Dalecroft Properties Ltd v Underwriters Subscribing to Certificate Number 755/BA004/2008/OIS/00000282/2008/005
| Jurisdiction | England & Wales |
| Judge | Mr Salter |
| Judgment Date | 26 May 2017 |
| Neutral Citation | [2017] EWHC 1263 (Comm) |
| Date | 26 May 2017 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No. CL-2015-000286 |
[2017] EWHC 1263 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice. Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Richard Salter QC
Sitting as a Deputy Judge of the High Court
Case No. CL-2015-000286
Mr George Spalton (instructed by Edwin Coe LLP) appeared for the Claimant
Ms Jessica Stephens (instructed by Clyde & Co) appeared for the Defendants
Hearing dates: 27, 28, 29 and 30 March 2017
Judgment Approved
Mr Salter QC:
Introduction
Since August 2007, the claimant (" Dalecroft") has been the freehold owner of a mixed commercial and residential property at 254–258 North Down Road, Margate, Kent (" the Property"). Dalecroft insured the property with the Defendants (" the Underwriters") under a property owner's policy initially taken out in July 2007, which was renewed in August 2008. The policy covered a number of risks, including fire. On 16 May 2009 a fire (" the Fire") caused severe damage to the Property, leaving it in such a state that it needed to be demolished and rebuilt. Dalecroft made a claim under the policy: but, by letter dated 15 September 2009, the Underwriters purported to avoid the policy and tendered the return of the premium.
In this action, Dalecroft claims an indemnity under the policy against its losses resulting from the Fire. The Underwriters counterclaim for a declaration that they were entitled to avoid the policy on the grounds of misrepresentation and/or non-disclosure and/or have been discharged from liability by breaches of warranty on the part of Dalecroft. The misrepresentations and/or non-disclosures relied upon by the Underwriters principally (though by no means exclusively) relate to the description and condition of the Property. The breaches of warranty relied on principally relate to the commercial un-occupancy conditions of the policy.
In respect of all save one of the allegations of misrepresentation, Dalecroft denies that what it said was untrue. It also says, in relation to all of the allegations of misrepresentation and of non-disclosure, that the matters relied upon by Underwriters were not material and/or did not induce the making of the relevant contract of insurance. In particular, Dalecroft says that that contract was not made until November 2008, when Underwriters issued a revised Certificate Schedule headed "Cancel and Replace". By then the residential part of the Property was unoccupied, and scaffolding supporting a "tin hat" roof had been erected: and Dalecroft argues that most of the alleged misrepresentations and non-disclosures had therefore by then become irrelevant. Alternatively, Dalecroft argues that the risk is divisible and that, since the alleged misrepresentations and non-disclosures relate only to the residential part of the Property, it is entitled to an indemnity against its losses in relation to the commercial part. Finally, Dalecroft denies the alleged breaches of warranty.
The parties
The claimant
Dalecroft was incorporated in 2005 as a property investment vehicle. The sole director and shareholder of Dalecroft was and is Mr Zalman Horowitz ("Mr Horowitz"). Dalecroft was and is a family business, and both Mr Horowitz's wife, Caroline, and his uncle also acted at times for Dalecroft.
The defendants
The Underwriters are a number of syndicates at Lloyd's, represented by JR Clare Underwriting (Agencies) Ltd (" JR Clare"). The policies issued to Dalecroft were written by Carter Middleton Limited trading as LIG Commercial Insurance Specialists, eLet Insurance and Tristar Underwriting (" Tristar"), which held a Binding Authority from the Underwriters. The principal of Tristar was Mr Elwyn Isted (" Mr Isted").
Dalecroft dealt with Tristar through Dalecroft's broker, Ms Miriam Ostreicher (" Ms Ostreicher") of Oster Insurance Services (" Oster").
The trial and the witnesses
The trial of this action took place over 4 court days, between 27 and 30 March 2017. Closing submissions were made in writing. Dalecroft was represented by Mr George Spalton. Ms Jessica Stephens represented the Underwriters. I am grateful to both counsel for their assistance.
I heard evidence from the following witnesses of fact:
8.1 Called by Dalecroft:
Mr Horowitz; Mr Pinchas Braun (" Mr Braun"); and Ms Ostreicher
8.2 Called by the Underwriters:
Ms Gail O'Brien (" Ms O'Brien"); Mr Charlie Marsh (" Mr Marsh"); Dr Sebastian Norager (" Dr Norager"); Mr Kevin Rowe (" Mr Rowe");Mr Isted; and Mr David Phillips (" Mr Phillips")
I also heard expert evidence on the issue of materiality from Mr Grahame Pipe (" Mr Pipe"), instructed by Dalecroft, and from Mr Trevor Clegg (" Mr Clegg"), instructed by the Underwriters.
In forming my views (where the evidence of the witnesses conflicted) as to which parts of the factual evidence to accept, and which to reject, I have of course paid close attention to the demeanour of the witnesses in the witness box as they gave their evidence to me. I have, however, also borne in mind the fact that the events with which this trial is concerned took place between 8 and 10 years ago and that it is inevitable that memories have faded and been made less reliable by the passage of years. I have therefore been careful to test the evidence of each of the witnesses against all of the other materials available to me, bearing in mind the helpful observations of Robert Goff LJ (as he then was) in The Ocean Frost1:
… It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth…
Overall, my impression was that most of the witnesses of fact were doing their best to tell the truth to the court, as they now remembered it. However, the recollections of some of the witnesses were not always reliable. Specifically:
11.1 Mr Horowitz
Mr Horowitz was a nervous witness, who had a tendency to blame everyone but himself for his problems, and to see things exclusively from his own point of view. He was sometimes muddled about dates and the sequence of events, and he sometimes treated what he wished had happened as if it had in fact happened. I approach his evidence, where it is not supported by contemporary documents or by other witnesses, with considerable caution.
11.2 Mr Braun
Mr Braun is a member of Mr Horwitz's family, who provided property management services for Dalecroft in 2008. Mr Braun seemed anxious to support Dalecroft's case wherever he could. Certain aspects of his evidence — particularly in relation to the layout of access from the courtyard to the basement — were plainly wrong: and he persisted in that evidence, even when shown photographs which clearly demonstrated the true position. I am therefore unable to place any significant reliance on Mr Braun's evidence, where it is not supported by contemporary documents or other witnesses.
11.3 Ms Ostreicher
Ms Ostreicher was a careful witness, but was naturally concerned to ensure that no responsibility for what had happened could be attributed to her or to Oster. I formed the view that that concern may have coloured some of her evidence to me, particularly in relation to the conversations leading to the preparation of the initial request to TriStar for a quotation.
11.4 Ms O'Brien and Mr Marsh
Ms O'Brien moved into the flat at the Property which had previously been occupied by Mr Harmer in about August 2007, and stayed there until June 2008. Mr Marsh ran an amusement arcade called "Time Tunnel" in the commercial part of the Property until about October 2008. Neither Ms O'Brien nor Mr Marsh had any financial interest in the outcome of the case. Both of them, in my judgment, were doing their honest best to explain, from their own individual perspectives, what had gone on at the Property at the time. However, neither of them kept any relevant written records: and both were sometimes slightly impressionistic in their recollections. It is therefore necessary for me to exercise a degree of caution in making findings based upon the unsupported recollection of either of them.
11.5 Dr Norager
Dr Norager was the specialist from Dr J H Burgoyne & Partners LLP who investigated the Fire on behalf of the loss adjusters appointed by the Underwriters. He gave evidence by video link from Singapore. Dr Norager's evidence was well-documented and supported by many photographs taken by him at the time of his inspection. I found his evidence to be helpful and reliable.
11.6 Mr Rowe
At the material times, Mr Rowe was one of the Senior Housing Improvement Officers employed by Thanet District Council ("TDC"). Mr Rowe made notes of his observations and actions and the time, and gave evidence by reference to his notes. I found his evidence to be helpful and reliable.
11.7 Mr Isted and Mr Phillips
Mr Isted, was a meticulously careful witness. His evidence corresponded with the contemporary documents, and I found it helpful and reliable. Mr Phillips, from JR Clare, was also careful in his evidence and his evidence was also, in my judgment, helpful and reliable.
As for the underwriting expert evidence, both Mr Pipe and Mr Clegg were impressive witnesses, with long practical experience of writing the sorts of risks at issue in this case. On the important issues, the disagreements between them proved largely to be matters of emphasis and reasoning. I shall return to these matters, where relevant, later in this judgment
The Property
Prior to the Fire, the Property extended over 5 floors:
13.1...
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