Alan Bate v Aviva Insurance Uk Ltd

JurisdictionEngland & Wales
JudgeJudge Mackie
Judgment Date17 June 2013
Neutral Citation[2013] EWHC 1687 (Comm)
Docket NumberCase No: 2011 Folio 1537
CourtQueen's Bench Division (Commercial Court)
Date17 June 2013

[2013] EWHC 1687 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

His Honour Judge Mackie QC

Case No: 2011 Folio 1537

Between:
Alan Bate
Claimant
and
Aviva Insurance Uk Limited
Defendant

Neil Moody QC, Sonia Nolten and Timothy Killen (instructed by Neumanns) for the Claimant

Graham Eklund QC and Nicholas Broomfield (instructed by Greenwoods) for the Defendant

Hearing dates: 12 to 22 March and 10 May 2013

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Judge Mackie QC:

1

This is the trial of a claim by the Claimant Mr Bate against the Defendant insurers for an indemnity and for damages arising from a fire on 5 June 2006 at buildings known as Long House at Dobcross near Oldham in Lancashire. It is accepted that Long House was largely destroyed by an accidental fire but liability is denied on several grounds. Aviva alleges that material facts were not disclosed or were misrepresented which entitle it to avoid the policy. Alternatively, it alleges that there was a breach of a condition precedent which entitles it to repudiate liability. Mr Bate denies all these allegations and claims not only an indemnity but consequential losses including the costs of borrowing following the fire and damages for distress. He claims the costs of rebuilding by his company Parthenon at some £1.2 million (somewhat higher than the sum insured). There is a loss of rent claim of £133,186 and a contents claim for £115,000. There are also claims for interest charges which appear to be over £1.4 million and for damages for distress and inconvenience. The Claimant also contends that the Defendant waived its right to avoid.

2

The trial has been of the question of liability and some issues of principle on damages. Apart from the controversial claim for consequential losses the legal issues are not much in dispute. There has however been great dispute about the facts which are complex and have involved days of evidence from fact witnesses and from one 'materiality' expert on each side. Deciding questions of fact in 2013 about a fire in 2006 has added to the difficulties in this case. Some people have left, others can no longer remember very much, Aviva lost an important file and witnesses on both sides, being human, have made mistakes.

3

At the trial 28 bundles of documents were before the Court. I heard evidence of fact from five witnesses for the Claimant who were Mr Bate, his daughter Emma, Mr Richard Cockerton, his broker at the time of the policies who was then a director of Hamptons in Bristol, Mr Alan Kirkham, an estate agent retained to market the development at the Long House, and Mr Philip Dust, the architect retained for that development and for the rebuilding after the fire. There were seven fact witnesses for the Defendant. Four were formerly with Aviva's cover holder Home & Legacy, Mr Ian Davies, an account manager, Ms Rebecca McGruther, a deputy team leader dealing with policy renewals, Ms Lesley Hubbard, operations manager and Ms Lorraine Prest, formerly a trading underwriter. Mr Brian Cohen is and Mr Andrew Crowe was with Woodgate & Clark, loss adjusters. Dr John Camplin works with Hawkins & Associates, the loss investigators retained by Aviva at the time of the fire. The experts were Mr Gardner Brown for the Claimant and Mr Simon Mobey for the Defendant.

4

The preparation for this trial has been formidably conscientious. I refer below for brevity only to Leading Counsel by name but I am well aware of the contributions of the other members of the teams. As there was an unfortunately long break between evidence and closing submissions and unexpected developments during the trial I have received in writing skeleton arguments, provisional closing submissions, final closing submissions and further detailed ripostes and additional notes. I cannot in a judgment of manageable length address all the points made. I have however considered each point but I do not mention those which though skilfully made seem to me to be fanciful.

The Policies in outline

5

The policies were underwritten by Norwich Union (now Aviva) through its cover holder Home & Legacy. For brevity I shall refer to both companies as 'Aviva.' It covered rich ("High Net Worth") individuals for their domestic property (i.e. their home) and was for domestic buildings and contents. Policy No DB04AA03288800 incepted on 24 November 2004 and insured the Claimant in respect of properties at 51 Radnor Drive, Egremont, New Brighton and The Stables, Long House. The combined buildings sum insured was £530,000 ("the 2004 Policy"). Policy No DB05AA0353700 incepted on 31 March 2005 and insured the Claimant in respect of the Long House. The buildings sum insured was £789,260 ("the 2005 Policy"). Aviva contends that the 2005 Policy also covered the Coach House. The two policies were merged in March 2006 and the Long House was placed onto the 2004 Policy. The policies were renewed but Aviva omitted to carry out the process in March 2006. The error came to light in May and cover for the three properties was endorsed retrospectively so there was valid insurance at the time of the fire.

The Long House and the surrounding buildings

6

The facts and the insurance arrangements cannot be set out coherently without first describing the buildings which comprise and closely surround the Long House, described at times by Mr Bate and shown in photographs as the Longhouse Hamlet, and referred to in a lease as the 'Estate'. When referring to this collection of buildings on a comparatively small plot as a whole I will use the term Estate for brevity although the set up is very different from what that word usually connotes.

7

The Long House is a substantial house built beautifully and in style with fine internal work, in the middle of the 19 th Century for an affluent mill owner. The Long House originally had stables and a tack-house. The tack house was converted to a self-contained house, known as "The Stables" which Mr Bate registered under a separate title. It was only some 8.25 metres from the main house. The actual stables which were close to the main house were converted to 5 garages, one belonging to The Stables. At the time of the fire three of the garages were within the registered title of the Long House (the other two belonging to The Stables and the Coach House, a property I refer to below.)

8

Mr Bate acquired the Long House Estate in 1984. It was used at first as his family home. In 1986 planning consent was obtained to use the house as a hotel and it functioned as such after about 1994. In January 2001, planning permission and building regulation approval was obtained for the change of use from an hotel to five dwellings (four to be carved out of the Long House, the fifth to be The Stables) plus garage accommodation. Work began on the outbuildings — the old stables which came to be garages and the old tack house which was to become "The Stables".

9

In 2001 Parthenon Building and Design Services Ltd ("Parthenon") was incorporated with Mr Bate and his daughter as the only shareholders and directors. Emma's role was nominal as Parthenon was Mr Bate's business. Parthenon continues to trade. On 3 rd April 2003, Mr Bate entered into an agreement with Parthenon whereby he sold the Long House to Parthenon to enable it to convert and sell the developed units, including The Stables and, as the units comprising the main house were to be called, South View, East View, The Gables and the Coach House. This agreement was rescinded on 14 September 2004.

10

The Coach House was an annex attached to the rear elevation of the Long House. On 2 April 2004, there was an agreement between Mr Bate, Emma Bate and Parthenon. By this Mr Bate sold to Emma Bate the area which was to become the Coach House, for conversion to be undertaken by Parthenon at a sale price of £195,000. On 11 June 2004, Mr Bate (not for some reason Parthenon) granted a lease of the Coach House to Emma, which enabled her to raise money to buy and develop it. The construction of the Coach House was carried out by Parthenon in the second half of 2004. It was declared "wind and watertight" by Mr Dust, the architect, on 17th November 2004. Thereafter internal works progressed slowly until the Coach House was handed over to Emma Bate on 26 February 2006. From about June 2004 Parthenon occupied the garage for the Coach House. There remains a connecting door between the Coach House and Mr Bate's property. Before the fire the Coach House had no separate meter for gas and Mr Bate paid all the bills, (as he advised Aviva's loss adjustor, Mr Crowe.).

11

In the meantime the freehold title for The Stables had been carved out from that of the Long House on 1st May 2003 and its conversion from tack room into a house was completed in autumn 2004.

12

In July 2003 Mr Bate instructed Alan Kirkham and Co, estate agents, to commence marketing the proposed new properties. Mr Kirkham gave evidence. Mr Kirkham used the gym at the Long House (now part of the Coach House) as an office for selling the properties for about nine months until the beginning of May 2004.

13

By September 2004 it was apparently clear to Mr Bate that there was little market interest in his proposed redevelopment of the Long House. As Mr Kirkham put it:

"To all intents and purposes Alan stated that the Stables was a test property; the remainder of the development would only be undertaken by Parthenon if that had sold…

At some point in the Autumn of 2004, I recall having a discussion with Alan about Parthenon's asking prices. In my view due to the downturn in the housing market they were now too high so I suggested that to sell the properties...

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