A NSW court has ruled in favour of Commonwealth Insurance in a jewellery theft dispute that centred on whether a hole was cut into a bedroom ceiling from below to make it appear as if burglars had entered from the roof.

The insured told the District Court his family’s cultural belief was to put faith in jewellery, rather than other forms of investment, and he kept items in a safe stored in a wardrobe at his unit, located on the upper level of a building in Brighton-Le-Sands.

After returning from an overnight trip to Goulburn in September 2013 he found the door wide open, the internal alarm system removed and placed in a bucket of water, a large hole in the ceiling with debris and pieces of plasterboard on the floor and the safe removed, he said.

The insured identified himself as an amateur musician operating a music and copy store, who was a painter for most of his life until injuring his foot. He moved to Australia from Macedonia in 1989.

He launched the legal action after the claim was refused on the grounds of fraud, swearing to the court he did not commit the theft and no third party had committed the theft with his consent or knowledge.

For at least the two years before the event he had taken out insurance, specifying the same items that were allegedly stolen. The amount sought through the legal action was $173,590 plus interest.

Counsel on his behalf said he had quickly called police and there were no circumstances indicating desperate financial need in a context where he had accumulated the jewellery collection over a significant period of time.

District Court Judge Alister Abadee said the case turned upon “how the hole got in the ceiling”, and if it was cut from within the main bedroom that was “virtually a conclusive step to a finding of fraud”.

Building consultants from both sides gave expert evidence on whether the damage was likely caused by someone entering the ceiling, which could be accessed from a manhole outside the apartment.

Judge Abadee considered evidence on dust disturbance, the structure of the ceiling, the size of the hole, its location and the presence of a handprint in deciding it was more likely to have been cut from below.

“Having regard to the relative fragility of the ceiling, if entry through the ceiling hole had occurred, I would have expected more of a breach than the dimensions of the hole that were eventually measured,” he said.

Judge Abadee described the physical evidence as a decisive influence, but also raised doubts about the insured’s credibility. He noted a prior criminal history, although the offences were not that recent, and that the man had previously sold a jewellery item to help out a family member in need. A brother also had a criminal record.

The judgment says anyone accessing the manhole would have needed a crate, or ladder or someone to assist, and questions the likelihood of a theft occurring as described.

“It would have been an extraordinary happenstance for someone, or more than one person, to have randomly visited a unit in a not overtly prepossessing apartment block with the purpose of effectuating a break in, if the person, or persons did not have a strong sense of expectation that they would find something valuable to seize,” he said.

Judge Abadee says he is not persuaded “to the requisite standard”, that a theft occurred.

“I do not find that an insured event occurred, which could trigger coverage under the contract of insurance,” he said.

The judgment is available here.