Michael David Stemson v (NZ) Ltd

[2003] NZCA 52

IN THE COURT OF APPEAL OF NEW ZEALAND

CA93/02

BETWEENMICHAEL DAVID STEMSON

Appellant

ANDAMP GENERAL INSURANCE (NZ) LTD

Respondent

Hearing:10 March 2003

Coram:Tipping J
Salmon J
Doogue J

Appearances:  G Minchin for Appellant

M G Ring and R Scott for Respondent

Judgment:18 March 2003 

JUDGMENT OF THE COURT DELIVERED BY TIPPING J

Introduction

[1]       On 12 May 1992 the historic home in Coromandel known as Firlawn House was partially destroyed by fire.  The appellant, Mr Michael Stemson, was the owner of Firlawn and had it insured against fire with the respondent, AMP General Insurance (NZ) Ltd (AMP).  In the High Court Hammond J held that AMP was entitled to decline liability to indemnify Mr Stemson because he was responsible for lighting the fire.  It was common ground at trial that the fire was arson.  The only issue was whether Mr Stemson was the arsonist.  The appeal is confined to the same issue.

[2]       In bringing his appeal, Mr Stemson challenges the Judge’s conclusion on a basis which is entirely factual.  There can be no question of the Judge having misdirected himself on the onus or standard of proof.  He correctly directed himself that AMP had the onus of establishing that Mr Stemson was responsible for causing the fire damage, and that the standard was a high one, consistent with the gravity of the allegation.  The Judge expressed himself as satisfied beyond reasonable doubt that Mr Stemson caused the fire.  He did not have to go quite that far but, having done so, no complaint can possibly be made about the level of proof which the Judge adopted.

[3]       Mr Stemson’s case is that, on all the evidence, the Judge was not entitled, indeed was plainly wrong, to reach the conclusion he did.  In his early submissions, Mr Minchin professed to acknowledge the constraints which face an appellate Court when considering findings of fact made by a trial Judge:  see Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190. Nevertheless, in presenting his substantive submissions, counsel tended to overlook those constraints. After hearing Mr Minchin’s oral argument, presented conscientiously and in detail over a full day, we did not find it necessary to call on Mr Ring to address us orally. We were wholly unpersuaded that Hammond J had erred in fact in concluding that Mr Stemson was himself responsible for the fire.

Admissions

[4]       The evidence against Mr Stemson comprised admissions and other statements against interest which he was said to have made, and a very substantial body of circumstantial evidence, from all of which the Judge drew the ultimate inference that Mr Stemson was responsible for the fire.  The Judge was, in our view, fully entitled to come to the view that Mr Stemson had made relevant admissions in various forms to several witnesses.  He made an admission to Mr Carryer of willingness to burn Firlawn down to prevent the Doyles from having it; to Mr Laing in the form of an offer to pay him $50,000.00 to burn Firlawn down; to Ms Jonas, after the event, that he had had the fire well planned; and to Mr King, after the event, stating in considerable detail that he himself had caused the fire.

[5]       A little bit more should be said about the position of Mr King, who was the subject of particular argument on the basis that the Judge should not have placed weight upon his evidence.  In February 1995 Mr King made a statutory declaration recounting in detail the admissions Mr Stemson had made to him.  At the same time he signed a brief of evidence in identical terms.  Not long before the first (aborted) trial, Mr King swore an affidavit in front of Mr Stemson’s then counsel, purporting to retract his earlier statutory declaration and brief.  He claimed that he had signed those documents because of his animosity towards Mr Stemson, and because Mr Byrne (AMP’s investigator) was insisting that Mr Stemson was guilty of the arson.  Mr King then went on to say that in good faith, and acting as he thought “within the spirit of the law”, he was prepared to make a statement that contained information he was “not really party to”.  That is a very curious statement indeed when, in the earlier statement, he was purporting to recite Mr Stemson’s very words to him. 

[6]       Mr King then went on in his affidavit to say that he felt in hindsight that his earlier statement was the “result of knowledge I acquired from gossip and hearsay”.  That too is an extremely odd observation in the light of the contents of the earlier statement.  Mr King made the similarly strange observation that his earlier statement was grossly unfair as it had been “based on rumour and speculation”.  On the same footing Mr King also said that he now sought to have his brief of evidence “dismissed” as it was formulated from “half truths and gossip and unsubstantiated statements from other parties”. 

[7]       After having been given the opportunity to take legal advice, Mr King adhered to his retraction of the earlier statement at trial.  An issue could arise as to whether the Judge was entitled in law to place any weight at all on Mr King’s earlier statements because they were not adopted in his trial evidence.  We do not, however, need to resolve that point because Mr Minchin accepted that the Judge could legally place some weight on material of this kind.  His argument was that the Judge should not have done so in the particular circumstances of the present case.  In view of the internal illogicalities of Mr King’s purported retraction, we consider the Judge was entitled to place some weight (and he put the matter no higher than that) on what was, after all, an earlier formal statement made as a statutory declaration.  But even if that were not so, we do not consider removal of this evidence altogether from consideration could reasonably make any difference to the Judge’s ultimate conclusion.  There would still have been a very substantial case that Mr Stemson was the arsonist. 

Motive and opportunity

[8]       We will now briefly address the issues of motive and opportunity.  It was not necessary for AMP to show that Mr Stemson had a motive for burning down Firlawn.  We are, however, of the view that the evidence was such that Hammond J was entitled to regard spite and financial difficulties as tenable motives, either singly or in combination.  The fire occurred shortly after Mr Stemson became aware that Ms Daniels had registered a caveat against the title to Firlawn House.  There was clear evidence that Mr Stemson’s relationship with her, and particularly with her mother, was far from good.  We have already noted his statement to Mr Carryer about burning Firlawn down to prevent “the Doyles” (that is, mother and daughter) from having it. 

[9]       In spite of Mr Minchin’s submissions on the point, we are satisfied that Mr Stemson’s financial circumstances were such that he could have regarded an arson, with an ensuing insurance payout, as helpful.  While that view may not have been entirely rational, it is a commonplace of life that people do not always act in a fully rational way, particularly when, as here, there seems to have been a history of some instability on Mr Stemson’s part.  Mr Minchin ultimately accepted, quite rightly, that Mr Stemson did have the opportunity to commit the arson, albeit the earlier visit of the police to his Parnell home may have signalled the risk he was taking. 

Model A fire and Mr Stol

[10]     The Judge found that about a fortnight before the Firlawn fire, Mr Stemson had deliberately set fire to his own Model A car during the night.  Mr Minchin mounted a sustained attack on this conclusion, relevant as it was in the Judge’s mind as demonstrating Mr Stemson’s willingness to set fire to his own property, and his intention to provide himself with cover by suggesting that another arsonist was operating in the area.  The reliability of Mr Stol’s evidence was central to the Judge’s finding about the Model A.  When first speaking to the police, Mr Stol did not identify the person who he had seen pouring what appeared to have been an accelerant into the Model A.  His evidence about why he had not earlier identified Mr Stemson as the perpetrator was accepted by the Judge.  We did not find it necessary to accept Mr Minchin’s invitation to listen to the tape recording of a conversation between the two men.  Mr Stol was not asserting that he had been overborne by Mr Stemson; simply that he was apprehensive of Mr Stemson’s reaction if he had named him.  We are far from the view that the Judge’s conclusion concerning the Model A was wrong.  We add that the Judge did not find Mr Stemson responsible for the house truck fire, a subject into which we do not propose to go further.  The occurrence of that fire is a strange aspect of the case but it does not serve to undermine the Judge's ultimate conclusion in any way.

Consistency of evidence

[11]     It was a feature of Mr Minchin’s argument in respect of several witnesses to draw attention to suggested inconsistencies between their trial evidence and what they had said in statements on earlier occasions.  The trial took place more than eight years after the relevant events and long after the earlier statements.  This wholly undesirable situation must be laid substantially at Mr Stemson’s door.  It is not surprising, in view of the time lapse, that there was a degree of inconsistency in places between what witnesses were saying in evidence and what they had said earlier.  Indeed an ability to replicate exactly an earlier brief would have created problems of a different kind.  We do not propose to go into detail.  In no instance to which Mr Minchin referred were we brought to the view that the suggested inconsistencies were of sufficient materiality to cause us to doubt the way the Judge assessed the evidence of the witnesses in question.

Mr Laing/forensic evidence

[12]     Mr Laing was the person to whom Mr Stemson pointed at the trial as the likely arsonist.  He was an occupant of Firlawn House at the time.  The Judge was fully entitled on the evidence to dismiss the suggestion that Mr Laing lit the fire.  His evidence was, in our view, broadly consistent with the evidence given by the police investigator, Ms Boyd, regarding the fire damage in Mr Laing’s bedroom.  There is certainly no inconsistency between this objective evidence and Mr Laing’s version of events.  He said he was woken by an object being thrown through his bedroom window.  It was in the nature of a molotov cocktail; he kicked it into the corner of the room where it ignited the curtains.  He then exited the premises in haste.  The forensic evidence as to fire damage in the bedroom, how the fire appeared to have moved to the corner, and whether the window was already broken before the “explosion”, when viewed as a whole, leaves ample room for the Judge’s conclusion, in acceptance of Mr Laing’s evidence, that a molotov cocktail was indeed thrown through his bedroom window and this is what caused the fire in that part of the building. 

Objects found in boot of Mr Stemson’s car

[13]     It is of no small moment that not long after the fire, when Mr Stemson’s car was searched in Auckland by the police, in the presence of Mr Byrne, objects consistent with the making of molotov cocktails were found in the boot.  There were screwed up pieces of paper resembling wicks, short pieces of nylon which were burnt at one end, spent matches and a flagon of clear liquid.  No evidence was given as to whether the clear liquid was or was not an accelerant.  It must be said that it was a strange and most unfortunate coincidence for Mr Stemson, if he had not thrown a molotov cocktail into Firlawn House, that shortly after the fire there were found in his car boot items entirely consistent with his having done so.  His explanation for this unhappy coincidence, and his attempt to explain away this significant evidence, were described by the Judge as utterly improbable and evasive.

General matters

[14]     We have taken account of all Mr Minchin’s written and oral submissions.  We have also borne in mind Mr Ring’s written argument, in the course of which a number of valid points are made in support of the Judge’s conclusion.  This appeal developed into the kind of exercise which this Court was seeking strongly to discourage in Rae’s case.  Mr Stemson really wanted a full factual re‑examination of almost all the relevant aspects of the case, based solely on the transcript of evidence and the various documents.  Such an exercise cannot capture the advantages possessed by the trial Judge in a case such as the present.  It is of course possible for an appellant in circumstances like these to demonstrate that in spite of those advantages the trial Judge has come to an erroneous factual conclusion; but to achieve that end the authorities show that the appellant must establish that the trial Judge was plainly wrong.

[15]     We have done our best to give as much credence as possible to the points made on the appellant’s behalf while, at the same time, adhering to the legal principles which apply to appellate review of factual conclusions. 

[16]     Although the Judge’s ultimate conclusion involved drawing an inference from all the evidence which he accepted, the inference was aided by the Judge’s finding that Mr Stemson had made significant admissions.  Most of the primary facts found by the Judge on the basis of which he drew his ultimate inference, were based on the Judge’s assessment of oral evidence and, in material respects, matters of credibility.  Mr Stemson has shown no basis upon which this Court might properly differ from the Judge’s primary findings.  The inference which he drew from those findings was a strong one and we are certainly not persuaded that the evidence was insufficient to enable him to draw it to the high standard required.  By the same token the evidence was such that the Judge was fully entitled to reject Mr Stemson’s denial that he was implicated in the fire.

Formal orders/costs

[17]     For the reasons given the appeal is dismissed and we have no need to address the second basis on which AMP declined liability.  We order Mr Stemson to pay AMP costs in the sum of $5,000.00 plus disbursements including the reasonable travel and accommodation expenses of one counsel, to be fixed if necessary by the Registrar. 

[18]     Mr Minchin told us that his client had applied for legal aid for the purposes of the appeal.  We were informed that no decision had been made on that application.  Hence there is no impediment to an order for costs being made against Mr Stemson in the ordinary way.  We should add, however, that if legal aid had been granted, or is granted in the future, we regard this case as one involving exceptional circumstances, within the meaning of s40 of the Legal Services Act 2000, justifying an order for costs being made against Mr Stemson personally in the same terms as that set out above. 

[19]     Our reasons for taking that view are that Mr Stemson, who was in receipt of legal aid in the High Court, was thereby protected from having to make any payment, beyond the level of his legal aid contribution, towards AMP’s costs for successfully resisting the claim.  It is one thing to be protected at first instance.  It is another thing to pursue the matter on appeal and then expect to be protected again.  If the appeal has some arguable merit, then it is appropriate for the same sort of protection which a grant of legal aid gives in relation to party and party costs to be available on the appeal also.  Here, however, we consider that the appeal was always doomed to failure and its presentation involved the very sort of exercise which this Court has consistently been at pains to discourage.  The considerable detail into which Mr Stemson’s written submissions went will have involved extra preparation on AMP’s part.  While exceptional circumstances should not lightly be found, we are satisfied that in this case the lack of merit in the appeal, and the way in which it was presented, crossed the threshold, disentitling Mr Stemson to the protection otherwise available should he obtain a legal aid grant for the appeal.

Solicitors:
Otene & Ellis, Auckland for Appellant
McElroys, Auckland for Respondent