Charged - Habil Biyak.

Habil Biyak. Photo: Angela Wylie

A pizza shop owner has been accused of hiring a customer to set fire to his restaurant for an alleged insurance fraud attempt during which the alleged arsonist accidentally set himself alight and suffered major burns, a court has heard. 

St Albans Pizza and Pasta in Melbourne's north-west was ravaged by a fire, which started before 5am on Sunday 11 August, 2013.

The owner of the restaurant, Derek Mcpadden, 29, and one of his regular customers, Habil Biyak, 46, have been charged with arson and recklessly endangering the lives of three people who lived above the shop front.

Derek Mcpadden.

Derek Mcpadden. Photo: Angela Wylie

Mr Mcpadden has previously indicated he intends to fight the charges against him, which also include attempting to obtain property by deception and knowingly signing an untrue declaration.

At a committal hearing before Melbourne magistrate Jan Maclean on Tuesday, an acquaintance of Mr Biyak said a man introduced to her as “Derek” had dropped off a near-naked and severely burnt Mr Biyak at her home on the morning of the fire.

This man handed Mr Biyak a large “wad” of $50 notes after helping him out of a blue car, the woman said in evidence.

Under cross-examination she said she had initially lied to police, at Mr Biyak’s request, telling them he had arrived at her house the following morning and had been burnt either refuelling or siphoning fuel out of a motorcycle.

Although Mr Biyak had first told the woman the motorcycle story, she said, she later overheard him tell her adult sons he had been burnt during “an insurance job” for which he was going to be paid $20,000.

But, she said, she feared him and lied to police and ambulance officers about when and how he had received his burns.

“He told [my sons] the truth, what he did ... had petrol and poured it into the pizza shop,” she said. “He even stood up and showed them what he did with the petrol.”

The woman then acted out what she claimed to have seen Mr Biyak do for the court, in a performance that suggested he had been walking backwards pouring petrol in front of himself, before tripping onto his back and covering himself in the fuel.

After spending a day and a half on the woman's couch Mr Biyak was taken to hospital by ambulance, she said.

The woman later identified Mr Mcpadden as “Derek” from a police photo board, the court heard.

Barrister Tom Moisidis, acting for Mr Mcpadden, said paramedics reported finding only $5 in change in Mr Biyak’s jacket and less than $200 in his wallet.

“That jacket did not have any wad of money it,” Mr Moisidis said. The woman responded: “It did when I handed it to the ambulance people.”

Mr Moisidis also questioned the changes in the woman’s version of events and said the police board had been “flawed” because it included individuals who clearly did not fit her description of “Derek”.

“I can’t forget that face,” the witness responded.

Mr Biyak had made some admissions when interviewed by police and "says many of the things she's been cross examined about" prosecutor Matt Fisher told the court.

The hearing continues.