PETER ALLAN WORK AND ROBYN MARGARET WORK v IAG NEW ZEALAND LIMITED [2022] NZCA 336

PETER ALLAN WORK AND ROBYN MARGARET WORK v IAG NEW ZEALAND LIMITED [2022]NZCA 336 [25 July 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA170/2022[2022] NZCA 336BETWEEN PETER ALLAN WORK AND ROBYNMARGARET WORKApplicantsAND IAG NEW ZEALAND LIMITEDRespondentCA293/2022BETWEEN PETER ALLAN WORK AND ROBYNMARGARET WORKApplicantsAND IAG NEW ZEALAND LIMITEDRespondentCourt: Miller and Dobson JJCounsel: G J Jones and J Heatlie for ApplicantsC M Stevens and S P Gunatunga for RespondentJudgment:(On the papers)25 July 2022 at 11.00 amJUDGMENT OF THE COURTA The applications for leave to appeal are declined.B The respondent is entitled to one set of costs for a standard application on aband B basis, with disbursements for both applications.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] The Works seek leave to appeal several interlocutory decisions of theHigh Court.1 The first is a judgment of Johnston AJ given on 22 November 2021 inwhich he declined to order:2(a) that IAG pay wasted costs of $130,746.71 in respect of a failed judicialsettlement conference that the Associate Judge had conducted; and(b) that will-say statements tendered by expert witnesses for IAG at thesettlement conference be admitted in evidence at the trial.[2] The second and third judgments were given by Lester AJ. In the first, deliveredon 8 March 2022, he declined to recall the 22 November decision of Johnson AJ andalso declined leave to appeal.3 He awarded IAG costs on the 22 November decisionand wasted costs of preparation for the trial, which was to commence on8 February 2022 but was adjourned at the Works' request.4 (It is now scheduled forFebruary 2023.) The sum awarded, on a scale basis, for wasted costs was about10 per cent of IAG's preparation costs, calculated at 2B scale,5 which totalled$15,054.39. In his second judgment, delivered on 27 May 2022, he rejected a claimthat he had failed to deal with the application for leave to appeal so far as it concernedthe issue whether the will-say statements could be used in evidence at trial.6 Hedeclined leave to appeal on that issue too.7[3] It will be seen that the judgments of Lester AJ are consequential upon that ofJohnston AJ. The Works propose to appeal the whole of the decision of 22 November.They also seek an order for stay of their own proceeding, alleging that the outcome ofthis appeal will be material to the conduct of the trial, and a stay of execution of the1 Senior Courts Act 2016, s 56(5).2 Work v IAG New Zealand Limited [2021] NZHC 3058 [Decision of Johnson AJ].3 Work v IAG New Zealand Limited [2022] NZHC 380 [First decision of Lester AJ].4 At [63] and [74].5 At [79].6 Work v IAG New Zealand Limited [2022] NZHC 1201 [Second decision of Lester AJ].7 At [13].costs award made by Lester AJ. They previously sought, but do not pursue, a directionthat IAG be required to participate in another settlement conference.[4] The subject matter of the proceeding is an insurance claim for the destruction,by fire on 23 November 2013, of a property owned by the Works and insured by IAG.IAG alleges that it was destroyed by arson and that Mr Work was the arsonist.It claims he ignited the fire by switching on a lamp the head of which had been laidon combustible materials. Its pleaded claim is that he did so by remotely instructinga printer to print a piece of paper that had been attached with cellotape to the lamp'scontact switch.[5] Both parties engaged expert witnesses. The experts provided will-saystatements for the settlement conference. The Works say that those of IAG's experts,Russell Joseph and Simon Cox, were dishonest. The allegation is also said topotentially implicate IAG and its lawyers.8 The allegation concerns two hand-solderedelectrical resistors which Mr Cox initially said he found in a charred mass comprisingthe remains of the lamp holder. The resistors were not part of the lamp. The Works'experts responded that the resistors had not been subjected to a fire. Mr Cox amendedhis statement to say that they were in the exhibits bag sent to him containing the lamp'sremains; they were with rather than in the black mass. He corrected his statement atthe settlement conference.[6] Johnston AJ found himself quite unable to find that some combination of IAG,its advisors and its experts acted dishonestly at the settlement conference. He notedthat the conference was held on a confidential and without prejudice basis.9 In anyevent, he was in no position to reach such a conclusion. The question whether IAG'sexperts falsely offered evidence to boost IAG's case was a trial issue.10 Even if theissues could be determined at this stage, the Judge was not persuaded that IAG'sexperts acted dishonestly.11 Should the Works succeed at trial they could claim costs,including costs relating to the settlement conference.12 He rejected an argument by8 First decision of Lester AJ, above n 3, at [17].9 Decision of Johnston AJ, above n 2, at [18].10 At [26].11 At [20]–[26].12 At [30].Mr Jones, for the Works, that IAG's counsel advanced an unsustainable argument asto the effect of a recent precedent and this somehow warranted an award of costs; therewas no reason to think counsel had knowingly misled the Court.13[7] In his first judgment, Lester AJ declined leave to appeal on a number ofgrounds, relevantly including the impossibility of deciding, on the record, that IAG'sexperts acted dishonestly.14[8] An allegation of arson is extremely serious. But that does not justify whatappears on the face of it to be the Works' attempt to obtain leverage against IAG beforetrial. The applications for leave to appeal are ill-advised.[9] The reason is that the question whether the will-say statements of IAGs expertscan be used to impeach them at trial ultimately must be decided by the trial Judge, asJohnston AJ pointed out.15 It need not be decided now. It would be highly inadvisableto do so at an interlocutory juncture even in the very unlikely event that this Courtwere to think it possible to make such findings on the record available.[10] That is sufficient to dispose of the two applications for leave to appeal.The claim for wasted costs of the settlement conference rests primarily on theassumption that the experts were dishonest. We make two further points about theclaim for costs. First, if they succeed at trial the Works will presumably be entitled tocosts in connection with the conference. Second, to sheet liability for additional costshome to IAG the Works will likely be required to show not only that the experts weredishonest but also that they caused wasted costs notwithstanding that the will-saystatements were corrected at the conference, and further that IAG was complicit insome way in their dishonesty.[11] Finally, it necessarily follows that the applications for leave to appeal cannotsucceed so far as they concern liability for IAG's costs. Whatever the ultimateoutcome at trial, there was no merit in the attempt to have the High Court makefindings of dishonesty at this juncture. Johnston AJ was right to describe the attempt13 At [27]–[28].14 First decision of Lester AJ, above n 3, at [43].15 Decision of Johnston AJ, above n 2, at [26].as misguided.16 Whether enforcement should be stayed pending trial is a matter forthe High Court.[12] For these reasons the applications for leave to appeal are declined. IAG isentitled to one set of costs for a standard application on a band B basis, withdisbursements for both applications.[13] We record, for the avoidance of doubt, that we should not be taken to suggestthe trial Judge ought to accede to an application to make use of the will-say statements.They are apparently privileged, meaning that the Works would have to surmount s 67of the Evidence Act 2006. They would be used not to contradict the witnesses — whoapparently will not claim at trial that the resistors were in the lamp — but to cast doubton their veracity. That being so, their probative value is limited even if it can be shownthat the experts did not act in good faith. The High Court would need to hear oralevidence about the circumstances of their investigations, as Johnston AJ observed.17The Judge might not find the evidence substantially helpful,18 or might not bepersuaded that its probative value justified the time and cost of adducing it.19Solicitors:Wotton + Kearney, Wellington for Respondent16 Decision of Johnston AJ, above n 2, at [26].17 At [23]–[24].18 Evidence Act 2006, s 37.19 Section 8.