England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
His Honour Judge Mackie QC
[2013] EWHC 1687 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/03/2014

Lord Justice Tomlinson :

1. The Appellant, Mr Alan Bate, appeals against the dismissal by His Honour Judge Mackie QC in the Commercial Court of his claim against the Respondent insurers for an indemnity and damages arising out of a fire on 5 June 2006 at his home, the Long House at Dobcross near Oldham. It is accepted that the Long House was largely destroyed by an accidental fire. The judge held that the insurers were entitled to rescind or avoid the policy by reason of material misrepresentation and non-disclosure. The judge also dismissed a claim for damages pursuant to s.150 of the Financial Services and Markets Act 2000, ("FSMA"). In rejecting the claim the insurers had not, as alleged by Mr Bate, acted in breach of Rule 7.3.6 of the Insurance Conduct of Business Rules ("ICOB") contained in the relevant Insurance Conduct of Business Sourcebook.
2. Permission to appeal was granted by me on an application on the papers supported by Grounds of Appeal and a skeleton argument prepared by Mr Bate's leading counsel at trial, Neil Moody QC, although not by junior counsel who appeared with him at trial. It was alleged that there had been serious procedural irregularity at trial amounting to unfairness, an allegation the strength of which is difficult to assess without the benefit of adversarial argument and extensive reference to the transcript of proceedings. I shall revert to this later.
3. At the hearing before us Mr Bate was without legal representation and presented his own appeal. He did so with skill and courtesy, and with considerable insight as to the legal issues involved, but his task was quite hopeless.
4. As will appear hereafter, the judge found against Mr Bate on a whole raft of issues, on each of which he must persuade us that the judge was wrong if the appeal is to succeed. It was accepted before us that, contrary to the findings of the judge, the insurers could not rely upon the failure to disclose the extent of works being carried out at the Long House, a breach of General Condition 4 of the policy which required such disclosure, as justifying rejection of the claim on that ground alone, as the 2006 fire was unconnected with the breach – see ICOB clause 7.3.6(2)(c) set out below. One issue out of many therefore falls away. In relation to one of the judge's major findings of non-disclosure there was in fact no appeal, save possibly inferentially a reliance upon the ICOB Rules as precluding insurers from reliance thereon. If reliance on the ICOB Rules is unavailing, Mr Bate needs to succeed on every issue of misrepresentation and non-disclosure if his appeal is to succeed. Accordingly, I shall in this judgment concentrate on the major issues. If Mr Bate cannot succeed on these his appeal must fail.

Background

5. In the account of the background which follows I gratefully adopt with some modification the account given by Mr Graham Eklund QC and Mr Nicholas Broomfield in their skeleton argument prepared for the purposes of the appeal.
6. Mr Bate has previously operated as a property surveyor ("Alan Bate & Co"), loss assessor ("Bate & Co Loss Assessors and Surveyors"), a Property Consultant who undertook work for solicitors, surveyors, accountants and engineers, and as a director of Parthenon Building and Design Services Limited. In addition to this considerable experience of property-related and insurance-related work, Mr Bate also arranged for various policies of insurance for his numerous companies over the years. His own company, Bate & Co Loss Assessors and Surveyors, carried on from one of the garages at the Long House, at times conducted the instant claim on Mr Bate's behalf.
7. Long House was a large country house on what was sometimes called the "Long House Estate", although it extended to only 1.9 acres, and was also referred to at times as the "Long House Hamlet".
8. The Long House "Estate" was originally comprised of the Long House, stables and a tack-house. In January 2001 Mr Bate obtained planning permission to change the use of the Long House to five dwellings and in 2001 Parthenon Building and Design Services Limited ("Parthenon") was incorporated with Mr Bate and his daughter, Emma Bate, as the only shareholders and directors. It was intended that Parthenon would carry out the development works and on 3 April 2003 Mr Bate entered into an agreement with Parthenon to convert the property into five dwellings and to sell them post-conversion.
9. The development works were intended to create the following buildings at the Long House Estate:-

i) "The Stables", which was to be converted out of the old tack house. The conversion works at the stables were completed by autumn 2004. The Stables, a distinct property, was situated 8.25 metres from the Long House and was registered at HM Land Registry under a separate title on 1 May 2004.

ii) "South View", "East View", and "The Gables", which were to be individual dwellings within the shell of the Long House itself.

iii) The "Coach House", which was to be in part carved out of the Long House and to include the Long House gymnasium, kitchen and laundry areas.

iv) Five garages, one of which would be reserved for each of the five aforementioned dwellings. Three of the garages remained on the Long House title, whilst one was assigned to the Coach House and one was assigned to the Stables.

10. On 4 April 2004, at which time the Long House was insured by the Zurich Insurance Company, Parthenon caused a fire at the Long House by cutting through an electricity cable. Parthenon had inadequate insurance cover to meet the claim. Mr Bate made a claim in respect of loss and damage quantified at about £50,000 against his household insurers, the Zurich.
11. Aviva provided Mr Bate with two policies for domestic property cover as a "High Net Worth" individual, placed through Home and Legacy Insurance Services Limited, ("Home and Legacy"), an insurance intermediary with limited underwriting authority on behalf of various leading insurers including Norwich Union, now Aviva. Following submission of a proposal form completed on Mr Bate's behalf by his brokers, Hamptons International, and signed by him on 28 November 2004, the cover incepted for "The Stables" at the Long House and another property, 51 Radnor Drive, Egremont, New Brighton. I shall call this the "2004 policy". In April 2005 a further proposal form was completed on Mr Bate's behalf by Hamptons International and signed by him on 13 April 2005, in consequence of which insurance for the Long House incepted on 31 March 2005. I shall call this second policy the "2005 policy". The two policies were merged in March 2006 with the Long House effectively being placed onto the 2004 policy. Although there was a glitch as to the renewal process in respect of which Mr Bate was critical of the insurers' competence, all three properties were provided with cover retrospectively in May 2006 so that there is no dispute that the insurance was in place at the time of the fire.
12. The Coach House was an annex onto the rear elevation of the Long House. On 2 April 2004 Mr Bate agreed to sell the Coach House to his daughter, Emma Bate, and an agreement was entered into with Parthenon to undertake conversion works. On 11 June 2004 Mr Bate granted a 999 year lease of the Coach House to Emma Bate and the construction of the Coach House was carried out by Parthenon in the second half of 2004. It was handed over to Emma Bate in February 2006. The Long House and the Coach House remained connected by an internal door and shared a common gas supply.
13. A fire, accepted to have been accidental, broke out at the Long House on 6 June 2006. By letter dated 21 August 2006 Aviva rescinded and/or avoided the relevant policy on the grounds of misrepresentation and non-disclosure. Proceedings were begun on 16 December 2011.
14. At the time of the fire in June 2006 Mr Bate was living in the Long House. One unit of the Long House was being converted for the purpose of providing accommodation for his invalid brother, Terence. Emma Bate was living in the Coach House which was having works done to it. The Stables was unoccupied. Efforts to sell it after conversion had failed. It was first let and then Mr Bate's brother Terence lived there between Christmas 2004 and mid-2005. Thereafter unsuccessful efforts were made to let it once more. One garage belonged to the Stables and one belonged to the Coach House. The other three garages were within the registered title of the Long House. Two garages, the Coach House garage and the adjacent garage, which was within the registered title of the Long House, were being occupied for business purposes by Parthenon and by Mr Bate's loss assessing and surveying business respectively. Parthenon carried out work for clients other than Mr Bate and at locations other than the Long House. Next to the garages was the "yard" which Parthenon used substantially for storage of machinery and materials.

The judge's findings in outline

15. The facts and the findings of the judge in this case are only of interest to the protagonists, and the curious may have resort to the judge's judgment, available at [2013] EWHC 1687 (Comm). Again I borrow heavily from Mr Eklund and Mr Broomfield's skeleton argument in summarising the judge's findings. References below to paragraphs of the judge's judgment are in square brackets.
16. The proposal form for the 2004 policy called for the proposer to confirm that neither he, nor any other member of his family living with him, had made a claim (scilicet a claim under a household insurance policy) within the last five years. If the proposer was unable so to confirm he was invited to provide full details. In response thereto Mr Bate misrepresented that the fire in April 2004 in respect of which he had made a claim had occurred at a "previous address" whereas it had not occurred at a "previous address". In November 2004 and at all times thereafter Mr Bate continued to own the Long House and to live and work there. Mr Bate signed the proposal form, knew of its importance and knew exactly what he was doing. "Previous address" "gave a false picture which Mr Bate must have known to be false. This was a material misrepresentation which would have affected the terms on which the insurance would have been granted". [J85]
17. In relation to the 2004 policy, Mr Bate failed to disclose the works at the Coach House "as part of Mr Bate's obligation to give insurers a fair picture overall of this unusual estate and the activity in it". [J81]
18. The yard behind the outbuildings at the estate was being used to store building materials in conjunction with the activities of Parthenon [J95-96]. The function of the yard was not simply for use by Mr Bate in connection with the maintenance and renovation of the Long House, but was more substantial than that. As such, the activity within the yard was material information which should have been declared. [J98]
19. Parthenon was more than a one-man band; apart from Ms Williamson, Mr Bate hired in family members and others to work on Parthenon contracts. [J97]
20. In relation to the 2005 policy "this was a policy for the home of a rich individual but it was no ordinary house and grounds as should have been obvious to Mr Bate. It was a collection of buildings close together". The "highly untypical arrangements should have been disclosed. They would have been disclosed if Mr Bate had given Mr Cockerton the full picture. Someone with the background of Mr Bate should and may have known that" [J100]. Mr Richard Cockerton was the broker at Hamptons with whom Mr Bate dealt.
21. In relation to the 2005 policy "By breaking down [the different aspects set out in J100] and treating them in isolation [Mr Bate] can make a plausible claim that in some particular respects matters are not material and, in isolation or as a concept, would not be regarded as such by an internal manual or in the view of an expert", but "one must look at matters as a whole, an observation that I have been tempted to repeat too often in this judgment." [J99-101]
22. In relation to the 2005 policy, Mr Bate misrepresented that the fire in April 2004 had occurred at a "previous address", essentially repeating in the 13 April 2005 proposal, albeit not in identical terms, the misrepresentation contained in the November 2004 proposal. This was clearly a false representation and gave rise to substantially the same conclusions as did the same misrepresentation under the 2004 proposal. [J102]
23. Although the works to the Long House at the time of the 2005 proposal were not of the scale alleged by Aviva, namely commercial works for the development of the Long House into "East View", "South View" and "The Gables" as hitherto planned, nonetheless very significant works were being carried out of the value of £36,500 plus VAT, including hot works, and should have been disclosed in accordance with General Condition 4 [J103-105]. The failure to disclose the works was a clear breach of condition [J107].
24. With respect to Mr Bate's claim that these works were notified to Aviva, and following the disclosure of the Hamptons' file on the fourth day of the trial, it was clear that no such notice was given in February 2006 as alleged and the judge found that "The note relied upon [in that regard] was very probably not prepared at the time but was created later to give a false impression that what might have seemed to be a gap in the case did not exist . . . It is implausible that Mr Cockerton's contemporaneous note of a conversation which then led to his letter to Mr Bate should have been written on his copy of the letter, already written." [J107]
25. The second of two letters dated 4 April 2005, written by Mr Richard Cockerton of Hamptons to Mr Bate, was written some time after the date which it bore, at the earliest on 23 May 2005, and probably "after the fire (at a time when Mr Cockerton had been enlisted by Mr Bate to campaign on his behalf)". The explanation provided by Mr Bate in his evidence in chief at trial was "false and Mr Bate must have known it to be so". [J114-123]
26. A fax allegedly sent by Mr Bate to Mr Cockerton on 6 April 2005 was never sent or did not reach Mr Cockerton until much later. [J89] The "copy fax" of that date disclosed by Hamptons on Day 4 of the trial was not a genuine document and was not sent by Mr Bate to Mr Cockerton. [J118]
27. Mr Bate was "less than candid over a number of matters . . . [he was] dishonest over the April 2005 letters in a manner that was planned and executed deliberately. This was not just a silly lie told under pressure . . . " [J127]
28. In relation to the findings of dishonesty, the judge rejected the criticisms that Aviva failed to put these matters or to plead them. The relevant material only emerged on the fourth day of trial. The judge said [J122] that Mr Bate was not asked about these matters because he had failed to disclose the Hamptons' file sooner and because there was no application to recall him later. However, as I mention at paragraph 44 below, Mr Bate was in fact asked about these matters. Mr Cockerton was well aware of what was being put to him when the judge asked him directly if he would like to deal with any potential accusation by Aviva that, in relation to the second 4 April 2005 letter and the February 2006 note, "his dealings had been less than straightforward". Mr Cockerton did not wish to comment. [J122]
29. Works to the Coach House and the carrying on of business from the Coach House garage were material, given the particular considerations affecting the estate, the nature of cover for a home and outbuildings, and the proximity of the buildings and activities within them. Where there had been misrepresentation or non-disclosure, the expert evidence led the judge to conclude that it was material, save to the extent that he indicated otherwise. That, together with the factual evidence, led to the conclusion that Aviva was thereby induced to enter into the insurance contract. [J133]

Misrepresentation as to the previous fire

30. The Grounds of Appeal assert that:-

"The Learned Judge wrongly held that the Defendant was entitled to avoid the Policy on the ground that the Claimant had misrepresented the position in relation to a previous fire:-

a. Properly understood, there was no misrepresentation;

b. The Learned Judge failed to carry out any or any adequate analysis of the evidence on materiality. The evidence as a whole demonstrated that the location of the previous fire was not material.

c. The Learned Judge failed to carry any or any adequate analysis of the evidence on inducement, instead simply inferring inducement from materiality. The Judge should have held that the Defendant had failed to prove inducement;

d. Further and in any event the operation of ICOB prevented the Defendant from avoiding the Policy."

31. As noted above the history of the alleged misrepresentation goes back to the 2004 policy. The proposal was in respect of 51 Radnor Drive with The Stables added as an "other item" under the rubric "Buildings" in the "Required Sums Insured" section of the proposal form. It was however clear that the insurance was to cover two properties owned by Mr Bate. The proposal form revealed that the "previous insurer" was Zurich. As described above it was stated on the form, in relation to Mr Bate's inability to confirm that he had made no claim within the last five years:-

"(xii) 04/04 Building contractor caused fire damage at previous address after cutting through an electricity cable - £50,000 (building contractor found to not have adequate commercial cover so insd attempting to persue (sic) through previous insurer – claim outstanding."

Two entries above this passage it was disclosed that:-

"(iii) Long House, The Stables, Long Lane, Dobcross, Oldham, OL3 5QH is a let property. The property is newly constructed (brick & tile/slate roof)."

The form was prepared by Mr Cockerton and signed by Mr Bate. There was at least one earlier draft but nothing turns on this in view of the judge's unchallenged findings of fact. At the time Mr Bate still lived and worked at the Long House, although he apparently intended to live for part of the week at 51 Radnor Drive with his partner with whom he had just purchased that property.

32. The suggestion that properly understood there was no misrepresentation has over time been put in a number of equally implausible ways. Initially it was said that "previous address" meant that address mentioned above, i.e. Long House, although for what it is worth that reference was in fact to The Stables. Plainly this is hopeless. In the skeleton argument supporting the Grounds of Appeal it is said that since Mr Bate intended to live for part of the week at 51 Radnor Drive and did not live at The Stables it was accurate to describe the Long House as a previous address. This is incomprehensible. It is also said in the same document that as the fire had occurred in that part of the Long House which became the Coach House, it was true to say that it was at a previous address. This too is incomprehensible. As the underwriter, Mr Davies of Home and Legacy, said at trial, previous address implies that it is not an address with which the proposer is any longer connected. Moreover, in relation to the 2004 proposal it was a fire damage claim of £50,000 in relation to a property in common ownership with and 8.25 metres away from The Stables which insurers were being invited to insure. It is the plainest possible misrepresentation.
33. The position in relation to the 2005 policy is still more stark. The property to be insured was the Long House itself, at which Mr Bate lived and worked. The misrepresentation was repeated. There was not even on this occasion prior reference to The Stables, so resort to the argument that "previous" means "as above" is unavailable. Mr Gardner Brown, Mr Bate's underwriting expert at trial, confirmed the materiality of a previous fire claim of £50,000 in respect of the very property to be insured. The evidence on this point was, unsurprisingly, all one way.
34. Mr Davies also gave evidence that fire is the number one concern of an underwriter of this class of business and that, had he known of this fire, the circumstances in which it had occurred and the ongoing work at the Long House, it is unlikely that he would have agreed cover. The risk was "an unsuitable one for the type of policy Mr Bate proposed for". At the very least disclosure of the fire at the premises to be insured would have prompted him to ask questions which would have revealed more information about the overall risk. It is true that Mr Davies' evidence did not differentiate between the fire simpliciter and the development context in which it occurred, combined with the ongoing works at the Long House. However it is simply not plausible to suggest that the judge failed adequately to analyse the evidence on inducement. Given that this was so far removed from a straightforward proposal for household insurance, it would have been unrealistic to expect Mr Davies to divorce the fire from its context. The judge's finding that this was a material misrepresentation which would have affected the terms on which the insurance would have been granted was fully justified, measured and inevitable.
35. As made clear at [J133], the judge did not simply infer inducement from materiality. He relied too on the [other] evidence. Inducement was proved. However there may be cases in which the materiality is so obvious as to justify an inference of fact that the representee was actually induced, although even in such exceptional cases the inference may be rebutted – see St Paul Fire and Marine Insurance Co (UK) Ltd v McConnell Dowell Constructors Ltd, [1996] 1 All ER 96 at 112 per Evans LJ. This was such a case where the inference of inducement would have been justified, had it been necessary to resort to it.
36. In presenting his appeal to us Mr Bate relied upon a quotation sheet sent to Mr Davies by Mr Cockerton on 23 November 2004 on which Mr Davies had made certain annotations including "Zurich" and a reference to the circumstance that both Allianz and Axa declined to quote. Mr Bate suggested that this demonstrated that Mr Davies must have contacted Zurich, discovered all the details of the fire, and that it was in the light of that information that Allianz and Axa had declined to offer cover. However this submission overlooked that Mr Davies had been asked about these annotations at trial. He had elicited from Richard Cockerton that the previous insurers were Zurich, either over the telephone or from an early version of the proposal form sent by him, and probably therefore that the claim was with them too. He explained that he had had no correspondence or contact with the Zurich at all. It was not suggested that this evidence was either incorrect or unreliable. In any event it is obvious that had Mr Davies discovered that the fire had occurred at the Long House matters would have taken a very different turn. The reality is that Mr Davies was put off any further enquiry by the representation that the fire had been at a previous address. That is a complete answer to the suggestion that if insurers wanted to know more about the fire they had only to ask. In fact that point was put to Mr Davies by Mr Moody at trial in only a half-hearted way:-

"Q. But, of course, what he was proposing for on this policy was Radnor Drive and The Stables, so it was accurate to say that the damage had occurred at the previous address, wasn't it?

A. There was a £50,000 fire claim 8 yards away from the property we were specifically being asked to insure. "Previous address" infers that it is not an address he is connected with at all any more. Somewhere he lived previously, for example.

Q. You didn't find it necessary to ask any further questions about that?

A. If I had been told it was at a previous address, why would I need to?

Q. OK."

Mr Moody then moved on.

37. The relevant ICOB Rule is 7.3.6 which provides:-

"Rejecting or refusing claims

An Insurer must not:

(1) unreasonably reject a claim made by a customer

(2) except where there is evidence of fraud, refuse to meet a claim made by a retail customer on the grounds:

(a) of non-disclosure of a fact material to the risk that the retail customer who took out the policy could not reasonably be expected to have disclosed;

(b) of misrepresentation of a fact material to the risk, unless the misrepresentation is negligent;

(c) in the case of a general insurance contract, of breach of warranty or condition, unless the circumstances of the claim are connected with the breach; . . . "

38. The judge found that Mr Bate's representation about the previous fire gave a false picture which Mr Bate must have known to have been false. I agree with Mr Eklund that it follows that the misrepresentation was at least negligent.
39. The judge's finding that Mr Bate must have known that his proposal gave a false picture would have been fully justified had it rested on nothing more than the inference properly to be derived from Mr Bate's experience in relation to property insurance. It follows that ICOB Rule 7.3.6(2)(b) does not disentitle insurers from rescission for misrepresentation. The misrepresentation relied upon was negligent. It also follows therefore that the appeal cannot succeed.
40. However the judge also found that, contrary to his evidence, Mr Bate had not told Mr Cockerton prior to placement of the 2005 policy that the 2004 fire had been at the Long House. Furthermore, contrary to his evidence, Mr Bate had not told Mr Cockerton prior to placement of the 2005 policy either that he ran a loss assessing and surveying business from the Long House or that he ran a construction company from the Long House. It was Mr Cockerton's evidence that he was at the relevant time, i.e. before placement of the risk, unaware of all these matters.
41. The judge also found that Mr Bate had supported his claim with a fraudulent device, the second letter bearing the date 4 April 2005. On 7 July 2006 Mr Bate made a written statement at the request of Mr Andrew Crowe of the loss adjusters, Messrs Woodgate and Clarke. Mr Bate prepared and typed this statement himself, having been unhappy with a previous draft. At paragraph 15 thereof he referred to a letter written to him by Mr Cockerton on 4 April 2005, a copy of which was annexed to the statement. This is the first of two letters from Mr Cockerton to Mr Bate bearing the date 4 April 2005. The first such letter read as follows:-

"New Household Insurance

I am delighted that you have chosen Hamptons International Insurance Services (HIIS) to assist with your insurance requirements.

I confirm having arranged for Home & Legacy, underwritten by Norwich Union, to provide cover from 31^st March 2005 and to verify our discussion you will find the following documentation enclosed:

Our Initial Disclosure Document

Key facts illustration

Statement of Price

Proposal form

Product summary or Key features Document

HIIS brochure

The reason for recommending Norwich Union is:

Competitive premium from within our panel of insurers

Underwriting criteria.

Insurance cover tailored specifically to suit your circumstances.

Insurance protection is, of course, subject to insurers terms and conditions together with submission of the enclosed proposal form, which I must ask you to complete and return to me in the envelope provided as soon as possible.

Payment for the first premium totalling £1,497.29 can be made by one of the following options:

Cheque made payable to Home & Legacy for £1,497.20

10 monthly instalments of £157.51 pm by completing the enclosed premium finance form

Credit/debit card by completing the attached mandate

Kindly return both the proposal and preferred method of payment within the next ten days in order that I can ensure continuity of cover.

I wish to take this opportunity to assure you that at Hamptons we truly value your custom and will always endeavour to provide quality advice and service in relation to your financial services.

Finally, should you have any enquiries or need any help then please do not hesitate to call my direct telephone number 0118 928 1511."

42. On 25 May 2011 Messrs Neumans solicitors wrote to insurers' then solicitors Messrs Greenwoods a formal pre-action letter of claim on Mr Bate's behalf. At paragraph 9 Neumans asserted that a proposal form was sent to Mr Bate under cover of a letter of 4 April 2005. A copy of the letter was enclosed at pages 9-10 of the documents annexed to Neumans' letter. It was what I have referred to above as the second of the two letters dated 4 April 2005. It purported to be a letter from Mr Cockerton to Mr Bate written on that day, but it was written on Hamptons' letter paper which, because of the names of the Directors printed thereon, could not have come into existence prior to 23 May 2005. It was an altered and extended version of the first letter dated 4 April 2005 and it included in the bullet points:-

"They [Home & Legacy] are aware of the fire claim at Long House in 2004."

Mr Bate said in his evidence in chief that he had asked for the first version of the letter to be amended. He said that he wanted the confirmation which the second letter contained before he would proceed with insurance placed with Home & Legacy / Norwich Union. It was his clear evidence, taking together his witness statement at paragraph 46 upon which he was expanding in his evidence in chief, that he had received the second letter dated 4 April 2005 before he had committed himself to the Home & Legacy cover. This evidence was manifestly untrue, and the judge so found. Moreover, Mr Cockerton's evidence that prior to placement of the risk in April 2005 he did not know that the fire in April 2004 had been at the Long House, is completely incompatible with any innocent explanation of the circumstances in which this letter was produced. The judge found that Mr Cockerton's evidence about this letter was that "of an honest man unused to telling untruths".

43. It is asserted in the Grounds of Appeal that dishonesty relating to the letters of 4 April 2005 was neither pleaded nor properly explored in evidence, and that the judge's finding of dishonesty amounted to a serious procedural irregularity. On closer examination with the benefit of submissions from the Respondent, this assertion proved to be wholly without substance. I do not propose to lengthen this judgment by dealing extensively with this point. It is dealt with comprehensively in the skeleton argument dated 6 February 2014 prepared for the purposes of the appeal by Mr Eklund and Mr Broomfield at paragraphs 8-34. It was unnecessary for the insurers to plead dishonesty, as they did not rely upon it in order to justify their rescission and avoidance of the policy. It was Mr Bate himself who in his evidence in chief on day three of the trial drew to the attention of the court the existence of two letters dated 4 April 2005 and, for the first time, proffered an explanation thereof by reference to a fax message, of which he had not given disclosure, which, he said, amounted to a request to revise the first version of the letter. Disclosure of Hamptons' file was only given overnight between days 3 and 4 of the trial. It contained a purported "copy" of a fax dated 6 April 2005 from Mr Bate to Mr Cockerton, which had allegedly led to the amendment of the 4 April 2005 letter. The judge gave his reasons for regarding this as not a genuine document, not "a real fax", at paragraph 118 of his judgment. They are compelling. No-one could explain how a "copy" of the fax had come to be placed on Hamptons' file and neither the original version as received by Hamptons nor the original version as sent by Mr Bate was disclosed. If a hard "copy" had been generated when the fax was sent one would expect it to have remained on Mr Bate's file.
44. As noted above, at [J122] the judge said both that he rejected the criticism that Mr Eklund failed to put these matters and that "Mr Bate was not asked about these matters, in effect, because he had failed to disclose the Hamptons' file much sooner, and there was no application to recall him later". The rejection of the criticism that Mr Eklund failed to put the matters to Mr Bate is possibly ambiguous. It could mean that Mr Eklund was simply not to be criticised, or it could mean that Mr Eklund did in fact put the matters to Mr Bate. If it means the latter, it is odd that the judge goes on to say that Mr Bate was not asked about these matters. In fact he was asked about them. Mr Bate was twice asked in cross-examination whether the second letter dated 4 April 2005 had been written when he subsequently realised that he needed to be able to establish that insurers did know about a fire having occurred at the Long House in 2004:-

"Q. Could it be, Mr Bate, that you asked for the second 4 April letter to be written when you subsequently realised that you needed to be able to establish that Aviva did know about the fire having occurred at the Long House in 2004?

A. Without wishing to be affronted, my Lord, I don't like the innuendo that Mr Eklund is making there and that is that I am not an honest and straightforward person.

HIS HONOUR JUDGE MACKIE:

I appreciate that you don't like it but you have got to answer the question, so just deal with the question. I understand you don't like it, but it's still something you have to deal with.

A. I do appreciate that. I apologise, my Lord, it just –

HIS HONOUR JUDGE MACKIE:

Mr Eklund, I expect, will put the question again and then perhaps answer it.

Mr Eklund: Could it be, Mr Bate, that you asked for the second 4 April letter to be written when you subsequently realised that you needed to be able to establish that Aviva did know about a fire having occurred at the Long House in 2004?

A. No, emphatically no.

Q. That's not right, is it?

A. If you say it's not, I can't agree with you. But you make the statement that it's not right and I disagree with you."

45. It is clear from the above passage that Mr Bate understood full well that what was being put to him was that the second letter dated 4 April 2005 had been written after the fire in 2006. This understanding was confirmed in re-examination. Mr Bate was asked by Mr Moody when he had asked Mr Cockerton to write the second letter, and Mr Bate confirmed that it was on 6 April 2005. The questions and answers continued:-

"Q. Right. I think it was being suggested to you that you might have asked for it to be written in 2011?

A. It most certainly was, Mr Moody.

Q. It most certainly was . . .

A. It was certainly suggested. That's nonsense, if I may use such strong terms, my Lord."

46. These matters were also put squarely to Mr Cockerton. In cross-examination there occurred the following exchange:-

"Q. It looks as if the document referred to as a fax has been sent to you at some time. You have produced a letter which we have looked at at page 685 after 3 May 2005 and you have backdated that letter to 4 April 2005, haven't you?

A. I don't backdate correspondence at all."

[Page 685 was the second letter dated 4 April 2005.]

Later, it was put to Mr Cockerton that the second letter dated 4 April 2005 must have been written some time after the first letter bearing that date, and Mr Cockerton agreed "that could well have been the case". As recorded in paragraph 28 above, the judge reverted to these matters at the conclusion of Mr Cockerton's evidence, but he indicated that there was nothing else he wished to add. The judge said this about Mr Cockerton at [J121]:-

"Mr Cockerton had a senior position in a well - known firm and is good at his job. He is liked and respected by those at Aviva with whom he dealt. In cross-examination he was at first confident, clear and convincing. I have no reason to doubt his evidence about more general matters. When the questions turned to the letters and the fax Mr Cockerton seemed a different man. He was hesitant and unconvincing and he became visibly nervous (as the Claimant's Counsel accept in their closing submissions). Judges know from the law, from their training and from experience that the demeanour of a witness is an unreliable guide to whether the truth is being told. This did however seem to me one of those extremely rare occasions where demeanour was of some weight. I had the impression of an honest man unused to telling untruths driven for some reason to do so and being very uncomfortable about it."

47. However the judge had no need to rely on demeanour, however compelling that may here have been. At [J123] he said this:-

"The weight of the documentary and circumstantial evidence is so great that it is not necessary to rely on demeanour. Further the absence of disclosure in the litigation by Mr Bate of documents which would be crucial if his account were true is striking."

48. Paragraph 1(d) of the Grounds of Appeal reads:-

"The Learned Judge wrongly held that the Claimant was prevented from relying on ICOB by reason of dishonesty relating to letters dated 4^th April 2005. In so holding:-

(i) the Learned Judge misapplied ICOB. The Claimant was entitled to the protection of ICOB unless the claim was fraudulent, which it was not;

(ii) in the alternative, since there was no evidence of a fraudulent claim (as opposed to dishonesty in arguing the claim after the avoidance) the Learned Judge misdirected himself as to the proper approach under ICOB."

49. I agree with Mr Eklund that the language of ICOB 7.3.6 draws a distinction between a claim, which might be fraudulent, and evidence of fraud. A fraudulent claim is perhaps ordinarily thought of as a claim which dishonestly asserts that an insured peril has occurred, when it has not, such as a claim in respect of a ship which has been scuttled by, or with the connivance of, her owners asserting a loss by perils of the sea. There is no doubt that Mr Bate's claim relates to an accidental fire and is in that sense genuine. However "evidence of fraud" is apt in the context to denote, or certainly to include, fraud used in making or pursuing a claim. That is exactly what has here occurred. The second letter dated 4 April 2005 was a fraudulent device by which the claim was sought to be supported. As the judge recorded at [J118]:-

"The Claimant has also failed to provide from his own disclosure his original versions of the letters of 4 April 2005, despite requests. The first time [the second letter of 4 April 2005] was disclosed was with the Claimant's solicitors' letter before action dated May 2011. It was not referred to in numerous communications between Aviva's avoidance letter dated 21 August 2006 and the solicitors' letter of May 2011, including those from the Claimant and Mr Cockerton who would have had his own file copy of [the second letter of 4 April 2005], had it been in existence then. Furthermore there was no claim by the Claimant in that period that a fire at the Long House itself had been previously disclosed."

For this reason too ICOB Rule 7.3.6 does not preclude insurers' reliance on the misrepresentation concerning the fire of April 2004 as justifying their rescission of the policy and rejection of the claim.

50. That is sufficient to dispose of this appeal.
51. As I have indicated above, in respect of a further finding of non-disclosure, there is in fact no challenge in the Grounds of Appeal. As partially set out in paragraph 20 above, paragraph 100 of the judge's judgment reads in full:-

"This was a policy for the home of a rich individual but it was no ordinary house and grounds as should have been obvious to Mr Bate. It was a collection of buildings close together. There had been a substantial previous insurance claim on the Estate the relevance of which the insured had concealed. The Coach House had been created from the back of the main house and minor work by Parthenon was continuing. Although previously insured as part of the Estate the Coach House was in 2005 not insured at all. A scheme to develop the main house and its buildings had come to nothing but signs of it still remained. Some works were being done to the main house and a flat was being created for a family member in breach of the condition to notify insurers. One business of a clerical kind was being carried on in the garage in breach of a representation. A separate construction business was being carried on from the neighbouring garage belonging to the Coach House and from the yard that formed part of the insured property. By breaking down these different aspects and treating them in isolation the Claimant can make a plausible claim that in some particular respects matters are not material and, in isolation or as a concept, would not be regarded as such in internal manuals or in the view of an expert. Thus it is right that business carried on or building work done in a neighbouring property is not a matter for the owner of a terrace house to disclose or to realise that he or she might have to disclose. But the Coach House was a neighbouring property in only a literal sense and the business it was doing also involved the insured yard. These highly untypical arrangements should have been disclosed. They would have been disclosed if Mr Bate had given Mr Cockerton the full picture. Someone with the background of Mr Bate should and may have known that."

52. It is true that Ground 1 of the Grounds of Appeal attacks the judge's finding that the insurers were entitled to avoid the policy on the ground that Mr Bate failed to disclose works to the Coach House, and Ground 3 attacks the judge's conclusion that insurers were entitled to avoid the policy on the ground that Mr Bate had failed to disclose that Parthenon worked from the Coach House garage – a building of which it is observed in the same paragraph of the Grounds of Appeal that it was not insured under the policy. The latter observation fails to grapple with the very point which the judge articulated at paragraph 100 of his judgment. Likewise, concentration on, first, the work to the Coach House alone and, second, the business being carried on from the garage alone, misses the point. What was required was a fair presentation of the risk. As the judge said at paragraph 101 of his judgment:-

"It is unsurprising that the conventional questions asked when a home insurance policy is taken out are insufficient to provoke disclosure of all material facts when the applicant is seeking insurance for an unusual property which has various uses and been subject to a degree of development. The answer to the repeated assertion on Mr Bate's behalf that particular matters could not reasonably have been expected to be disclosed is that when these matters are all put together it becomes obvious that disclosure of most of them is required to give a fair presentation of the risk."

53. There is no challenge to this conclusion of the judge. Reliance on ICOB in respect thereof is doubly unavailing. First, there is evidence of fraud, as discussed above, and in any event the judge found that the non-disclosure was in this respect of a fact which Mr Bate could reasonably have been expected to have disclosed. The only challenge to the latter conclusion is in respect of the Coach House works, which even if successful in isolation (which in my view it is not) does not meet the point that it was obvious that these highly untypical arrangements looked at as a whole required to be disclosed. The judge rightly took into account in this regard Mr Bate's experience and background. Trading as Bate & Co, Loss Assessors and Surveyors, he had dealt with about two hundred property-related insurance claims. On his evidence about 70% of those claims had been rejected initially, some on the grounds of non-disclosure and/or misrepresentation of material facts. He accepted that over the years he had arranged "quite a lot of insurance for the various businesses" which he had operated. That included a hotel business and various building businesses. He had of course arranged insurance for his various homes. He was familiar with the requirement to disclose material facts.
54. For this additional reason therefore this appeal cannot succeed.
55. Mr Bate sought to persuade us that some or all of the materials stored in the yard were for the maintenance of the estate rather than for use by Parthenon at other sites. He also sought to persuade us that Mr Alan Heathcote (upon whom, according to Mr Moody in his final submissions to the judge, Mr Bate bestowed the grand-sounding title of "The Estimator") assisted him in the conduct of Parthenon's business only from his home and never from the Long House. Even if he is right about these two particular points it does not overcome his failure to give a fair presentation of the risk, looked at as a whole.
56. In the circumstances I do not propose to deal in detail with the other Grounds of Appeal. I would only add that the judge had ample evidence from Mr Davies and Ms Hubbard on the topic of inducement, evidence which was only challenged in cross-examination upon the premise that the facts as alleged by Mr Bate were correct. It is not therefore surprising that the judge did not feel the need to analyse it in detail. In any event, as I have pointed out at paragraph 35 above, the Grounds of Appeal are wrong to assert that the judge simply inferred inducement from materiality. It is true that his reference at [J133] to the evidence other than that of materiality is both general and abrupt, but understandably so.
57. I would also add that the judge's findings that (i) Home & Legacy were given no notice of the ongoing works at the Long House and (ii) a note purportedly written by Mr Cockerton on 9 February 2006 on a similarly dated letter, which apparently evidenced Mr Cockerton giving notice of such works to Miss Rebecca McGruther of Home & Legacy on that day, was created later to give a false impression that what might have seemed to be a gap in the case did not exist, seem to me absolutely unassailable.
58. I add two matters for completeness. Mr Bate drew attention to contemporary Home & Legacy promotional literature describing the cover it offered in terms which included:-

"Our policies include as standard, features that other insurers would see as extras. For example, we recognise that people do an increasing amount of work from home, so we automatically include £10,000 of business equipment cover under your contents."

It hardly needs to be stated that "people doing an increasing amount of work from home" is not a reference to the running of businesses exclusively from property represented to be domestic property. Second, Mr Bate drew attention to some wording in the Binding Authority between Norwich Union and Home & Legacy dated 7 July 1999 which he suggested obliged Home & Legacy to carry out a survey in respect of properties insured for more than £750,000, if built prior to 1900, the Long House qualifying on both scores. Mr Bate contended that had Home & Legacy complied with its contractual obligation it would have discovered all those features of the arrangements at the Long House which the judge found required to be disclosed. I express no view on the true meaning of the provision in the Binder. I will even assume, as Mr Bate did, that this was a contractual duty owed to him as the insured. The fact that insurers would, on this hypothesis, had they complied with their own contractual responsibilities, have discovered, after coming on risk, some or all of these undisclosed features, is no answer to their reliance upon misrepresentation and non-disclosure inducing acceptance of the risk. I might add that it is not in any event suggested that they would have thus discovered after April 2005 when the Long House came on cover that there had been a fire at the Long House in April 2004 which, whilst generating a claim of £50,000, gave rise predominantly to smoke and water damage.

59. I would dismiss this appeal.

Postscript

60. Shortly after I had prepared a draft judgment in the form above Mr Bate wrote to the court asking to be permitted to make some further submissions in writing, supplemented by a file of documents which he described as 'additional evidence'. He explained that through nervousness at the hearing he had failed to make certain salient points. Naturally I have studied his undated three page document entitled "Appellant's Late Submissions" and the documents attached thereto as described in the accompanying Schedule.
61. In fact some of the points made in Mr Bate's Late Submissions either were made by him at the hearing or are at any event considered in my judgment above, whilst others are merely developments of or are related to points which were articulated at the hearing. For example, the suggestion that insurers obtained knowledge of the nature of previous activity at the Long House before accepting the risk is allied to the suggestion, discussed at paragraph 36 above, that Mr Davies had obtained full details of the April 2004 fire.
62. It is also evident that even now Mr Bate is either labouring under a misapprehension or, possibly, simply refusing to face up to reality. It was only upon disclosure during the trial of the "copy" fax of 6 April 2005 (see paragraph 43 above) that it became apparent to insurers that the claim had been sought to be supported by use of a fraudulent device.
63. However, it is unnecessary for me to address Mr Bate's Late Submissions in any further detail. As it happens, none of them are directed to the first and major point upon which his appeal founders, misrepresentation concerning the location of the April 2004 fire.

Lord Justice Christopher Clarke :

64. I agree.

Lord Justice Maurice Kay :

65. I also agree.