LM-2024-000066 - [2025] EWHC 1416 (Comm)

In summary, the claimants challenge the misrepresentation defence on the basis that Zurich received no express representation from the claimants stating that there would be no contract works in the 12 months following policy inception. Rather, the claimants say that it has emerged, through the pleadings and initial disclosure, that it was Zurich itself which assumed that answer. This assumption was not based upon any statement by the claimants, or their brokers; but simply because the brokers’ risk presentation lacked any mention of any intended contract works. Zurich did not obtain any confirmation from the claimants, or their brokers, as to the presence, or absence, of any contract works. Despite that, Zurich unilaterally generated a statement of insurance, inserting ‘No’ as the answer to the contract works question (along with assumed answers to several other questions). Zurich now seeks to avoid the policy on the basis that its own assumed answer was incorrect. The fact that the claimants made no representation to Zurich has a further consequence: it means that there can have been no conceivable factual reliance by any underwriter at Zurich upon any representation of which (on this footing) it was entirely unaware. The claimants seek the strike out of, or alternatively reverse summary judgment on, what Mr Mesfin describes as “this unmeritorious and legally impermissible position”.

Mr Mesfin characterises Zurich’s case on fraudulent misrepresentation as “fundamentally flawed”. He submits that it fails to plead two essential elements: (1) that the claimants made a representation to Zurich, and (2) that Zurich relied upon any such representation. Without these elements, Mr Mesfin submits that Zurich’s case on misrepresentation has no real prospect of success. Mr Mesfin emphasises that this application does not ask the court to determine: (i) whether any alleged representation was in fact false (i.e., whether there was any misrepresentation), or (ii) whether, if there was a misrepresentation, it was made in breach of the claimants’ duty to take reasonable care not to make a misrepresentation. The only issue for this application is whether the pleaded case discloses any representation at all. Mr Mesfin also points out that there is an issue between the parties as to the role of Giles Gowers; but, for the purposes of this application only, the claimants are content to proceed on the basis of Zurich’s pleaded case, which is that Giles Gowers were acting as the claimants’ agents when placing the insurance cover with Zurich.

In the course of their oral submissions, both counsel referred me to passages in the Law Commission Report on Consumer Insurance Law, which preceded the enactment of CIDRA. Mr Mesfin emphasises that CIDRA codifies much of what had long been recognised in the insurance industry as best practice, and reflects the approach adopted by the Financial Ombudsman Service. He relies upon the following legal principles governing misrepresentation in consumer insurance contracts (which he develops in his skeleton argument by reference to the authorities):

Applying these principles, Mr Mesfin emphasises that a properly pleaded claim for misrepresentation must allege that:

Mr Mesfin’s principal submission is that Zurich has not pleaded that any misrepresentation was made to Zurich by or on behalf of the claimants. In none of its pleadings does Zurich explain the key elements of when, or how, the alleged misrepresentation was made by the claimants to Zurich, or how Zurich relied upon it when incepting the home insurance policy. This is a point taken at paragraph 173 of the claimants’ reply and defence to counterclaim:

The misrepresentation on which Zurich relies was contained within the SOI. Yet Mr Mesfin objects that this was a document generated by Zurich itself, and not by the claimants. Mr Duddle (of Zurich) first generated the SOI on 3 May 2022; and he sent this, with the other policy documents, to Mr Davison (of Giles Gowers) by email at about 12.35 that afternoon. A further version was sent with Mr Field’s email to Mr Murphy at 16.16 on 9 May 2022, when cover was incepted. At paragraph 15 of Mr Duddle’s witness statement, he makes it clear that it was he who inserted the answer ‘No’ to the question about future contract works in the SOI. He did so because Mr Davison had made no mention of any works being undertaken to the property. “If Colin did not mention that there were any works then I took it that none were planned at the property.” Mr Mesfin points out that it was therefore Mr Duddle, and not the claimants, or their brokers, who answered ‘No’ to the contract works question. This flatly contradicts Zurich’s pleaded case that it was the claimants who supplied that answer.

Mr Mesfin submits that Zurich’s case is not advanced by the telephone call at about 3.16 on the afternoon of 9 May, when Mr Murphy called Mr Field to request a reduction in the quoted premium. There is no suggestion in Mr Field’s evidence that, during this call, Mr Murphy said anything relevant to the contract works question. Mr Field simply proceeded on the basis that since no changes were made to any of the answers to any of the questions in the SOI, he was prepared to bind the risk. Mr Mesfin submits that Mr Field’s decision to proceed was based upon his own assumptions. He did not rely upon any statement or confirmation from Mr Murphy. Rather, he proceeded in the belief that Mr Duddle had completed the form correctly, and that he (Mr Field) had not been told of any changes by Mr Murphy. In so doing, Mr Field was relying upon a duty of disclosure which simply does not exist. There is no pleaded case of, nor any evidential basis for, any qualifying misrepresentation being made to Mr Field by either the claimants, or Giles Gowers.

Mr Mesfin submits that since it was Zurich itself which generated the SOI document containing the answer ‘No’ to the contract works question, it cannot now treat that as a misrepresentation by the claimants. He relies upon observations by Mr Richard Seymour QC (sitting as a deputy High Court judge) in Parallel Media LLC v Chamberlain [2014] EWHC 214 (QB) at [48] to the effect that a party cannot rely upon a document containing statements which it has made itself as if they were representations made by the other party. “In English law that amounted to the giving of warranties, not the making of representations.”

For these reasons, Mr Mesfin submits that Zurich’s assertion that ‘No’ was the claimants’ answer to the contract works question has no factual basis. The claimants never answered that question. The SOI was not created by them (or by Giles Gowers); nor was it provided to Zurich by them (or by Giles Gowers). Rather, it was generated and completed by Zurich. Further, Zurich does not plead any reliance by Zurich on any statement about contract works – just as it does not plead that either the claimants (or Giles Gowers) made any such representation. There is no pleading that the underwriter who issued the policy received, or relied upon, any statement regarding contract works from the claimants, or their brokers. Mr Mesfin suspects that Zurich cannot plead this (or support it with a statement of truth) because:

Mr Mesfin emphasises that Zurich has not pleaded any case based upon s. 2 (3) of CIDRA. However, Mr Mesfin addresses this provision for the sake of completeness. S. 2 (3) provides as follows:

The phrase “particulars previously given” necessitates two preconditions: first, that the consumer has provided information to the insurer, meaning, in the case of the claimants, that they had provided information to Zurich; and secondly, that such information is the subject of a subsequent request for confirmation or amendment. A request to ‘confirm or amend’ presupposes, and factually requires, that there is something specifically originating from the consumer, and provided to the insurer, which is either to be confirmed or corrected. Thus, s. 2 (3) applies only where (1) the consumer has previously given particulars to the insurer concerned, and (2) the insurer subsequently requests confirmation or amendment of those particulars. I would further add (3) that the consumer must also fail to comply with the insurer’s request.

Here, Mr Mesfin submits that neither condition is satisfied. Zurich had simply made assumptions; the claimants had not previously given any particulars to Zurich about contract works. Nor was there any request by Zurich to confirm or amend information it had received from the claimants – for the simple reason that there was no such information.

Whilst s. 2 (3) allows an insurer to invite a consumer to revisit and, if necessary, correct, information they have already supplied to that insurer, it imposes no duty on the consumer to verify assumptions unilaterally made by the insurer in the absence of any prior consumer representation to that insurer. Where an insurer – such as Zurich – has made statements, or drawn conclusions, based purely upon its own assumptions, without any input from the consumer, those statements cannot be re-characterised as ‘particulars previously given’. Such insurer-generated material lies entirely outside the scope of s. 2 (3).

Mr Mesfin objects that Zurich is impermissibly seeking to invert the statutory framework by treating its own assumptions as if they were consumer representations. It would be seeking to impose upon the claimants a duty to correct or confirm Zurich’s own statements – statements that the claimants neither made nor endorsed. That approach finds no support in either the language, or the legislative purpose, of CIDRA. Parliament did not intend to create any duty upon consumer insureds either to vet, or to verify, insurer-generated documentation. On the contrary, CIDRA was designed to protect consumers by codifying the practice, endorsed by the Financial Ombudsman Service, of requiring insurers to ask, and obtain answers to, clear and specific questions, and to bear the consequences if they failed to do so. The Law Commission had been explicit in rejecting the imposition of burdensome, and unrealistic, disclosure obligations on consumers. The test under CIDRA is whether the insurer has asked a clear question, and whether the consumer has provided an inaccurate response; not whether the consumer has failed to police assumptions that the insurer has made independently.

During the course of his oral submissions, Mr Mesfin referred to the relevant section (paragraph 5.52) of the Law Commission Report. This gives two instances of where s. 2 (3) might apply: (1) Where an insurer writes to a consumer on renewal with a statement of the information it holds about the consumer, and asks them whether anything has changed. (2) Where the insurer takes information from the consumer over the phone, and then sends the consumer a statement of fact, and asks the consumer to contact them if the statement is incorrect. Neither situation applies here. S. 2 (3) is simply not engaged where the relevant particulars have not previously been given by the insured, but rather have been assumed, and generated, by the insurer: there is no requirement on an insured to mark the insurer’s own homework. Any duty of disclosure is limited to the correction of actual information previously provided by the insured in response to a request from the insurer to confirm or amend particulars the insured has previously given. Mr Mesfin also referred to the practice of the Financial Ombudsman Service when considering a consumer’s complaint that, in finding a misrepresentation, their insurer had treated them unfairly. If an insurer considers that information given to them was incomplete or incorrect, the Ombudsman will “need the insurer to provide evidence showing what questions was [sic] asked, what answers were given and proof showing the answer was incorrect”.

In the course of his reply, Mr Mesfin pointed out that the only relevant written ‘request’ from Zurich for confirmation of any particulars given would have had to be constituted by Mr Duddle’s email of 3 May 2022 (timed at about 12.35), attaching the original SOI and the other policy documentation. That is because the later email from Mr Field, timed at 16.16 on 9 May, was sent after, or contemporaneously with, the inception of the policy.

In the course of his reply, Mr Mesfin also contrasted the facts of this case with those in Jones v Zurich Insurance plc [2021] EWHC 1320 (Comm), [2022] Lloyd’s Rep 219. There the underwriter had sought express confirmation from the insured’s broker as to the accuracy of the information that there had been no previous claims. Neither Mr Duddle’s original email, nor Mr Field’s later email, contained any similar request. Mr Mesfin reiterated that relying upon one’s own mistaken assumption is very different from relying upon another’s representation. Inducement cannot take place without reliance.

Mr Mesfin submits that Zurich’s reliance on the policy exclusion in respect of loss or damage ‘caused by or resulting from contract works’ is untenable since it does not plead the cause of the fire; nor does it allege any facts to support any case that the fire was caused by contract works. Zurich has failed to plead any causal link between the contract works and the fire. Alleging that the fire occurred ‘during the course of the contract works’ – which had been ongoing for some time before the fire – is not a pleading that the fire was ‘caused by or resulting from’ those works. The formulation ‘during the course of’ merely suggests a temporal coincidence, and not causation. At a minimum, Zurich is required to plead: (1) what contract works were being carried out at the time of the fire; (2) the mechanism by which those contract works caused or resulted in the fire; and (3) what resulting loss or damage is said to fall within the exclusion. Without those allegations, the contract works exclusion defence has no real prospect of success. At present, there is no issue as to the cause of the fire (because Zurich has not pleaded one), still less any issue in dispute that could engage the exclusion (namely a dispute as to whether the contract works caused loss or damage which would fall to be excluded from cover).

The courts require exclusions in insurance policies to be pleaded with precision and specificity because they limit coverage otherwise provided by the policy of insurance. Mr Mesfin acknowledges that parties are not required to plead evidence. But, he says, that is not the issue here. The point is more fundamental: Zurich has failed to plead any facts to establish that the exclusion applies. There is no pleaded basis that the cause of the fire was the contract works. Mr Mesfin emphasises that this position is aggravated by Zurich’s repeated refusal, over the course of the past ten months, to remedy its deficient pleadings, despite ample opportunity to do so; and its insistence that its case should stand or fall on the pleadings as they are. This is a point that, he says, applies equally to the misrepresentation claim. This is not merely a question of deficiencies in the pleading; it has real, and practical, consequences. Without a properly particularised case as to how the exclusion is said to be engaged, it is impossible to identify the real issues in dispute, or determine the proper scope of disclosure (as required by PD 57AD). That not only prejudices the claimants in understanding, and seeking to meet, the case against them; it also deprives the court of the ability to case manage and resolve the issues effectively, fairly and at proportionate cost. The steps of extended disclosure, witness, and expert evidence cannot sensibly be taken in a vacuum.

In summary, Mr Mesfin objects that Zurich cannot invoke an exclusion to avoid liability unless and until it pleads a properly particularised case that sets out why the exclusion is engaged. He says that this is all the more striking given that Zurich already holds expert evidence on the cause of the fire, which it has repeatedly refused to disclose.

In the course of his oral submissions, Mr Mesfin also addressed Mr Crowley’s alternative submission that once the house was being redeveloped, then the whole property fell to be treated as ‘contract works’. This is wrong, both as a matter of law, and on the facts. First, as to the law, ‘contract works’ are works carried out to the house. They are not the house itself. Otherwise the second limb of this exclusion would be entirely unnecessary, otiose, and redundant. The physical house is separate from the ‘contract works’.

Secondly, on the facts, the works were being carried out to the house. They did not involve the construction of a replacement house. That is clear from paragraph 40 of Zurich’s defence and counterclaim, which pleads:

Mr Mesfin submits that there is no other reason why either the misrepresentation claim or the contract works exclusion issue should proceed to trial. The suggestion that the claimants’ application should be refused because its success would not dispose of the entire claim is misconceived for the following reasons:

Mr Mesfin developed these submissions in oral argument. In summary, he emphasised that Zurich now accepts that it had made an assumption about the answer to the contract works question. It did not ask that question itself. Rather it assumed the claimants’ broker had done so. That was said to take the case into the territory of mere non-disclosure. There was no allegation of any representation, and therefore there could be no allegation of any reliance. Nor did any of Zurich’s pleadings adequately engage the contract works exclusion.

Mr Mesfin addressed the court under five headings:

Mr Mesfin stressed that the gravamen of any claim in misrepresentation is that the counter-party has said something upon which the complainant has relied as inducing it to enter into a contract. Here the complaint is not: You spoke and I was misled by what you said. Rather, information was simply not volunteered. Zurich assumed an answer to a question that had never been asked; and the claimants failed to correct Zurich’s pre-existing, and self-generated, understanding. That represents a failure to speak out, rather than speaking out falsely. There is a bright-line distinction between silence that misleads and silence that fails to correct a misunderstanding. In the context of consumer insurance contracts, a duty to disclose can only arise in limited circumstances, none of which applied here. That is because, when enacting CIDRA, Parliament removed any duty of disclosure in the case of consumer insurance contracts. If an insurer fails to ask, it cannot complain about any non-disclosure. The burden rests with the insurer to ask questions. If it fails to do so, it cannot avoid the policy.

Here, surprisingly, Zurich’s underwriting was not based upon information provided by the insured, but upon the insurer’s unilateral assumptions, based upon the brokers’ silence. Zurich now seeks to hold the insured to an answer they never gave. It assumed an answer from the brokers’ silence, and now seeks to hold the claimants to an answer they never gave to a question they were never asked. But CIDRA does not permit an insurer to rely upon assumptions and inferences from mere silence. In addition to the contract works question, Zurich made similar assumptions from silence about the lack of any director disqualifications or pending criminal prosecutions on the part of the claimants. Zurich simply filled in the gaps in the SOI itself, based upon the brokers’ silence. The root cause of this (as explained at paragraph 16 of Mr Duddle’s witness statement) is that Zurich’s underwriters were “really busy at the time and that we would send out quotes more in hope than expectation”. Unfortunately, such an approach comes with a risk. If an insurer chooses speed over scrutiny, says Mr Mesfin, it cannot invoke CIDRA to remedy the consequences of its own haste.

Mr Mesfin emphasises that it is a bedrock of case management that a party is bound by their pleadings. He accepts that a party does not need to plead evidence; but it does need to plead a cause of action. Here there is no plea that the claimants ever made any relevant representation to Zurich. The claimants accept that they signed each page of the SOI without making any amendments. But they did not do so until 24 May. And they then returned the document to their brokers, and not to Zurich. That gave rise to no qualifying representation because of: (1) timing: it was some two weeks after the inception of the insurance cover and policy, and the duty not to make any misrepresentation had long-since ceased; and (2) non-transmission: there is no plea, and no evidence, that the signed SOI was ever passed on to Zurich. At paragraph 18 of his witness statement, Mr Adrian Giles says that upon reviewing the brokers’ retained file, there is no correspondence suggesting that the signed SOI was ever forwarded on to Zurich.

On the subject of reliance, Mr Mesfin identifies a three-stage approach: (1) Representation – was anything said by the insured? (2) Reliance – did the insurer hear the representation? (3) Inducement – did the representation affect the insurer’s conduct? He complains that Zurich elides reliance and inducement.

Mr Mesfin relies upon observations of Cockerill J in Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd [2023] EWHC 2759 (Comm) at [400]-[402] as authority for the proposition that the complainant must have been aware of the relevant representation before they can say that they were induced to act in reliance upon it. Rejecting the suggestion that this would create a ‘rogue’s charter’, the judge commented that… there is no unfairness in not providing a remedy in respect of a representation which has not been received or comprehended. The greater unfairness is to provide a remedy when the standard requirements of the cause of action are not satisfied.

In doing so, Cockerill J drew upon the following observations of Hamblen J in two earlier cases:

Mr Mesfin relies upon the conclusion expressed by Cockerill J at [421]-[422]:

Here, Mr Mesfin submits that there is no plea of reliance; it is merely asserted. It was Zurich which generated the SOI. It was then sent to the brokers, and passed on to the claimants. But Zurich never received back from the brokers the SOI, duly signed by the claimants. In any event, by the time the claimants came to sign the SOI, it was already too late; the insurance policy and cover had already been created and incepted. Mr Mesfin objects that Zurich has ‘reverse-engineered’ a case on reliance. It relies upon its own document, constituted by answers which Zurich simply assumed, and which were not supplied by the claimants. Mr Mesfin accepts, by reference to Hayward v Zurich Insurance Co plc [2016] UKSC 48, [2017] AC 142, that a complainant need not necessarily believe the representation to be true, so long as it influenced the complaint’s mind, and had an effect upon their decision. In the graphic words of Lord Toulson, in his concurring judgment (at [62]):

For all these reasons, Mr Mesfin invites the court to strike out the relevant parts of the defence, and to enter reverse summary judgment in favour of the claimants in the terms of the draft order that accompanies the application notice.