Joseph Fielding Properties Ltd v Aviva Insurance Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 23 August 2010 |
| Neutral Citation | [2010] EWHC 2192 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Claim No: 9MA90759 |
| Date | 23 August 2010 |
[2010] EWHC 2192 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MERCANTILE COURT
Before: His Honour Judge Waksman Qc (sitting as a Judge of the High Court)
Claim No: 9MA90759
Claim No: 9MA90759
Simon Vaughan (instructed by Pannone LLP Solicitors) for the Claimant
Graham Eklund QC (instructed by Greenwoods Solicitors) for the Defendant
Hearing dates: 7 – 11 and 14 – 18 June and 1 July 2010
HTML VERSION OF JUDGMENT
INTRODUCTION
This is the trial of the liability of the Defendant insurer (“Aviva”–formerly Norwich Union –“NU”) to indemnify the Claimant (” JFP”) in respect of a fire which occurred at its property at Hoo Hill Industrial Estate, Blackpool on 26 November 2008. The principal shareholder in and director of JFP is Mr Peter Leonard.
Although quantum is not before me, the present claim is substantial – over £2m has been sought to cover the reinstatement of the individual tenanted units at “the kiln” on the estate which have been damaged. The subject policy was presented on 18 March and incepted on 28 March 2008. Aviva denies liability not on the basis of any defect in the subject claim itself but on three other grounds:
(1) During the currency of this policy JFP made a fraudulent claim for which Aviva paid it £9,870, in respect of damage to a drain at Hoo Hill in September 2008 (“the Drainage Claim”); and/or
(2) JFP failed to disclose to Aviva at inception that Mr and Mrs Leonard had made a fraudulent claim against a prior insurer, National Insurance & Guarantee Corporation (“NIG”) in respect of water damage to a lodge owned by them at Whitecross Bay Leisure Park and Marina, Windermere (“Whitecross Bay”) in February 2007 (“the Langdale 9 Claim”); and/or
(3) The failure by JFP to disclose to Aviva at inception the fact that on numerous occasions previously Mr Leonard had made misrepresentations and/or nondisclosures when presenting to other insurers in the past.
Aviva has sought to avoid the subject policy on all three grounds referred to above. It contends that if it succeeds on any one of them it is entitled not merely to refuse to indemnify in respect of the subject fire but also (a) recover the £9,870 paid in respect of the Drainage Claim and (b) the further sum of £37,624 paid to JFP in respect of an earlier fire which took place at Hoo Hill in June 2008.
JFP denies all of these allegations.
The burden of proof is of course upon Aviva to make out these defences. They contain serious allegations of fraud. That being so I remind myself of the words of Lord Nicholls in Re H [1996] 1 AC 563, 586:
“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence…Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation. Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established…”
I heard oral evidence from the following lay witnesses:
(1) for JFP, Mr and Mrs Leonard, Peter Lund, a site manager employed by Mr Leonard or one of his companies, Sean Cummings, a self-employed general builder who has worked for Mr Leonard, Martin Salthouse, who is self-employed and runs a contracting and plant hire business, Nicola Duignan, JFP's company secretary and book-keeper who has also worked for Mr Leonard in his other businesses, and John Holdsworth who used to work at Whitecross Bay;
(2) for Aviva, Robin Wintrip who was previously an insurance claims investigator employed by the loss adjusters Crawford & Co. (“Crawfords”), Alastair Watson, previously the General Manager at Whitecross Bay, Alex Hodgson formerly the Maintenance Manager at Whitecross Bay, Alisha Bamford a special investigator in the technical department of Halifax General Insurance Limited (“Halifax”), and Geoffrey Woods, the underwriter at Aviva who wrote this particular policy.
Each side called one underwriting expert: Miles Emblin for JFP and Stephen Coates for Aviva. They produced a joint statement of areas of agreement and disagreement on 21 May 2010.
Mr Leonard's evidence is considered extensively below. As will be clear I often found his evidence to be unreliable or implausible. In my view he was someone who was not averse to telling untruths to insurers in the past, or on occasion to the Court, if he felt it necessary, and whose general attitude towards the duty of disclosure upon an insured was cavalier at best. In considering his evidence, I have taken into account the unfortunate fact that after she attended Court on the first day, Mr Leonard's mother was taken seriously ill. She was diagnosed as having had a heart attack and a stroke. As a result the Court did not sit on the second day because Mr Leonard needed to be with her. However he was able to, and wanted to, resume his evidence on the next day. Obviously all of this put additional pressure on him. However it could not explain the difficulties with and implausibility of much of his evidence (given mainly on Day 1 and completed on Day 2), as recounted below. Nor, to be fair, was his mother's illness invoked by Mr Vaughan as a reason why his evidence might be less satisfactory than otherwise.
Mrs Leonard also gave evidence briefly. She could only provide relevant information in respect of the Langdale 9 Claim. As I make clear below her evidence was unsatisfactory in certain respects and I formed the view that she was also prepared to tell untruths if it assisted Mr Leonard.
I should add that prior to his acquisition of JFP, Mr Leonard ran a garage business called the B.A.R MOT centre. He then went into the property business and formed a company called Leonard Property Services Limited (“LPS”) to own his portfolio. At the end of December 2007 he acquired JFP which owned Hoo Hill Estate. This in turn was comprised of industrial units and 15 residential properties.
Following the conclusion of the evidence I received two sets of written submissions from each of Mr Vaughan, for JFP, and Mr Eklund QC for Aviva. Oral submissions were made on 18 June and 1 July. I am extremely grateful to Counsel for their assistance throughout the trial and for their very helpful submissions. On 28 July this judgment was sent out to the parties in draft.
THE DRAINAGE CLAIM
Introduction
On or around 10 September 2008, according to Mr Leonard, a problem with the drains was experienced at the Hoo Hill industrial estate. The tenants had complained that their waste pipes which led into the main drain were backing up which suggested a problem with the main drain itself. Its route can be seen on the large plan referred to at trial. The drain was found to have collapsed in the area between units 8 and 11. The cause was thought to be a lorry or lorries running over the concrete above and forcing the drain out of place so that it disconnected with the lengths of drain before and after it. Hence the blockage. Mr Leonard says that he called in Martin Salthouse a contractor whom he often used, and Sean Cummings to inspect the drains on that day. By Friday 12 September it was clear that the main drain had collapsed and would have to be replaced with various attendant works. Because it had collapsed the jetting of the drain had not solved the problem. Mr Leonard decided to call out the insurers ie Aviva and at around 3pm on Friday 12 September Ms Alicen Schofield of Crawfords, the loss adjuster appointed by Aviva, attended at Hoo Hill.
It is common ground that Ms Schofield was told that the drain had collapsed and that Mr Salthouse gave a verbal quotation for the cost of the repair works at £8,000. Ms Schofield did not give evidence but this figure is stated in her notes at 17/30 and broadly accords with Mr Salthouse's evidence on this point. She approved the execution of the repair/replacement works to the drain.
On 23 September, Ms Schofield wrote to Mr Leonard and confirmed receipt of some photographs relating to the drain and then said “We look forward to receiving copy repair estimates/accounts in order that we might consider this matter further.” Some time afterwards, probably just before 10 October she received a copy of the invoice which is at the heart of this part of the defence. It purports to come from Mr Salthouse, is dated 15 September and is for the sum of £8,400 plus VAT making £9,870 in respect of work to the drains. It also has on it the manuscript words “Paid in full with thanks”. I shall refer to this document as “the Main Invoice”. One of her notes for 10 October records that Mr Leonard called on that day urgently requesting payment. There was a chaser from Mr Leonard on 12 October and on 13 October Ms Schofield authorised payment of £8,400 ie net of VAT. This was because she thought the VAT would be reclaimable by JFP. Aviva sent out the cheque but on 15 October her notes record a conversation with Mr ...
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