Direct Line Insurance Plc v Fox

JurisdictionEngland & Wales
JudgeHIS HONOUR JUDGE RICHARD SEYMOUR Q.C.,His Honour Judge Richard Seymour Q.C.
Judgment Date10 March 2009
Neutral Citation[2009] EWHC 386 (QB)
Docket NumberCase No: HQ08X03596
CourtQueen's Bench Division
Date10 March 2009

[2009] EWHC 386 (QB)



Before : His Honour Judge Richard Seymour Q.C.

(Sitting as a Judge of the High Court

Case No: HQ08X03596

Direct Line Insurance Plc
Kenneth Ronald Fox

John M. Collins (instructed by Cogent Solicitors) for the claimant

Edward Brown (instructed by Attwater & Liell) for the defendant

Hearing dates: 23 and 24 February 2009

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.

HIS HONOUR JUDGE RICHARD SEYMOUR Q.C. His Honour Judge Richard Seymour Q.C.

His Honour Judge Richard Seymour Q.C. :



The basic facts relevant to this action were not in dispute.


The claimant, Direct Line Insurance Plc (“Direct Line”) is an insurance company.


The defendant, Mr. Kenneth Fox, was, at all material times, the freehold owner of the property known as and situate at 26, Fallow Fields, Great Woodcote Park, Loughton, Essex (“the House”). Mr. Fox was also a director of a company called Bright Look Double Glazing East Ltd. In addition, Mr. Fox had interests in property development through a company called Fox Developments Ltd.


Mr. Fox entered into a contract of insurance (“the Policy”) numbered 40595540/01 with Direct Line under which Direct Line insured the buildings at the House, and the contents thereof, against, amongst other things, the risks of damage from fire and smoke.


One of the conditions of the Policy, Condition 6, was in these terms:—

“If any claim or part of a claim is made fraudulently or falsely, the policy shall become void and all benefit under this policy will be forfeited.”


On 8 April 2007, during the continuation of the cover provided by the Policy, a fire occurred in the kitchen of the House. Severe damage was caused to the kitchen itself and to an adjacent hall. There was smoke damage to the remainder of the House and to various contents therein.


Mr. Fox made a claim under the Policy in respect of the damage to the House and to the contents thereof.


That claim was accepted by Direct Line.


Direct Line instructed loss adjusters, Cunningham Lindsey United Kingdom (“Cunningham”), in connection with the assessment of the claim.


Various payments were made in respect of the claim on the advice of Cunningham. The payments included an initial payment of £1,425, a payment amounting to £1,891.95 in respect of initial hotel accommodation, because the House was uninhabitable until repairs had been carried out, and further payments in respect of accommodation totalling £15,371.63. In addition an amount of £12,327.87 was paid in respect of damage to the contents of the House.


The question arose of the repair of the damage to the House itself. Tenders were sought by Cunningham for the work in question. The lowest tenderer was a company called S. & A. Gregory Ltd. The amount of the tender presented by that company totalled £53,015.00, plus Value Added Tax. However, as a result of discussion between Mr. Gilbert Theodore of Cunningham and Mr. Fox it was agreed that Mr. Fox would himself arrange, through his various contacts, the undertaking of the necessary work, and supervise that work himself.


The agreement between Mr. Theodore and Mr. Fox was reduced to writing (“the Written Agreement”) in a document prepared by Mr. Theodore, addressed to Direct Line, and signed by Mr. Fox, dated 7 June 2007. The Written Agreement was in these terms:—

“Subject to your approval and subject to the terms and conditions of the Policy I agree to accept the sum of £46,524.50 in full settlement and discharge of all my Buildings claims under your Policy No. 40595540/01 for loss and damage by Fire which occurred on the 8th April 2007.

I understand that my Insurers will make an interim payment of £42,412.00, followed by a final payment of £4,112.50, subject to me providing invoices demonstrating my outlay in respect of the VAT element of replacement bespoke kitchen which will be manufactured by Darren Brett Furniture Ltd.

I confirm that there is no other insurance covering this loss or damage and that no other persons have an interest in the property the subject of this claim other than Abbey National.

I accept that any valuation used in assessing policy liability was calculated for that purpose only and is not a valuation for future insurance or loss adjustment.


Direct Line did approve the Written Agreement and the interim payment of £42,412 was made.


Mr. Fox wrote to Mr. Theodore a letter dated 14 August 2007. The material part was in these terms:—

“Gilbert, I am please [sic] to tell you we have now moved back to the above address. Thank you very much for your prompt and professional assistance with handling our claim. As per our agreement dated 07/06/07 there remains one small outstanding amount of monies for £4112.50. I enclose a copy of there [sic] invoice which has been settled by myself. Could you please ask Direct Line to forward me a cheque for the above amount?

Once again many thanks, if you have any queries please don't hesitate to contact me.”


The document enclosed with the letter appeared on its face to be a copy of an invoice rendered on the printed letter-head of a company called Daren Brett Furniture Ltd. to Mr. Fox and to bear the number 2007007. It was dated 18 July 2007. It bore the heading “Re: Replacement kitchen for 26 Fallow Fields, Great Woodcote Park, Essex, IG10 4QP”. The narrative in the document was:—

“To remove granite tops and set aside.

To dismantle existing kitchen and take away.

To manufacture kitchen as per existing, re install, re paint as per original, re fit granite tops, sink etc.

At a cost of £23,500.00 plus vat @ 17.5% £4112.50

Total £27,612.50

Paid in full

Many thanks”


The authenticity of the document a copy of which was enclosed with the letter dated 14 August 2007 was called into question on behalf of Direct Line. In response to a request made by Cunningham Mrs. J.E. Brett, the wife of Daren Brett, provided a copy of an invoice rendered by Daren Brett Furniture Ltd. to Mr. Fox numbered 2007007. However, that invoice was dated 20 April 2007, was in the sum of £11,800 and related to work done in connection with two new-build properties in Upshire Road.


In a letter dated 4 September 2007 to Mr. Fox Mr. Martin Bates of Direct Line wrote as follows:—

“I refer to your claim with the above incident and advise that we are instructing Cunningham Lindsey to make a further visit to you to verify the works that have been completed and ensure that all is proceeding as it should be. It will involve taking a statement and verifying the documentation received to date.

Whilst the claim is ongoing, it must be clearly understood that if your policy is cancelled, renewed or amended in any way and/or further premium payments are accepted, then this is done strictly without prejudice to any rights we may have to avoid your policy or take other appropriate action, from the date of this claim or from another appropriate date.

This is a standard paragraph, and we reserve our position generally.”


Mr. Fox seems to have received that letter by no later than 6 September 2007, for on that day, at 10.35 a.m. he telephoned Mr. Theodore. Mr. Theodore made an attendance note of the call the accuracy of which was not in dispute. What Mr. Theodore wrote in his attendance note was:—

“Insured advised that he has rec[eive]d a letter from Insurers and now no longer wishes to pursue the o/s [i.e. outstanding] aspect of his claim – namely VAT element of the kitchen replacement. I advised that I would speak to Insurers about his request and come back to him with their comments.”


Mr. Theodore did make contact with Direct Line and then telephoned Mr. Fox at 14.45 hours on 6 September 2007. Mr. Theodore's attendance note of that call read:—

“Advised that on Insurers instructions he should now write to them explaining why he no longer wishes to pursue the claim.”


In a letter dated 7 September 2007 to Direct Line, marked “Without Prejudice”, Mr. Fox wrote:—

“I am writing with regard to the invoice I submitted from Mr. Darren Brett in respect of the above insurance claim.

As you are probably aware, after my house was damaged by fire, I negotiated a financial settlement with Direct Line Plc that enabled me to oversee the reinstatement of works. The final settlement figure I had to accept allowed no margin for adjustment, being some £20k under the closest quotation. Yet I agreed to it, because I was keen to ensure the highest standards of refurbishment work and my family were back in our home A.S.A.P.

During these negotiations, I witnessed the lengthy claim processes and got a fair insight into just how protracted the matter was going to become. For instance, I was told at the outset that it would take at least two months before the refurbishment would even be approved!

Bearing in mind my personal situation, of having a family with three young children – 11 years, 15 months and 4 months respectively; and my running a business that relies on my hands-on, day-to-day presence, I was eager to resolve matters as soon as possible. Living out of cases in a hotel and subsequently moving into rented accommodation of questionable standard, was stressful to say the least. Family life was suffering and I was becoming concerned with the knock-on effects on my business.

Therefore, after my completing the preparation work, I gave Mr. Brett – a previously trusted supplier – the go ahead to start work on refitting the kitchen in early July. Bearing my comments regarding processing in mind, I also asked for him to raise an invoice for the agreed amount (£23,500 + vat) so that I...

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2 cases
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