DMC Category Rating: Confirmed

The trial judge found in favour of AMP on both grounds. The New Zealand Court of Appeal upheld the trial judge’s findings of fact. The findings of fact were appealed to the Privy Council ("the Board"), the opinion of the Board being given by Lord Hope. But, unusually, a concurring judgment was also given by Lord Mance considering the trial judge’s decision that AMP were also entitled to avoid the policy due to the use of fraudulent means and devices by Mr Stemson when making his claim on the policy.

Judgment
Factual Appeal
The Board accepted the concession of Mr Stemson that "a court of last resort ought not to disturb a concurrent finding of fact by courts below unless it can be clearly demonstrated that the finding was erroneous". This was the practice of the Board (see Allen v Quebec Warehouse Co (1886) 12 App Cas 101, 104) and a similar test was applied in the House of Lords (see The Owners of the P Caland and Freight v Glamorgan Steamship Ltd [1893] AC 207, 215).

Mr Stemson claimed that (1) there were clearly erroneous findings because the trial judge had incorrectly analysed the evidence (holding that expert evidence was entirely consistent with evidence given by an eyewitness, which contradicted some of the evidence considered) so that the judge may have concluded that the required high standard of proof was not reached in determining the cause of the fire, and (2) that the New Zealand Court of Appeal had wrongly refused to consider the evidence for determining who was responsible for causing the second fire (one fire starting in the bedroom, a second starting in the lounge) so that there were no concurrent findings.

In applying the test, the Board came to the conclusion that the two alleged defects had no substance or materiality to them when the judgments were assessed as a whole (there being other evidence to support the trial judge’s findings and no question having being raised before the courts below as to the possibility of there being two separate agencies causing the fire) as there were no cardinal facts overlooked or an altogether erroneous view taken of the evidence. The alleged defects were not such as to justify the Board opening up the concurrent findings of the courts below. Therefore the Board dismissed the appeal.

Fraudulent Means
The Board reviewed and confirmed the finding of fact that Mr Stemson had given a knowingly false statement to AMP’s claims assessor during the course of the investigation of the claim, as to Mr Stemson’s intention and attempts to sell the house before the fire; a finding that Mr Stemson did not seek to challenge. The Board also confirmed the finding of fact that Mr Stemson only admitted the truth to AMP when it became apparent to AMP that the previous statement was false information. However, Mr Stemson argued that AMP could not avoid liability where he had admitted the true position four months before AMP rejected the insurance claim, so that AMP could not have relied upon the false statement in the rejection of the claim.

Mr Stemson did not take issue with the legal principles advanced by Mance LJ (as he then was) in Agapitos v Agnew (No.1) (The "Aegeon") [2006] QB 556, and specifically accepted para 37 of the opinion, which stated: "Does the fact that the lie happens to be detected or unravelled before a settlement or during a trial make it immaterial at the time when it was told? In my opinion, not."

On that basis, the Board had "no hesitation" in dismissing the submissions of Mr Stemson and upheld the trial judge’s conclusions, because "quite apart from any question of arson, the respondent was entitled to reject the appellant’s insurance claim (as it did) on the ground that the appellant had sought to promote it … by lying to the respondent about the position, and his state of mind, regarding any attempt to sell the house prior to the fire. The materiality of such matters to the respondent’s investigation and evaluation of this insurance claim is not challenged, and is, as the judge indicated, obvious." Therefore the Board would have also dismissed the appeal on this basis.

Comment
The decision on the factual reassessment issue shows that, for a court of last resort to reconsider the facts, there must be strikingly obvious defects in the trial judge’s decision and those defects must be such that they have materially affected the conclusions reached. This indicates that there are very few instances in which appellate courts will reverse the trial judge’s findings. The rule primarily developed because the trial judge is best placed to assess the relevance, reliability and weight to be attributed to the evidence in coming to a judgment, having had the benefit of dealing with the witnesses first hand during the course of the trial.

While the opinion of the Board on the issue of fraudulent means and devices is obiter (not necessary for the decision) the opinion is highly persuasive and indicative of the conclusions that would be drawn by their Lordships in the House of Lords. Thus Stemson v AMP has admirably reinforced the principles elaborated in Agapitos v Agnew (No.1). The opinion indicates that, once materially significant fraudulent means or devices are used to promote an insurance claim, they cannot be withdrawn or corrected and will remain a valid ground upon which the insurer may avoid the policy even though the insurer could then have assessed the claim on the basis of its true circumstances. Accordingly, it represents a punitive deterrent to those who may seek to manipulate a claim to their advantage.

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