Scottish Court of Session Decisions

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Carloway Lord Clarke Lord Coulsfield	[2009] CSIH 70 A1586/01 and A1595/01 OPINION OF THE COURT Delivered by Lord Carloway in causa STUART JEREMY PETER WILKIE, Pursuer and Reclaimer against DIRECT LINE INSURANCE plc, Defenders and Respondents ­­­­­­­­­­­­­­­­­ ___________ ­­­­­­­­­­­­­­­­­

Act: Party

Alt: Hofford, Q.C.; HBM Sayers

28 July 2009

1. The Pleadings

[1] This litigation concerns two actions raised in May 1998. In each, the pursuer seeks a declarator that:

"in terms of their 'Policy of Insurance No. 91539300/CWK1', the defenders are obliged to indemnify the pursuer for losses sustained by him as a result of fire to his property at Achanellan, Glen Loy, Fort William, on about 6^th December 1992".

In the first, the pursuer seeks payment of £179,340; being the costs of re-instating his former house at Achanellan. In the second, he seeks a further £22,000 for the loss of the contents of that house. The pursuer had bought the house in June 1989. He had renovation works carried out by a builder, namely George Brown, from September 1989 to March 1990. He avers [Closed Record p 6B-C]:

"On or about 29^th July 1991 the pursuer made application by telephone to the defenders for home insurance. In response to said application the defenders sent to the pursuer a Home Insurance Proposal Confirmation Form which the pursuer signed on 25^th August, 1991 and returned to the defenders. Said document bears to form the basis of Policy No. 91539300/CWK1 for the period 29^th July, 1991 to 28^th July, 1992".

The terms of the Proposal Confirmation form are narrated in the pleadings. They include the following:

"This Proposal Confirmation records information given to us orally and it forms the basis of the Contract of Insurance. You must check this form carefully. If it is correct and complete please sign and return one copy to us. If incorrect, please initial any changes, sign the form and still return one copy to us.

This document forms the basis of Policy Number: 9139300/CWK1

HOME INSURANCE PROPOSAL CONFIRMATION

...

This insurance is based on the following statements made by the policyholder (subject to any amendments detailed overleaf).

The Home

...

3. is in a good state of repair and will be kept so

...

IMPORTANT

Failure to disclose all relevant facts could invalidate all or part of your policy. If you are in doubt as to whether certain facts are relevant or not please ask us. In particular, you should disclose any facts which would influence an insurer in the assessment and acceptance of the risk.

...

DECLARATION

I declare that the statements made by me which are set out above and overleaf are true and correct to the best of my knowledge and belief and will be the basis of the contract between me and Direct Line Insurance plc.

I agree to accept insurance subject to the terms and conditions of the Company's policy, which I have now received.

Date 25^th August Signature Stuart Wilkie".

The Policy itself stated:

"The information given to us orally or otherwise and in the proposal confirmation and declaration signed by you forms the basis of this contract. You must tell us of any change in this information as soon as possible as failure to do so could affect the cover provided".

[2] The pursuer admits [7B-C] the defenders' averment in answer [10D-E] that:

"... the Proposal Form declared that the property was 'in a good state of repair and will be kept so'. ... [H]e required to disclose all relevant facts being facts "which would influence an insurer in the assessment and acceptance of risk". ... [T]he pursuer signed a declaration to the effect that the statements within the Proposal Form were true and correct to the best of his knowledge and belief and formed the basis of the contract between him and the defenders".

[3] So far, the averments raise little by way of disputed issues of fact. However, the defenders' response to the pursuer's claim for indemnity as a result of the fire, which affected the house in December 1992, is that:

"The property was not in a good state of repair at the date of the Proposal and this was known to the pursuer ... [10E]

The pursuer had undertaken renovation of the property. He had raised [Sheriff Court] proceedings against the contractor George Brown ... on 29^th of November 1990 seeking payment of £18,100. The pursuer alleged in the proceedings that the work carried out by Brown was sub-standard and unprofessional ... In March, 1993 the sum sued for was increased to £105,085 and adjustments were made to allege, inter alia, that the extension was unsafe and unsatisfactory and required to be demolished and rebuilt. The pursuer referred to a Report prepared for him by Architects, Kinghorn Mee, dated 12^th November 1991 ... The inspection by Kinghorn Mee was carried out on the 23^rd September and the Report issued on 16^th October 1991. The Report disclosed substantial defects in the property which defects were present when the proposal had been made ..." [12B-13D].

The defenders refer to the evidence of another builder, namely John McKinnon, who had been instructed by the pursuer for the purposes of the Sheriff Court action which he raised against Mr Brown. In that action the pursuer had maintained that the house required substantial rebuilding. Eventually, after the case had reached the Inner House, the pursuer had been awarded £83,072.31 for remedial and anticipated reinstatement costs. The defenders continue:

"As at the date of the Proposal to the defenders in August, 1991 the property was not in a good state of repair and this was known to the pursuer. Esto it was not known to the pursuer that the property was not in a good state of repair (which is denied) the pursuer signed a Warranty on 25^th of August, 1991 that the property was in a good state of repair as at the date of inception of the Policy irrespective of his state of knowledge. Esto the property was in a good state of repair (which is denied) the defects in the work carried out to the property were material facts which would have influenced the defenders in their assessment and acceptance of the risk and, accordingly, required to be declared to the defenders" [15A-D].

At a later point [17D-E] the defenders refer also to a letter, dated 7 October 1991, from Lochaber District Council to the pursuer's solicitors confirming that no completion certificate would be forthcoming in view of the numerous items requiring attention.

[4] The pursuer joins issue with the defenders in respect of the need to declare any state of disrepair. He counters the defenders' position by maintaining [7E-8D] that:

"... substantial renovation works were carried out during the period from May 1990 until June 1991. By about June 1991 all renovation works were complete save for minor cosmetic items. In June 1991 the buildings were in a good state of repair. Defective work carried out by George Brown had been rectified before July 1991. ... Following the departure of George Brown, renovation works in respect of both the original building and the extension were completed. In July 1991 the pursuer applied to the Royal Bank of Scotland for a mortgage over the subjects. For that purpose a valuation was obtained from H.J.G. Samuel & Partners, Chartered Quantity Surveyors, ... on about 18^th July 1991. Said firm valued the buildings at £95,000 in their current state".

This last reference is to a Valuation Report for Mortgage Purposes completed by Russ Bones, surveyor. The pursuer refers to the survey, stating that £6,500 of work still remained to be carried out. He avers that he had obtained grant monies of:  £5,000 on 12 January, 1990; £2,500 on 4 April 1990; and two sums of around £1,000 each thereafter. He continues [9A-D]:

"... said report by Kinghorn Mee, Architects was instructed by the pursuer's solicitors on about 5^th September, 1991. The author of said report visited the premises on 23^rd September, 1991 and the report was issued on 16^th October, 1991. Said report did not comment on the state of the buildings as at September, 1991. Said report was retrospective and was based upon a video and photographs of the building showing its condition when George Brown left the site. ... Solicitors acting for George Brown produced a report from John D Spencely, Architect, dated 31^st March 1992. Said report failed to find any signs of distress in the structure or evidence of roof leaks. Said report specifically noted that the walls were plumb, showed no sign of cracking nor of any water penetration".

[5] On the basis of the facts stated on record, the defenders were thus attempting to prove that the pursuer was in breach of the insurance contract because: (a) he knew that the house was in a poor state of repair at the date of the inception of the policy and had failed to disclose that; (b) in any event he had signed a warranty that it was in a good state of repair and it was not; and (c) in any event, he ought to have declared the Kinghorn Mee defects because they made it clear that the house was not in a good state of repair. But their plea-in-law is simply:

"3. The said contract of insurance having been voided ab initio, the defenders are entitled to decree of absolvitor".

[6] The pursuer's response is that, as at the date of the policy and thereafter, the house was in a good state of repair in terms of the Spencely report. He does not take any point on record about the terms of the letter of repudiation, which is referred to [15E-16A], as limiting the defenders' ability to repudiate to the first of the three grounds set out by the defenders. The letter, which is dated 27 May 1993, states:

"We are in possession of reports on the condition of the property, by Richard Haynes Developments in October 1990 and Kinghorn Mee in November of 1991, both showing that the property was suffering from major structural defects. It is understood that these reports were commissioned by you to assist with a civil action against the builder. On the basis of this evidence, I am satisfied that at the time you proposed to Direct Line for insurance, you were aware your property was in a very poor condition, and you failed to advise us of this fact when arranging the insurance. Had you done so, cover would not have been made available to you. I consider your failure to inform us of the true condition of your property to be a misrepresentation of material fact, which leaves us with no option but to avoid your insurance from inception".

2. The Lord Ordinary's Opinion

[7] At the proof in the conjoined actions, the pursuer gave evidence himself and adduced Sylvia and David Whitehead (two of his friends, who lived locally) and John Spencely, the architect. He lodged affidavits from David Cottier and Mr Bones, both surveyors. The defenders led: David Mee, the architect; Ian Todd, loss adjuster; Mr McKinnon, the builder; Alistair Robin, their former regional claims manager; Malcolm Cooper, one of their underwriters, and Michael Harris, a retired Lloyd's underwriter.

[8] In the course of the pursuer's testimony, he attempted to give evidence about the content of the telephone call which he had with the "tele-sales" operative around the time of the inception of the policy. The defenders objected to this line of evidence, because the basis of the contract had been admitted upon record to be the terms of the Proposal Confirmation form. This objection was sustained (Lord Ordinary's Opinion para [9]).

[9] The Lord Ordinary examined the issue of the state of the house at the date of inception of the policy and thereafter. He concluded that:

"[63] ... in June 1989 when the pursuer acquired Achanellan it required renovation ,... In October 1989 Mr Brown began work on what were intended as quite extensive alterations to the existing house and its original extension. That work included building or extending walls, constructing new floors and roofs; breaking out openings and fitting new windows. The pursuer was not satisfied with Mr Brown's work. It was his view that there had been little improvement in the state of the house. As at May 1990 when Mr Brown left the site there were no slates on the roof. There were no floors upstairs. The solum had not been taken out. Windows had been fitted in a temporary fashion. A lintel was missing".

[10] The report from Kinghorn Mee, following upon Mr Mee's visit in September 1991, included the following, as narrated by the Lord Ordinary:

"[40] ... Structural Integrity: ... it is evident that the works do not conform with adequate building practice, or the requirements of Building Warrant approval. Structural masonry work fails to comply with [the relevant British Standard].

Setting Out: It is evident that in setting out the works, no accurate check for squareness was carried out either by diagonal measurement or other means. There is no evidence that clearly marked storey or gauge rods ... have been provided ... to ensure the accuracy of the walls and the openings in them. The starting courses have not been set out to allow for the position of openings etc. to ensure that broken or irregular bond and cutting is kept to a minimum. Bricks and blocks are not laid in true and regular courses on full, fairly smooth level bed of mortar with all joints filled ... Perpendicular joints and quoins are not constructed plumb ... At openings in masonry wallings, lintels do not have consistent adequate bearing on the wall at the sides of openings and occasionally bear short lengths of cut block ...

Structural work of timber fails to comply with [the relevant British Standard]. Timbers are not sawn truly square. There is a general failure to make joints and provide bearings in a manner that brings and maintains all surfaces in full contact. Failure to make tight joints and bearing surfaces will considerably reduce strength of joints and the ability to resist lateral and rotational forces on the structure. There is evidence that inappropriate fixings have been used in that nails of inadequate length to provide a secure fixing are used. Nails are not driven on the slant so that the connection does not loosen under load. Nails are used instead of screw fixings in locating joinery components which may become loose due to inappropriate methods of fixing. Where joist hangers are used there is a general failure to ensure that all supporting or fixing surfaces are in close contact with the background and the timber beam supported ... General construction fails to make adequate provision for the exclusion of rising and penetrating dampness...

General Construction: The general construction displays a lack of attention to basic constructional detailing and good practice. There is a general failure to relate to specification contained in the relevant approvals and implied contract terms. The works are not carried out in accordance with adequate good building practice. General precautions to ensure structural stability, exclusion of dampness and general integrity of the works have not been taken, to the extent that considerable remedial works will be required to bring the works to an adequate standard of stability, integrity and completion".

[11] Mr Mee had spoken to his report in the Sheriff Court action and, before the Lord Ordinary, accepted the accuracy of the transcript of his evidence in that Court. Notwithstanding his criticisms, the house was not, according to Mr Mee, in imminent danger of collapse. Mr Spencely, who had been instructed by Mr Brown in the Sheriff Court action, had visited the site on 12 December 1991 and produced his report in March 1992. He agreed with many, but by no means all, of Mr Mee's observations. He had not considered that the specific defects, which he agreed existed (25 in number), were causing any structural stress or failure or water penetration. Nevertheless he accepted in his evidence that:

"[47] ... the work had been rough and ready, that the brickwork was not as he would have wished it to be ..., and that it had been done to a standard that he would not have accepted had he been responsible for the job ... When it was put to him that John McKinnon, a building contractor who had been asked to look at the property in January 1992 had declined to do anything other than knock it down and replace it at a cost of £68,000 (plus VAT), Mr Spencely said that he was not surprised ...".

[12] Where there was a disagreement between Mr Spencely and Mr Mee, the Lord Ordinary preferred Mr Spencely. But the Lord Ordinary went on to state that, with one exception, he accepted the accuracy of the Kinghorn Mee report as describing the defects in the work when Mr Brown left the site. He then addressed the issue of whether it also accurately described the condition of the building when Mr Mee had visited the site; as distinct from being a retrospective view, as suggested by the pursuer, describing the work when the builder left. In that regard, the Lord Ordinary accepted that some work had been done between Mr Brown leaving the house and Mr Mee examining it. He did not, however, accept (para [64]) that, with the exception of slating and flashing, the work done in this period had remedied the defects described by Mr Mee. The Lord Ordinary explains:

"[65] I take the view that the defects listed in the Kinghorn Mee report ... were probably still in place in September, and indeed in December 1991, for the following reasons. The defects relate in the main to substantial structural matters: masonry, structural timber, slapping, door openings, damp proof courses and repair of pre-existing stonework. Remedying these would have involved substantial down-taking. Although the pursuer talked in broad terms about the subsequent work having put right what Mr Brown had failed to do, I did not hear him speak specifically about re-doing masonry or taking down and replacing floor and roof timbers. Indeed, he expressly accepted that it had not been possible to remedy Mr Brown's failure properly to set the masonry work. Nor did I think it likely that the pursuer, with only modest funds at his disposal, would have undertaken radical down-taking if he thought that what was there was at all serviceable. His complaints about Mr Brown, at least before he met with Mr Mee, seemed to be about how little Mr Brown had done and how much he had charged rather than about the quality of his work. When giving evidence, Mr Mee conceded that he had relied in part on what he had been told by the pursuer and the photographs he had been shown but, nevertheless, I understood him to be saying that his report was intended to describe the property as it was in September 1991 and not simply as it had been at some earlier date ... Almost without exception when Mr Spencely is able to see an item he confirms Mr Mee's assessment, as he confirms all but one of the items on which he is able to comment in the Lochaber District Council letter. I do not see anything in the affidavit evidence of Mr Russ Bones or the evidence of Mr and Mrs Whitehead to contradict the view that the Kinghorn Mee report and the Lochaber District Council letter provided broadly accurate pictures of Achanellan in the latter part of 1991 and indeed later. I can understand that Mr Russ Bones may not have been looking for and in any event did not see the defects described in the Kinghorn Mee report. By the time of the final visit by Mr and Mrs Whitehead Achanellan may well have appeared satisfactorily completed to someone who was merely on a social visit. That does not mean that it had in fact been satisfactorily completed.

[66] Thus ... I conclude that the Kinghorn Mee report taken together with the Lochaber District Council letter accurately describe Achanellan as at 25 August 1991 and subsequent dates, in particular 23 September 1991, 12 December 1991 and, because I heard no evidence of any work on the property during 1992, thereafter up until the date of the fire on 6 December 1992 (and therefore on 29 July 1992)".

[13] The Lord Ordinary's next step was to examine the pursuer's knowledge of the condition of his house. He did not consider that the pursuer knew of the detailed defects in the Kinghorn Mee report and Lochaber District Council letter at the time of the inception of the policy; although that was not to say that he did not know something was amiss. However, he found that the pursuer had been sent a copy of the Kinghorn Mee report in November 1991 and, in any event, had been made aware of the state of the house, having discussed it with Mr Mee in detail with reference to photographs and plans, on 23 September 1991. The Lord Ordinary concluded that, as at September 2001, the pursuer was very familiar with the house and its defects. Having heard un-contradicted evidence from the underwriters (supra) about the materiality of these defects, the Lord Ordinary held that:

"[73] ... the condition of Achanellan, as it was known to the pursuer by the time of the visit of Mr Mee in September 1991 and, in any event, no later than March 1992, and therefore on 29 July 1992 was such that it would have been material to a reasonable insurer in assessing the risk."

[14] At the stage of submissions, the defenders (who had been invited to address the Court first) maintained not only that there had been material non-disclosure at the inception of the policy but that:

"[75] ... there were facts relative to the condition of the property which were sufficiently material to have affected the defenders' judgment of the risk had they been informed and which therefore had to be declared at renewal ... The obligation [to disclose all material circumstances] is incumbent on the insured when proposing for insurance ... and when a new contract is made at renewal or when the contract is varied, for example by extension of cover...".

The pursuer responded by submitting that the defenders' entitlement to repudiate had to be tested by reference to the material which they had relied on to justify the decision (para [78]). He stated that the condition of the house at the date of renewal had not been explored in evidence (para [79]).

[15] The Lord Ordinary accepted the pursuer's submission that the defenders could only found upon a ground for avoiding the policy which had been stated in their letter of repudiation. However, he held that:

"[84] ... I take the condition of the property as at the date of proposal to be as described in the Kinghorn Mee report to the extent that that report is not contradicted by the Spencely report and as supplemented by the Lochaber District Council letter. There is no evidence that significant remedial work was done after the date of Mr Spencely's visit, ... I find the pursuer to have been fully aware of that state of affairs but not until after the inception of the policy. He was however aware of it prior to the date of renewal of the policy. Again as I have explained I regard the condition of the property as I found it be to have been material to assessment of the risk by a reasonable insurer... Mr Spencely found no evidence of structural failure or cracking or water penetrations. That said, the criticisms made by Mr Mee and not disputed by Mr Spencely were significant and numerous. When they are taken together they point unequivocally to the property not being in a good state of repair.

[85] I am not satisfied that the defenders have proved that the pursuer was aware of everything that appears in the Kinghorn Mee report at the time he signed the Proposal Confirmation Form thereby giving the warranty relied on by the defenders. Accordingly, while I am satisfied that the property was not in a good state of repair at the date of inception of the policy the pursuer has not been shown to have been in breach of his warranty that the property was in a good state of repair because, for all that has been proved to the contrary, the pursuers statement, made on 25 August 1991, may have been true to the best of his knowledge and belief. However, the warranty given by the pursuer was not only that the property was 'in a good state of repair' but that it would be "kept so", during the course of the insurance. I have found that the pursuer became aware of all the information contained in the Kinghorn Mee report. Probably no later than 23 September 1991 when he discussed matters with David Mee. Thereafter, because he did not remedy the condition of the property ... or renegotiate the terms of the insurance contract he was in breach of warranty and the defenders were accordingly entitled to avoid the policy ... I did not find [the pursuer] to have failed in his duty of disclosure at the time of inception of the policy. However, the pursuer again came under an obligation to make disclosure of material facts and circumstances when the policy was renewed on 29 July 1992. As I have found, the state of the property was a material fact ... He must therefore be held to have been guilty of material non disclosure at the time of renewal of the policy. The defenders were therefore entitled to avoid the policy on that ground also".

The defenders' third plea (supra) was sustained.

[16] It is of some importance, having regard to the submissions in the reclaiming motion, to note the Lord Ordinary's impression of the pursuer. He reached the view that the pursuer had not been a witness upon whom he could "unreservedly rely" (para [57]) having regard to four sources: the circumstances in which he came to give his evidence; the content of that evidence and the manner in which it was given; the manner in which he had conducted himself as a party litigant; and the inconsistency of his positions before the Lord Ordinary and the Sheriff (para [58]). On the first matter, the Lord Ordinary was simply concerned about the depth at which the pursuer had become involved in his case as a party litigant. He reached the view (para [59]), that it was:

"unrealistic to expect him to be detached and, particularly with the passage of a significant amount of time, it would be unsurprising were he to have become convinced of the truth of what he had to say, irrespective as to what might be the actual position".

Applying a degree of caution, if not reticence, to his language, the Lord Ordinary expresses his view (para [60]) that the pursuer:

"is someone who is prepared to be economical, in other words selective, with the truth ... Moreover, the pursuer behaved obstructively during cross-examination. On occasion he avoided answering or simply refused to answer questions".

The Lord Ordinary considered (para [61)] that, in his submission to him, the pursuer had lied about one matter, notably his understanding of the effect of the process of conjoining proofs; the pursuer claiming that he thought that he could lead only three witnesses (including himself) in the buildings action and two in the contents action. The Lord Ordinary considered that the pursuer had been less than candid when he had belatedly said that he had failed to obtemper the order of the court, made in advance of the proof, to find caution for the expenses of witnesses. The inconsistencies of the pursuer's positions in the two actions is perhaps self evident. In the Sheriff Court he had claimed that Mr Brown's work had been so defective, as at January 2002, that it would cost almost £80,000 to rebuild. In the action before the Lord Ordinary, he was maintaining that there were no substantial problems with the house when he had proposed for the insurance and when the house had been damaged by fire.

[17] On quantification of loss, the Lord Ordinary noted that Mr Bones' Valuation Report had valued the house for mortgage purposes at £95,500 in its then (18 July 1991) condition. But, he then observed that this report "supported only by Mr Bones's affidavit and not by his oral testimony" was a "rather fragile piece of evidence" (para [86]). The report, as the pursuer had submitted, proceeded on the basis that the house had been in good repair. But the Lord Ordinary had held that this was incorrect. He noted that he had heard very little other reliable evidence about valuation. Mr Cottier's affidavit had referred to a reinstatement cost of £145,000. But the Lord Ordinary did not consider that this was the correct measure of loss to be indemnified, as the pursuer had not chosen to reinstate. The extent of the indemnification had to be restricted to the value of the asset lost. The Lord Ordinary selected the Valuation Report figure of £95,500, even although he held that it had been based on a false premise and the pursuer had subsequently sold the house for a significant sum.

[18] The Lord Ordinary records that he had heard "even less evidence in relation to the value of the contents". He had heard testimony that the house had contained a pianola, a pool table, a Rayburn stove and "some furniture". He noted that lodged in process was a list of items but, the Lord Ordinary specifically states, this list was not spoken to by the pursuer as reflecting the items in the house at the material time or their value. He therefore assessed damages at an "arbitrary sum" of £1,000 (para [88]).

[19] Finally, as a post script, the Lord Ordinary adds (para [90]):

"The pursuer accused the defenders, their agents and [counsel] of various improprieties during the course of the proof. Because I was disinclined to become involved in collateral matters I did not accede to the pursuer's invitation to investigate the allegations and therefore I am not in a position to comment upon them. I would, however, record that the pursuer complained that a false date had been added to one of the reports by Richard Haynes and that the existence of the report by Mr John Spencely had not been revealed until a late stage. Whatever the basis for the pursuer's complaints ... as matters transpired I did not see that the pursuer had suffered prejudice in the conduct of the proof by reason of anything relating to them. I did not hear evidence from Richard Haynes and I have left the content of his reports entirely out of account. Mr Spencely was led under reference to his report which the pursuer had fully a year to consider...".

3. Recording of the Hearing, Transcripts of the Evidence and Legal Representation

[20] At the outset of the hearing of the reclaiming motion, the pursuer requested that the hearing be tape recorded. This was the same application as he had made several times in the past, when the case had called in the Inner House to deal with procedural matters. The pursuer explained that the recordings would be helpful in due course, when the case proceeded to the House of Lords. It was, on each occasion, explained to the pursuer that the Court did not tape-record legal debate and that having a tape-recording of such a debate was unlikely to help any appellate body.

[21] The pursuer also repeated his oft expressed concerns that he did not have transcripts of the evidence at the proof. He re-raised this matter later in his submissions under reference to articles 4 and 19 of the Treaty of Union 1707 (on the basis that payment for such transcripts would be ordered by the courts in England). The history of this matter is worth recording. The Lord Ordinary's Opinion is dated 15 August 2007. In September 2007, the pursuer enrolled for review of the Lord Ordinary's interlocutor in the usual way. He also made an application to have the evidence at the proof transcribed. There was no problem with that, as no application is needed, although it appears from the interlocutor of 27 September that his motion, in that regard, was granted. However, he also requested that the cost of transcribing the recording of the evidence be met from public funds.

[22] The pursuer founded his application upon the terms of a Note appended to Chapter IV of the Table of Fees. That Table is intended, as a generality, to regulate the fees of solicitors allowable in party and party accounts (RCS 42.16). Chapter IV specifically deals with the fees payable to shorthand writers (now almost obsolete in the Court) and transcribers. The first note to this Chapter provides that transcripts are to be made only on the direction of the court, whereupon the costs are to be borne equally by the parties' solicitors. This is dealing with the situation where the case is in the Outer House. It is not clear why this Note is still considered to be extant, as this matter is now specifically regulated by a Rule of Court (RCS 36.11.(3)). The Note then goes on to deal with the position in a reclaiming motion where transcripts are required. The Note states that, in that event, the solicitor for the reclaimer may request a transcript. No permission of the Court is necessary, but the solicitor must bear the cost of transcription, in the first instance. Once more, this is now the subject of a specific Rule of Court (RCS 36.11.(8)). However, the second note to the Table reads as follows:

"2. In any cause where the court, on a motion enrolled for the purpose, certifies that there is reasonable ground for reclaiming and that the reclaimer is unable, for financial reasons, to meet the cost of the necessary transcription from which copies for the use of the Inner House are made, the cost of such transcription will be paid out of public funds".

[23] The origins of this Note are unclear and, in view of the terms of the Rules of Court, its status is uncertain. But it certainly appears to permit the Court to sanction the use of public funds to transcribe evidence, if it is satisfied both that there is reasonable ground for reclaiming and that the reclaimer is unable to meet the cost. In the normal case, in the modern era, if these conditions are satisfied then generally the Court would expect the reclaimer to attempt to obtain legal aid to pursue his appeal. If granted, legal aid could cover the production of any necessary transcripts.

[24] The Court was unable to recall any case in which a motion of this type had ever been granted, or indeed enrolled. It might be regarded as exceptional for the Court to become involved in the tasks of assessing the merits of a reclaiming motion and determining the impecuniosity of a party in limine. Although it might, in an exceptional case, be prepared to rely upon ex parte statements of counsel relative to such matters, it might be difficult for the Court to accept the ipse dixit of a party litigant on the state of his finances or the merits of his own cause.

[25] Be that as it may, the pursuer did apply for sanction to have the evidence transcribed at public expense. On 27 September 2007, the Court (Lord Johnston, Lord Wheatley and Lady Paton) refused the motion to have the costs met from public funds. It did, however, continue the motion so that the pursuer might specify what parts of the evidence he wished transcribed. The pursuer appears to have taken this to mean that a final decision on public funding had not been made, although it is clear from the interlocutor that it had. By the time of the next calling of the case on 9 October 2007, the pursuer had produced a list of the days of evidence which he wished transcribed. This was essentially some four half days and two full days. He again moved his motion in relation to public funding, pointing out that he had a fee exemption certificate. It was again refused (Lords Osborne, Nimmo Smith and Carloway), the Court explaining to the pursuer that the application had already been refused by another Division. The pursuer tried again in January 2008, when the motion was refused once again (Lords Johnston, Nimmo Smith and Wheatley). Notwithstanding the several decisions of the Court, the pursuer raised the same matter on 15 October 2008 with the same result (Lord Osborne, Lady Paton and Lord Carloway).

[26] The pursuer is in the habit, when addressing the Court, of treating the Court's decision to refuse to sanction the use of public funds for the purpose he desired as a refusal to sanction the transcription of the evidence at the proof. That is not, of course, the case. As already noted, a reclaimer does not need any sanction from the Court to have the evidence at a proof transcribed, but he does require to fund that exercise, as he would any other outlay in an appeal. He may in due course recover his expenses, including the costs of transcription, from his opponent if he succeeds, but that is another matter.

[27] A further preliminary matter advanced by the pursuer was his lack of legal representation. It is of note that the pursuer was granted legal aid for these proceedings and did have counsel and agents (Messrs Biggart Baillie) acting for him in its early stages. He appears to have chosen to dispense with the services of agents some time after the commencement of the action because he had ascertained that this firm did some work for the defenders' parent company, RBS plc. There was no suggestion that Messrs Biggart Baillie regarded this as an obstacle to their continuing to act. The pursuer maintained that he did want to be legally represented but that no-one would act for him against a subsidiary of RBS plc. He said that he had sought the assistance of thirty seven legal firms, and the advice of the Law Society, before deciding to proceed as a party litigant. It appeared, from what the pursuer was prepared to say, that there were several instances of both agents and counsel withdrawing from acting for him.

[28] The Court cannot comment on any negotiations which may have taken place, except to observe that it would be surprising if no legal firm could be found to act against RBS or one of its subsidiaries, since it is not exactly uncommon for that company to be involved in litigation in this Court in which law agents and counsel appear content to act as their contradictors. In any event, the Court has not been given any adequate reason for the pursuer having failed to organise such instruction on conventional terms. It is a matter of considerable regret that he did so fail for reasons which will become clear. It was because of his failure to obtain legal representation that, according to the pursuer, his legal aid certificate was suspended.

4. Submissions
Pursuer

[29] It is not unreasonable to comment, in limine, that the Court had, on many occasions, difficulty in understanding the points which the pursuer was trying to make at the bar or in grasping their materiality to the case. Although he had lodged Grounds of Appeal extending to eight pages and containing twenty two such Grounds (plus a further page directed specifically to the contents action), his submissions did not follow the numerical order selected on the written page. Rather they moved from one ground to another without apparent structure. This somewhat rambling approach made the Court's task particularly difficult in its attempt to separate what appeared, at least upon first impression, to be points of substance from those of peripheral and marginal import.

[30] At the commencement of the hearing, the Court requested that the pursuer address the specific grounds of appeal in some form of order, preferably numerical. This request did not meet with success. At the end of the first day, the Court requested the pursuer to consider what he had submitted and to attempt to address the specific grounds lodged. On the morning of the second day, the Court explained that it considered, on a review of his submissions, that he had addressed the majority of the points raised in his Grounds of Appeal and that the Court would appreciate it if he could now address those remaining grounds that he wished to advance. This met with no success either. Rather, the second day was taken up with a sequential analysis of the documents contained in the pursuer's appendices. The Court has had regard to the content of all of this material, although that content is not all repeated here. Whilst not suggesting that the examination of this material was an entirely sterile process, it was at times unnecessarily time consuming, especially when combined with what was frequently repetition by the pursuer of points already covered several times in oral submission and the written Grounds. The pursuer appeared to be under the misapprehension that the Court would be unable to understand the points he was making unless they were repeated on a number of occasions.

[31] An attempt is made here to encapsulate in summary the major points advanced, even if those of apparent substance are already detailed in the written Grounds themselves. The scheme adopted is broadly, but not entirely, the same as that advanced in the submissions of the defenders, which correctly categorised the pursuer's complaints under seven different headings:

A. ORAL TERMS OF CONTRACT (Grounds 1,2 and 5)

[32] The Lord Ordinary had erred in failing to take into account the terms of the conversation, which the pursuer had with the defenders' tele-sales operative when arranging the building insurance. It was not disputed that it had been on 29 July 1991 that the pursuer had first contacted the defenders by telephone. It was following upon that conversation that the defenders had sent to the pursuer the Proposal Confirmation form, signed by the pursuer and returned to the defenders on 25 August 1991 (Opinion para [9]). It had been the pursuer's submission to the Lord Ordinary (para [78]) that he had read over to the operative the content of the Valuation Report dated 18 July 1991. This had stated that the house was "still under reconstruction", but had valued the house in its then condition at £95,500 and, on prospective completion, at £102,000. The pursuer maintained that there was no evidence that he had been asked on the telephone whether the house had been in a good state of repair. The contract had been concluded on the telephone and not in the course of the subsequent exchange of forms.

[33] According to the pursuer, the defenders' Household Underwriting Manager, namely Mr Cooper, had admitted during the course of his evidence that the content of the telephone conversation would still be contained on a computer file. Yet the defenders had elected not to provide this information. This was sinister. The defenders had deliberately withheld vital information relating to the formation of the contract. This ought to be held against the defenders under the maxim "omnia preasumuntur contra spoliatorem" (Armory v Delamirie (1722) 1 Strange 505; 93 ER 664).

[34] The Lord Ordinary had failed to take into account the content of the conversation in determining the terms of the contract of insurance, despite the reference to oral information in the Proposal Confirmation form, which was said to constitute the basis of the Contract of Insurance. Reference was made to The Zephyr [1984] 1 Ll LR 58. The terms of the Record (supra), in which the pursuer admitted that "the statements within the Proposal Form ... formed the basis of the contract" were inaccurate. The pursuer had told his former solicitors about this. The pursuer's averments materially misrepresented the true position. The defenders' underwriters had not been involved in the formation of the contract. Rather, a fully trained "tele-sales" operative, who could have referred the proposal to an underwriter, had been. The Lord Ordinary had erred in taking into account only the written material, as in a contract of marine insurance, and in considering that the Proposal Confirmation form contained all the information given, when the proposing had all been oral. The contract had been completed on the telephone. Reference was made to Bear Stearns Bank v Forum Global Equity [2007] EWHC 1567 (Comm). The Lord Ordinary had also erred in not obtaining the information held on the defenders' computer system about what had been said. When the pursuer had requested this, the Lord Ordinary had asked the defenders to be scrupulous in their provision of the relevant information but the defenders had not complied with the Lord Ordinary's request.

B. BIAS (Grounds 3, 6, 8, 11, 13, 16, 17 and 19)

[35] The Lord Ordinary had failed to act impartially during the hearing. There were a number of aspects to this, not all of which had been incorporated in the written Grounds of Appeal.

[36] The Lord Ordinary had constantly interrupted the pursuer's cross-examination of witnesses, especially Mr Mee. Mr Mee had been saying, in response to objectionable leading questions from the defenders, that he had no recollection of certain matters. The pursuer had been putting the content of his reports to him, but Mr Mee had continued to deny having any recollection. The pursuer had been told by the Lord Ordinary to stop his cross-examination on the basis that time had been "dragging on". He was stopped pursuing his line about Mr Mee's lengthy conversation with the defenders' law agent prior to the proof (infra).

[37] The Lord Ordinary's remarks about the pursuer in his Opinion amounted to a "personal assault", the extent of which the pursuer had not previously encountered. They would amount to libel if repeated outwith the Court. The Lord Ordinary ought not to have taken into account the pursuer's conduct outside the witness box in assessing his evidence. He ought not to have had regard to the pursuer's failure to find caution for the expenses of his witnesses. The pursuer had been reduced to calling five witnesses when he had agreed, at the hearing on caution, that he would find £2,000 in respect of five witnesses. He had not breached the Court's order relative to caution, as he had not formally cited any of his witnesses. The pursuer accepted that he did refuse to answer questions from the defenders regarding his personal finances at the time of the insurance claim. These questions had been posed to rile him.

[38] The Lord Ordinary had displayed partiality in relation to witnesses. This applied to Mrs Whitehead, when she had been shown the Richard Haynes report (supra). This had been wrongly dated. The defenders had put to her a report dated 1991 (the only copy in process is undated), with a view to challenging her evidence about the soundness of the condition of the house in that year. However, the witness had said that the report (which was in some sort of file) had been accompanied by a letter dated October 1990. The pursuer had objected, claiming, by reference to an undated version of the report, that the report produced had been fabricated (forged). But his objection had not been accepted. Rather, the Lord Ordinary had "lost control", repeatedly told the pursuer to sit down (rather than persist in his objection) and then left the court. The Lord Ordinary had threatened the pursuer that he would find him in contempt of court. This conduct displayed ill will and partiality.

[39] The Lord Ordinary had failed to investigate the defenders' fraud in relation to the report and had admitted forged evidence (see the pursuer's motion to sist the cause pending criminal investigation dated 14 November 2006). The covering letter and the 1991 report had been "removed" from process. The defenders had undertaken to produce copies of all versions of certain reports, notably those from Mr Spencely and Mr Haynes (see letter of 3 November 2006), but they had failed to do so.

[40] The Lord Ordinary had failed to "dismiss" a suborned witness, again Mr Mee. This allegation concerned a forty five minute telephone conversation, which Mr Mee had said that he had had with the defenders' law agent, in advance of the proof. The pursuer had reported this to the Procurator Fiscal, as the Lord Ordinary had not done anything about it. The Lord Ordinary had also failed to do anything about Mr Harris approaching the Whiteheads outside the courtroom and attempting to suborn them by "trying to put things in their heads". The detail of the allegation was contained in a document lodged in the pursuer's appendix, but in essence consisted of Mr Harris engaging the Whiteheads in conversation of one sort or another. The evidence of Mr Mee, Mr Harris and Mr McKinnon had all been "clearly suborned".

C. FAILURE TO PROVE THE CASE ON RECORD AND THE EFFECT OF THE REPUDIATION LETTER (Grounds 4, 21 and 22)

[41] The Lord Ordinary had erred when he concluded (at para [85]) that the pursuer had breached "an obligation to make disclosure of material facts and circumstances when the policy was renewed on 29 July 1992". There was "no written warranty and there was no investigation, or evidence pled (sic), on the condition of the property at this date". The onus was on the defenders to justify their decision, which was contained in the letter of 27 May 1993. The issue of the condition of the house at renewal was not mentioned in the letter of repudiation (see also the defenders' Memorandum of 21 May 1993). Only the condition of the house at the date of inception of the policy had been relied upon. A high degree of openness was only required at the date of formation of the contract and not thereafter (Manifest Shipping Co v Uni-Polaris Insurance Co (The Star Sea) [2003] 1 AC 469, Lord Clyde at para 7). The pursuer had made full disclosure at inception. Given the Lord Ordinary's findings on the pursuer's knowledge at that date, the defenders' position that avoidance of the policy from its inception was justified could not stand. The defenders had not proved their case. It had only been at the stage of submissions that renewal of the policy had been mentioned.

[42] Where an insurer denies liability under a policy, the parties' rights are fixed at the time of denial on the basis of the reasons then given. The insurer cannot create further grounds for escape after a proof (Marine Shipping Co v Uni-Polaris Insurance Co (supra), Lord Scott of Foscote at para 83, under reference to Rego v Connecticut Insurance Placement Facility (1991) 593 A2d 491, Callahan AJ at 497). The defenders were fixed with the reasons given in the letter. They could not use further reasons which appeared at the proof.

D. PROCEDURAL IRREGULARITIES (Grounds 7, 9, 10, 14, 15, 18)

[43] The pursuer had been unaware, until the Lord Ordinary had invited the defenders to make their submissions first, that the onus had been on the defenders to prove their case against the pursuer. The Lord Ordinary should have told the pursuer this in advance; presumably at the beginning of the proof. The pursuer had lost an advantage because of this.

[44] The Lord Ordinary had not made the same evidence available to all parties. This appeared to be linked to the allegations concerning the Haynes Report. The rule about the exchange of witness lists (RCS 36.2) had been breached by the defenders but the Lord Ordinary had done nothing about this. The Lord Ordinary had prevented certain evidence emerging on the one hand and allowed leading questions on the other (supra, sub nom. Bias).

[45] The Lord Ordinary had obliged Mr and Mrs Whitehead, who were both elderly, to wait outside the courtroom for, respectively, one and two weeks. This was disgraceful and showed disrespect for aged witnesses. Knowledge of this had discouraged Mr Bones, who was also elderly, from attending.

[46] The Lord Ordinary had failed to deal with "various arguments" raised by the pursuer.

E. EVIDENCE OF DEFECTS (Grounds 10, 20 and 22)

[47] There was no reliable evidence of any substantial problems with the house either at the inception of the policy or at renewal. The Spencely report had made it clear that the house was wind and watertight with no structural problems. The Lord Ordinary had relied on this report, but had reached a contrary conclusion. Mr Spencely had expressed no difficulty with the pursuer living in the house, except in relation to one matter, which had been remedied.

[48] The first Haynes report had been succeeded by a second report showing much progress in the ten months prior to the inception of the policy. The most recent report, at the time of the inception, was the Valuation Report, instructed at the behest of the lenders, RBS.

[49] The Lord Ordinary had given insufficient weight to the testimony of Mrs Whitehead in relation to the state of the house. The Lord Ordinary had given undue weight to the hearsay from Mr Brown and Mr Glen, neither of whom had been called as witnesses. Although he had "dismissed" their evidence, it had crept into cross-examination and was repeated in the Lord Ordinary's Opinion. The Lochaber District Council letter had not been signed by Mr Caton and was inadmissible. The Lord Ordinary had erred in not giving the affidavits from Mr Cottier and Mr Bones "credence" (Civil Evidence (Scotland) Act 1988, RCS 36.8).

F. REINSTATEMENT and QUANTUM (Ground 12)

[50] The Lord Ordinary had erred in his assessment of quantum. The parties had agreed, after the fire, that reinstatement of the house would take place. The pursuer had commenced works in that regard and the defenders had provided him with a caravan to enable demolition to commence. If the pursuer had been contractually entitled to the cost of reinstatement at the time of the fire, then that cost should also be the measure now. The pursuer had only been prevented from re-instating the house by RBS, who had forced him to sell. The pursuer had produced an affidavit from Mr Cottier referring to his report of 13 April 1993, which had costed reinstatement, on the basis of demolition and re-building, at £145,000. This report had been requested by the defenders. The Lord Ordinary had erred in not accepting the evidence of Mr Bones on valuation. The defenders had not produced any valuations of their own.

[51] The pursuer had further letters from the Highland and Western Isles Valuation Joint Board regarding their valuations of the subjects. The pursuer had timeously lodged a letter from the Highland Council referring to the payment of grant monies totalling £9,450 from January 1990 to March 1991, to which the Lord Ordinary had given inadequate weight.

G. CONTENTS ACTION

[52] The pursuer had understood that the evidence at the proof would be concerned first with the buildings action and then separately with the contents action. He had been refused permission to give evidence in the contents action.

[53] The Lord Ordinary had misunderstood the position regarding contents. Contents had continued to be brought into the house right up until the Summer 1992, when the pursuer's parents had delivered furniture in a van from their home in Guildford. The Lord Ordinary had ignored evidence of the extent and value of the contents such as the detailed "Contents List & Replacement Values", which had been lodged in process and brought out a total value of £59,987.53. The Lord Ordinary had disregarded a valuation of his pianola. He had not taken into account the loss adjusters' agreement to pay certain amounts (totalling £3,374) in February 1993. He had given insufficient weight to what was shown in certain photographs which illustrated the house contents. The defenders had received all the documentation on contents. Reference was made to Goshawk Dedicated v Tyser & Co [2006] 1 All ER (Comm) 501.

Defenders

[54] There was no transcript of the evidence. The pursuer had put forward in submissions his version of what the evidence had been. He had effectively given evidence twice. The circumstances in which the Court can interfere with a Lord Ordinary's assessment of evidence are well established. The Court can decide what facts have properly been established and can judge matters of weight and sufficiency if a transcript is available. But the documents produced by the pursuer were not evidence. Some of them had not been spoken to by any witness.

A. ORAL TERMS OF CONTRACT

[55] There was no clear evidence of the content of the telephone call. The defenders had taken objection to the whole line of evidence relating to the call, because there was no issue on record about the formation of a contract in a telephone call. There had been no attempt by the pursuer to amend what he accepted were defective pleadings on this.

[56] There had been some general evidence about the practice of recording calls. Recording had been sporadic and not routine. There had been no evidence that any recording could still be accessed. Mr Cooper had not said that a recording existed. The pursuer had made an oral application at the proof for the production of the transcript of the call. There had been no commission and diligence granted to recover any documentation. The defenders' law agents had investigated the matter and advised the pursuer of the position (letter of 21 October 2005). They had stated that there was no transcript of any conversation which the pursuer had had with the defenders' tele-sales operative in 1991. The defenders had not tried to hide any information.

[57] The Lord Ordinary had sustained the defenders' objection to the evidence of the telephone call at the proof, since the basis of the contract was admitted on record to be the content of the Proposal Confirmation form. There was no question of there being a part oral and part written contract. It was only in his submissions that the pursuer had made reference to his having read over the Valuation Report to the tele-sales operative. Hence, the Lord Ordinary did not record this as being part of his evidence.

B. PARTIALITY
[58] In the absence of a transcript, it was not possible to examine the allegations of excessive interruption. The Lord Ordinary had shown impartiality and great forbearance throughout the proof. He had been entitled to interrupt to ensure fairness and that time was not wasted on irrelevant issues. When he did interrupt, it was in an attempt to assist the pursuer and not to hinder him. The pursuer had been given a long rein. Mr Mee had spent over two days in the witness box, mainly in cross-examination by the pursuer. Much of the questioning had been repetitive and often consisted of recitations of the pursuer's own evidence. Sometimes the Lord Ordinary had had to interrupt. He had left the Court at one stage, having been sorely provoked. Throughout his cross-examination, the Lord Ordinary had to direct the pursuer to answer questions, as he had refused to do so. The pursuer had also been in the habit of making repeated objections, during the testimony of others, even after they had already been expressly repelled.

[59] There was little that could be said about the pursuer's allegations of fraud and forgery except that they had no foundation in fact. The first Haynes report had been dated 24 October 1990. The "secondary report" had been undated and had been in one of the defenders' loss adjusters' files. The 1990 report had been put to Mrs Whitehead with a view to testing her recollection of the state of the house, since the report had been written within about eight months of the inception of the policy. Neither report had ultimately been proved in evidence. The Lord Ordinary had therefore left them both out of account.

[60] During the evidence of Mrs Whitehead, on the seventh day of the proof, the defenders' cross-examination was constantly interrupted, especially in relation to the first Haynes report. The line had been whether her memory was consistent with the content of the report. The defenders had eventually stated that, if the same objection continued to be made, they would be unable to go on with cross-examination. The pursuer had been rebuked by the Lord Ordinary for raising his voice. The Lord Ordinary eventually rose and left the court. On his return, he had stated that he considered that the pursuer may have been in contempt of court but that he was not going to make such a finding. The defenders decided not to pursue cross-examination further, although the pursuer did re-examine. The Lord Ordinary had exercised great restraint in the circumstances.

[61] In relation to subornation of perjury, Mr Mee was a professional witness. The allegation stemmed from his being precognosced by the defenders' law agent. It was standard procedure. At no time was it suggested to Mr Mee by the pursuer that he was lying. In any event, the Lord Ordinary had held that Mr Mee and Mr Spencely were essentially saying the same thing.

[62] The pursuer had railed against Mr McKinnon at various times, but the Lord Ordinary had not attached any weight to Mr McKinnon's evidence. The Lord Ordinary also had reservations about Mr Harris's testimony, but felt able to accept it as it was both un-contradicted and corroborated by that of Mr Cooper.

C. FAILURE TO PROVE CASE
[63] There had been no dispute at the proof about the applicable legal principles. The pursuer was in breach of the warranty at the inception of the policy and thereafter. He had failed to disclose material facts at renewal. The defenders had led un-contradicted evidence about the materiality of the defects. The central point in the repudiation letter was that the house had not been in a good state of repair. There was no evidence of that state changing. The defenders did not shy away from the fact that the letter focussed on the date of inception, but the knowledge of the pursuer concerning the poor state of repair was fixed within a few weeks of that date. The warranty had already been breached by that time. The defenders were not confined to what was contained in the letter. They were entitled to expand upon the original grounds for repudiation (cf the marine insurance case in Manifest Shipping Co v Uni-Polaris Insurance Co (The Star Sea) (supra)). The case had been argued on the basis of the evidence as it emerged and the pursuer had not complained about the absence of record regarding the date of renewal.

D. PROCEDURAL IRREGULARITIES
[64] It was accepted that the onus had been on the defenders to demonstrate the basis of the repudiation, but the pursuer had not been forced to lead at the proof. If he had wished the defenders to lead, he could have applied by motion accordingly. The defenders were not under an obligation to volunteer to lead. The pursuer had refused to reveal the names of his witnesses in advance of the proof.

[65] The defenders had not asked leading questions of Mr Mee, who was, in any event, a professional witness able to withstand the effects of leading. There had been numerous objections during the course of his examination in chief, but none to do with leading.

[66] The Lord Ordinary had had no involvement in the timetabling of witnesses. That was for the pursuer to determine. The Whiteheads had been delayed because of the length of the pursuer's cross-examination of Mr Mee, who had been interposed into the pursuer's proof, and the pursuer commencing each morning with a number of motions to the Court, often repetitive in nature.

[67] The Lord Ordinary was not obliged to address every issue raised by the pursuer; only those germane to the central issues.

E. EVIDENCE OF DEFECTS
[68] The Lord Ordinary had considered the evidence of both architects. Neither had had much actual recollection of events, but Mr Mee had said that the content of his report reflected what he had seen when he had visited the house. The Lord Ordinary had not erred in reaching his conclusions of fact, notably that there had been no evidence of anything other than slight remedial works up to the date of the fire. Although there had been evidence of what Mr Brown and Mr Glen had said in the Sheriff Court action, the Lord Ordinary had not taken that into account. Only Mr Wilkie had spoken to the grant letter.

F. REINSTATEMENT and QUANTUM
[69] The pursuer had not reinstated the house and hence reinstatement ought not to be the measure of indemnity. The figure of £95,500, which was selected by the Lord Ordinary, did not reflect the value of a house with the defects found to exist. The house had been sold in 1996.

G. CONTENTS ACTION
[70] The actions had been conjoined in December 2002. That decision had been reclaimed and the reclaiming motion had been refused. The Contents insurance had been added in November 1992 as a variation or amendment to the House Policy Schedule. There had been no separate contract. Mr Robin had given evidence about this. The Lord Ordinary had rejected as incredible the pursuer's evidence that he did not know what the effect of conjoining the actions was. It was only when he had run out of witnesses at the proof that the pursuer had admitted his failure to find caution. There had been virtually no evidence of the contents. The list referred to had not been spoken to in evidence. The pianola document had also not been proved. In these circumstances the Lord Ordinary had been generous in his award.

5. Minute of Amendment

[71] During the course of the defenders' submissions on the reclaiming motion, the Court expressed concern that the defenders' pleadings had not focussed upon any date, other than that of the inception of the policy and the signature of the warranty in July and August 1991. Yet the Lord Ordinary had held that there had been breach of a continuing warranty as at September 1991 and material non-disclosure at the date of renewal. Without prejudice to the existing adequacy of their pleadings, the defenders tendered a Minute of Amendment, which proposed to delete "as at the date of inception of the Policy irrespective of his date of knowledge" (Closed Record 15B-C (supra)) and substituting "and would be kept so. By no later than 23 September 1991, the pursuer was in breach of said warranty". In addition the Minute added the following averments:

"Separatim, as at the date of renewal of the policy on 29 July 1992, the pursuer was aware of a material fact that the property was not in a good state of repair yet he failed to make a disclosure to the defenders".

Additional pleas-in-law were proffered:

"4. Separatim the pursuer having been in breach of warranty, the defenders were entitled to void the contract and are entitled to decree of absolvitor.

5. Separatim the pursuer having failed to disclose a material fact at renewal of the policy, the defenders were entitled to void the contract and are entitled to decree of absolvitor".

[72] The Court allowed this Minute to be received, but permitted the pursuer eight weeks in which to answer it. He did not answer it. A By-Order hearing was appointed thereafter to consider whether the pleadings ought to be amended in terms of the Minute and any Answers. Meantime, the pursuer had enrolled a motion to remit the cause to a bench of five judges, but he did not appear at the calling of that motion, which was refused for want of insistence.

[73] When the case called By-Order, the defenders moved the Court to allow the open record to be opened up and amended in terms of their Minute. Reference was made to Burns v Dixon's Iron Works 1961 SC 102, Lord Justice-Clerk (Thomson) at 107-108; McCusker v Saveheat Cavity Wall Insulation 1987 SLT 24, Lord Justice-Clerk (Ross) at 27; and "Vitruvia" SS Co v Ropner Shipping Co 1924 SC (HL) 31, where amendment had been permitted in the House of Lords. The amendment was necessary for the determination of the issue in controversy. The defenders explained that the issue of disclosure at the date of renewal had been canvassed in the evidence without objection (Boyle v West of Scotland Shipbreaking Co 1963 SLT (Sh Ct) 54, Sheriff Principal (later Lord) Robertson QC at 56). The pursuer would not be prejudiced by the amendment. His position would have been no different at the proof. That position had been that the house had been in a good state of repair throughout; right up until the fire. It was in the interests of justice that the amendment be allowed. If objection had been taken to the evidence concerning the date of renewal at the appropriate time, the defenders could have offered to amend then. In any event, there was a case based upon the warranty (on which see Forte: Insurance, Stair Memorial Encyclopaedia, Vol 12 para 873 et seq.). There was a duty to disclose at renewal (MacGillivray on Insurance Law (11^th ed) para 17-24). The Lord Ordinary had found that the pursuer had the relevant knowledge at that time and its materiality had not been contradicted.

[74] The pursuer opposed the motion, maintaining that non disclosure at the renewal had only been raised at the point of submissions. There had been no evidence of the state of the house at the date of renewal or of the pursuer's knowledge at that time. The amendment came too late and the pursuer would be prejudiced by it. The defenders had been allowed to amend previously. They were a major insurance company and their law agents were experienced litigators. They had failed to prove the case which they did have on record (Caledonia North Sea v London Bridge Engineering 2000 SLT 1123).

[75] Having considered the matter, the Court held that the amendment came too late and refused to allow it. Cases involving the state of a party's record in reparation cases are not of much assistance other than in their statement of the general principles. In such cases, the issue is often whether there was simply a variation, modification or development of the facts already averred on record, rather than something "new, separate and distinct". If only a variation etc., amendment may not be required (Burns v Dixon's Iron Works (supra); McCusker v Saveheat Cavity Wall Insulation (supra)). Where something is new, separate and distinct, the fact that evidence about it has been adduced without exception will be a factor in determining whether any necessary amendment should be allowed (Boyle v West of Scotland Shipbreaking Co (supra). But if something is new, separate and distinct, amendment is necessary, even if the evidence about it has already emerged at proof, to enable the Court to make any necessary findings of fact and to sustain any relative plea-in-law (see McGlone v British Railways Board 1966 SC (HL) 1, Lord Reid at 12, Lord Guest at 14-15; cf Cleisham v British Transport Commission 1964 SC (HL) 8).

[76] The issue here was whether to allow an amendment and not whether what emerged in evidence could form the basis of a case of breach of contract without being specifically pled. The issue of the state of the property at the date of renewal is not foreshadowed in the pleadings at all, nor is the pursuer's knowledge at that time. It is a new, separate and distinct case from that on record and amendment is clearly necessary for it to be advanced as a ground for repudiation of the policy. Assuming the amendment proposed falls within the category in the Rule of Court (RCS 24.1.(1)) of being necessary to determine the real question in controversy between the parties, which this amendment potentially is, the question is where the interests of justice lie. There is some force in the submission that any evidence founded upon as supporting the new averments ought to have been objected to at the time. Had that been done then amendment could have been considered during the proof and additional evidence could have been adduced to cover the new averments. But a party is entitled, as a generality, to assume that until amendment is proposed, he is in court to meet only the case pled against him on record. That is the case here. If the defenders were contemplating, as they must have been, a case based on the date of renewal then it was for them to consider whether amendment might be required and, if it were, to tender a Minute of Amendment at the earliest reasonable opportunity. This amendment came on the final day of a reclaiming motion, after any opportunity to lead further proof had long since passed. Had this case been on record prior to the proof, the pursuer could have adduced further and different evidence to meet the specific point of knowledge at the date of renewal. In any event, the possibility that he might have done so cannot reasonably be excluded. Given that the defenders had already been allowed to amend before the proof, it was apparent that the interests of justice required that this amendment be refused as coming too late and prejudicing the pursuer's position.

6. Decision
A. ORAL TERMS CONTRACT
[77] The state of the Closed Record is determinative of the terms of the contract of insurance. The pursuer both avers and admits that the statements within the Proposal Confirmation form constitute the basis of that contract. There are no averments of any other terms of contract. In particular, there are no averments that such terms were agreed either exclusively or partly during an initial, or any subsequent, telephone conversation between the pursuer and the tele-sales operative. That being so, this case must be determined having regard solely to the terms stated in the form. The Lord Ordinary was correct when he sustained the defenders' objection to evidence of terms beyond those in the form.

[78] It follows that the pursuer's assertion, in his submissions both to the Lord Ordinary and this Court, that he had read over the terms of the Valuation Report to the tele-sales operative, must be disregarded. Equally, his contention that there exists on the defenders' computer system a record of the telephone conversation must be regarded as irrelevant to the determination of the issues on record. In any event, it is for a party to determine what evidence he wishes to lead at a proof and to decide whether he needs to recover documents or other materials for that proof. There are established procedures for obtaining such materials, but the pursuer does not appear to have made any attempt to recover computer or other records in advance of the proof. If he had done so, given the state of the Closed Record, the Court would have been bound to refuse a Commission and Diligence to recover material relating to his telephone conversation with the tele-sales operative. That might have drawn attention to the effect of the pleadings and led the pursuer to seek to add appropriate averments. He did not, however, do so and the case has to be decided on the averments as they stand. The pursuer cannot avoid the rules of written pleading by disowning his own averments and blaming his former solicitors for misrepresenting his position.

B. BIAS
[79] In the absence of a transcript of the proceedings before the Lord Ordinary, it is impossible for this Court to engage in an assessment of the degree of interruption, leading or other alleged irregularity which might have occurred during the proof. The production of a transcript of the evidence is the responsibility of a reclaimer, who seeks to make specific criticisms of a Lord Ordinary's conduct or the absence of an evidential basis for his findings in fact. Despite his protestations, it was for the pursuer to present to the Court the material necessary to support his submissions. He did not do so.

[80] The Lord Ordinary has narrated, in some detail, many of the problems which arose in the course of hearing the proof. The Court will always try to bear in mind that party litigants labour under difficulties, because they are unfamiliar with the rules of procedure and, often, with the substantive law which has to be applied. Their personal involvement in their case will place them under particular stress. But the Court must make it abundantly clear that party litigants must not suffer from the delusion that they have a licence, which is not available to professional advocates, to treat the Court, their opponents or their representatives, witnesses or Court officials, in a discourteous, contemptuous, abusive or obstructive manner. The circumstances narrated by the Lord Ordinary go well beyond common experience in such cases. On the Lord Ordinary's narrative, the pursuer behaved in an obstructive, defiant and wholly unreasonable manner. In his presentation to this Court, some similar characteristics were apparent. He did not display the same open defiance, but he did not, for example, scruple to accuse the Clerk of Court, in a letter to the Chief Executive of the Scottish Court Service dated 11 March 2009, of fraud, corruption and perverting the course of justice; accusations which were both untrue and unreasonable. While, therefore, the Court does not have the material to enable it to deal with many of the accusations against the Lord Ordinary, these circumstances go some way to reassuring the Court that the pursuer is not suffering any injustice by the dismissal of his submissions under this heading.

[81] In so far as it is possible to deal with particular complaints, given the length of time over which Mr Mee was cross-examined, his status as a professional witness and the fact that any interchange between him and the defenders' law agent was entirely normal, the Court does not consider that there was any basis for the Lord Ordinary to have rejected his testimony on any of the grounds advanced. In assessing the pursuer's credibility and reliability, the Lord Ordinary was entitled to take into account not only the demeanour of the pursuer in the witness box, the coincidence of his testimony with other evidence and general plausibility, but also his conduct of the litigation. In particular, when assessing his evidence, the Lord Ordinary was entitled to have regard to the fact that the pursuer had been ordained to find caution for his witnesses, but had neither done so nor been prepared to admit that fact until pressed. He could take into account the pursuer's refusal to answer questions, when told to do so, even if the pursuer himself considered that his own recalcitrance was justified.

[82] It is clear that the pursuer had a concern about the alleged forgery and disappearance from process of a copy of one of the Haynes reports. Suffice it to say, the Court is not satisfied that there has been any malpractice by the defenders or their legal advisers. On the contrary, the defenders' advisers seem to have co-operated with requests from the pursuer, well beyond those which they were bound, or even advised, to have responded to.

[83] Finally, the Court is not persuaded that any conversation between the Whiteheads and Mr Harris resulted in the Whiteheads altering what would otherwise have been their testimony. It may have been ill advised for Mr Harris to engage the Whiteheads in any form of discourse, but this having been done, no material effect on the evidence has been demonstrated to this Court. Whatever influence, if any, was brought to bear on Mr McKinnon, his evidence was discounted by the Lord Ordinary and remains of no moment.

C. THE CASE ON RECORD AND THE REPUDIATION LETTER
[84] A party to an insurance policy is under a duty at common law to disclose all facts material to the formation of the contract as at the date of that formation. In this case, the pursuer was also under a contractual duty to do so. But the positive duty to disclose at common law, and the averred duty under the particular contract, does not extend beyond the date of conclusion of the contract (see generally Forte: Insurance, Stair Memorial Encyclopaedia Vol 12 para 863; McGillivray on Insurance Law (10^th ed) para 17-25). The Lord Ordinary has held that the pursuer was not aware of the defective state of the house as at that date. That is an unchallenged finding. It will be apparent, from what has been said above regarding the Minute of Amendment, that the Court does not consider that a case based on a failure to disclose at the date of renewal of the policy in July 1992, when the duty would again arise (Forte (supra) para 863; McGillivray (supra) para 17-24), was properly averred on record. In these circumstances, the defenders were not entitled to advance a case based on non-disclosure at that later date. It follows from this that the Court considers that the Lord Ordinary was in error in holding (para [85]) that the pursuer was in breach of any general duty of disclosure.

[85] However, what the defenders do have on record is a case based on breach of warranty. That warranty was both averred and admitted to be that the property was "in a good state of repair and would be kept so" (Closed Record 10C-D). The Lord Ordinary has found as fact that the house was not in a good state of repair as at the date of inception of the policy. He held that it remained in a defective state of repair thereafter. The Lord Ordinary approached matters, in the first place, on the footing that the pursuer was not in breach of the warranty at the time at which it was signed, since the declaration included on the Proposal Confirmation form is qualified by the words "to the best of my knowledge and belief". But the Lord Ordinary has also found in fact that the pursuer became aware of the defects, which would later be documented in the Kinghorn Mee report, during his discussions with Mr Mee on 23 September 1991. Having regard to its full terms, in particular the words "and will be kept so", the warranty was a continuing one. Its effect endured for the term of the policy and imposed a continuing obligation on the pursuer during that term. On the hypothesis that the Lord Ordinary was entitled to make these findings regarding the condition of the house and the pursuer's state of knowledge, there was no alternative but to hold that the pursuer was in breach of the warranty within two months of the inception of the policy, and within one month of the signing the warranty itself.

[86] The Court considers that a relevant case of breach of warranty has been made out and is adequately covered by the averments on record. In particular, the Court does not consider that the defenders are prevented from advancing such a case on the ground that they failed to prove the relevant knowledge as at the date of signing of the warranty (25 August), which is their specific averment, when they did prove such knowledge, in respect of what was averred to be a continuing warranty, less than a month later (23 September). As at the latter date, at the latest, the pursuer was proved to be in breach of warranty. He required at that time at least to advise the defenders of that fact, to allow the defenders to take such action in relation to cover as they deemed appropriate, or to remedy the defect. His failure to do either entitled the defenders to repudiate the policy in due course.

[87] The Court does not consider that the terms of the letter of repudiation are such as to preclude the defenders from making out a case based upon a breach of the warranty as a generality. It is of some note in that regard that no such argument is apparent from the record or in submissions. The Lord Ordinary accepted that the defenders' letter did limit the defenders to the grounds therein stated. He referred (para. [82]) to the principle stated in Rego v Connecticut Insurance Placement Facility (supra), but held that it did not prevent the defenders from relying on the breach of the continuing warranty. The Court agrees with that view. This is not a situation where the insurers are founding upon a novel ground, which has only emerged at a proof. The grounds stated in the letter are essentially that the pursuer failed to tell the defenders about the defective state of the property. It is true that the letter does state that the defenders considered that the pursuer possessed the requisite knowledge at the date of inception. But it also makes specific reference to the terms of the Kinghorn Mee report, which the pursuer did not obtain until after inception. The fundamental basis for the repudiation was the pursuer's knowledge of the defective state of the property, as revealed to him in, for example, the Kinghorn Mee report. That is ultimately the same factual basis upon which the defenders proved, before the Lord Ordinary, entitlement to repudiate on the basis of the warranty. Similarly, although the defenders' plea-in-law relates to the beginning of the contract, it does not prevent the defenders from founding upon a breach of warranty occurring very shortly after that commencement. In these circumstances, the Court considers that the Lord Ordinary was correct in reaching the conclusion (para [85]) that the pursuer was in breach of the warranty.

D. PROCEDURAL IRREGULARITIES
[88] The Court tends to go to considerable lengths to ensure fairness in proceedings involving party litigants. The Court staff regularly try to help them to understand court practices and procedures. But, as touched upon already, the Court cannot assume the responsibilities of legal advisor to a party litigant, especially in the field of deciding what evidence he should lead, and when. The party litigant remains responsible for the conduct of his own case. It is for him to make such procedural choices as are open to him, and to do so at the appropriate time. The pursuer claimed in submissions that he had been unaware that the onus was on the defenders to prove the ground of repudiation. There may be no satisfactory way of testing the veracity of that assertion, but that is of no moment. It was for the pursuer to inform himself on matters of onus and, if advised, to make the appropriate application for the defenders to lead at the proof. He did not do so and it was not for either the defenders to offer to lead or for the Court ex proprio motu to ordain the defenders to do so. Whether to oblige another party to lead at a proof is often a question of tactics and it would not be appropriate for the Court to enter that type of forum.

[89] There is nothing in the Lord Ordinary's Opinion to suggest any procedural unfairness. The pursuer was given every opportunity to lead such witnesses as he wished and to cross examine those adduced by the defenders. He had access to such documents as were lodged in process. The pursuer complains about the time which the Whiteheads had to wait before being called as witnesses. Even if that had any relevance to the outcome of the proof, the Lord Ordinary had no input into that matter. The scheduling of witnesses is entirely a matter for the party seeking to call them.

[90] The Lord Ordinary appears to have dealt with all the arguments pertinent to the case. He does not require to document every application or statement made by a party, especially if it is obviously of no relevance to the issues before him.

E. EVIDENCE OF DEFECTS
[91] Ultimately, the pursuer's principal complaint relates to the Lord Ordinary's findings in fact. It is the pursuer's clear position, and was throughout the proceedings in both the Inner and Outer House, that his house had not been in a defective condition either at the inception of the policy or at any other time prior to the occurrence of the fire. It is therefore his position that he was not in breach of any obligation of disclosure or of the warranty that the house would be kept in a good state of repair. Had the Lord Ordinary found in his favour on these matters of fact, he would have succeeded. The problem for the pursuer is that he failed in these critical areas of proof.

[92] The Lord Ordinary had before him the Kinghorn Mee report, dated 16 October 1991, spoken to by Mr Mee, who had visited the premises on 23 September 1991. The report lists a substantial number of major structural faults in the house (see the parts quoted from the Lord Ordinary's Opinion para [40] (supra)). If these faults had existed when Mr Mee visited the house and if he had discussed them with the pursuer, the pursuer's knowledge, so far as relevant to the warranty, would be fixed as at that time. Before the Lord Ordinary, and this Court, the pursuer explained his position clearly and repeatedly. He said that Mr Mee's report was a retrospective exercise and reflected the state of the property at the time when Mr Brown left it and not when Mr Mee examined it. He said that much work had been done between Mr Brown leaving the site and Mr Mee examining the house. Again, if that had been accepted by the Lord Ordinary, the pursuer might well have succeeded. But the Lord Ordinary did not accept it (para [64]). He rejected the pursuer's evidence in this area, for the reasons he gave regarding the pursuer's reliability and credibility (supra). He did not consider that the evidence of the Whiteheads assisted him, because they were simply visiting the house and not examining it for defects (para [65]). He was not prepared to place significant weight on the Valuation Report, standing the absence of its author from the witness box. Although Mr Bones's affidavit was competent evidence, the Lord Ordinary was entitled to give it little weight, where the testimony had not been subjected to any cross-examination.

[93] The Lord Ordinary accepted the evidence of Mr Mee that, contrary to the pursuer's position, the report reflected the state of the property when he examined it. The Lord Ordinary considered (para [47]) that the condition of the property, as reflected in the report, was substantially, but not entirely, supported by the evidence of Mr Spencely, who had visited the property on 12 December 1991, but had not produced a report until March 1992. He considered that it was also consistent with the content of the Lochaber District Council letter. The significance of the letter was not the truth of its content as such. There was no need for its author to have been adduced in evidence to prove that truth. Its importance lay in the fact that it was not disputed that the pursuer had received this formal communication, on or about 7 October 1991, stating that his house, and notably the recent building work, was defective. It was therefore an important adminicle in the proof of the pursuer's knowledge of the state of his own property at about that time.

[94] The Lord Ordinary explains in some detail why he did not accept the pursuer's contention that significant remedial work had been carried out after the departure of Mr Brown (para [65]). He also sets out his grounds for considering that, as at September 1991, the pursuer was aware of the defective state of his house, standing his discussions with Mr Mee and the arrival of the Lochaber District Council letter within a fortnight or thereby. His reasoning (see also para [84]) is both adequate and comprehensible in its treatment of this crucial area of proof. The Court can see no proper basis for interfering with the Lord Ordinary's conclusions of fact.

F. REINSTATEMENT and QUANTUM
[95] In light of the decision on the merits, neither reinstatement nor quantum strictly arise. However, suffice it to say, the Court considers that the Lord Ordinary was entitled to reach the view that the appropriate level of indemnity was confined to the pursuer's actual loss as a result of the fire and not to the notional cost of reinstatement. The terms of the policy were that the defenders would "pay for loss of or damage to the buildings caused b y... Fire ...". The "Basis of Claims Settlement" was that the defenders would "pay the cost incurred in reinstatement or repair". However, in the event of the insured not re-instating or repairing the building, the defenders, at their option, undertook to pay either "a) the cost of re-instating the damage ... or b) the difference between the sale value of [the] home in the open market immediately prior to the damage and its residual value following such damage". The pursuer did not reinstate or repair the house to any significant extent. The defenders would accordingly have been entitled to limit their liability to the difference between the property's pre-fire and post-fire values. In fact, the Lord Ordinary appears to have been prepared to award the pursuer the whole pre-fire value calculated on the assumption that the house was in a good state of repair (i.e. the Valuation Report figure) and without deduction of the eventual sale price. Such an approach can only be regarded as generous.

G. CONTENTS
[96] Again, given the decision on the merits, this issue does not arise. However, it does again revolve around issues of fact. The Lord Ordinary rejected as incredible the pursuer's contention that he did not understand the meaning of conjoining the proofs. It was the pursuer's submission that after he had adduced evidence relating to the buildings, and the defenders had led their evidence, the proof would start again in relation to the contents. Whether that was what the pursuer actually thought is, like his understanding of onus of proof, of no moment. The conjunction of the proofs meant that the pursuer, in his proof, required to lead such evidence as he wished to prove the facts on record in both actions. It is apparent that he did not attempt to prove the contents of the house. The Lord Ordinary specifically states that the critical list of contents was not referred to in the evidence. It seems likely that the pianola document also remained dormant in its inventory. That being so, there was simply no proof of any significant contents and the award of a nominal sum remained the only option for the Lord Ordinary to adopt.

7. Interlocutor

[97] The reclaiming motion is, in substance, refused. However, in light of the Court's approach, the defenders may not technically have been entitled to avoid the policy "ab initio" as is stated in the third pleas-in-law in both actions. The appropriate result ought to be that the Court repels the pursuer's first plea-in-law in both actions and sustains the defenders' third plea-in-law, again in both actions, under deletion of the words "ab initio".