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

I first address the misrepresentation defence.

On the evidence presented to this court, I am satisfied that Zurich has demonstrated an arguable defence to this claim on the grounds of misrepresentation. As explained at paragraph 62 above, in very brief summary, Zurich’s case is that, in May 2022, the claimants made a deliberate or reckless (or careless) qualifying misrepresentation by falsely answering the contract works question. 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 (which they did). The claimants did then, in fact, carry out contract works to their home; and these caused loss and damage to that 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 has now avoided the policy. In my judgment, Zurich has a real prospect of succeeding on that defence.

It is now clear that it was Zurich, and not the claimants, or their brokers, who supplied the answer ‘No’ to the contract works question in the SOI. How then was any representation made by the claimants to Zurich? And how can Zurich claim to have relied on an answer that they themselves gave to a standard-form question that they themselves had posed? Clearly, these two questions are closely related.

Zurich’s answer is as follows: Following their conversation in the early afternoon of 3 May, 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 well knew that Zurich would not write new business where contract works were involved or contemplated. Since Mr Davison had made no mention of any works to the property during their telephone conversation, Mr Duddle made the assumption that no such works were being undertaken or planned within the next 12 months. He therefore answered ‘No’ to the contract works question on the SOI; and he generated an insurance quotation and policy documentation accordingly. Had Mr Duddle understood the answer to the contract works question on the SOI to have been ‘Yes’, then Mr Duddle would not have done this. Mr Duddle then emailed the quotation, the SOI, and the other policy documentation to Mr Davison on 3 May 2022, at around 12.35pm. He did so in the belief that Giles Gowers would check the questions and answers with the claimants, as their customers. Up to this point, I am prepared to accept that this is a case of passive non-disclosure, and not of active misrepresentation.

Mr Duddle’s belief that Mr Davison would discuss the answer to the contract works question with his client was well-founded: Mr Davison did discuss this with Mr Bellhouse over the telephone early on the afternoon of 9 May, as acknowledged by the claimants at paragraph 91.3 of the claimants’ reply and defence to counterclaim (cited at paragraph 67 above). One realistic analysis of that conversation is that Mr Bellhouse, for himself and his wife, thereby confirmed, endorsed, and adopted the answer ‘No’ to the contract works question in the SOI. But at that precise point in time, this was not communicated to Zurich. However, that position arguably changed shortly thereafter.

Later that afternoon, by email to Giles Gowers, timed at 14.39, Mr Bellhouse instructed them “to progress with this Zurich policy”. One realistic analysis is that the claimants thereby instructed Giles Gowers, impliedly if not expressly, to place the insurance with Zurich on the basis that the answer to the contract works question in the SOI was ‘No’. This Mr Murphy proceeded to do, by calling Zurich, speaking to Mr Field, and placing the insurance on the basis of the documents that Zurich had already provided, including the SOI. By this means, any misrepresentation contained within the answer ‘No’ to the contract works question, previously confirmed, endorsed, and adopted by the claimants, was communicated to Zurich. Zurich thereby relied upon that answer by proceeding, and so was induced, to issue the home insurance policy to the claimants, with a revised quotation, and to incept the household and contents cover. As Mr Field explains (at paragraphs 22 and 25 of his witness statement):

In my judgment there is no legal impediment to such an analysis of the evidence in this case. I agree with Mr Crowley that Parallel Media LLC v Chamberlain should not be treated as authority for the proposition that, as a matter of law, there can be no representation where an insured confirms and adopts a statement previously drafted by an insurer. I agree with the criticisms directed to that decision at paragraph 4.75 of The Law of Rescission (cited at paragraph 73 above). In my judgment, whether or not the adoption of such a statement constitutes a representation or a warranty is a question of fact, rather than law. Its characterisation as a representation or as a warranty will depend upon the character and terms of the confirmation and adoption. That is a matter of evidence for trial. Any rigid, and invariable, characterisation of such a statement as a warranty would run counter 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. If the purported representor promises or warrants that the statement is true, it may become a contractual warranty (unless that conclusion is inconsistent with other contractual terms). But if the purported representor simply states, adopts, represents, or repeats the relevant statement, then it should be treated as a statement of fact, and therefore a representation. If the deputy judge intended to formulate a principle of law of general application, rather than reaching a decision on the particular facts and documents in the case before him, then I would decline to follow that part of his reasoning and decision.

I would accept the conclusion of Cockerill J in Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd (cited at paragraphs 56-58 above) that the complainant must have been aware of the relevant representation before it can claim to have been induced to act in reliance upon it:

For the sake of completeness, I should record that I find it unnecessary to venture any opinion on the potential application of s. 2 (3) of CIDRA on the evidence presently before this court. That is because Zurich does not need to rely upon that provision to establish any defence of misrepresentation. I would not necessarily dissent from Mr Crowley’s submission that the phrase ‘particulars previously given’ is not necessarily limited to particulars given by the insured. But it seems to me that it is implicit in the sub-section that the insurer’s request must relate to particulars previously given to the insurer. On the chronology of events in the present case, and bearing in mind that the insurance policy was incepted before, or contemporaneously with, Mr Field’s email to Giles Gowers, timed at 16.16 on 9 May, Zurich may find it difficult to identify any pre-inception request to confirm or amend any particulars previously given to it. But, if properly pleaded, that is a matter for trial.

The difficulty Mr Crowley has to face, however, is that, in my judgment, it is impossible to draw out, and identify, this way of putting Zurich’s case on misrepresentation from any of its statements of case. Whilst preparing this judgment, I have read, and re-read, Zurich’s pleadings. I am afraid that I find them to be overly long, rambling, and digressive. Rather than focussing upon the facts essential to establish Zurich’s grounds of defence, they are full of irrelevancies, and matters of background facts and evidence. They are the very antithesis of the paradigm urged upon pleaders by Leggatt J in Tchenguiz v Grant Thornton (cited at paragraph 19 above); they are not concise, nor do they confine themselves only to the material facts. I agree with Mr Mesfin’s criticism that it is impossible to distil from Zurich’s pleadings precisely how the qualifying misrepresentation was communicated to Zurich, or (if and when it was) exactly how, and in what way, anyone, and if so who, at Zurich relied upon it. An unkind, or cynical, reader of Zurich’s statements of case might be tempted to conclude that their very complexity and length were intended to conceal the lack of essential substance at their very heart.

I accept Mr Mesfin’s submission that a properly pleaded claim for misrepresentation must allege that, and explain how:

Although the authority was not cited to me, I bear in mind the observations of Mummery LJ in Boake Allen Ltd v Revenue and Customs Commissioners [2006] EWCA Civ 25, [2006] STC 606 at [131]:

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 afforded the opportunity of making them. I do consider that substantial clarification, and amplification, of Zurich’s case is required. The claimants need to know the particular facts and matters upon which Zurich advances the essential elements of its defence, so that the claimants can identify, and seek to address, them, focussing upon the matters relevant to that defence. At present, this exercise is entirely obscured by the turgid nature of Zurich’s statements of case, which only serve to divert the claimants’ attention away from essential elements of Zurich’s true defence. I will need to consider how Zurich’s lack of due pleading should affect the outcome of the present application once I have addressed the other relevant limb of Zurich’s defence.

So I move on to the contract works exclusion. So far as concerns the first limb, which excludes cover for the ‘contract works’ themselves, I am satisfied that this has no real prospect of success and falls to be struck out, with summary judgment being entered against Zurich on this alleged ground of defence. I accept Mr Mesfin’s submissions on this issue, as recorded at paragraphs 47-48 above. The contention that once the claimants started to carry out their works to the house, the whole property fell to be treated as ‘contract works’ is wrong, both as a matter of the true construction of the exclusion (and thus of law), and also on the facts as pleaded. First, as to the law, ‘contract works’ are defined as ‘any work to your home or outbuildings including alteration, construction, demolition, renovation, repair, restoration or other similar work’.‘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, and in any event, on the facts as pleaded at paragraph 40 of Zurich’s defence and counterclaim, the claimants were carrying out works to only parts of their house and not constructing an entirely new house. Contrary to the assertion at paragraph 79 of Mr Crowley’s skeleton argument, on Zurich’s pleaded case, the property was not being ‘entirely re-developed’.

I therefore turn to consider Zurich’s pleaded reliance upon the second limb of the exclusion: that the reinstatement claim is for ‘loss or damage … caused by or resulting from contract works’. In my judgment, neither paragraph 76 nor paragraph 94 of Zurich’s defence and counterclaim is sufficiently fully and properly pleaded to raise the contract works exclusion as an arguably valid defence to the claimants’ reinstatement claim. Unless amended, this part of the defence would also fall to be struck out, and summary judgment entered against Zurich on this issue.

First, as to paragraph 76, as a matter of its true construction, I am entirely satisfied that this does not plead that the loss or damage to the house was caused by, or resulted from, the contract works. All it does is to plead that the fire occurred “during the course of the contract works”. I reject, as wholly unsustainable, Mr Crowley’s submission that this plea plainly includes causation, and not just a ‘temporal coincidence’. I have no hesitation in accepting Mr Mesfin’s submissions to the contrary. A temporal coincidence is all that Zurich pleads in paragraph 76. That is insufficient. Zurich needs to plead that loss or damage to the property was caused by, or resulted from, the contract works; and to give full and proper particulars as to how this came about. These omissions may readily be capable of being cured by Zurich; and it is surprising that Zurich have not already sought to do so. After all, it has been a persistent complaint from the claimants’ solicitors that Zurich has in its possession, but has refrained from disclosing, a report from an expert forensic fire investigator into the cause(s) of the fire at the property.

Secondly, as to paragraph 94, I have already ruled that the reference to loss or damage to the contract works themselves is unsustainable, as a matter both of law and of fact. The words ‘contract works and/or’ fall to be struck out in consequence. As to the remainder of this paragraph, in my judgment the present pleading is insufficiently particularised to raise a triable issue with any real prospect of success. The paragraph consists of no more than bare assertions, containing no supporting particulars of Zurich’s case as to precisely how either (1) the estimated cost of the contract works exceeded 20% of the buildings sum insured, or (2) the contract works altered the square footage of the house. These are not simply matters for evidence, to be provided when witness statements and expert reports are exchanged in due course. The claimants need to know the case they have to answer on these matters, so that they can seek to address this in their own witness statements and expert evidence. The latter omission may readily be cured by the simple addition of a reference back to paragraph 40 of Zurich’s defence and counterclaim, describing the nature of the works that the claimants had been carrying out to their house. The former omission should also be capable of short particularisation to the best of Zurich’s present knowledge and belief.

The question therefore arises: what should the court do where it is satisfied that the defence which is the subject of an application for strike out and summary judgment may have real prospects of success but at present is inadequately pleaded. The answer, foreshadowed by my observations at paragraph 21 above, is to give Zurich the opportunity of curing the defects and omissions in its pleaded case. Towards the end of his oral submissions, albeit very much as a fallback position, Mr Crowley invited me to take that course.

I am satisfied that I should afford Mr Crowley the opportunity of addressing the deficiencies in Zurich’s present pleadings. Faced with an existing turgid defence and counterclaim, which has inevitably engendered a lengthy, and necessarily discursive, reply and defence to counterclaim from the claimants in response, I am reluctant to afford Zurich any opportunity to add to the length of its existing pleadings, with the attendant risk of further obscuring the true nature of its defence. In my judgment, and in the exercise of my discretionary powers of case management, the appropriate course is to direct that, if and to the extent that Zurich intends to maintain these defences, it shall file short particulars, briefly setting out its case on the misrepresentation and contract works exclusion defences. This document should:

For the sake of completeness, I should make it clear that had I been minded to conclude that Zurich had no real prospect of succeeding on either (or both) the misrepresentation or the contract works exclusion defences, I would not have found this to be one of those vanishingly rare cases where the court should nevertheless conclude that those issues should be disposed of at a trial. On this aspect of the case, I would have preferred, and accepted, the cogent submissions of Mr Mesfin over the competing submissions of Mr Crowley. For the reasons advanced by Mr Mesfin, I would have found there would have been sufficient factual, and also temporal, separation between those two issues and Zurich’s remaining defences; and sufficient case management and litigation advantage in securing a speedy resolution of those two issues to have warranted their summary disposal.