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

For Zurich, Mr Crowley submits that the claimants’ application is misconceived because:

In very brief summary, Zurich asserts that in May 2022, the claimants made a deliberate or reckless (or careless) qualifying misrepresentation by misrepresenting their intention to carry out contract works to their home in the following 12 months. The claimants expressly confirmed, endorsed and adopted the question and answer in the SOI that the property was not likely to undergo any contract works within the next 12 months; and they instructed Giles Gowers to secure insurance on that basis. The claimants did then, in fact, carry out the contract works; and these caused loss and damage, both to the contract works themselves, and to the property, on 29 December 2022, when a fire occurred during the course of the contract works. Without the misrepresentation, Zurich would not have entered into the contract of insurance with the claimants at all. Zurich have now avoided the policy.

Mr Crowley submits that further evidence needs to be adduced at trial as to what communications took place between the claimants and Giles Gowers, especially what questions they asked, and what answers were given by Mr Bellhouse, throughout the history of their relationship, particularly concerning contract works in existence or in contemplation. This is said to be especially significant now that the claimants are disputing a second, key telephone call between Mr Bellhouse and Mr Davison on 29 April 2022. Evidence will need to be given about this at trial.

Mr Crowley criticises Mr Mesfin’s skeleton argument for ignoring, or misunderstanding the ‘shape of the case’ from the statements of case and the documents and evidence adduced so far. He submits that this application is based on a misunderstanding, and confusion, of the well-established principles of insurance law. Likewise, Mr Mesfin misunderstands, and so confuses, the purpose of statements of case, as opposed to the disclosure that will be given, and the evidence that will be adduced, on the issues identified by the statements of case. Disclosure and evidence on the issues so identified will be produced in the ordinary way, in accordance with the court’s directions at the first, deferred, costs and case management hearing. Mr Crowley claims that the misrepresentation and contract works defences are fully and properly pleaded. He says that it is noteworthy that the Part 18 request for further information was fully, and properly, answered; and that there has been no further such request.

In summary, Mr Crowley submits that at the heart of Zurich’s first defence is that the claimants misrepresented the contract works they were contemplating. They secured home insurance on the basis of that misrepresentation. Without the misrepresentation, Zurich would not have entered into the contract of insurance. Likewise, the loss and damage, which was contract works, and was caused by contract works, is clearly pleaded and evidenced. Against that unpromising factual backdrop, Mr Crowley says that the application for strike out and summary judgment is misconceived and hopeless.

Mr Crowley emphasises (by reference to paragraphs 11 to 15 of his witness statement) that Mr Duddle assumed that Mr Davison had questioned Mr Bellhouse about any contract works. Mr Duddle made this assumption because he was aware that Mr Davison knew that Zurich would not write new business where contract works were involved or contemplated. Since Mr Davison made no mention of any works to the property during their telephone conversation, shortly after 12.15 on the afternoon of 3 May 2022, Mr Duddle also assumed that no such works were being undertaken or planned within the next 12 months. If the answer to the contract works question on the SOI had been ‘Yes’, then Mr Duddle would not have generated a quotation. Instead, he completed the questions on the SOI, generated the quotation, and then emailed it to Mr Davison on 3 May 2022 at around 12.35pm (along with the SOI and the other policy documents) so as to ensure that Giles Gowers checked the questions and answers with the claimants, as their customers.

The claimants plead that on 3 May 2022 (at 14.28), Mr Davison told Mr Bellhouse that he had obtained a quotation from Zurich; and Mr Davison went through a number of questions which related to the SOI. Later that afternoon (at 16.19) this was emailed through to Mr Bellhouse. Mr Crowley says that evidence will need to be given at trial about that conversation. Paragraph 91.3 of the claimants’ reply and defence to counterclaim pleads that Mr Bellhouse and Mr Davison spoke by telephone on 9 May 2022 at 13:37. During this call:

At 14.39 on 9 May 2022, Mr Bellhouse replied to Giles Gowers’s email of 3 May 2022 (which included the SOI) asking them “to progress with this Zurich policy”. Mr Crowley contends that the claimants thereby instructed Giles Gowers to place the insurance with Zurich, on the basis that the answer to the contract works question in the SOI was ‘No’. This, says Mr Crowley, is the misrepresentation. The claimants admit, at paragraph 159.1 of their reply and defence to counterclaim, that they answered ‘No’ to the contract works question in the SOI. They thereby admit that they confirmed, endorsed, and adopted Zurich’s answer. That was communicated to Zurich by Mr Murphy calling Zurich and placing the insurance on the basis of the documents provided by Zurich, including the SOI. The importance of the accuracy of the SOI, and the need to “check these details carefully and let us know immediately of any errors”, is emphasised in the SOI itself, and throughout the insurance documentation. The fact that Mr Bellhouse believed that he had completed the SOI himself is entirely consistent with Zurich’s case that he endorsed, confirmed, and adopted the answer ‘No’ to the contract works question. In this case, looking at what was said and done, and its likely effect upon Zurich, that is precisely what happened. Mr Bellhouse instructed the brokers to place the insurance on the basis of that misrepresentation.

On 9 May 2022, in a telephone call starting at 15.16, Mr Murphy (of Giles Gowers) called Mr Field (of Zurich) seeking to reduce the premium on the quotation. Mr Murphy did not seek to amend the answer ‘No’ to the contract works question. He thereby secured cover for the claimants on the basis that the answer to the contract works question was ‘No’. On that basis, Mr Field agreed to reduce the premium slightly, and to send updated policy documents (including the final SOI, with the reduced premium figure) to Giles Gowers. Mr Field did so at 16.16 on 9 May. Zurich contends that this is when the policy incepted. Later that afternoon, at 16.44, Mr Murphy sent the final SOI and the other policy documentation to Mr Bellhouse, who was asked to read the attached documents carefully, make sure that all the details were in order, and to “kindly print off, sign and date each page of the Statement of Insurance form to our office…”. Mr Murphy chased Mr Bellhouse for this on 20 May 2022. On 24 May 2022, Mr Bellhouse returned the SOI to Giles Gowers having signed each page confirming that its contents were correct.

Mr Crowley submits that the misrepresentation is clearly pleaded in paragraph 26 of the defence and counterclaim. The claimants admit (in paragraph 159.1 of their reply and defence to counterclaim) that they answered ‘No’ to the contract works question; but they deny that it was a misrepresentation, asserting (in paragraph 162) that “Mr Bellhouse was honest and careful in answering the Contract Works Question”. Mr Crowley acknowledges that, on the evidence to date, the claimants may not have physically filled out the SOI with the answer ‘No’ to the contract works question. But he submits that it is telling that the claimants’ verified pleaded case (consistent with their solicitors’ pre-action correspondence) is that they believed that they did. In any event, the evidence establishes that they confirmed, endorsed and adopted the answer ‘No’ on the SOIs.

In considering what representation, if any, was made, Mr Crowley emphasises that the court will consider the relevant words and conduct in their context. He relies upon the following observations of Langley J in Sumitomo Bank v Banque Bruxelles Lambert SA [1997] 1 Lloyd’s Rep 487 at p. 515 (col.1):

Mr Crowley submits that, on an objective assessment of what was said and done here, and its likely effect upon Zurich in this context, the claimants confirmed, endorsed and adopted the answer ‘No’ to the contract works question on the SOIs. They instructed Giles Gowers to effect the insurance on that basis. Hence, the claimants made a misrepresentation to Zurich.

Mr Crowley further submits that Parallel Media LLC v Chamberlain should not be treated as good authority for the proposition that there cannot be a representation where an insured confirms and adopts a statement drafted by an insurer. The deputy judge cited no authority in support of that conclusion in Parallel. It is not an insurance case; nor is it a case under CIDRA. It is contrary to the “wide and flexible approach to the issue of what amounts to a misrepresentation” that was advocated by the Law Commission at paragraph 5.50 of their Report. The authority has been doubted in O’Sullivan, Elliott and Zakrzewski: The Law of Rescission (3^rd edn) at para 4.75 in the following terms:

In the course of his oral submissions, Mr Mesfin did not take any issue with the general principle enunciated in the Sumitomo Bank case; but he confessed himself to be mystified as to how it assists Mr Crowley on the facts of the instant case. Mr Mesfin described Mr Crowley’s explanation of the misrepresentation allegedly made by the claimants to Zurich as ‘entirely opaque’. At best, it was merely an allegation of non-disclosure. Although there had been some academic criticism of the observation in the Parallel Media case, it had never been disapproved in any later authority. It was precisely in point. Since it was Zurich that had supplied the answer to the contract works question, it could not amount to a misrepresentation.

Mr Crowley also attacks Mr Mesfin’s reliance upon s. 2 (3) of CIDRA. He submits that the phrase ‘particulars previously given’ in s. 2 (3) is not limited to particulars previously given by the insured. S. 2 (3) introduces a new concept, and makes it clear that there is a misrepresentation for the purposes of the Act ‘whether or not it could be apart from this subsection’. At paragraphs 5.50-5.54 of their Report, the Law Commission advocates “… a wide and flexible approach to the issue of what amounts to a misrepresentation”. The Commission did not seek to limit ‘particulars previously given’ to particulars previously given by the insured. There is no reason why it should be so limited. The absence of any such limitation is entirely in accordance with the purpose of CIDRA, which is to give insurers rights and remedies in response to a misrepresentation by an insured. The insured is being given the full opportunity to confirm or amend the particulars, so there is no reason to limit s. 2 (3) to particulars given by the insured. Here, the claimants confirmed, endorsed, and adopted the answer to the contract works question. The two examples given by the Commission at paragraph 5.50 of their Report are merely examples of situations where s. 2 (3) might apply; they are not intended to be exhaustive. In any event, it is significant that the first example applies where information is ‘held’ by the insurer, with no mention of it having been given by the insured. In answer to a question from the Bench, Mr Crowley submitted that an ‘omission’, for the purposes of s. 2 (3), is merely an omission to comply with a request from the insurer; it does not require an outright refusal.

On the issues of reliance and inducement, Mr Crowley emphasises that the SOIs containing the misrepresentation were sent by Zurich to Giles Gowers, who then sent them on to the claimants. Obviously, Zurich saw, considered, and relied upon these documents. Mr Crowley says that the claimants’ inability to grasp this pretty fundamental and self-evident point appears to be the principal source of their ongoing confusion as to what they term ‘factual reliance’, which has led to this misconceived application for strike out and summary judgment. In any event, Mr Crowley says that there is no issue between the parties, since, in Devonshires’ pre-action letter dated 6 August 2023, the claimants have already conceded that the misrepresentation was communicated to Zurich. Reliance and inducement, are clearly pleaded, and particularised, in paragraphs 9 and 11 of Zurich’s reply to the defence to counterclaim.

Mr Mesfin’s arguments are said to be premised on a misunderstanding of, and confusion as to, some of the well-established principles of insurance law. The correct legal analysis is that Zurich were ‘induced’ to enter into the policy by the claimants’ misrepresentation in the SOIs as, without the misrepresentation, Zurich would not have entered into the contract of insurance with the claimants at all. Inducement (and reliance) are questions of fact. Zurich’s factual reliance on the misrepresentation in the SOIs is properly pleaded. Mr Crowley references paragraphs 78 and 79 of Zurich’s defence and counterclaim. These plead:

In his oral submissions, Mr Crowley pointed out that the Loreley Financing case had not featured in Mr Mesfin’s skeleton argument. It was a very different case to the present. The judgment did not follow on from a strike out, or summary judgment, application, but was delivered after a trial of more than five weeks. At trial, the claimant failed to establish any of the alleged misrepresentations, so Cockerill J’s observations on the issue of reliance are said to have been obiter. Mr Crowley submits that a more reliable guide is the judgment of Waksman J in Crossley v Volkswagen AG [2021] EWHC 3444 (QB), [2023] 1 All ER (Comm). That case involved an application for summary judgment. This was refused, both because the claim in deceit, founded upon an implied representation by conduct, had a real prospect of success; and because there were other compelling reasons for a trial. Even if there was nothing in the deceit claim, the trial of the other claims was likely to remain extensive and involved; and it would cover the same, or similar factual, evidence as to the defendant’s conduct. In the course of his judgment, Waksman J had to consider whether, as a matter of law, in order to prove reliance upon an implied representation, a representee must plead and prove that they were ‘consciously aware’ of the representation in question. This was referred to as ‘the awareness condition’. For the reasons developed in his judgment, Waksman J considered that the whole issue of the awareness condition could not seriously be described as a ‘short point of law’, to be grappled with, and determined, on an application for summary judgment. Mr Crowley submits that this is also the case with the present application.

Zurich also relies upon the presumption of inducement. This is addressed in the judgment of Lord Clarke (with whom the other Justices all agreed) in Hayward v Zurich Insurance Co plc [2016] UKSC 48, [2017] AC 142. At [34], Lord Clarke approved the following statement from Chitty on Contracts:

That point was reiterated by Longmore LJ in his leading judgment in BV Nederlandse Industrie van Eiprodukten v Rembrandt Enterprises Inc [2019] EWCA Civ 596, [2020] QB 551 at [43] where he confirmed that:

Mr Crowley pointed out that the contract works exclusion has two limbs. First, it excludes loss or damage to ‘contract works’. So, as here, once a property is being entirely re-developed, and effectively becomes a building site, then the whole property is ‘contract works’ and is excluded from buildings reinstatement cover under the policy. Secondly, if the loss or damage to the existing structures is caused by or results from ‘contract works’, then that is similarly excluded. Zurich relies upon both exclusions. The claimants’ alleged loss and damage was ‘contract works’; and it was caused by and resulted from the ‘contract works’. This is pleaded at paragraphs 76 and 94 of the defence and counterclaim thus:

Mr Crowley further observes that this limb of the strike out application is truly ‘bizarre’ as there is no real dispute that the loss and damage were caused by the contract works. This is because:

Mr Mesfin points out that Mr Williamson is a loss adjuster and not a forensic fire investigation expert (unlike Mr John Hughes of Hawkins & Associates, retained by Zurich). I also note that Mr Williamson’s report states that “the property sustained fire damage on 29th December 2022, and at the time of issuing this report, the proximate cause is unknown”.

Mr Crowley submits that Zurich have drawn a clear distinction between facts that are pleaded and evidence which does not need to be pleaded. Zurich has identified the sources of further evidence (such as the brokers at Giles Gowers and the claimants themselves). Unlike Mr Micawber, Zurich is not simply playing for time in the hope that something will turn up.

Mr Crowley says that, on current evidence, Zurich’s defences are in fact highly likely to succeed. The evidence before the court all points one way on the defences. It is noteworthy, and telling, that, in this application, the claimants have not adduced any contrary evidence on the issues that they raise. Mr Netherway’s witness statements, and Devonshires’s lengthy correspondence, consist of contentions on Zurich’s case and unmeritorious, old-fashioned ‘pleading points’, but no actual contrary evidence on the issues on which the claimants seek strike out and summary judgment.

Drawing together the relevant points from the authorities on striking out and summary judgment which have particular application to this case, Mr Crowley makes the following points:

Turning to issues of pleading, Mr Crowley submits that Zurich have complied with both the rules and the guidance on pleading misrepresentation and fraud. Zurich’s statements of case are clear on what the misrepresentation was, and why it was false and untrue.

The claimants’ lengthy correspondence, and this application, are said to be the product of a fundamental misunderstanding, and confusion, about the purpose of statements of case, as opposed to the disclosure that will be given, and the evidence that will be exchanged, on the issues identified by those statements of case. This is said to be exemplified by Mr Netherway’s 3^rd witness statement (at paragraph 12) where he says that the telephone call between Mr Duddle and Mr Davison on 3 May 2022 at about 12.15pm is not pleaded. But it does not need to be. Zurich does not need to plead every telephone call or document in the case. These are background facts and matters of evidence. Disclosure, and evidence, on such issues will be produced, and exchanged, in the ordinary way, and in accordance with the court’s case management directions.

Mr Crowley’s primary submission is that no amendments are required to Zurich’s pleadings. In the course of his oral submissions, however, Mr Crowley indicated that should the court consider that any amendments are required to Zurich’s statements of case, he would wish to be given the opportunity to frame them.

Mr Crowley points out that even if it were to succeed, the claimants’ application would not resolve this claim as there are numerous matters to be determined at trial, such as:

Mr Crowley submits that the matters the claimants seek to strike out also overlap with, and are relevant to, these issues, and so will still be issues to be determined at trial in any event. Likewise, the matters sought to be struck out are also relevant to the claimants’ credibility; and the claimants will be cross-examined on the misrepresentation at trial in any event.

Finally, even if, contrary to Zurich’s submissions, the claimants’ application is successful, the paragraphs in Zurich’s statements of case referred to in the application should not be struck out as, for the reasons given above, many of them overlap with and are still relevant to the issues at trial. A further illustration of the hopeless nature of the application is that the claimants are seeking to strike out paragraphs which they (partially) admit.

For all these reasons, the claimants’ strike out and summary judgment application should be dismissed, with costs to be summarily assessed on the indemnity basis.