendants, and whose evidence will be referred to below.
15 This was Ms Suzanne Hutchinson, a paramedic employed by St John Ambulance, also called by the defendants.
He could remember her phone number, but not that of Mrs Angus: her cell phone number was stored in a speed dial setting on his own phone, which he did not have.
The principal issues
[54] The plaintiffs’ case stands or falls according to whether the main components of the evidence given by Mr Angus set out above are accepted. The defendants say that in its essential aspects his evidence is false.
[55] There are several substantive issues about the evidence that I will need to address below, but I record here that this is not a case where it would be possible to draw any inferences adverse to Mr Angus on the basis of his demeanour in the witness box or the way he responded to the questions put to him. In the course of a lengthy, rigorous and at times vigorous cross-examination by Mr Jones, Mr Angus answered the questions in a calm and apparently straightforward way, conceding there were some points that he could not explain. For example, when asked where the bags the robbers used to carry liquor out of the main building had come from, Mr Angus said he did not know. Similarly, he could not explain what later happened to the bag that he observed from the manager’s unit when speaking to the first of the robbers at the outset of the robbery (it was never found).
[56] When on occasions Mr Jones challenged the truthfulness of his evidence Mr Angus politely expressed his disagreement. He did not prevaricate or attempt to avoid giving a responsive answer. I also accept the submission made by Mr Quinn that Mr Angus appeared on occasions, both when being interviewed by the police and in his evidence, to be quite suggestible, ready to accept propositions put to him that might have been thought to be adverse to his interests. For example, in the police interview on 27 August, he accepted the statement put to him that there were many inconsistencies between his first and subsequent statements.
[57] The consideration of the main issues must also take place against the background that nothing in Mr Angus’s history would suggest that he is a person who might commit arson, and I accept submissions made by Mr Quinn that he apparently took pride in the hotel, and was regarded by those who worked there as a good employer. One of them, Mrs Pickering, paid him the compliment that he was
“the most honest business person” she had ever known. It is also necessary to bring into account the fact that the Anguses had recently completed the renovation of the manager’s unit in the hotel. All of these matters tend to suggest that it would be unlikely that Mr Angus would deliberately burn down the hotel and make a false insurance claim.
[58] However, the issue of whether the account given by Mr Angus should be accepted must be assessed in the context of all of the evidence called by the parties, including in particular the evidence about what happened on the night. In the end, the resolution of the case turns on some key issues, including in particular:
(a) the evidence about the alarm system installed in the main building, its operation and whether it was or was not set when Mr Angus left the building prior to the fire in the early morning of 2 July 2010;
(b)the plausibility of the account given by Mr Angus about his initial encounter with the alleged robbers;
(c) accelerants found on Mr Angus’s clothing;
(d) how the fire was set;
(e) the timing of the events recounted by Mr Angus; and
(f) whether Mr Angus had a motive to start the fire.
[59] The resolution of these issues depends not on any impression gained of Mr Angus (or Mrs Angus) in the witness box but rather on what has been called the logic of events. In that respect I have been guided by the observations of the High Court of Australia in Fox v Percy16 in which the Court referred to assessing the appearance of witnesses as they give their testimony in the following passage:17
… in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from
16 Fox v Percy (2003) 214 CLR 118.
17 At 129 (footnotes omitted).
falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their 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. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical.
[60] I approach the case on this basis.
The alarm
The significance of the issues concerning the alarm system in the main building
[61] The plaintiffs’ case had to confront the fact that the records of the operation of the hotel’s alarm system showed that there was a “partial set” of the alarm at
7.23 pm18 and that the system was disarmed at 1.59 am. In this respect it was
Mr Angus’s evidence, as set out above,19 that immediately prior to leaving the building with his employees Jackie Peka and Casey Bennett, he attempted to set the alarm and, prompted by Ms Peka who thought that the system had not made the right sound, he checked it and confirmed that it was alarmed. But this “full set” was not recorded by Chubb.
[62] The defendants say that Mr Angus deactivated the partial set of the alarm at
1.59 am, leaving the entire premises unprotected, and then deliberately did not perform a full set. This was part of a predetermined plan to enable him to return to the building once his employees had left for the evening. Otherwise, his re-entry would have required a deactivation that might have attracted the attention of the monitoring company. Without a full set, Chubb would not be aware that the hotel had closed for the night, and the possibility of a monitoring response that might be generated by a full set followed by a subsequent deactivation, would be avoided.
[63] However, Mr Quinn submitted in closing that there was a very simple explanation for the fact that the records did not show that the alarm had been armed.
It was the plaintiffs’ case that Mr Angus did set the alarm on leaving and then
18 As will shortly be explained, the partial set affected only part of the premises not in use at that time.
19 At [29].
disarmed it when he re-entered with the robbers, but the monitoring log failed to record these events. Alternatively, Mr Angus thought that he had done those things when in fact he had failed to do so. On this second scenario, he successfully achieved the deactivation at 1.59 am (of the earlier partial set), but the log would not have registered his subsequent failed attempt to arm the system.
[64] I note that Mr Angus consistently maintained that he had set the alarm on leaving the building. The possibility that he had failed to do so was nevertheless raised by Mr Quinn as an inference that might be drawn from the facts as a possible explanation for the fact that the log did not record that the alarm had been set.
[65] Either way, whether there was a malfunction of the log, or whether Mr Angus simply failed to set the alarm when he thought he had, it was a coincidence that one or other of these events occurred on the night of the robbery.
[66] These issues need to be considered carefully because a conclusion that Mr Angus had deliberately not set the alarm would obviously tell strongly against his allegations of robbery and arson.
The alarm system
[67] The alarm system installed in the main building of the Pinelands Hotel was for some years monitored and maintained by Mr Colin Reid’s company, Computech Alarms Ltd (“Computech”). Mr Reid was called to give evidence about it by the plaintiffs. He said he was very familiar with the system, although he had not worked on the alarm since 2001 when Chubb Monitoring took over its monitoring. He could not recall whether the system was a model DSC 5010 or a DSC 5015, but he recalled it as having an LED keypad.
[68] There could be both a “full set” and a “partial set” of the system. Under the latter the system would be armed in parts of the hotel but unarmed in other parts. Mr Reid explained that he had set the system up to operate in this way for Mr and Mrs Angus. By pushing a button on the keypad marked “Stay”, the operator could activate the alarm for the restaurant and lounge bar only, leaving other parts of the building not alarmed. The ability to do this was desirable because those parts of the
main building were often not used after sometime between 7.00 and 8.00 in the evening.
[69] Mr Reid was not certain as to the parts of the premises that were covered by the partial set. Cross-examined by Mr Jones, he said that he thought that the partial set resulted in the alarming of the areas described on the Noble plan as the Restaurant and Lounge 1, but not the area referred to as Lounge 2 on the plan (also referred to in evidence as the “function lounge”). However, there was evidence from both Mr and Mrs Angus, and also from Ms Casey Bennett, who was a member of the bar staff, that Lounge 2 was included in a partial set. I accept their evidence on this point, given Mr Reid’s uncertainty about it.
[70] Where there was a partial set, it was necessary to deactivate that partial set before carrying out the full set. Consequently, to alarm the whole premises when leaving on the early morning of 2 July, it was necessary for Mr Angus first to deactivate the partial set and then press the button marked “Away”.
[71] The defendants called evidence from Mr Anthony Stephens, the Technical Support Manager of a company called Intek, which imports and distributes access control, intrusion, and surveillance devices, including those manufactured by DSC. His specialty included the DSC Power Series.
[72] Mr Stephens referred to advice from Chubb that the system installed in the Pinelands hotel was what he described as a “DSC PC 5015/Power 832 Contact ID Panel Interface”. Noting that Mr Reid had referred to it as a DSC PC 5010, Mr Stephens said that the DSC PC 5010 and PC 5015 are similar models, both part of the DSC Power 832 series and both operating in the same way. He described their operation, and I am satisfied on the basis of his evidence that it does not matter whether the system was a DSC PC 5010 or PC 5015.
[73] The keypads have an audible indicator and command entry keys, with either an LED or LCD keypad. Mr Reid said the keypad was an LED one, and I have no reason to doubt his evidence about that. In any event, on the basis of Mr Stephens’ evidence, the operation of the system is the same, whether the keypad is of the LED
or LCD variety. Mr Stephens confirmed that when armed in the “Away mode”, all zones are active. In the “Stay mode” certain zones can be armed with the remaining zones inactive.
[74] Arming the system, whether in the Away mode or the Stay mode, can only occur if the green “Ready” light is continuously lit. If it is, then to arm the system in the Stay mode requires the operator to push the Stay button. The red “Armed” light and the green “Ready” light will then be lit for about 90 seconds (this period can be altered by the installer). The green light will flicker if motion is detected in the “protected exit area” during this period, and the keypad screen will read “exit delay in progress”. Once the exit delay period is completed, all keypad lights are extinguished save for the red “Armed” light. The system is armed. The keypad screen will read either “Armed-Stay” or simply display the time or date.
[75] Access codes are used to disarm the system, whether it is in the “Stay” or “Away” mode. These codes can be a four- or six-digit number, depending on how the system has been programmed. A four digit code was in use at the Pinelands hotel. Mr Angus’s code was 1919.
[76] When the system has been armed in the “Stay” mode, and the operator wishes to arm the system in the “Away” mode to leave the premises, it is necessary first to enter the four- (or six-) digit code to turn off the “Stay” mode. Once that is done the red light that has been active during the Stay mode will be extinguished. The green “Ready” light will come on if all the zones are sealed. At that point, providing the green light is lit continuously, the operator can then push the “Away” button to activate the entire system.
[77] Once the Away button is pushed, the red “Armed” light and the green “Ready” light both remain lit for the exit period as when arming in “Stay” mode. During the exit period the green light will flicker if motion is detected in the protected exit area, and the keypad screen will read “exit delay in progress”. At the end of the period all lights will go off apart from the red “Armed” light. Once armed, entry to the premises other than through the designated entry path would immediately activate the alarm.
[78] Mr Stephens said that at any time the red “Armed” light is on, the four- or six- digit code must be entered to turn the alarm off. A user returning to alarmed premises, and entering through the designated entry path, will hear a constant beep emitted by the alarm system. The beep will cease on entry of the digit code. As each digit of the code is entered the system will emit a short beep. The red “Armed” light will then be replaced by the green “Ready” light.
Evidence given by Mr Angus
[79] The evidence in chief given by Mr Angus about setting the alarm prior to leaving the premises has been set out at [35] above. In essence he said that he pressed the alarm “as normal” and walked away. However, he noted that the alarm did not make its normal sound and Ms Peka had said to him that it did not sound right. As a result, Mr Angus said he went back to the keypad, the beeping was continuing and the keypad was showing “Armed”. Ms Peka then walked towards him, looked over his shoulder “sort of thing” and then said “Oh yeah it’s sweet”. He said that he did not touch the keypad a second time.
[80] He was cross-examined on this evidence by Mr Jones. After initially stating that he simply went to the keypad and pressed the “Away” button, when prompted by Mr Jones he added that he had first entered his code to deactivate the partial set. Otherwise he confirmed the substance of his evidence in chief. He denied a proposition put to him that after he had deactivated the alarm he had deliberately not set it, but tried to make it look like he had.
[81] Mr Jones referred Mr Angus to the fact that, a week earlier, the alarm in the hotel had been triggered and Chubb had attempted to telephone Mr Angus. Mrs Angus, the hotel premises and finally an employee, Mrs Pickering, to alert them. Mr Angus denied that he had not activated the alarm so as to avoid this kind of attention from Chubb when, as planned, he later re-entered the main building. It simply “happened” to be a situation where the activation had not occurred or had not been recorded.
[82] As has been seen, Mr Angus also said, in his evidence in chief, that on entering the main building with the robbers he walked directly to the alarm panel and
pressed 1919 to deactivate the alarm. Mr Jones put it to him that he had not done that, because the alarm was not on and he knew that to be the case. Mr Angus denied those propositions.
Evidence given by Ms Peka
[83] Ms Peka was called by the defendants. She had been employed at the Pinelands hotel for about five years at the time of the fire. She assisted behind the bar and with the poker machines and other aspects of the hotel’s operation, including the TAB which was located just inside the front door (facing the car park). She generally worked through until the hotel was closed and the premises were alarmed and locked up at the end of the day.
[84] Her evidence in chief, read from the brief provided before the trial, was that the alarm beeped as Mr Angus pushed the buttons on the alarm but that when they went to walk out of the building the “timer beeper” did not sound. This led her to ask Mr Angus if he had set the alarm. He responded that he had, and she then asked him if he was sure. At that, Mr Angus turned around and went back to check. She also stepped back a few steps to a position from where she could see the keypad panel. She said that “the alarm panel’s red light (to show it was armed) appeared to be on. It was flashing.”
[85] Responding to further questions from Mr Jones, Ms Peka clarified that she was standing near the outside door to the Workroom when she realised the “timer beeper” had not sounded, and that she had just taken a couple of steps back to a point where she could see the keypad panel. Her evidence did not match that of Mr Angus insofar as she did not describe herself as looking over his shoulder, but she claimed to have been in a position from which she could see the panel on the keypad. She said that she thought Mr Angus must have reset the alarm because the red armed light “came on”. She then heard what she described as the “hold down beep” (she demonstrated the sound made as a continuous tone of two or three seconds) that, as she put it, “gives you that 20 odd seconds to walk out”. This was followed by what she described as the “second [beeps] to go out”.
[86] Mr Jones was evidently concerned about the implications of these additional answers and put to Ms Peka statements that she had previously made to the police on the morning of 2 July 2010, and to Mr Bourgeois, the defendants’ investigator (on
5 July). She had not in those statements made any reference to Mr Angus resetting the alarm or hearing a beeping noise after he had done so. She said that these events must have slipped her mind. However she stood by the evidence that she had just given in Court.
[87] In cross-examination by Mr Quinn she said that if she had thought that the alarm was not properly set she would have raised that with Mr Angus: she had in fact done so, when initially the alarm did not beep and that had caused him to check it.
[88] I have not been able to accept the additional evidence that Ms Peka gave, supplementing her brief. I consider it likely that the statements she made on the day of the fire and three days later, the substance of which was repeated in the brief she read as her evidence in chief, are likely to have been more accurate than the apparent afterthoughts she had in the witness box. I do not think it credible that she would have remembered in some detail, near the time, the events that led her to ask Mr Angus whether he had set the alarm (including the absence of the beeping sound normally emitted once the alarm was set) but omitted to mention the facts that he had reset the alarm and that had been followed by the normal beeping noises as they left the building.
[89] More importantly, Ms Peka’s additional evidence is in fact contrary to what Mr Angus said happened. On his account, prompted by her, he simply went back to confirm that he had set the alarm, he had not touched the keypad again, but noted that it was beeping and that it was reading “Armed”. A conclusion that he reset the alarm following Ms Peka’s intervention would be incompatible with this evidence.
Evidence given by Ms Bennett
[90] Such a conclusion would also be in conflict with the evidence given by Ms Bennett, to which I now turn. She was called by the defendants. Her evidence was that Mr Angus set the alarm, but that initially it did not beep the way it normally
did. She reported Ms Peka saying “it’s not making that beep sound”. Then Mr Angus walked back to keypad and said the light was set, “so it must be on.” She was not in a position to see the panel as she was standing at the back door at the relevant time. Ms Peka was half way between her and the alarm panel when she made the comment about the absence of the beeping sound.
[91] This evidence was essentially compatible with that of Mr Angus. It did not support the amplified account given by Ms Peka in the witness box.
[92] Ms Bennett was not cross-examined on this aspect of her evidence.
Evidence given by Mrs Angus
[93] It is appropriate next to refer to the evidence by Mrs Angus about her part in the events of the evening and early morning of 1 and 2 July. She had been working in the main building on the evening of 1 July, and as was often the case she acted as a de facto door-person ensuring that patched members of the Mongrel Mob, which has a strong presence in Kawerau, did not enter the premises. Mrs Angus would sit or stand near the front door of the hotel from about 8.00 pm onwards, so as to be in a position to turn gang members away if they tried to enter.
[94] There were members of the Mongrel Mob present in the hotel car park on the evening of 1 July, a place where they would gather from time to time. Mrs Angus said there were about 12 of them, and at about 9.30 pm she went to the darkened lounge bar (Lounge 2) from where she could observe them without being seen. In order to do that, she said she had to deactivate the alarm, because an employee, Paula Te Rito, had performed a partial set earlier in the evening; unless deactivated the alarm would have been triggered when she entered that part of the hotel. Mrs Angus said that she reactivated the system once she had finished observing the car park and left the lounge.
[95] This was important evidence, because the deactivation and reactivation of the partially set alarm were not recorded in the alarm records provided by Chubb. If accepted, the evidence would lend support to the plaintiffs’ claim that the system
malfunctioned when Mr Angus attempted to set it when leaving the premises later that night.
[96] In cross-examination Mr Jones put to Mrs Angus the possibility that she had not gone into the lounge bar, but into the TAB area (an area not affected by a partial set) and looked out the front door, which would also have afforded her a view of the car park. She denied that was what she had done and repeated that she had deactivated the alarm before going into the lounge bar area to look out the window. She was unable to recall the process she had followed in deactivating the alarm saying vaguely that she knew she “pushed something”. In re-examination she said that she had gone into the lounge bar to look because there was a large number of members of the Mongrel Mob present in the car park and she would have been conspicuous looking at them from the front doors.
[97] I note that Ms Peka was asked in cross-examination whether she could recall if “at one point during the night” Mrs Angus had gone into the functions lounge to look outside at what was happening in the car park. She said “yes”, but was unable to give any detail about when it was, simply saying “she always went in there and checked … but I can’t give you a time” and “she did it every band night, or every function night.” Although Mr Quinn relied on this evidence as corroborating the evidence given by Mrs Angus, it does so in a very limited way. The absence in Ms Peka’s evidence of any detail about the timing or any other aspect linking her memory to this particular evening makes it of limited value.
[98] The difficulty with Mrs Angus’s evidence is that the alarm seems (from the Chubb records) to have registered the partial set at 7.23 pm, but not the deactivation that Mrs Angus claimed to have made at about 9.30 pm, nor the subsequent partial reactivation by her. Yet, when Mr Angus left the premises at 1.59 am, the system recorded a deactivation. This would mean that the system had malfunctioned when operated by Mrs Angus, but was able to function properly when Ms Te Rito performed the partial set at 7.23 pm and Mr Angus deactivated it at 1.59 am (he would have been deactivating the 7.23 pm partial set). It then would have malfunctioned again at the point when, immediately after the deactivation of the partial set, Mr Angus claims to have set the alarm.
The Chubb records
[99] Both the plaintiffs and the defendants sought to rely, for different purposes, on the Chubb records relating to the alarm for the period from 1 October 2009 to
2 July 2010. These took the form of a log, recording the occasions on which the alarm had been activated and deactivated, using the words “OPEN” and “CLOSE” to describe these events, and giving the dates and times that they occurred on a
24 hour clock. The last two entries were “CLOSE” at 19:23:41 on 1 July and
“OPEN” on 2 July at 01:59:46.
[100] As noted above, the records did not support the account given by Mrs Angus that she had deactivated the alarm at about 9.30 pm on 1 July, and reactivated it shortly after that. Nor did they support Mr Angus’s evidence that he had reset the alarm immediately after the deactivation at 1.59 am on 2 July.
[101] As already described Mr Angus was sure that he had deactivated and then set the alarm, and Mrs Angus was also clear that she had earlier deactivated and then activated a partial set. If she is right, then Mr Angus was able to deactivate her partial set before leaving the premises, but was either unable to set it because he made a mistake or the alarm somehow malfunctioned.
[102] Mr Jones provided a helpful analysis of the material contained in the Chubb records. It showed 127 occasions on which the alarm had been partially set early in the evening, followed by, in swift succession, a deactivation and full set later the same night. Such events occurred consistently over the period that the records covered, right down to Wednesday 30 June, on the night before the fire. There were, over the same period, 23 occasions where a partial set was followed, well before closing time, by a deactivation and further partial reset. There would then be, after closing time, the usual deactivation of the partial set and full alarming of the premises for the night. This occurred three times in October, once in November, and three times in December 2009, and three times in January, three in February, four in March, three in April and three in June 2010.
[103] The records also showed that on ten occasions there was the apparent repetition of the same signal. For example, the record “OPEN” appeared twice in
succession (with no intervening “CLOSE”) about 4 seconds apart on Thursday
15 October 2009. There were also two consecutive “OPEN” records, on
26 February, Sunday 7 and Sunday 14 March, and Friday 7 May and on Tuesday
13 April 2010. Similarly, there were consecutive “CLOSE” records (with no intervening “OPEN”) on Tuesday 23 March, Thursday 6 May, Saturday 8 May and Tuesday 8 June 2010. In each case after the 15 October occasion, the records were two or three seconds apart.
[104] There were however three other occasions where consecutive records of “OPEN” (with no intervening “CLOSE”) were recorded further apart in time. These were on Thursday 31 December 2009/Friday 1 January 2010, when there consecutive records of “OPEN” at 07:08:32 and 02:09:27; Wednesday 20/Thursday
21 January, with “OPEN” recorded for 07:01:23 and 00:16:01; and the same applying on Friday 19 March/Saturday 20 March, at 07:20:32 and 07:04:02. It seems likely that there were unrecorded intervening “CLOSE” events on these occasions.
Discussion
[105] Mr Reid gave evidence about possible explanations for the failure of the alarm to record the events that Mr and Mrs Angus described.
[106] He recalled what he described as a “large number of times” in the period when Computech was providing monitoring services for Pinelands that the alarm was not set properly. He thought this was understandable because it would often be required to be set in the early hours of the morning, when those responsible for setting it would be tired and wanting to leave quickly. When Computech was responsible for the monitoring, Mr Angus would be contacted and advised if the alarm had not been set properly; Mr Angus would go back over to the main building and arm the system. Mr Reid clarified in cross-examination that the occasions when the alarm was not set properly to which he was referring were ones on which Computech had noticed that that the alarm had not been set by a time when that would normally have occurred, and made contact with Mr Angus accordingly.
[107] Mr Reid was critical of the Chubb records. He pointed out that the records failed to distinguish between a “full set” and a “partial set”. However, the fact that a set was only a partial set was a matter able to be inferred from the timing recorded for the set, since the partial sets consistently occurred well before the closing time. Thus, it was, for example, common ground that the set recorded for 7.23 pm on
1 July was a partial set.
[108] Mr Reid also pointed to the fact that the records showed a number of occasions when the alarm appeared to have been opened or closed twice in succession, an operation which in his view should not have been possible. This had occurred, he said, without any follow-up by Chubb. However, Mr Stephens explained how consecutive signals could be sent. It was his evidence that when the alarm panel communicates with the receiver at the monitoring station it will seek confirmation that the message has been received. If the panel does not “hear” the confirmation message or for whatever reason the panel confirmation message is not sent, the panel sends the signal a second time. I note that in cross-examination, Mr Reid accepted that, as he put it, “the panel actually looks for an acknowledgement signal from the receiver and if it doesn’t get that clearly it repeats it”. I am satisfied that this must be the explanation for the occasions when the records showed two events of the same sort in close proximity in time.
[109] However, Mr Stephens accepted that explanation will not apply to the same events being recorded many hours apart, as happened on 1 and 21 January and
20 March 2010. Mr Stephens agreed that in those cases there must have been some sort of malfunction resulting in a “CLOSE” not being recorded between two “OPEN” events. He said that under normal situations, where the equipment is still available for analysis, it is possible to ascertain the reason such an event has occurred: that is not possible in the present case because of the fire.
[110] I have not been persuaded by evidence given by Mr Reid that the explanation for the Chubb records on the evening of 1 and 2 July not recording the events which the plaintiffs claimed occurred could be found in operator error, such as an unsuccessful attempt on the part of Mr Angus to set the alarm. I think this is unlikely given his familiarity with the system and the fact that, as the Chubb records
show, there had been a deactivation of a prior partial set followed by a successful alarming of the premises on numerous occasions in the past when the premises were closed for the night. Further, according to Mr Angus, when an issue about the sound of the audible signals given by the system was drawn to his attention by Ms Peka, Mr Angus says he checked it, and the panel was reading armed. The idea that he had been inadvertent when attempting to set the alarm does not fit with this evidence.
[111] Mr Angus was also clear that he did not touch the panel a second time. His evidence was that he set the alarm immediately after performing the deactivation of the partial set.
[112] I note too that Mr Reid appeared to accept, on the basis of the Chubb monitoring records, that the system was not armed when Mr Angus left the premises on 2 July. However, he suggested there was a possible explanation for Mr Angus thinking he had done so. This was movement in the designated exit area, which would have been by Ms Peka or Ms Bennett. Mr Reid agreed with the evidence of Mr Stephens that in the case of such movement, the alarm would have emitted three short beeps followed by a long beep as a warning to the user that the alarm had not activated. Mr Reid said in his evidence in chief that if Mr Angus had merely glanced at the keypad panel at that point he would possibly have seen a red light on, or even flashing on and off for zone 1 (the designated exit area), and this may have led him to believe that the system was armed. I note that Ms Peka also claimed to have seen a flashing red light at the point when Mr Angus went back to check that the alarm was armed.
[113] This evidence must be seen in the context that on the panel there is a row of red “zone” lights above the red (armed) and green (ready) lights referred to by Mr Stephens in the evidence discussed above.20 Mr Reid’s explanation was essentially that Mr Angus could have mistaken one of the red zone lights for the red light that would be lit if the system had been successfully armed. That seems to me unlikely given the long period over which Mr Angus had successfully operated the
system and given also the fact that a failed attempt to set the alarm would also be
20 In addition to the green and red lights in the lower row there is a third, yellow, light. The function of the yellow light is to indicate some sort of fault in the system.
accompanied by the different beeps that Mr Stephens described in evidence. While Mr Reid expressed the opinion that, in his experience, operators were often inattentive to the audible signals given by the alarm, in this case there is the evidence that the nature of the signal had actually been drawn to Mr Angus’s attention by Ms Peka. The query she raised must surely have focused his attention on what he needed to be looking at on the alarm panel.
[114] Apart from these considerations, there are two real difficulties with the plaintiffs advancing the argument that Mr Angus believed he had set the alarm when in fact he had failed to do so. They arise, first, from the fact that Mr Angus said he did set the alarm, that he checked it and it was “showing armed”. More significantly, he also said that he deactivated the alarm when he re-entered the main building with the robbers, having heard a constant tone. In order for him to deactivate it, it would have had to be armed to start with.
$320,000 and a depreciated replacement cost figure of $1,220,003.
[294] Mr Gillespie’s evidence was that as at 30 June 2010 the value of Pinelands land and buildings as a going concern was $1.35m plus GST. That sum comprised
$634,000 for the main building, $196,000 for the accommodation units, $70,000 for other improvements, $360,000 for the land value and $90,000 for chattels.
[295] Although Mr Pratt’s instructions meant that his valuation exercise had
different objectives, in the course of carrying them out he arrived at a figure of
$640,000 as the effective equivalent of Mr Gillespie’s $1.35m. Mr Pratt had provided a valuation in 2008, on instructions from the plaintiffs. In that valuation he had assessed a value on a going concern basis of $1.45m, exclusive of GST. Consequently, the $640,000 figure appears on the low side, and is apparently a figure for the lessee’s interest only.
[296] Considerable time was spent in the hearing in analysing the different approaches of Mr Gillespie and Mr Pratt and both were extensively cross-examined. The main point of that cross-examination related, however, to the quantum of the plaintiffs’ claims. For present purposes, the important issue is not really what the actual value of the land and buildings was, whether on a going concern or other basis. In assessing whether Mr Angus had a motive to set the fire, I infer that he would have assumed a value somewhere in the vicinity of the figure assessed by Mr Gillespie, because he was aware of the value assessed by Mr Pratt in 2008. However, he would also have been aware from Mr Pratt’s 2008 valuation that the performance of the hotel had a substantial impact on its value as a going concern.
[297] Mr Pratt explained in evidence that his 2008 valuation took into account the performance of the hotel in the three years to 31 March 2007, and details of weekly banking for the weeks ending 6 April 2007 to 18 January 2008, so as to derive a realistic net cash flow for the business as at January 2008 of $201,420 (excluding rent, depreciation, proprietors’ salaries and interest). He had adopted a similar approach for the July 2010 valuation. In the three years to 31 March 2010, there had been a considerable decline in the trading income: the total trading income for the year ended 31 March 2008 was $635,383, compared with $463,545 for the year to
31 March 2010. In the latter year he calculated a net cash flow of $90,271 (exclusive of rental, depreciation, proprietors’ salaries and interest), which was 55 per cent down on the equivalent figure used in his 2008 valuation. This had a significant impact on the valuation of the business.
[298] Mr Gillespie considered that Mr Pratt’s approach was based on an aggressively low rental, having regard to the figures Mr Pratt had assessed in his
2008 valuation. However, it is not necessary to resolve the differences between the valuers at this point. There can be no suggestion that Mr Angus would have been aware of the actual impact of any reduction in revenues on the value of the hotel on the eve of the fire.
[299] But I think it realistic to infer that he would have been aware that there would be an impact on the value: not only is that common sense, but the methodology employed and explained in Mr Pratt’s 2008 valuation made the importance of
turnover in assessing the value clear. The recent performance of the hotel would therefore have been of concern to Mr Angus, especially against the background of the failure to sell the business over the comparatively lengthy period that it had been on the market. The fact that the only credible potentially interested party, NTHL, was not interested in purchasing the business on a going concern basis would have added to that concern.
The accounting evidence
[300] The forensic accountants who gave evidence were Mr Shane Hussey, called by the plaintiffs, and Mr Andrew McKay for the defendants. Both had slightly different instructions. Mr Hussey was asked to consider the financial position of the plaintiffs around the time of the fire, and further whether that position was indicative of any financial stress. Mr McKay was instructed to provide an evaluation of the financial position of the various entities through which the Pinelands land and business were owned and operated, and Mr and Mrs Angus personally, considered separately. Accordingly, he considered the financial position of the Pinelands hotel operation (owned and operated by the partnership between Mr and Mrs Angus, which Mr McKay referred to as the “Pinelands Partnership”) and the DW & SE Angus Trusts Partnership (by which the land and buildings were owned and leased to the Pinelands Partnership).
[301] Mr Hussey accepted that from an accounting point of view there was nothing wrong with Mr McKay’s approach of considering the position of the Trusts and the Anguses separately. That was done in order to consider whether Mr and Mrs Angus were under financial pressure at the time of the fire. It was more appropriate to consider the overall position. I agree with that approach. I doubt that Mr and Mrs Angus would have viewed the position of either of the trusts and themselves in other than a holistic way. As Mr Hussey pointed out, the financial position of the Pinelands Partnership and that of Mr and Mrs Angus were inseparable, and they had access to the assets of the Trusts Partnership. Any conclusion that their financial position was such as to give Mr Angus a motive to set fire to the hotel would have to be based on an overall appraisal of their position including that of the trusts.
[302] Commendably, both Mr Hussey and Mr McKay had endeavoured to reach agreement on matters where that was possible. Although differences between them remained, I was assisted by the candid and straightforward approach taken by them both. In the end, they were able to record a substantial level of agreement, recorded in a joint statement provided to the court in various drafts and, in final form, on 18
November 2013. In the joint statement they recorded that, notwithstanding their different instructions, they had both considered the historical trading results and financial position of the Pinelands operation and the financial position of Mr and Mrs Angus around the time of the fire.
[303] The defendants allege that the Pinelands business was in decline, and this would have been of serious concern to the plaintiffs since the property and business were by far their major assets. The deteriorating trading performance would inevitably have affected the price that they would have been able to achieve on sale of the business. The defendants say that this was sufficient to motivate Mr Angus to set the fire to procure payment under the insurance policies issued by the defendants.
[304] Mr and Mrs Angus purchased the Pinelands business in 1996 and the freehold of the property in 2002. As has been seen, since 2006 they had endeavoured without success to sell both the property and the business. The business (the Pinelands Partnership in the terminology of the joint statement) had returned a reasonable profit of $99,175 in the financial year ending 31 March 2006 but sustained a loss of
$2,938 in the year ending 31 March 2007. There was a profit of $58,948 in the financial year ending 31 March 2008, but another loss, of $11,065 in the 2008/2009 financial year. There was a more substantial loss of $43,798 in 2009/2010.
[305] In their joint statement, Mr Hussey and Mr McKay expressed the opinion that in the two years before the fire the Pinelands Partnership was performing poorly, and was effectively relying on the support of the Trusts Partnership during this period. Considering the performance of both partnerships combined, the business was still performing poorly, in that it was not providing a reasonable income to Mr and Mrs Angus: the combined “cash profit” (net loss with depreciation expense added back) for those two years was a total of $23,359 ($22,603 in 2009 and $756 in 2010). Mr McKay said in cross-examination that this did not represent a “reasonable return” on
the assets, and was an income well below the average wage. Although he also accepted, as put to him by Mr Quinn, that the Anguses were “treading water”, rather than going backwards financially, he pointed out that except for 2008, the profitability of Pinelands was trending down.
[306] Mr Hussey disputed that downward trend. He considered that there had been considerable variability in the performance of the hotel business over the period
2003-2010. While the results for the 2009 and 2010 financial years were the worst, the result for the 2008 year was the second best of the eight years he had analysed. Nevertheless, there was “no denying”, as he put it, that that the performance of the business in the 2009 and 2010 financial years would have been “troubling”.
[307] While they agreed that the performance of the combined operations was poor during the two years prior to the fire, Mr Hussey and Mr McKay disagreed on the future outlook for the business at the time. Mr Hussey’s opinion was that the poor trading performance in the years preceding the fire was the result of the global financial crisis, and not indicative of the long-term outlook for the business. Short- term matters on which he relied for a more optimistic view of the future included the proposed maintenance shut down at the Carter Holt Harvey Kawerau mill in late
2010 and early 2011, and an offer from the Lion Foundation to increase the rental sums payable in respect of the hotel gaming machines. The effects of the GFC would abate in the future.
[308] Mr McKay was less optimistic. He considered that the difficult trading environment was likely to continue at least in the short to medium term (three to five years and beyond). The increase in rental from the Lion Foundation was “nominal” and the maintenance shut downs at the mills had previously occurred and been reflected in the financial results of previous years.
[309] The new deal that had been secured for the gaming machines would have resulted in an increase in revenue from the $144,000 derived from that source in the
2010 financial year, to a minimum of $154,440. There was also a guarantee of
$238,680 over an 18-month period (equivalent to $159,000 per annum). The weekly payment received on 12 April 2010 was $3,645. Mr Hussey considered that it was
reasonable to expect that the 2011 year gaming rental income would have been at least $160,000, a sum $16,000 higher than what was achieved in the previous year.
[310] It was his evidence that if the 2011 year mirrored the 2009 year (the second worst year on record), allowing for the increased gaming machine rental, the result would have been cash generated of around $25,500.
[311] The maintenance shut at the Carter Holt Harvey mill had been arranged during a visit to Pinelands by Mr Joseph Parry in April 2010. Mr Perry gave evidence that preparations were underway for a lengthy shutdown due to occur over the period from December 2010 to March/April 2011. It was a longer shut than most previous shuts. He had told Mr and Mrs Angus that bookings would be required for
30 contractors to stay at Pinelands over this period, during which the hotel’s bar and
restaurant facilities would be used extensively. At some point in the middle of 2010
Mr Perry confirmed with Mrs Pickering that the accommodation would be required at Pinelands. Both Mr Angus and Mrs Pickering explained in evidence that during the shutdown the accommodation units at the hotel would usually be double booked because of the round the clock shifts in which the work was carried out.
[312] Mr Hussey also mentioned that the construction of a major geothermal power station in the area completed in late 2007 had contributed to the “excellent results” for the 2008 financial year.
[313] The plaintiffs also referred to other upcoming events that might have assisted revenue streams in the 2011 financial year, including the Kawerau half marathon, to take place on 4 July 2010, which would have involved expenditure in the hotel bar and restaurant; a 10 day school trip to the area by a party from Perth, for which there would be breakfast and dinner at the hotel on most days; and a Transfield conference to be hosted on 5 and 6 July 2010, with lunches provided.
[314] Against this background of future events and patronage of the hotel, Mr Quinn asked rhetorically why Mr Angus would not have waited for them to occur before burning down the hotel. That question is not able to be answered, of course. However, the more substantial point made was that there was some prospect of an
improvement in the financial performance of the business, making it less likely that
Mr Angus would wish to set the fire.
[315] Mr Angus accepted that the business had not been performing well, observing “things had been slow”. Nevertheless, he said that he and Mrs Angus thought that they were making a reasonable living from it, that the hotel was reasonably busy at the time of the fire. They also knew it was about to get busier with the upcoming shut at the mill.
[316] Mr Angus also gave evidence that prior to the fire he and his wife were giving consideration to selling their house in Whakatane and moving back into the manager’s unit in the hotel. There was another option that they were also considering, namely retaining ownership of the house and renting it out. To facilitate either option, the manager’s unit had been renovated in the early part of 2010, with new carpet, paint and wallpaper.
[317] According to Mr Angus, the move would have been undertaken because they were tiring of the travel between Whakatane and Kawerau, and not because of their financial circumstances. Nevertheless, Mr Hussey considered that selling or renting out the Whakatane house would likely have generated a further $15,000-$20,000 per annum, either by way of reduced interest charges or from rental income. Putting this together with the extra income from the gaming machines and an improved trading performance, Mr Hussey spoke of Mr and Mrs Angus “generating around $40,000-
$45,000 of cash per annum whilst enjoying virtually no living costs.” He considered that, from the point of view of cash being generated, Mr and Mrs Angus were not in a “dire” position in mid-2010.
[318] However, the proper assessment of the position requires consideration also of their overall financial position. Mr Hussey and Mr McKay were unable to agree on this, essentially because of differences in the opinions given by Mr Gillespie and Mr Pratt about the values of the Pinelands land and buildings, and the business.
[319] They agreed that the overall combined net worth of Mr and Mrs Angus was represented by the net assets in their personal names, together with the net position
of the Pinelands Partnership and the Trusts Partnership. Their significant personal assets included the house in Whakatane and personal cash of about $65,000. The house was valued between $300,000 and $360,000, and was not mortgaged, although it provided collateral security in support of the bank debts of the partnerships. It was subsequently sold for $330,000 and that value can appropriately be adopted for present purposes.
[320] Mr and Mrs Angus also had a personal debt of $241,580, owed to the Trusts Partnership, which was shown as a current asset in the financial statements of that partnership. Offsetting that liability against their total personal assets gives a personal net asset position of approximately $153,000. Combining that with the net asset position of the business determined by Mr McKay would give a combined net worth of $393,000. The similar calculation on the basis of Mr Hussey’s assessment of the net value of the business would give a figure of $1,053,000.
[321] The Joint Statement also said that if the value of the land, buildings and business was taken as $1.3m, as assessed by Mr Gillespie, then the combined net worth of Mr and Mrs Angus was $1.075m. However, because the property and business had been on the market at that price for an extended period without selling, Mr McKay did not accept the $1.3m figure.
[322] If Mr Pratt’s assessed valuation of the land, buildings and business at
$640,000 was taken as correct, Mr Hussey and Mr McKay agreed that the combined net worth of Mr and Mrs Angus was $415,000.
[323] As can be seen, there is a difference in the Joint Statement between the net asset position said (by Mr Hussey and Mr McKay) to be assessed on the basis of the different Gillespie and Pratt valuations for the Pinelands land, business and buildings, and the net asset position assessed by Mr Hussey and Mr McKay themselves. The difference in each case is $22,000: between $1,053,000 and
$1,075,000 in the case of Mr Hussey and $393,000 and $415,000 in the case of Mr McKay. This difference was not focused on at the trial and may have been obscured by the range of values given by Mr Hussey and Mr McKay for the Whakatane property (which they said was between $300,000 and $360,000). I have taken the
midpoint of that range for present purposes, but this does not explain the $22,000 difference. However, I do not consider the difference to be material.
[324] There is merit in Mr McKay’s view that the period for which the hotel had been on the market and had failed to sell casts doubt on the value that the plaintiffs were trying to achieve. However, whether the plaintiffs’ net asset position was the higher figure assessed by Mr Hussey, or the lower figure assessed by Mr McKay, the hotel was by far the most substantial contributor to their worth. As at July 2010 I consider it likely that Mr Angus would have been concerned about the impact of the hotel’s performance on the value of their most substantial asset. He knew that they had been unable to sell the business for the value assessed by Mr Pratt in 2008, and he knew that no party was interested in purchasing it at that value. The economy had deteriorated. I accept Mr McKay’s assessment that the income being produced was well below the average wage in the two years before the fire.
[325] Even on Mr Hussey’s more optimistic approach, the cash generated in the
2011 financial year would not have been a significant figure: he postulated that cash generated in the 2011 financial year would have been $25,500. While there was some prospect of a slight improvement in the months ahead, I doubt that the increased gaming machine revenue, the expenditure resulting from the mill shutdown and the other anticipated business would have had a significant impact on Mr Angus’s concerns about the future.
The defendants’ right to require reinstatement
[326] Mr Quinn submitted that Mr Angus would not have been motivated to start the fire because of the right of the defendants to insist on reinstatement, and some evidence that he wanted to rebuild in any event. Under the material damage policy, the indemnity provided was in the following terms:
If any unintended and unforeseen physical loss or damage happens to any of the Property Insured at the Location and during the Period of Insurance the company will indemnify the Insured by payment for that loss or damage and other costs as insured, or, at the option of the company, by the repair or replacement of the Property Insured.
(Emphasis added.)
[327] Mr Angus gave evidence that after the shock of the fire and robbery had passed, Mrs Angus and he had decided they would rebuild and continue to run the hotel. In fact, he said they were looking forward to it as a project and they were keen to make something positive out of the events that had occurred. He referred to a letter he had written to the Kawerau District Council on 22 November 2010 seeking an extension of time for the gaming licence for the hotel which he thought was due to expire on 2 January 2011. Near the end of the letter he wrote:
We have no future plans of the outcome as the Insurers have, and will not, accept the claim until the police have made a decision. Then we will be in a negotiation stage as to a rebuild.
[328] Mr Angus said that at that stage he expected that eventually the claim would be accepted. He said that by referring to “negotiation” he had in mind the dealings he expected to have with “builders etc” regarding the cost and timing of the rebuild.
[329] Mr Quinn referred to observations made by Fisher J in Monkley v Guardian Royal Exchange Assurance of New Zealand Ltd which he said were apt in the present case:35
There does not seem to have been any obvious advantage in burning down the business premises under the insurance policy itself. There was the customary insurer’s power to require reinstatement. Mr Dugdale makes the point that the plaintiffs may not necessarily have appreciated that at the time. However, even ignoring the potential reinstatement requirement, from the plaintiffs’ point of view a fire could not be equated with selling the property, and that is what they had previously been trying to achieve. They would still be left with the land and remains of the building, thereby sacrificing the goodwill for which they had paid $60,000 two years earlier and built up since.
[330] Mr Quinn submitted that destruction of the tavern building by fire would result only in a right to have it rebuilt. The fact that neither the manager’s flat nor the motel units were damaged or threatened by the fire would leave the plaintiffs with an even more difficult scenario. Mr Quinn referred to a passage in Mr Angus’s videoe interview with Detective Gabb (on 27 August 2010) in which there was the
following exchange:
35 Monkley v Guardian Royal Exchange Assurance of New Zealand Ltd HC Hamilton CP209/88,
23 August 1990 at 31-32.
Q. And you burnt your place of work down for the insurance money, yeah, to have the place replaced?
A. And what good would that have done?
Q. Well it gives you a better place to sell doesn’t it?
A. Oh for goodness sake.
[331] The issues raised by Mr Quinn are significant and have given me occasion to pause. On the face of it, as Mr Quinn submitted, burning down the hotel, and leaving the accommodation blocks intact could have left the Anguses in a difficult situation. There would be no cover for the undamaged accommodation blocks, and any prospect of selling the business as a going concern would have been lost. Any payout for the damage sustained to the main building was contingent on the defendants deciding not to insist on reinstatement. Looked at from these points of view it does not seem sensible for Mr Angus to have put so much at risk for an uncertain outcome.
[332] On the other hand, Mr Quinn’s submissions assume knowledge on Mr Angus’ part about the contents of the insurance policy which he may not have had. The passage quoted from the video interview with Detective Gabb dates from a period of about seven weeks after the fire when he would have had more opportunity to consider the content of the policy. The letter to the Council on which he relied was also written well after the fire and may not be a reliable indication of Mr Angus’ thought processes prior to it.
[333] He may also have calculated that the defendants would not require the repair or replacement of the main building and have factored in the possibility of selling the accommodation blocks to NTHL as in fact later occurred.
Conclusion on motive
[334] Mr Hussey concluded that Mr and Mrs Angus were not under financial pressure at the time of the fire, and their position was not “dire”. While the latter may be an accurate statement, given that the plaintiffs were continuing to meet their obligations as they fell due, I consider there must have been financial pressure. The combination of circumstances represented by the recent poor performance of the
business, the failed attempts to sell over a period of about four years, the absence of any prospective purchaser interested in buying the business and the lack of real prospects for significant improvement in the future could have been sufficient motivation to set the fire for the purpose of making a false claim on the insurance policy.
[335] The issues raised by Mr Quinn, based on the ability of the insurer to require reinstatement and the impracticality of burning down the main building only, weaken the defendants’ position on motive, but in the end do not lead me to a different conclusion from that compelled by the evidence about what happened on the night of the fire.
Conclusions and result
[336] For the reasons discussed, I have concluded on the balance of probabilities that the fire at the Pinelands Hotel was set by Mr Angus for the purpose of making a false claim under the insurance policies issued by the defendants. The most significant findings that support that conclusion are those that relate to:
(a) the alarm, and my conclusion that Mr Angus deliberately failed to set it on leaving the hotel in the early morning of 2 July; and
(b)the petrol detected on Mr Angus’s shoe(s) compared to the petrol/kerosene mixture on his other clothins, which puts him in the vicinity of the petrol as it was being poured in the main building at a time when he would not have been present if his account is correct.
[337] The fact that accelerant was poured in various parts of the main building, requiring access to parts of the building behind locked doors when the keys were retained by Mr Angus throughout adds to the weight of the evidence against him.
[338] The same applies in the case of the various other issues which I have
identified as implausible aspects of Mr Angus’s account.
[339] In the circumstances there will be judgment for the defendants together with costs. If costs cannot be agreed I will receive memoranda from the parties: by the defendants within 15 working days and by the plaintiffs within 15 working days of receipt of the defendants’ submissions.
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