Raymond Sehayek v Amtrust Europe Ltd
| Jurisdiction | England & Wales |
| Judge | Andrew Singer |
| Judgment Date | 05 March 2021 |
| Neutral Citation | [2021] EWHC 495 (TCC) |
| Date | 05 March 2021 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No: HT-2019-000389 |
[2021] EWHC 495 (TCC)
RECORDER Andrew Singer QC
(sitting as a Judge of the Technology and Construction Court)
Claim No: HT-2019-000389
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Shomik Datta (instructed by Northover Litigation, Solicitors) for the Claimants
Mr Doré Green (instructed by Shoosmiths LLP, Solicitors) for the Defendant
Hearing dates: 16 th–17 th February 2021
Introduction
This is a trial of preliminary issues ordered by Alexander Nissen QC sitting in the TCC on 9 th October 2020. The issues relate firstly to the interpretation of a policy of insurance underwritten by the Defendant (“the Policy”) for defects relating to a new build property in Grove End Gardens, St John's Wood, London (“the Property”). The Property is owned by the Claimants whose claim for sums they say are payable by way of indemnity under the Policy has been rejected by the Defendant giving rise to the substantive proceedings in this Court. Secondly, the preliminary issues raise questions of estoppel and/or waiver alleged to arise in favour of the Claimants.
Mr Shomik Datta appeared for the Claimants and Mr Doré Green for the Defendant. I am grateful to them both for their helpful and comprehensive written and oral submissions. I have taken them all into account in reaching my judgment. I do not deal in this Judgment with every point raised, but that should not be taken as meaning that I have not considered them all; simply that I do not regard it as necessary for them all to be set out in this Judgment. The trial was held remotely due to the COVID-19 restrictions. It was nevertheless a public hearing.
The burden of proof is on the Claimants to show that they are entitled to the benefit of the Policy on the balance of probabilities. That burden applies equally to issues which need to be established to demonstrate entitlement under the Policy such as the preliminary issues which have been the subject of this trial.
The Preliminary Issues
The preliminary issues are as follows:
(a) Were the Rules incorporated into the Policy?
(b) Is the provision of cover under the Policy conditional upon the Developer complying with the Rules?
(c) Are the Claimants entitled to the benefit of Section 3.2 of the Policy in relation to the Property given the definition of “the Developer” within the Policy?
(d) Is the Defendant:
(i) estopped from asserting that DPD was not the Developer in relation to the Property for the purposes of the Policy; alternatively
(ii) estopped from asserting that the Rules had not been complied with by the inception of the Policy; alternatively
(iii) estopped from relying on the strict terms of the Rules and/or Policy to assert that the Property was not covered by the Policy on the basis that DPD was not the Developer; alternatively
(iv) has the Defendant waived any breach of the Rules and affirmed the Policy by incepting the Policy and dealing with the Claimants' asserted claim thereunder?
The Facts
I heard oral evidence from Mr Sehayek on behalf of both Claimants and Mr Smith, the Scheme Administrator for the Defendant underwriters. I was satisfied that they both gave their evidence honestly and sought to deal with all questions in an open and cooperative manner. It was not suggested to me that either party's witness evidence was unreliable or that their evidence should be disbelieved or discounted in any material respect. For the avoidance of doubt, I accept that their evidence both in their witness statements and in their oral evidence before me was truthful and accurate.
The factual background to these preliminary issues was not disputed and is mostly apparent from the documentation which has been presented to the court and is within the trial bundle.
I make the following findings of fact on the witness and documentary evidence presented to me. Since, as noted above, there have been no substantive disputes between the parties as to the factual background, it is unnecessary for me to explain my reasons for making those findings.
Dekra Penthouse Developments Limited (“DPD”) was incorporated on 8 th March 2001. Mr and Mrs Cunnington were the directors of DPD and Mr Cunnington was its sole shareholder.
In late 2004/early 2005 LABC (a trading style of MD Insurance Services Limited who acted as agents for the Defendant in these proceedings) issued an initial Certificate of Insurance for a development at Trinity Road, London SW17. That insurance was underwritten by Liberty Syndicate 4472 at Lloyds, not the Defendant in these proceedings. The Developer was listed as “Dekra”. Correspondence was with Mr Cunnington of “Dekra”. On 1 st March 2005 Mr Cunnington on behalf of Dekra sent an Indemnity Agreement and Rules of Registration to the Defendant's agents which resulted in June 2005 in a Certificate being issued to “Dekra”. The final Certificate when issued was also in favour of “Dekra”.
On 28 th April 2005 Dekra Developments Limited (“DDL”) was incorporated with the same directors and ownership as DPD. On 29 th April 2005 Dekra Holdings Limited (“DHL”) was incorporated. In that company's case Mr and Mrs Cunnington were equal shareholders.
In October 2007 “Dekra” entered into a Deed of Indemnity in respect of a development at Wellington Court in St John's Wood. When dealing with that development, the present managing agent (again acting for a different insurer) referred to Dekra as an existing developer.
On 24 th January 2008 Alison Woods of LABC sent an email to Mr Cunnington in respect of a third development at the Terraces, St John's Wood. That email reads:
“Further to your enquiry regarding the above new site. If GD Investments are the developers we will require a Contract Notification Form and Registration Form being filled in by and signed by them. If Dekra Developments are to be the builder, this should be under contractor information on the Contract Notification Form and if they just put reference that Dekra are already registered with LABC New Home Warranty than[sic] this will be taken into consideration when rating.
I have attached the necessary forms if you wish to pass these on to GD Investments. If you have any further enquiries please do not hesitate to contact me.”
This third development was, I was told and accept, different to the usual developments because there was a third party (GD Investments) who were the developer whereas Mr Cunnington/Dekra's usual approach was to be both developer and builder.
On 29 th October 2009 a final Certificate of Insurance was provided for Trinity Road. The developer was “Dekra”.
On 16 th December 2011 the final Certificate of Insurance was issued for Penthouse 2 at Wellington Court and also listed “Dekra” as the developer as did subsequent certificates issued thereafter for the remaining penthouses.
On 25 th March 2013 Grove End Gardens London Limited (“GEG”) was incorporated with the same directors as DPD and DDL. The sole shareholder of GEG was DHL.
On 7 th May 2013 Mr Cunnington applied to LABC/the Defendant in the name of Dekra in respect of a development at Grove End Gardens. That is the development which includes the Property the subject of these proceedings. The Contract Notification Form includes the following. In Section 5 of the Form in answer to the question “Who will carry out the building works?” is stated “Dekra”. Likewise, the name of the builder is “Dekra”. The LABC Warranty Registration Number is given as 004279. In answer to the question “Are you connected with a developer who is already registered with LABC Warranty?” the answer is given “Yes”. In addition, in handwriting is written (probably by Mr Cunnington):
“Dekra are a building company that do their own developments. We have been building for 30 years: see sheets attached.”
In addition in handwriting the following had been written (also probably by Mr Cunnington):
“Company — Dekra
You will have more information than I could send.”
In a document generated internally by the Defendant's managing agents which is undated but must have been produced after 7 th May 2013 and before 11 th June 2013 the developer is described as Dekra Developments. That document also makes clear that the developer is an existing developer, ie one that has been insured before, and the references in the internal document are to the previous developments at Trinity Road and Wellington Court as well as to the Terraces development with GD Investments.
On 11 th June 2013 LABC sent a Quotation for the Grove End Gardens development in which the client was named as DDL. The Quote Details noted that the client was an “existing developer under 19376” which is the reference to Wellington Court. The quote also required the Contract Notification Form to be “completed and signed in the full developer name”. Further, a “suitable cross-company guarantee” was to be provided in respect of cover for Section 3.2 of the Policy. It was noted that:
“We are unable to issue any Certificates without receipt of the Cross-Company Guarantee.”
On 18 th June 2013 a lease was granted of the airspace above Grove End Gardens to GEG. On 19 th June 2013 a payment was made to LABC by Davenport Lyons Solicitors on behalf of DPD in the sum of £59,557.08 and in acceptance of LABC's quote for insurance for the Grove End Garden development.
A Developer's Indemnity Agreement was entered into on 26 th June 2013 between DDL and the Defendant. DDL confirmed receipt of the LABC Rules on 1 st July 2013. An Initial Certificate for Grove End Gardens was issued by LABC on 27 th August 2013. The Developer was named as DDL.
On 12 th December 2013 GEG and DPD entered into a JCT...
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