England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/01/2010

Mr Justice Wyn Williams:

Introduction

1. In these proceedings the Claimant claims from the Defendant the sum of £671,623.89 together with interest. The claim is brought against the Defendant under the Third Parties (Rights Against Insurers) Act 1930. It arises in consequence of the following sequence of events.
2. At all times material to this action Joshua & Usman Legal Services Limited (hereinafter referred to as "JULS") traded as Joshua & Usman Solicitors. JULS was a "recognised body" within the terms of section 9 of the Administration of Justice Act 1985. The directors of JULS were Ogheneovo Joshua Atikpakpa (referred to hereinafter as "Mr Atikpakpa") and Iraida Usman (referred to hereinafter as "Ms Usman"). Ms Usman was admitted as a solicitor in 1993. She engaged in private practice for some time in the 1990s using her surname as the name of a firm; in the 1990s she also worked at a Law Centre. Mr. Atikpakpa was admitted in 1998. The firm of solicitors called Joshua & Usman came into being some time prior to 1999; it seems to have taken its name after Ms Usman's private practice was acquired and she returned to work at a Law Centre. For some of the time after which the firm came into existence Mr Atikpakpa was its sole principal. In November 1999 Ms Usman joined the firm. She was then employed as an associate solicitor. In September 2000 Ms Usman became a salaried partner along with two other persons, Caroline Arogundade and Vivienne Phillips.
3. On 25 January 2001 JULS was incorporated. There is some suggestion in parts of the evidence that at its date of incorporation JULS had three directors, namely, Mr Atikpakpa, Ms Usman and Caroline Arogundade. However this claim has proceeded on the basis that at the material time the directors of JULS were Mr Atikpakpa and Ms Usman. As well as being a director Ms Usman was also an employee of JULS.
4. Mr Atikpakpa and Ms Usman were linked by family as well as profession. In the period with which I am concerned Mr Atikpakpa was married to Ms Usman's sister, Enyote.
5. There is one further relevant family relationship which it is convenient to mention at this stage. Ms Usman has a nephew – a man by the name of Victor Okporuah (hereinafter referred to as "Mr Okporuah"). As will become apparent, both Mr. Okporuah and Ms Usman have asserted that Mr Okporuah was an employee of JULS.
6. For the year commencing 1 October 2002 the Defendant provided professional indemnity insurance for JULS. Under the terms of the policy of insurance issued by the Defendant it agreed to indemnify JULS against "civil liability to the extent that it arises from Private Legal Practice in connection with the Firm's Practice, provided that a claim in respect of such liability is first made against [JULS] during the Period of Insurance or during or after the Period of Insurance and arising from a Circumstance first notified to the [Defendant] during the Period of Insurance" (clause 1 of the policy under the heading "Scope of Cover") see TB 2 page 89.008. The policy defined the word circumstance to mean "an incident, occurrence, fact, matter, act or omission which may give rise to a Claim in respect of civil liability"; the word claim was defined to mean "a demand for, or an assertion of a right to, civil compensation or civil damages or an intimation of an intention to seek such compensation or damages."
7. On 2 November 2001 Mr Atikpakpa applied to Mortgages Plc for a loan of £541,579.70. He applied for the loan ostensibly so that he could purchase the property known as 5 Montague Pace Poplar E14 with a view, thereafter, to letting it. The loan was to be secured by a mortgage over the property. In the application form submitted to Mortgages Plc Mr. Atikpakpa represented that he owned 80% of the shares in JULS; he also stated that the balance of the proposed purchase price (then approximately £155,000) was to be provided from his savings. It is common ground (or, if not, incontrovertible) that both those statements were false. On 29 November 2001 a subsidiary of Mortgages plc, Mortgages 5, offered to lend Mr. Atikpaka the sum of £532, 973 in order to facilitate his purchase of the property at a price of £650,000. Mr. Atikpakpa accepted the offer. Mortgages 5 instructed the Claimant to act in relation to the proposed transaction; Mr Atikpakpa instructed JULS to act on his behalf.
8. As I understand it, a solicitor by the name of Anne Coombs handled the transaction within JULS.
9. On 19 December 2001 Ms Coombs faxed to the Claimant a copy of the draft agreement for the purchase of 5 Montague Place. She asked for confirmation from the Claimant that the loan would be released on 20 December. That request was refused. The Claimant informed Ms Coombs that it needed sight of all the contractual documentation so that it could investigate title and report to Mortgages 5. The next day substantial documentation was provided to the Claimant. Under cover of a letter dated 27 December 2001 Ms Coombs sent to the Claimant a document headed "BOND TO LET ACCOUNT ASSIGNMENT." The content of the document is not important. Its importance is that it was signed by Mr. Atikpakpa and his signature was witnessed by Ms Usman. On 28 December 2001 the Claimant sought a certified copy of Mr. Atikpakpa's passport or driving licence. On 2 January 2002 Ms Coombs sent the Claimant a certified copy of his passport. The copy document was certified by Ms Usman.
10. On 7 January 2002 the Claimant transferred to JULS the sum of £507,941.32 in anticipation of the completion of the purchase by Mr Atikpakpa of 5 Montague Place. However, Mr Atikpakpa did not purchase 5 Montague Place. Rather, he stole the sum of £507,941.32.
11. In late 2001 Mrs Enyote Atikpakpa (hereinafter referred to as "Mrs Atikpakpa") had also applied for a loan from the same lender. It is common ground that the loan was to facilitate the purchase by Mrs. Atikpakpa of the premises known as 42 Tulse Hill, London SW2. In late 2001 those premises were owned by Mr. Atikpakpa. The application form which was submitted to Mortgages 5 in support of the application for the loan is not before me. I understand that Mortgages 5 cannot produce the document. There is, therefore, no means of knowing whether the application form contained information which was false.
12. On 14 January 2002 Mortgages 5 made an offer to Mrs. Atikpakpa to loan her the sum of £152,880 to facilitate her purchase of 42 Tulse Hill. Mrs. Atikpaka appointed a firm of solicitors known as Anthony & Roberts to act for her. Mortgages 5 appointed the Claimant; Mr. Atikpakpa in his capacity as vendor appointed JULS. This proposed transaction was handled at JULS by a solicitor named Sonia Clark. In the ensuing few weeks the solicitors exchanged correspondence and provided necessary documentation. On 5 February 2002 Anthony & Roberts sent the Claimant a document entitled "Confirmation Form" in which appeared the following

"The seller is my husband and I confirm that the transaction is at arms length."

13. On 14 February 2002 Mortgages 5 released the sum of £143, 313.30 to the Claimant to be used for the purchase of 42 Tulse Hill by Mrs Atikpakpa. On the same day the Claimant transferred the sum of £143,019.30 to Anthony & Roberts. On 15 February 2002 Anthony & Roberts transferred the sum of £143,019.30 to JULS. However the transaction between Mr & Mrs Atikpakpa was never completed. Mr Atikpakpa stole the money which had been transferred to JULS.
14. In the Skeleton Argument on behalf of the Defendant the assertion is made that Ms Usman facilitated this transaction by witnessing Mrs Atikpakpa's signature on a "BOND TO LET ACCOUNT ASSIGNMENT" and by certifying a copy of Mr. Atikpakpa's passport (see paragraph 49). In fact the references provided to support this submission relate not to the purchase of 42 Tulse Hill but to 5 Montague Place. It is correct that Mrs Atikpakpa signed a bond to let account assignment on or about 1 February 2002. However, her signature on that document was witnessed by a solicitor whose name appears to be Otu Iban (see TB 2 page 186). Further, I have been unable to trace any evidence which shows that Ms Usman certified a copy of Mr. Atikpakpa's passport in connection with this transaction.
15. It seems to me, therefore, that Ms Usman did nothing to facilitate the proposed purchase of 42 Tulse Hill by Mrs. Atikpakpa.
16. On or about 7 November 2002 the Claimant referred the conduct of JULS to the Office of the Supervision of Solicitors. This followed increasingly urgent requests for information from the Claimant to JULS concerning what had happened in relation to the two transactions. On or about 5 February 2003 the Law Society intervened in the affairs of JULS. The Society appointed a firm of solicitors known as Russell Cooke to act as its agent. At some stage thereafter, Mr. Atikpakpa left the United Kingdom for Nigeria. In September 2003 Ms Usman moved to Egypt. On or about 29 October 2003 disciplinary proceedings were instituted by the Law Society against Mr. Atikpakpa, Ms Usman and JULS.
17. On 4 November 2003 JULS was struck off the Register of Companies. On 3 August 2004 it was restored to the Register at the instigation of the Claimant but made subject to an order for winding up.
18. Meanwhile Mortgages Plc and Mortgages 5 had made a claim against the Claimant for the amount of money which had been transferred to the Claimant and which had been intended to be loaned to Mr Atikpakpa and Mrs Atikpapkpa. In the face of this claim, the Claimant paid over to the two companies the total sum of £671,623.89.
19. By Deed of Assignment dated 28 February 2005 Mortgages Plc and Mortgages 5 assigned their respective claims against JULS to the Claimant. By a Claim Form issued 10 April 2007 the Claimant instituted proceedings against JULS in which it claimed the total sum of £671,623.89. In those proceedings the Claimant relied upon its rights as the assignee under the Deed of Assignment dated 28 February 2005; it also relied upon its right to be indemnified pursuant to the Civil Liability (Contribution) Act 1978. JULS did not defend the proceedings. Indeed, as I understand it, it took no step in the proceedings whatsoever. On 23 August 2007 the Claimant obtained judgment in the action against JULS for £671,623.89.
20. Section 1 of the Third Parties (Rights Against Insurers) Act 1930 is in the following terms so far as is relevant to these proceedings: –

"1(1) where under any contract of insurance a person (hereinafter referred to as the "insured") is insured against liability to third parties which may incur, then –

a….

b. in the case of the insured being a company, in the event of a winding up order… being made… with respect to the company…. If, either before or after that event, any such liability as aforesaid is incurred by the insured, his rights against the insurer under the contract in respect of the liability shall, notwithstanding anything in the act, or rule of law to the contrary, be transferred to invest in the third party to whom the liability was so incurred."

21. As I have said, the Claimant brings these proceedings in reliance upon this section of the 1930 Act. It is common ground that if the Defendant was bound to indemnify JULS in respect of the claim brought by the Claimant it is also liable to the Claimant in these proceedings. However, the Defendant asserts that it would not have been bound to indemnify JULS against the Claimant's claim and, consequently, it is not liable in these proceedings.
22. In support of that stance it advances discrete defences. They are set out in paragraphs 14 and paragraphs 19-24 of the Defence. Most of the hearing before me was taken up with an examination of the merits of the defence particularised in paragraphs 19 to 24 of the Defence. I propose to deal with the issues raised by this defence first since, as it seems to me, it was this defence which the Defendant relied upon primarily in order to defeat the claim brought against it.

The Primary Defence

23. Under the heading "Exclusions" the following clause appears in the Policy of Insurance:-

"The Company shall not be liable under the Policy in respect of

.............

7. Fraud or dishonesty

Any claim falling within the Scope of Cover clauses 1-7 against any Insured arising from dishonesty or a fraudulent act or omission committed or condoned by such insured, except that –

a. this Policy shall cover each other Insured, and

b. no such dishonesty, act or omission will be imputed to a body corporate unless it was committed or condoned by, in the case of a company, all directors of that body corporate or in the case of a limited liability partnership, all members of that limited liability partnership"

24. Mr Fenwick QC, on behalf of the Defendant, submits that the Defendant is entitled to rely upon this exclusionary clause in order to repudiate liability under the policy. He submits that the evidence establishes beyond doubt that the claim made by the Claimant against JULS arose from the dishonesty and fraudulent acts of Mr. Atikpakpa. He further submits that it is established, at least on the balance of probabilities, that the claim arose from the dishonesty and fraudulent acts of Ms Usman; alternatively that the claim arose from the dishonesty or fraudulent acts of Mr. Atikpakpa which were condoned by Ms Usman. At the material time Mr. Atikpakpa and Ms Usman were the only directors of JULS. Accordingly, submits Mr. Fenwick QC, the Defendant is entitled to rely upon clause 7 and it is entitled to repudiate liability.
25. Mr. Tozzi QC, on behalf of the Claimant, does not dispute that the Claimant's claim against JULS arose from dishonesty and/or fraudulent acts on the part of Mr. Atikpakpa. He submits, however, that the evidence fails to demonstrate that the claim arose from dishonesty or fraudulent acts on the part of Ms. Usman or that she condoned the dishonest or fraudulent activity of Mr. Atikpakpa.
26. During the course of submissions there was some debate about the appropriate test to be applied in judging whether Ms Usman had acted dishonestly or fraudulently. I was taken to passages in the decisions of Twinsectra v Yardley [2002] 2 AC 164 and Barlow Clowes International Ltd v Hamilton [2006] 1 WLR 1476. In the context of this case I do not find it necessary to analyse these decisions in detail or consider whether there is any tension between the two. I am content to proceed on the basis that the appropriate test is laid down in the speeches of their Lordships in Twinsectra and that it is encapsulated in the following short extract from the speech of Lord Hutton:-

"....before there can be a finding of dishonesty it must be established that the defendant's conduct was dishonest by the ordinary standards of reasonable and honest people and that he himself realised that by those standards his conduct was dishonest..." see paragraph 27 of his speech.

In reaching conclusions about whether or not Ms Usman acted dishonestly or fraudulently I have applied this test. There was no dispute between the parties as to how I should approach the issue of whether Ms. Usman had condoned dishonest or fraudulent activity on the part of Mr. Atikpakpa. It was agreed that the word "condoned" in the policy should be given its ordinary, natural meaning. In the context of this policy, the word "condone" is intended to convey a state of affairs where the non dishonest director knows of the dishonesty or fraud of his co-director yet overlooks it. Guidance on its meaning can be found in a recent decision of Irwin J – as to which see paragraph 96 below. Finally, I should record that submissions were addressed to me about the approach I should adopt to the necessary standard of proof given that criminal or potentially criminal conduct was being alleged against both Mr. Atikpakpa and Ms Usman. As it happens, following the completion of the hearing before me, the Supreme Court considered this issue authoritatively in S-B (Children) [2009] UKSC 17 see paragraphs 8 to 19. The standard of proof is the balance of probabilities.

27. In order to reach reasoned conclusions about the rival contentions of the parties it is necessary to analyse rigorously the salient primary facts which have emerged as the case has unfolded. Most unusually, in a case of this kind, no oral evidence was called by either party. Neither Mr. Atikpakpa nor Ms Usman was called to give evidence. The absence of Mr. Atikpakpa is hardly surprising and is probably unimportant. I am invited by Mr. Fenwick QC to conclude, however, that the absence of Ms. Usman provides some support for the allegations of dishonesty or fraud made by the Defendant against her; further or alternatively that her absence is support for the proposition that she condoned the dishonest or fraudulent activities of Mr. Atikpakpa. In due course I will deal shortly with this submission. However, it is first necessary to pay close attention to the documentary evidence which was placed before me.
28. As I have said, the Claimant, through Mr. Tozzi QC, accepts that Mr. Atikpakpa was dishonest and fraudulent in relation to the particular events which gave rise to its claim against JULS. As I understand it, the Claimant accepts that Mr. Atikpakpa made false assertions in support of his application for a mortgage in respect of the loan to facilitate his purchase of 5 Montague Place; thereafter, he stole the money which was loaned. It is also accepted that he stole the money loaned to Mrs Atikpakpa to facilitate her purchase of 42 Tulse Hill. However, the Claimant denies that Ms Usman acted dishonestly or fraudulently in relation to these events; additionally it denies that she condoned the dishonest and fraudulent conduct of Mr. Atikpakpa.
29. There is no dispute but that Ms Usman's conduct helped Mr. Atikpakpa to obtain the loan from Mortgages 5 in respect of 5 Montague Place; she witnessed his signature on a document and certified a copy of his passport – see paragraph 9 above. It has not been suggested however that this conduct, if it stood alone, would be sufficient to permit me to conclude that Ms Usman was a participant in Mr. Atikpakpa's dishonesty and fraud in respect of 5 Montague Place or that she had condoned his dishonesty and fraud.
30. There is no evidence which shows that Ms Usman took any part in facilitating the Transaction relating to 42 Tulse Hill. Indeed, there is no direct evidence that she knew of it.
31. It is also clear that there is no direct evidence which suggests that Ms Usman obtained any personal direct benefit from the theft of the money advanced in respect of these two transactions. Nonetheless, to repeat, the Defendant asserts that Ms Usman was complicit in the dishonesty or fraud of Mr. Atikpakpa in respect of these two transactions or at the very least she condoned his dishonesty or fraud. The Defendant makes this submission on the basis of a number of different strands of evidence which it submits taken together and looked at in the round point inescapably to that conclusion.
32. The first strand of the evidence relied upon by the Defendant is that which proves wide ranging dishonesty on the part of Mr. Atikpakpa. The Defendant relies upon dishonest conduct on his part which goes far beyond his admitted dishonesty in relation to the transactions which are at the heart of this claim.
33. The relevant history begins in 1999. On 30 May 1999 Mr Atikpakpa applied to the Kensington Mortgage Company for a loan of £79,000 in order that he could purchase 42 Tulse Hill. In the mortgage application form signed by Mr Atikpakpa there were a number of assertions which were false. Mr. Atikpakpa described his employer as Joshua & Usman; he asserted that he owned a 20% shareholding in this company and he alleged that his gross income was £75,000.00 per annum. However, at the material time Joshua & Usman was not a limited company but, rather, a partnership. The accounts for the period 1 October 1998 to March 1999 showed that Joshua & Usman had two partners, Mr Atikpakpa and Mr Sivaganeshn. Those same accounts showed that Mr Atikpakpa enjoyed 90% of profits and the actual profit earned by the Firm was given as £5,335.
34. In August 2000 Ms Usman's mother, Mrs Emuowhemuere, successfully applied for a loan of £295,000 from an organisation known as Mortgage Express. Security for this loan was to be the property known as 11 Arlingford Road. It is admitted on behalf of the Claimant that on 30 August 2000 Mortgage Express advanced the sum of £295,000 to facilitate the purchase of 11 Arlingford Road. The transaction was not registered until 3 January 2002. It is further admitted on behalf of the Claimant that some time between 30 August 2000 and 3 January 2002 Mr Atikpakpa stole £245,000 of the sum advanced.
35. Either on 11 May 2001 or 11 September 2001 Mr and Mrs Atikpakpa applied for a loan of £450,000 in respect of the property known as 67A Croham Road, South Croydon. Mr and Mrs Atikpakpa owned that property which was already the subject of a mortgage. Their application in respect of the property anticipated a re-mortgage of the property as security for the loan of £450,000. In the mortgage application form Mr Atikpakpa represented that his income from his position as a self employed solicitor within Joshua and Usman was £120,000 for the tax year ending in 2000, £100,000 for the tax year ending in 1999 and £95,000 for the tax year ending in 1998. On a separate page of the application form Mr Atikpakpa represented that his basic gross income from his employment was £120,000 per annum. He also claimed to be an 80% shareholder of Joshua & Usman.
36. The financial statement for the year ending 31 March 2001 prepared on behalf of Joshua & Usman showed that the net profit for that year was £102,907. The same financial statement showed that those profits were split 95% to Mr Atikpakpa and 5% to Ms Usman. The accounts for the year ending 31 March 2000 showed profit before appropriation of £27,026 and the profit before appropriation for the period 1 October 1998 to 31 March 1999 was £5,928 as shown in the relevant accounts. It is clear, in my judgment, that Mr Atikpakpa provided false information in the mortgage application form in support of the application for the loan in respect of 67A Croham Road South Croydon.
37. Mr Tozzi QC accepts that this is so. He further accepts the accuracy of assertions made by the Law Society in proceedings which it brought against Mr. and Mrs, Atikpakpa. The Law Society alleged as follows:-

"This property was purchased by [Mr and Mrs Atikpakpa] on 18 December 1998 with a mortgage from Woolwich plc. The property was then re-mortgaged to GMAC-RFC…which transferred £339,970 in to the client account of Joshua & Usman on 31 July 2001. That sum was not applied to redeem the Woolwich mortgage nor was the GMAC-RFC charge ever registered. The £339,970 was misappropriated by [Mr Atikpakpa]. No repayments have been made to GMAC –RFC."

38. In June 2001 Mrs Atikpakpa applied for a loan from Mortgages plc in order to purchase the property known as 9 Alexander Road, Croydon. As of that date that property was owned by Mr Atikpakpa.
39. In his oral submissions Mr Tozzi QC expressly accepted that what he called the "purported sale" by Mr Atikpakpa to Mrs Atikpakpa of 9 Alexander Road was, in fact, the first of two frauds perpetrated by Mr Atikpakpa using this property. Mr Tozzi QC was content to accept as accurate the following extract from the Points of Claim which were served on behalf of the Law Society in the proceedings involving the Law Society and Mr and Mrs Atikpakpa.

"[Mr Atikpakpa] purchased this property on 15 September 2000 and registered a charge of the same date in favour of Capital Home Loans Ltd. On 4 July [2001], the property was purported to be sold to [Mrs Atikpakpa] who obtained a mortgage from Mortgages 5 Ltd. The advance of £157,940.22 was transferred to the Joshua & Usman client account on 4 July 2001 but no charge was registered in favour of Mortgages 5 Ltd and the Capital Home Loans Ltd charge was not redeemed. The £157,940.22 was misappropriated. The property was purportedly sold again, this time to Mr Atikpakpa's nephew, Victor Okporuah. The bank advanced £202,500 to the Joshua & Usman client account for this purpose but again neither the Capital Homes Loans Ltd nor the Mortgages 5 Ltd loan was redeemed. The Bank's mortgage advance of £212,500 was misappropriated."

40. In each case it is common ground that it was Mr Atikpakpa who misappropriated the sums advanced by the proposed mortgagees.
41. There is no direct evidence that Ms Usman did anything in order to facilitate Mr. Atikpakpa in respect of any of the transactions to which reference is made in paragraphs 30 to 37 immediately above. That is not the case in relation to the transaction to which I turn next.
42. On 7 June 2001 Mr. Atikpakpa entered into a contract to purchase a property known as Netherstone in Purley, Surrey. He signed the contract as the purchaser and Ms Usman witnessed his signature. The contract specified that the purchase price was to be £2,640,000. Some 4 months later, Mr. Atikpakpa applied for a loan of £1,800,000 in order to facilitate the purchase; Netherstone was offered as security. In the application form submitted to the proposed lender, Mr. Atikpakpa represented that he had savings of £980,000 and, at least by implication, the balance of the purchase price was being funded from those savings. The loan was approved. In January 2002 Mr. Atikpakpa purchased Netherstone for the sum of £2,658,700. Sometime prior to completion (17 December 2001) Ms Usman signed a certificate of title in respect of the property. However, there is no evidence to suggest that she had investigated title. In correspondence about this issue with solicitors acting for the Defendant she displayed a cavalier approach to the propriety of certifying title without having investigated the same.
43. In my judgment it is inconceivable that Mr. Atikpakpa had savings amounting to £980,000 as at October 2001. He did not use savings to fund the purchase. The reality is and, indeed, the Claimant admits, that the funds necessary to complete the purchase over and above the sum which was borrowed were stolen from the client account of Joshua and Usman.
44. On or about 29 November 2004 the Solicitors Disciplinary Tribunal published its findings in relation to the disciplinary process instituted against Mr. Atikpakpa and JULS. In summary, it concluded that Mr. Atikpakpa had committed a variety of dishonest acts. It ordered that he should be struck from the Roll of Solicitors. It also concluded that JULS's status as a recognised body should be revoked. The Solicitors' Disciplinary Tribunal made specific findings that between July 2001 and December 2001 there were 12 improper transfers from the client account to the office account of Joshua & Usman (those accounts being held at Nat West Bank); it also found that between January 2002 and 24 October 2002 (when the client and office accounts were held at Bank of Scotland) there were 25 such transfers. The Solicitors Disciplinary Tribunal found that Mr. Atikpakpa had been responsible for all the improper transfers.
45. I remind myself that Mr. Atikpakpa took no part in the disciplinary process. However, I have seen no evidence in these proceedings which casts any doubt upon the findings of the Tribunal and I accept those findings without hesitation.
46. There can be no doubt, in my judgment, that the Defendant has made good its submission that Mr. Atikpakpa was guilty of extensive dishonesty and fraud during the time that he was a director of JULS and before. He engaged in a course of conduct between 1999 and 2001 in which he made a number of applications for loans to mortgagees which contained false information. I have no doubt that he provided the false information quite deliberately and knowing that to do so was dishonest by any standard. Having persuaded the mortgagees to lend money he stole substantial sums from the money loaned. All the relevant transactions involved what are colloquially called "mortgage frauds."
47. The second strand of evidence relied upon by the Defendant relates to mortgage applications made by Ms Usman in her own right. On 7 March January 2002 Ms Usman made an application for a loan of £195,325 offering the property known at 54 Canmore Gardens, Streatham as security for the loan. Ms Usman had acquired that property in 2000 and she wished to remortgage it.
48. In her application form she represented that the property had been bought, first, by her in June 2000 for the sum of £200,000. She claimed that she had borrowed £100,000 to facilitate her purchase. In that section of the application form which sought details of her employment and income she represented that she had a basic gross income of £45,000 per annum and a further guaranteed income of £40,000 per annum and a net monthly income of £4500. On the last page of the application form Ms Usman repeated that her income was £85,000 per annum. This representation appeared immediately below a declaration in the following terms:-

"I/We certify that my/our income, which is subject to UK tax, is sufficient to service and repay existing commitments and borrowings……"

49. There is no evidence which begins to suggest that Ms Usman had a guaranteed total income of £85,000 pa. Indeed there is no document which is contemporaneous with Ms Usman's employment by JULS which suggests that she earned anything like that salary whether guaranteed or not. The contemporaneous documentary evidence (bank accounts) suggest that she earned approximately £2300 per month net of tax. It seems clear that the information provided by Ms Usman in this application form as to her income was false.
50. It seems equally clear that the information which she provided about the purchase price of 54 Canmore Gardens and the source of the purchase monies was also false. The documents before me establish that the purchase price of 54 Canmore Gardens was £152,500. During the course of giving evidence in proceedings to which I will refer in a moment Ms Usman told the court that she had borrowed approximately £100,000 to facilitate the purchase of a property.
51. The proceedings to which I have just referred were entitled St Paul Travelers Insurance Co Ltd v Victor Okporuah & Others [2006] EWHC 2107 (Ch) (hereinafter referred to as Okporuah.) As is obvious from the title Mr Okporuah was the principal defendant in a contested trial which took place before HHJ Hodge QC sitting as a Judge of the Chancery Division of the High Court. Ms Usman gave evidence on behalf of Mr Okporuah. During the course of her evidence she was examined and cross-examined about her application for a mortgage in respect of 54 Canmore Gardens. In particular Ms Usman was cross-examined about how it came to be that the application form asserted that she had a gross annual income of £85,000.
52. I have read Ms Usman's answers in respect of this line of questioning with care. She appeared to be suggesting that her income was substantial – at least approaching £85,000 gross– although she accepted that this income was not guaranteed and, further, that she had never in fact received anything like that amount of money per annum.
53. Ms Usman also appeared to suggest that she had not completed the application form personally. She did not suggest, however, that the person completing the form on her behalf had misrepresented her income against her express instructions.
54. In my judgment it is difficult to avoid the conclusion that Ms Usman knowingly provided false information on this mortgage application form. At the material time she was a mature woman and an experienced solicitor. Her representations as to income bore no relation to what she actually received.
55. In my judgment it is also difficult to avoid the conclusion that Ms Usman deliberately misrepresented the original purchase price of the property. It is hard to believe that she could be mistaken about the purchase price of a property purchased no more than approximately 18 months before she completed the mortgage application.
56. On 28 May 2002 Ms Usman made an application for a loan of £268,000 in order to facilitate her purchase of a property known as 15 Whimbrel Close, Sanderstead, Surrey. In that application form she represented that she had a basic gross annual income of £45,000; other guaranteed income of £40,000 per annum and that her net monthly income was £4500. As with her previous application the assertion that Ms Usman an income of £85,000 per annum appeared immediately above her signature on the document.
57. In my judgment this was no coincidence. It is simply incredible that Ms Usman could have made two separate applications for loans from mortgagees in which identical misrepresentations were made about her income but yet those representations were made innocently. Nothing which Ms Usman said in the course of giving evidence in Okporuah begins to cast doubt upon that conclusion.
58. It is also of some significance, in my judgment, that Ms Usman named Mr Atikpakpa as her referee in respect of her application for a loan in respect of 15 Whimbrel Close. It seems to me that Ms Usman would have done so only if she was confident that Mr Atikpakpa would have confirmed the information as to her income which was provided in the application form.
59. It is also apparent that an application for a loan was completed in respect of the proposed acquisition of the property known as 42 Pennistone Road. In the end, as I understand it, this application form was never submitted to a mortgagee. It cannot be ignored, however, that the form specifies Ms Usman's income as being £85,000 and Mr Atikpakpa is named as her referee.
60. As I have said I have scrutinised with care the sworn evidence given by Ms Usman about her mortgage applications in the claim brought against Mr Okporuah. In summary I find the evidence given by her to be implausible when that evidence is considered against the context of the nature of the documentation which Ms Usman was signing, the amount of money potentially at stake and the fact that Ms Usman was an experienced solicitor at the material time.
61. I am driven to conclude that Ms Usman engaged in "mortgage fraud" in her own right. I reach that conclusion despite the fact that no finding of dishonesty was made by the Solicitors Disciplinary Tribunal against Ms Usman. The plain fact is that no allegation of dishonesty was made against her in that forum and the Tribunal simply did not investigate her conduct in the manner which it has been scrutinised before me.
62. That said there is no evidence which begins to suggest that Ms Usman stole any of the money which was loaned to her on the strength of her fraudulent applications.
63. I turn to the third strand of the evidence relied upon by the Defendant in support of its case. This evidence relates to mortgage applications made by Mr. Okporuah.
64. On 2 May 2001 Mr Okporuah applied for a loan of £101,700. The loan was sought so as to enable Mr Okporuah to purchase premises known as 14 Percy Road South Norwood. The application form completed by Mr Okporuah contained the following information which the Defendant alleges was false. First, the suggestion was made that Mr Okporuah was employed by Joshua & Usman as a solicitor. Second, his basic gross income from that employment was said to be £29,250 and his net monthly income was specified as just in excess of £2,200.
65. The representation relating to Mr Okporuah's gross annual income was set out in two places on the form. It first appeared in a section of the form specifically relating to employment and income; it appeared again on the last page of the form immediately above Mr Okporuah's signature and immediately below a declaration in identical terms to that set out at paragraph 48 above.
66. In the application form Mr. Okporuah named Mr Atikpakpa as his referee.
67. It is common ground that Ms Usman assisted Mr Okporuah to obtain the loan of £101,700 in order to purchase 14 Percy Road. Her assistance was provided in two ways. She signed and certified a copy of Mr Okporuah's passport. Secondly she signed a letter dated 13 June 2001. The letter was written on the official notepaper of Joshua and Usman. The relevant contents of the letter are these:-

"Re: Mr. Victor Okporuah-222 Loughborough Park, London, SW9 8TB

We write with reference to your letter dated 21 May 2001. The answers to the information are as follows:-

1. Position held: Billing Officer

2. Date employment commenced: 5 January 1998

3. Basic salary per annum: £29,250

4. National insurance number: JJ L9 25 75 D

5. Tax office: LT Lothian

Tax reference number: 846/A7049

6. Regular bonus/commission/overtime: None

Is this guaranteed: Not applicable

7. Is this position permanent: Yes "

68. Mr Fenwick QC submits that the letter of 13 June 2001 contained information which is obviously false. He points, in particular, to the assertion that Mr Okporuah was employed as a Billing Officer at a basic salary per annum of £29,250.
69. In the voluminous documentation disclosed in this case there is no contemporary document which suggests that Mr Okporuah was employed by Joshua & Usman in the position of a billing officer earning a basic annual salary of £29,250. There is one document, a document of account apparently prepared on behalf of Mr Okporuah, which suggests that he earned approximately £9,100 per annum for such work as he performed for Joshua & Usman. That is the only contemporary document which exists, so far as I know, which supports a conclusion that Mr. Okporuah was an employee of Joshua & Usman although, of course, it contradicts the suggestion that he was paid an annual salary of £29,250.
70. In Okporuah, Ms Usman gave evidence about matters which were relevant to the issue of Mr. Okporuah's employment with Joshua & Usman. In her witness statement dated 12 June 2006 she says this about that employment and his employment generally:-

"11. Victor used to work for Usman and Co and Joshua and Usman. He was Joshua's assistant whenever Joshua needed any help, he would call upon Victor. He did all sorts of work for Joshua including clerking, attending court and costing the files etc. A lot of the work was done outside the office. As Victor's commitments to his other jobs became more demanding, I recall Joshua told me that gave Victor 5 files to take home so that he could cost them.

12. Victor had various jobs, he didn't just work at the firm. He started working at a barber's shop when he was around 16 years old. He decided not to proceed with his studies as he wanted to earn money instead. I believe he made this decision because Joshua encouraged him to earn money instead of studying. This decision was not very popular with the family. However, Victor was happy with it and he was clearly making money.

13. Victor also worked as a DJ. I listened to him a couple of times when he was on the radio. Victor also had a music shop. It was somewhere in or near Battersea, not far from my child's school in Parson's Green. He offered to take me to the shop many times but I did not go as I have never been interested in the type of music he sold."

71. It is difficult to see how this description of Mr. Okporuah's working pattern would justify giving him the job title of billing clerk earning £29,250 per annum.
72. During her evidence in chief before His Honour Judge Hodge QC Ms Usman explained how it was that she came to write the letter of 13 June 2001. The relevant questions and answers appear at TB9/1625 and 1626. I quote:-

"Q Could you explain, please, how letter came to be written?

A I received a call from Joshua and he told me that he was meant to do a reference for Victor. It was quite urgent but unfortunately he wasn't in the office and it needed to be done. The letter had already been typed but he hadn't added his name and he asked me to retype it, having retyped it and add my name to sign it. I had no objection in doing so.

Q When you retyped it is the only thing you changed was the name or did you change something else?

A No, just my name.

Q And did the contents of the letter surprise you or accord with your understanding of the position or are you not able to comment either way?

A No, the contents were fine. I had no problems with the contents. I knew Victor had been working with Joshua and Usman for a while and he had been in other things so I was quite happy with that. I assumed that his salary-I don't know anybody's salary apart from my own and maybe the trainee solicitors I have underneath me because that was confidential information and this letter, the contents had been prepared before hand and all I did was literally change my name and initial it."

73. Under cross-examination Ms Usman was asked a great many questions about the letter of 13 June 2001 and Mr Okporuah's employment-or lack of it-with Joshua & Usman. The relevant part of the transcript is at TB9 pages 1649 to 1656. In the light of the cross-examination it is very difficult to accept that Ms Usman genuinely believed that Mr Okporuah was employed by Joshua & Usman as a billing clerk and that he earned a gross annual salary of £29,250.
74. Even looked at in isolation it would be difficult to avoid the conclusion that Ms Usman knew that the information contained in her letter of 13 June 2001 was false. It is also difficulty to avoid the conclusion that she must have realised that the contents of the letter, particularly the part relating to income, would be identical with the information which had been set out in the mortgage application form.
75. On 6 December 2001 Mr Okporuah applied for a loan to facilitate the purchase of premises known as 158 Mitcham Road, Croydon. He sought a loan of £100,000 and specified that the purchase price in respect of the property was £125,000.
76. In this application form he described himself as a solicitor employed by Joshua and Usman. He represented that his income was £29,450. The mortgage application form specified that Mr Atikpakpa was the person to be contacted for a reference. As I understand it Mr Okporuah purchased these premises on 22 October 2002.
77. There is no direct evidence that Ms Usman facilitated this purchase in any way. Indeed, there is no direct evidence that she knew of it.
78. Mr Okporuah applied for a loan to facilitate his purchase of 2 Woodstock Road, East Croydon, on 24 January 2002. He sought a loan in the sum of £284,000 in order to facilitate a purchase at the sum of £355,000. He specified in the mortgage application form that he was a solicitor, earning £29,250 and that he was providing £71,000 towards the purchase price of the property. He named Mr Atikpakpa as the person to be contacted for a reference.
79. Mr Okporuah's assertions that he was a solicitor earning £29,250 pa were clearly false. In my judgment the assertion that he was providing £71,000 towards the purchase price of the property was also false. There is no evidence contained within the documentation before me which begins to show that Mr Okporuah was capable of providing such an amount from his own funds.
80. The Defendant alleges that a substantial part of the balance of the purchase price in respect of 2 Woodstock Road came from Mr Atikpakpa. It is not necessary for me to determine whether that is so. I say that for this reason. It is admitted that Ms Usman provided £10,000 towards the balance of the purchase price.
81. In Okporuah Ms Usman was cross-examined about this payment. Her evidence was that she had loaned Mr Okporuah the sum of £10,000 not to purchase the property itself but for the purpose of purchasing furniture within the property. She had never sought repayment of the loan.
82. In my judgment Ms Usman's evidence about this transaction is unlikely to be true. I say that for two principal reasons. First, it is inherently implausible when looked at in relation to the whole of the evidence in this case. Second and more specifically it flies in the face of the fact that Ms Usman received part of the proceeds of sale of this property when Mr Okporuah sold it in 2004. On 7 December 2004, following the completion of the sale of 2 Woodstock Road, Mr Okporuah's solicitors wrote to him indicating how they were dealing with the proceeds of sale of the property. They sent him two cheques; one cheque in the sum of £65,000 was made payable to Ms Usman; the second cheque was in the sum of £32,300 and payable to a Mr Jordan Lewis; the balance of the proceeds of sale were transferred, telegraphically, into the bank account of Mr Okporuah.
83. Mr Fenwick QC submits that the most likely explanation for the transfer of £65,000 was that Ms Usman acquired an interest in the property by providing £10,000 towards the purchase price. It is hard to disagree.
84. That leads me to the transaction which was the subject of the proceedings in Okporuah. On 10 July 2002 Mr Okporuah applied to the Bank of Scotland for a loan of £255,000 to facilitate the purchase of the property known as 9 Alexandra Road, Croydon. In his judgment, HHJ Hodge QC said this about the contents of the application form completed in support of the application for a loan:-

"(5) Even applying the criminal standard of proof, I'm sure that Victor lied in his mortgage application concerning Alexandra Road. In particular, he deliberately lied when he stated that he was a solicitor, that he was providing a deposit from his own savings, that he was in permanent full-time employment with Joshua and Usman, that he intended to live in Alexandra Road and that he was not purchasing from a relative."

I need not detail the other lies which the Learned Judge found that Mr

Okporuah had told in respect of this transaction.

85. All that said, there is no evidence that Ms Usman did anything, directly, to facilitate Mr Okporuah's obtaining of the loan to facilitate the purchase of 9 Alexandra Road.
86. In my judgment the evidence summarised above demonstrates that Mr Atikpakpa, Ms Usman and Mr Okporuah engaged in "mortgage frauds". Each of them obtained loans from mortgagees by knowingly making false statements in mortgage application forms.
87. I do not think it credible that Ms Usman was engaged in making fraudulent applications herself but yet knew nothing of the fraudulent activities of Mr Okporuah and Mr Atikpakpa. First, such a scenario is inherently unlikely given the close links between the three. Second, there are features of the evidence which point, unerringly, to Ms Usman knowing of the fraudulent activities of the two men. In May/June 2001 Ms Usman knew that Mr Okporuah was proposing to purchase 14 Percy Road. It was she who wrote to the proposed mortgagees certifying Mr Okporuah as having a basic salary of £29,250 per annum and being employed as a billing officer. As I point out in paragraph 72 above it is difficult to avoid the conclusion that Ms Usman knew that the information contained in her letter was false. I reached that conclusion when this transaction was looked at in isolation. When it is looked at against the context of the whole of the evidence and in the round that conclusion becomes inescapable. Six days before she signed that letter Ms Usman witnessed Mr Atikpakpa's signature on the contract which he signed to purchase Netherstone. In my judgment it simply beggars belief to think that she did not know that Netherstone was a very substantial property and that the purchase price was very large. Even allowing for the argument (which is probably correct) that Mr Atikpakpa controlled the finances of JULS Ms Usman must have known that Mr Okporuah could not legitimately raise funds or service a mortgage to purchase such a property. Mr Atikpakpa applied for a loan so as to purchase Netherstone on 4 October 2001. On 2 November 2001 he applied for a further loan so as to facilitate the purchase of 5 Montague Place. There can be no doubt that Ms Usman knew of this transaction since she certified a copy of Mr Atikpakpa's passport and witnessed his signature on the "BOND TO LET ACCOUNT ASSIGNMENT". It is inconceivable that she did not know that Mr Atikpakpa was engaged in "mortgage fraud" given the potential expenditure to which he was committing himself in respect of Netherstone and 5 Montague Place. No lender would have contemplated the very substantial loans necessary on the basis of Mr Atikpakpa's true income. While I accept that Ms Usman probably did not know, precisely, what Mr Atikpakpa was earning she surely knew that his income was nothing like sufficient so as to service the necessary loans.
88. Further support for the view that Ms Usman knew that Mr Atikpakpa was engaging and had been engaged in mortgage fraud can be obtained from her reaction to the increasingly urgent demands of the Claimant to know whether the transactions in respect of 5 Montague Place and 42 Tulse Hill had been completed and properly registered. Essentially, she did nothing. Such correspondence as exists and which can be attributed to her or which should have been brought to her attention shows her to be stalling (see TB 3 pages594 to 610). It is, of course, conceivable, looked at in isolation, that fraud on the part of Mr Atikpakpa simply dawned on her at this stage. Given that she herself had engaged in fraud some months before, however, and given, further, that she had knowingly assisted Mr Okporuah in his fraudulent enterprises (at least in relation to 14 Percy Road and 2 Woodstock Road) such a conclusion is untenable.
89. A significant part of the submissions were given over to the issue of whether adverse inferences should be drawn against Ms Usman from the fact that she was not called to give evidence. I have decided not to overburden this judgment with a discussion of the relevant legal principles or, indeed, a detailed discussion about whether it would be proper to draw adverse inferences against Ms Usman from the fact that the Claimant did not call her to give evidence. It suffices that I say in an appropriate case it is permissible for a judge to conclude that a party derives some support for its case when an opposing party fails to call to give evidence from an important witness (always assuming that no good reason exists for that failure). In the instant case I do not find it necessary to have recourse to this principle. The plain fact is that the documentary evidence amply supports the adverse conclusions which I have reached about Ms Usman.
90. I am also of the view that it is unnecessary to investigate, closely, whether Ms Usman properly cooperated with the defendant in its attempts to discover whether it should afford an indemnity to JULS. I accept that, superficially at least, the early part of the correspondence between the Defendant's former solicitors (Reynolds Porter Chamberlain) and Ms Usman show that she answered many of the questions which were put to her. Her enthusiasm for co-operation waned once it became clear that some lines of inquiry advanced by the solicitors tended to suggest that Ms Usman herself had engaged in fraud. However, in my judgment, the extensive correspondence between Reynolds Porter Chamberlain and Ms Usman does not add any significant support for the conclusions which I have reached about her conduct.
91. On the basis of the evidence analysed above I have reached the conclusion that Ms Usman knew that both Mr Atikpakpa and Mr Okporuah were engaging in mortgage fraud. In the case of Mr Okporuah, Ms Usman knew that he was engaging in such fraud in respect of the transaction related to 14 Percy Road and she facilitated that transaction by signing the letter of 13 June 2001. It is difficult to pinpoint a date when Ms Usman knew that Mr Atikpakpa was engaging in mortgage fraud but her involvement in the transaction involving Netherstone strongly supports the view that on balance of probability she was aware of his fraudulent activities from about June 2001. I am satisfied to the requisite standard of proof that Ms Usman knew that Mr Atikpakpa was engaged in mortgage fraud prior to the transactions which are the subject of this claim. In relation to 5 Montague Place I am satisfied that Ms Usman knowingly facilitated the mortgage fraud perpetrated by Mr Atikpakpa.
92. In relation to 42 Tulse Hill, however, different considerations arise. Mr Atikpakpa did not perpetrate a mortgage fraud. He did not apply for the loan of the money which he stole. So far as I am aware the only dishonest act proved or alleged is that Mr. Atikpakpa stole the money intended to be used by his wife to purchase the property.
93. As I have said, there is no suggestion that Ms Usman benefited directly from the theft perpetrated by Mr Atikpakpa. It may be that she benefited indirectly – JULS existence and therefore her income may well have been dependant upon the thefts committed by Mr. Atikpakpa. Even if she did, however, it does not seem to me that this, of itself, could lead to the conclusion that she knew of the thefts and condoned them. I have considered with care whether it is proper to conclude that she knew of the thefts at the time they were perpetrated. In my judgment such a conclusion would not be justified on the evidence available. It is one thing to obtain loans by making fraudulent statements; it is quite another to steal the loans. There is no direct evidence that Ms Usman knew that Mr Atikpakpa was engaging in theft and I am not prepared to conclude that the evidence which implicates her in knowledge of mortgage fraud also justifies the conclusion that she knew that Mr Atikpakpa was engaging in theft. On the evidence before me it is probable that the first theft which he committed was the theft of the money borrowed by his mother-in-law in order to purchase 11 Arlingford Road. It seems very unlikely that Ms Usman knew of that theft which was so disadvantageous to her mother and yet did nothing about it. In relation to the theft of the money loaned in respect of the proposed purchase of 42 Tulse Hill by Mrs Atikpakpa she was as much a victim as the lender on the basis of the evidence available. It is inherently unlikely that Ms Usman would have known that Mr Atikpakpa was stealing money intended to be used by her sister for the purchase of a property and yet stood by and done nothing. No family member was a "loser" in relation to the transaction involving 5 Montague Place. Nonetheless the evidence available does not convince me that Ms Usman knew that her brother-in-law either proposed to or did steal a sum in excess of £500,000 at any time which would allow the conclusion that she condoned this dishonesty.
94. In the light of these findings is the Defendant entitled to repudiate liability under the policy? Has the Defendant established that the claims in respect of 5 Montague Place and 42 Tulse Hill arose from dishonesty or a fraudulent act or omission on the part of Ms Usman or has it established that the claims arose from dishonesty or a fraudulent act or omission on the part of Mr. Atikpakpa which Ms Usman condoned? In my judgment, Ms Usman committed a fraudulent act in respect of the transaction in relation to 5 Montague Place. She witnessed Mr. Atikpakpa's signature on a document and she certified a copy of his passport. While those acts, in isolation, were not fraudulent since Mr. Atikpakpa's signature and passport were genuine Ms Usman committed fraud since she knew that she was assisting Mr. Atikpakpa to obtain a loan from Mortgages 5 by deception. In the language of the criminal law she aided and abetted his crime. On any view, her actions amounted to condoning his dishonest and fraudulent mortgage application which enabled him to obtain a loan from Mortgages 5.
95. Mr Tozzi QC argues that the claim brought by the Claimant arises from the theft of the money loaned by Mortgages 5; he submits that it does not arise from the dishonest and fraudulent mortgage application. In my judgment that is too narrow a view of what transpired. There could have been no theft by Mr. Atikpakpa without the dishonest and fraudulent mortgage application. In my judgment the phrase "arising from" interpreted in a policy of insurance afforded to solicitors is apt to embrace both aspects of Mr. Atikpakpa's dishonesty.
96. I am fortified in this conclusion by the decision of Irwin J in Zurich Professional Ltd v Karim & Others [2006] EWHC 3355 (QB). I need not outline the facts with which Irwin J had to grapple. Ultimately he had to consider whether the insurers were entitled to rely upon the following clause in a professional indemnity policy of insurance:-

"The insurer is not liable to indemnify any insured to the extent that any civil liability or related defence costs arise from dishonesty or a fraudulent act or omission committed or condoned by that insured….

The Learned Judge reached the following conclusions about the ambit of that clause:-

"105. As we have seen, Clause 6.9 also states the Insurer is not liable where a claim is made against any Insured which arises 'from dishonesty or a fraudulent act or omission committed or condoned by that Insured'. Is there a distinction to be understood between 'dishonesty' and 'a fraudulent act or omission'? I asked for further submissions on that point, which have helpfully been provided in writing by the Claimants' Counsel. The concern is this: do the Claimants have to show that a given Defendant/Insured either committed or condoned the specific 'dishonesty' or 'fraudulent act or omission' from which the claim arose? Or is it sufficient for avoidance of the claim, that an Insured should condone general practice or conduct which [1] was in fact dishonest or fraudulent [2] the Insured being at least reckless as to whether the general practice or conduct was dishonest, which [3] brings the conduct of the 'condoning' insured within the test of dishonesty as defined in either Derry v Peek or Barlow Clowes, and where [4] the general practice or conduct condoned led to or permitted the specific acts or omission giving rise to the claim? This is not a mere academic question. In my judgment it is determinative of liability under the policy in the cases of Imran and Saira Karim.

106…..

107. In the end, the question becomes one of construction of the clause. The Claimants proffered an elegant approach to the meaning of 'condoned' in their opening written submissions. They say they can find no authority on the meaning of the word save in the possibly misleading context of the old law of divorce. I agree that is not likely to be helpful. The Oxford English Dictionary definition is 'To forgive or overlook an offence, so as to treat it as non-existent; especially to forgive tacitly by not allowing the offence to make any difference in one's relation with the offender.' I accept that as the natural meaning of the word, but I am of the view that you cannot condone an act or omission of which you are not aware. How can you be taken to forgive or overlook a fact which you do not know about, even if you should know about it? If the wording of the policy imports a requirement that there was a condonation of the specific acts or omissions which give rise to the relevant civil liability, I would not be able to grant the relevant declarations in respect of Imran and Saira."

108. However, the Claimants also argue that there is no need for specific condonation of the particular relevant acts or omissions. A number of reasons are set out in the further written submissions given to me. In my judgment, however this too is a matter of construction of Clause 6.9. After some consideration, it seems to me that the phrase '…dishonesty or a fraudulent act or omission committed or condoned…' is intended to be disjunctive as between 'dishonesty' and 'a fraudulent act or omission'. That reading is reinforced by sub-paragraph (b) which deals with imputation to a corporate body of the relevant 'dishonesty, act or omission' again appearing to me to emphasise that the three words are to be regarded as disjunctive – each adding something rather than being merely repetitive. I am in the end reinforced in this view by considering what the objective reasonable reading of such a contract would be – by the reasonable person on the Underground. Different responses to this situation might reasonably emerge from the person on the Underground, including surprise that such a contract permits insurers to stand aside from this kind of liability at all. Nevertheless, construing the document, it seems to me the reasonable person would be surprised if this Clause allowed the Insurers to step aside from those within the firm who practised or condoned the specific forgery but not from partners who condoned persistent dishonest handling of money, breaches of the rules, and so forth, which allowed the specific act or omission to take place."

97. As can be seen from these extracts from his judgment Irwin J decided that if an Insured condones a course of conduct which is dishonest or fraudulent and that course of conduct leads to or permits the specific acts or omissions upon which the claim is founded the insurer is entitled to repudiate liability. While the wording of the clause considered by Irwin J is not identical to the clause in the instant case I can see no basis for thinking that the words of the clause which I have to consider should be given a different meaning from the words considered by Irwin J. Further, it seems to me that the approach of Irwin J is correct and that I should follow it.
98. Accordingly I conclude that the claim in respect of 5 Montague Place arose from dishonesty on the part of Ms Usman and/or arose from dishonesty and fraudulent acts on the part of Mr Atikpakpa which she condoned.
99. Can it be said that the claim in respect of 42 Tulse Hill arose from conduct on the part of Mr Atikpakpa which Ms Usman condoned? In my judgment the answer to that question is yes given the interpretation which I have placed upon the relevant clause in the policy of insurance. I have found that by the time that Mr Atikpakpa stole the money loaned in respect of 42 Tulse Hill Ms Usman knew that he was engaging in mortgage fraud. Specifically, she knew of his application for a mortgage in respect of Netherstone and she knew of his application for a mortgage in respect of 5 Montague Place. Upon my findings of fact she knew that he had made false representations in the mortgage application forms. That was a course of conduct which she condoned. Had she not condoned such conduct Mr Atikpakpa would have been in no position to steal the money borrowed by his wife in order to purchase 42 Tulse Hill. Her condoning of Mr Atikpakpa's fraudulent mortgage applications permitted a state of affairs to arise whereby he was left free to steal.
100. I readily accept that if, upon its proper interpretation, the clause under consideration allows the Defendant to repudiate liability only if Ms Usman condoned Mr Atikpakpa's theft neither the defence in respect of 5 Montague Place nor the defence in respect of 42 Tulse Hill can succeed. As I have indicated, however, I do no accept that the clause should be interpreted so narrowly.
101. The consequence is that I am satisfied that the Defendant has established its primary defence. Accordingly this claim must fail.

Secondary Defences

102. I mean no disrespect to leading Counsel when I say that I have decided to deal with this aspect summarily. As I understand it, Mr Fenwick QC accepts that he can succeed upon his technical defences only by reason of the current form of the claim for relief in the Particulars of Claim. Mr Tozzi QC does not accept that the technical defences can succeed even given the form of the prayer for relief. He points out, however, that if the only bar to a successful claim is the form of the claim for relief justice demands that the claimant should be permitted to amend its prayer for relief.
103. I have reached the conclusion that the defences advanced on behalf of the Defendant (other than its primary defence) are properly to be regarded as "technical" and should not be permitted to succeed only on the basis of the form of a pleading. Accordingly, had the primary defence failed I would have granted permission to amend the prayer for relief without any hesitation if that was necessary. Since, of course, the primary defence has succeeded there may be no useful purpose in formulating an appropriate amendment. I have used the word 'may' advisedly. If the Claimant is content to accept my decision no useful purpose will be served by an amendment. If, however, the Claimant wishes to appeal against my decision it may wish to have resolved, completely, the issues raised by the "technical defences".