Arvind Manilal Mandalia and Another v Beaufort Dedicated No. 2 Ltd
| Jurisdiction | England & Wales |
| Judge | Gerard McDermott |
| Judgment Date | 28 November 2014 |
| Neutral Citation | [2014] EWHC 4039 (QB) |
| Docket Number | Case No: HQ12X04529 |
| Court | Queen's Bench Division |
| Date | 28 November 2014 |
[2014] EWHC 4039 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Gerard McDermott QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: HQ12X04529
Mark James (instructed by Messrs Leigh Day) for the Claimant
Julian Field (instructed by Messrs Berrymans Lace Mawer) for the Defendant
Hearing dates: 23–27 & 30 June; 4 August 2014
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.
Gerard McDermott QC:
This is my Judgment in this case between the Claimants, who are and were, the owners of shop premises and the flats above at 287–289 Burnt Oak, Broadway, Middlesex, and the Defendant insurance company.
Those shop premises, at the time of the events which give rise to this claim, were divided into
(a) a takeaway restaurant called "Lick'N Chick'N" and
(b) a general grocery shop called United Cash and Carry.
The claim form reveals a claim which was initially put at £295,931.58 but which has since been revised downwards.
The claim, essentially, is about the extent of the insurance coverage that the Claimants had under a commercial combined insurance policy issued by the Defendant or rather by Evergreen Underwriting Services which is now Beaufort Underwriting Services and the extent to which that cover should respond to the claim made upon the same. The Defendant says that the real dispute arises because there is a misapprehension on the part of the Claimant as to the extent of the coverage and also the extent of losses that are payable under that cover.
Background
The Claimants bought the premises in the 1980's and traded from the premises as "Mandalia Cash and Carry". They had initially traded with the First Claimant's brothers but ultimately the Claimants bought them out and they continued to run the business on their own from that time.
It seems that the business was quite successful and over the years they were able to buy first, one and then the other flat above the premises and to knock them through creating a home for themselves above the shop.
Unfortunately the Claimants have suffered from ill health (the details of this are set out at paragraph 11 of the Second Claimant's first witness statement) and the running of the cash and carry business became too much for them. Initially they had intended to start a restaurant which they thought would require much less of their own manpower if they had reliable staff and on 24 th May 2004 they obtained planning permission to alter the use of the premises from retail to mixed use of retail and the sale of hot food and drink.
As their health continued to deteriorate they decided to market the shop lease instead.
On 3 rd May 2005 the Claimants enter into a 12 year lease of the premises with Mr Balasingam Kaskiran and Mrs Anthea Pirathavan. These became regarded by Mr and Mrs Mandalia as the "bad tenants". These tenants split the premises into a fast food takeaway called Lick'N Chick'N and a general grocery store called United Cash and Carry.
The lease had required the tenants to carry certain fit out works by 2 nd November 2005 and these were identified by reference to two plans. The works included dividing the premises and installing an extractor fan and ducting.
The relationship between landlord and tenants was very much less than satisfactory and the tenants failed to carry out the fit out works by 2 nd November 2005 as had been agreed. They also carried out a large amount of unauthorised work. As a result of this the Claimants served section 146 LPA notices and then on 2 nd June 2007 commenced proceedings for possession against the tenants. The Particulars of Claim in that action contain extensive allegations of breaches of the lease which include unauthorised building work. During the course of that action a Mr Harold True, a chartered building surveyor, was appointed as a single joint expert to report on the complaint that work had been carried in breach of the specific terms of the lease agreement.
There was a three day trial of the Claimants' action against the tenants on 16 th to 18 th December 2008. Judgment was handed down on 13 th February 2009 and an order was made on 13 th March 2009 giving relief from forfeiture provided they paid:
i) £55,000 of arrears by 13 th March 2009 together with interest of £2,385,46; and
ii) Carried out certain specified work at the premises by 10 th April to the satisfaction of Mr True.
iii) The order (p1935 of the bundle) also provided for Liberty to apply in relation to the date for completion of the works;
The tenants failed to pay any of the arrears of rent or interest by 13 th March 2009.
Thereafter what has been referred to in the expert reports as "the event", took place. On 5 th April 2009, which it had been erroneously suggested was Easter Sunday, the tenants entered the ground floor premises and stripped out much of the contents. They removed their own fixtures and fittings but also, on the Claimants' account, stole a lot of fixtures, fittings and items belonging to the Claimants whilst at the same time causing significant damage to the property.
It is the occurrence of the event and what flows from that which gives rise to these proceedings and, in the first instance, gave rise to a claim under the policy. The focus of this Judgment will be upon what happened on that day, what the consequences are in terms of the insurance coverage available to the Claimants and what losses are recoverable by them against the Defendant.
The day after the event the Claimants contacted their brokers, WB Tidey and Co who in turn contacted Paul Southcott at Special Risks Group Limited, who are loss adjusters but who also had delegated authority from Evergreen to confirm or repudiate claims and to settle claims up to a value of £250,000.
The claim was originally presented as one of malicious damage and there was a conversation between Mrs Mandalia and Tidey on 9 th April 2009 in which she explained about the ongoing Court action and the arrears of rent and unauthorised alterations to the property. Thereafter there was a conversation between Tidey and Special Risks during which Special Risks confirmed that the issues in the ongoing Court action and their tenants were not matters for Evergreen.
On 15 th April 2009 Mrs Mandalia wrote a long letter to Tidey (page1153 E ) about the events of 5 th April 2009 and what happened thereafter. One of the main concerns in that letter appears to be in relation to rotting food stuffs and notices that had been served by the Council. Jamie Greig of Special Risks confirmed to the Claimants' son Amar Mandalia, that the environmental health issue was not something that insurers would become involved with.
Thereafter a site visit took place on 24 th April 2009 at which were present, Mrs Mandalia, Amar Mandalia, Jamie Greig and the police. The issue of theft by the tenants of furniture and fittings from the premises was raised on that occasion. The insurers at that stage took the view that the damage was not malicious – see the report dated the 12 th day of May 2009 at page 939.
In that report Mr Greig came to the view that the damage was not malicious and was damage caused as a consequence of either:
i) The tenants' failure to keep the landlords fixtures and fittings clean and in good repair; or
ii) The hurried removal of the tenants' own fixtures and fittings resulting in inevitable secondary damage to the landlords' fixtures and fittings which in normal circumstances the tenant would be required to make good under the terms of the lease.
Thereafter Mrs Mandalia sent an email on 16 th June 2009 and also a list of items missing or damaged by the tenants (p1276 – 1277 (c)). This referred to an order of 9 th June 2009 by which the Claimants were granted possession of the premises from the tenants and also noted "that the process of clearing rotten food was underway". In her email Mrs Mandalia requested Jamie Greig to arrange for fumigation and other work to be done to the property so that it could be put back on the market for letting. Jamie Greig replied on 19 th June 2009 (p1159 also a copy at 1278) stating that whereas the list of missing/damaged items appeared to detail every defect or omission recorded after the Claimants eventually regained possession of the premises, it was necessary to be very clear as to what aspects could receive consideration of the policy as opposed to being separate contractual/civil issues that had already been or needed to be pursued with the tenants. Jamie Greig went on to say that the insurers were solely concerned with damage caused by theft or malicious persons.
I pause here to note that it will be important, in considering the issues in this case, to distinguish between damage which may have been caused by the tenants during the course of the lease and/or which was incidental to their occupation of the premises or their departure from the same and damages which can be brought with the meaning of the insurance policy and for which the Defendant is required to indemnify the Claimants. That is not an entirely straight forward task and is one that I will turn to later in this Judgment. It may be impossible to be precise, particularly at this distance in time, on the evidence that I have, about how to attribute individual items of loss or damage.
There then followed quite a lot of correspondence between the parties, some from Mrs Mandalia and some from her son Amar Mandalia, in relation to the claim and on 17 th July 2009 Jamie Greig wrote...
To continue reading
Request your trial
-
Damage By Tenants And The Meaning Of 'Malicious' In A Property Insurance Context
...v Beaufort Dedicated No2 Ltd [2014] EWHC 4039 (QB) The Claimants own shop premises which were let out to (what they describe as) "bad tenants". These tenants failed to pay all rent due and to carry out fit-out works to a satisfactory standard. Accordingly, proceedings for possession were co......