Parker & Anorr v The National Farmers Union Mutual Insurance Society Ltd

On 6 December 2009 a house known as Crossfield and owned by the First Claimant, Mrs. Barbara Cooke, as she then was, suffered substantial damage by fire. The house was insured by the Defendants, the NFU, pursuant to a policy dated 6 July 2009 which named the First Claimant as the assured and insured the property against, inter alia, damage by fire. As from 22 September 2009 the Second Claimant, Mr. Parker, was added as an assured. At the time of the fire the First and Second Claimants were living together (though not at Crossfield). They married in April 2010. I shall therefore refer to them as Mr. and Mrs. Parker.

Mrs. Parker has claimed an indemnity from the NFU pursuant to the insurance policy in respect of (i) the damage to her house by fire in the sum of £538,681.77 (being the agreed costs of reconstruction, though not the agreed measure of the NFU’s liability), (ii) the loss of contents in the agreed sum of £20,000 and (iii) the loss of rent for 12 months in the sum of £42,000. Mr. Parker, as an additional named assured, has made the same claims.

It is common ground that the property was damaged by fire. Thus the Claimants have proved all that they need to prove in order to show that the property was damaged by an insured peril.

The NFU denies liability on several grounds. First, the NFU says that it was entitled to avoid the policy and did by its letter dated 14 June 2010 avoid the policy on account of the failure by the Claimants to disclose two earlier fraudulent claims, one by Mr. Parker in 2002 in respect of the alleged theft of an expensive watch and the other by Mr. and Mrs. Parker in 2007 in respect of the alleged theft of two expensive watches from their luggage whilst in the custody of British Airways. Second, the fire in 2009 was deliberately set by Mr. Parker or by persons acting under his direction. Third, the Claimants relied on fraudulent means in support of their claim, namely, false documents relating to the alleged lease of Crossfield and false statements in response to the the NFU’s investigation of the claim. Fourth, the Claimants, failed, in breach of the terms of the policy, to provide documents requested by the NFU and are therefore not entitled to payment. By way of counterclaim the NFU seeks, by way of restitution, its outlay in respect of the 2002 and 2007 watches claims and its costs of investigating the claim arising out of the fire in 2009. If Mrs. Parker is held entitled to recover in respect of the 2009 fire the NFU seeks a declaration that, upon payment to Mrs. Parker, the NFU would become subrogated to Mrs. Parker’s rights and be entitled to recover damages from Mr. Parker in the sum of its liability to Mrs. Parker.

The evidence at the trial therefore covered not only the events surrounding the fire in December 2009 but also the suggested theft of valuable watches in 2002 and 2007. The principal issues of fact were:

The NFU has made very serious allegations against Mr. and Mrs. Parker. The standard of proof in civil matters is the balance of probabilities but the evidence relied upon must have a strength or cogency commensurate with the gravity of the allegations made against Mr. and Mrs. Parker. This has been stated many times; see for example The Ikarian Reefer [1995] 1 Lloyd’s Rep. 455 at p.459 and Re H [1996] AC 563 at p.586. In the present case fraud is alleged. Thus the strength or cogency of the evidence relied upon by the NFU, if it is to discharge the burden of proof, must be commensurate with the gravity of that very serious allegation.

Some of the facts were not in dispute. I shall first set them out and in the course of doing so will resolve some of the lesser factual disputes. Only then will it be possible to determine the principal issues of fact and so decide whether the NFU has proved the serious allegations it has made against Mr. and Mrs. Parker.

Mr. Parker owns or operates a business which provides healthcare and, in particular, nursing homes and obesity surgery. In addition he has an interest in a business which supplies bathrobes and towels to the hospitality industry. He is also engaged in the construction industry. These businesses are conducted by the “Parker Group of Companies.” Those who know Mr. Parker consider him to be a successful businessman. He told the court that his house, known as The House, was worth about £9 million. He collects rather expensive watches.

He gave evidence in this action and was cross-examined for over two days. It was suggested that, based upon a comparison between the contents of his witness statement and what he said when being cross-examined, that he was making up his evidence in the witness box. His evidence in relation to his account of how the watches came to be identified in his 2007 claim was open to that interpretation. There were also grounds for believing that he was prone to embellish or exaggerate his evidence. Two examples will suffice. First, he had previously been engaged in litigation which went to the House of Lords and in respect of which he was successful. His account of a telephone conversation with Lord Bingham in which Lord Bingham apparently promised to resolve a problem over costs strained credulity. Second, through his counsel he suggested to Mr. Dunleavy and Ms. Jennings, the owners of an insurance agency which arranged his insurance, that he or his companies paid insurance premiums which exceeded more than £100,000 per annum. It was apparent from their responses that this was an exaggeration. Mr. Dunleavy thought the true figure of the order of £10-20,000.

I therefore considered that I should be cautious about accepting his evidence and that I should be careful to compare it with the contemporaneous documents and with the probabilities. That is in any event the approach the court must adopt in a case where serious allegations of fraud are made and the reliability of oral evidence must be assessed.

“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.” (per Robert Goff LJ in The Ocean Frost [1985] 1 Lloyd’s Rep. 1 at p.57)

Mrs. Parker is a businesswoman. She is the managing director of a company which supplies towelling robes and the like goods to hotels such as the Dorchester. The company appears to be part of Mr. Parker’s group of companies in the sense that one of his companies owns 50% of the shares in it.

Mrs. Parker also gave evidence in this action and was cross-examined for over a day. She gave her evidence with firmness and clarity. Unlike her husband she did not appear to exaggerate or embellish her evidence. Also, when presented with documents which appeared to contradict her evidence, she fairly accepted that her recollection must have been in error, even when (as was the case with her evidence that Crossfield had not been put on the market in 2008) it was later accepted by counsel for the NFU that her recollection was correct.

Counsel for the NFU severely criticised her evidence. He said that she had engaged in at least one “refreshing conversation” with Mr. Parker. But it would be astonishing if she had not done so. They are husband and wife. He said that her evidence in her witness statement as to her knowledge of the 2007 watches claim (and her pleading which was verified by her statement of truth) was misleading and untrue and that her oral evidence was evasive. I accept that whereas in her witness statement she had said that she did not know that Mr. Parker had made an insurance claim arising out of the alleged loss of watches in 2007 in her oral evidence she said that Mr. Parker had alluded to trying to make a claim but that she had never heard whether it had been settled. I do not view this evidence in the sinister way that counsel submitted that it should be viewed. In 2007 Mr. and Mrs. Parker had separated. She was living in Crossfield. He was living in The House. The watches were with him and it was he, not she, who allegedly packed them for the trip to Reno during which the watches were alleged to have been lost. She said that she was “not really on speaking terms with Mr. Parker in the proceeding months after the Reno trip”. In those circumstances it is not surprising, and is in accordance with the probabilities, that she knew little of the claim. A fair criticism of her evidence would be that her statement could have been fuller by adding that she had been told that a claim was intended to be made but that she did not know that it had been settled. But I do not accept that she gave evidence which was obviously untrue or that she was evasive when being cross-examined. I accept that she was incorrect in suggesting that she had not moved back to The House until September 2009 when she had in fact moved back in 2008 (as she accepted when shown certain documents). But I do not consider that this indicates “a determination to insulate herself from the 2007 watches claim”. Rather, it was events (her separation from Mr. Parker) which insulated her from the 2007 watches claim. The claim was settled months before she moved back into The House in 2008.

Nevertheless, it is necessary to test her evidence against the contemporary evidence and the probabilities having regard both to the nature of the allegations made against her and the long time which has elapsed since the events in 2007.

Both Mr. and Mrs. Parker had been married before. Their relationship started in about 2001. They began living together in Crossfield (her former matrimonial home) in about 2004. In 2005 Mr. Parker acquired a 50% interest in Crossfield for the sum of £400,000.

From time to time Mr. Parker gave Mrs. Parker expensive jewellery, including expensive watches. Mrs. Parker was not a collector of expensive watches like Mr. Parker and did not appreciate them in the same way as Mr. Parker did. He chose the watches. She did not.

The House, Mr. Parker’s property, was purchased in 2006. Mr. and Mrs. Parker moved into it in 2007 after it had been refurbished. The watches, including those given by Mr. Parker to Mrs. Parker, were then kept in a safe at The House.

It was apparent from some of their answers to questions in cross-examination that theirs was, perhaps, an unconventional relationship. Each of them had a forceful personality and/or personality traits which caused more than a little irritation to the other. Living together appeared to have its tempestuous moments. Indeed, in 2007 their relationship broke down and they ceased to live together as man and wife. Mrs. Parker referred to it as “the split” following a “big row”. Mrs. Parker, with the assistance of a loan from her brother, bought out Mr. Parker’s interest in Crossfield so that, in about October 2007, she resumed full legal ownership of the house. She returned to live solely in Crossfield. On 25 October 2007 Mr. Parker had Crossfield removed from the insurance policy he had earlier arranged.

The “row” was so divisive that Mr. Parker refused to allow Mrs. Parker to have access to The House and so it was he who subsequently delivered her possessions to Crossfield. He did not return the jewellery, including the watches, which he had given her. The watches remained at The House.

However, it is apparent that Mr. Parker wished to restore his relationship with Mrs. Parker. He sought to do so by taking Mrs. Parker and other members of his family to Reno in the United States for a holiday in September 2007. The holiday was not immediately successful in that regard but the couple resolved their differences and got back together in 2008. They then lived in The House, Mr. Parker’s property. On 30 May 2008 Mrs. Parker woke up to the lack of insurance on Crossfield and requested the NFU to insure it immediately.

In April 2010, some four months after Crossfield had been extensively damaged by fire, Mr. and Mrs. Parker married in the Maldives.

Crossfield is (or rather was) a large bungalow with outbuildings set in approximately 1.2 acres of gardens and grounds. It was accessed from Crown Lane in Farnham Royal, Berkshire via a private driveway.

Between 2005 and 2009 a number of applications for planning permission to demolish Crossfield and build a new dwelling were made. The first in 2005 was withdrawn. The second in December 2005 was refused and an appeal dismissed. The third in February 2006 was also refused and an appeal dismissed. But a fourth application made in June 2009 was granted on 17 August 2009. It is to be inferred that Mrs. Parker was willing to see her former matrimonial home in which she had brought up her children demolished.

By 2009 (when Mr. and Mrs. Parker were not living at Crossfield) little money had been spent on Crossfield. Although planning permission had been obtained to demolish Crossfield and build another house Mrs. Parker’s preference, having regard to the economic climate, was to rent out the property.

On 13 August 2009 Mr. Terence Steele, an old friend of Mr. Parker and godfather to his two sons, returned to England from Panama. He initially stayed with another old friend, Matthew Bolshaw, but then, with the agreement of Mr. and Mrs. Parker, stayed in Crossfield. A note dated 18 September 2009 made by Mr. Dunleavy (of the NFU insurance agency, Dunleavy and Jennings) of a conversation with Mr. Parker recorded that Crossfield had been rented to Mr. Steele and that he was to move in “tomorrow”.

Mr. Steele and Mr. Parker gave evidence that they had signed a lease in respect of Crossfield for a rent of £2,500 per month in September 2009. There is no dispute that this lease, dated 19 September 2009, was signed by both Mr. Steele and Mr. Parker on or about the date of the lease. They also gave evidence that they agreed to increase the rent to £3,500 per month in November 2009. This agreement formed the basis of the claim by the Claimants in respect of lost rent. The NFU did not accept that either party had any expectation that a rent of £3,500 would be paid. The NFU said that the lease and agreement to increase the rent were both shams.

Mr. Steele had been in Panama since November 2007 and before that, since 2001-2, in the United States. His business career in Panama and the United States had not met with success and in August 2009 he determined to return to England where he was a solicitor and had had, it seems, a successful career before leaving for the United States. However, his financial situation was so dire in August 2009 that he had to ask for help from his friends to pay for his air fare back to England.

Mr. Steele gave evidence to the court. He was not an impressive witness. He gave evidence that his Panamanian fiancée had told him that she was pregnant and that he and she intended to raise their family in Crossfield. However, in his extensive interview with the NFU’s loss adjuster during the course of their investigations into the fire at Crossfield, neither the pregnancy nor the intention to raise a family at Crossfield had been mentioned. Nor had these matters been mentioned in his statement which stood as his evidence in chief. I was left with the distinct impression that this evidence had been made up in the witness box. There were other difficulties with his evidence, particularly with regard to his financial affairs. He claimed to have invested £250,000 from his accumulated pension funds in a project off the coast of West Africa in 2008. Given his financial circumstances in Panama at that time that seems to have been an unlikely investment decision to have made. In at least two respects his conduct appeared to fall short of ordinary standards of honest dealing. First, although he had been provided with the cost of his airfare home by a friend he in fact paid for the flight back to England with “air miles” but did not repay the cost of the airfare to his friend. Second, after the fire at Crossfield he stayed at another property of Mr. Parker’s. He said that the rent was £800 per month. He received a state benefit to pay for his rent but did not use it to pay rent to Mr. Parker. Instead he used it for other purposes. I reached the very clear conclusion that I should only accept his evidence if it was corroborated by reliable contemporaneous documents or other reliable evidence.

There is no dispute that in 2002 Mr. Parker’s car was broken into when parked outside a pub in Manchester. The theft occurred on 9 August 2002 in the evening. Mr. Parker reported the theft to the police on 10 August 2002. He reported the following property was missing: a laptop computer, a holdall, clothing and a video game player. The police report made no mention of a missing watch. The theft had occurred whilst Mr. Parker was en route to Scotland for a short holiday at Gleneagles with his two sons.

On his return from Scotland he made a claim on an insurance policy with the NFU. The NFU instructed Cunningham Lindsey by letter dated 13 September 2002 to settle the claim. Their instructions referred to a watch specified at £11,397.

Cunningham Lindsey’s report dated 1 October 2010 recorded that Mr. Parker was a collector of watches and that he had concealed a Breitling World watch in the side pocket of his suitcase which had been stolen along with a bag containing a laptop computer. The author of the report was a Mr. Allaway. He reported that he had no reason to suppose that the loss was other than entirely fortuitous so far as Mr. Parker was concerned and that he had formed a favourable impression of him. He recommended a reserve of £15,000 in respect of the claim.

Mr. Allaway then made enquiries as to the value of the watch and reported to Mr. Parker on 29 October 2002 that the value was £6,285 on a new for old basis. He said that his enquiries indicated that the watch had never had a retail value anywhere near the specified amount of £11,000.

On 3 December 2002 he reported to the NFU that he had agreed a settlement in the sum of £9,239.80, allowing £6,355.50 for the watch and £2,954.80 for the other items. The claim was settled in that amount.

Mr. Allaway gave evidence. Although he had a recollection of his conversation with Mr. Parker (for personal reasons associated with his medical condition and what Mr. Parker had said about his own medical condition) he was, unsurprisingly, able to add little to the documentary record of these events which took place almost 10 years ago.

Mr. Parker’s explanation for the omission of the watch from the police report was that he was not sure of what had been put into the car and it was not until he got home that he could check what he still had and therefore what had been stolen. That was how he had discovered that his watch had been stolen. It was, he said, one of two identical watches he had bought, intending that one should be passed to each of his two sons. Mr. Allaway could not recall seeing the police report. His own report noted that Mr. Parker had had difficulty in reporting the theft to the police, eventually doing so at a service station when by chance he met two police officers.

Prior to this claim the watches insured by Mr. Parker included his own watch collection which was stated in the policy to be “kept in HOME locked safe when not worn” and valued at £127,577. Amongst the papers kept by the NFU in relation to the 2007 policy was a list of the items included in the watch collection. The list included a Patek Philippe valued at £14,400 and three Breitling watches valued at £12,500, £5,475 and £3,145. Amongst the specified items was a “Lady’s Jaeger Le Coultre Rendezvous wrist watch” valued at £38,928 and a Chopard Happy Diamond dress watch in white gold valued at £22,968. (It seems that in earlier years his own watches were also specified. Thus, according to the schedule to the 2003 policy, there were specifically insured four gentleman’s watches including a “Gentleman’s Breitling World wrist watch” valued at £11,728.)

Following the holiday to Reno with Mrs. Parker and others, and after BA had failed to carry his luggage to San Francisco on the same flight as he had travelled, Mr. Parker made another insurance claim. The claim form described Mr. Parker as the policyholder. It was signed by Mr. Parker and dated 19 September 2007. The date and time of the loss was reported as 12 September 2007 between London HRW and Reno, Nevada. Mr. Parker stated that he was “unsure” how the loss had happened. The items lost were described as belonging to Mr. Parker or to members of his family who reside with him. The items lost (which had been written into the form by Mr. Stephen Austen who was a sales executive with the Dunleavy and Jennings agency) were described as a “Patek Philippe World Time Gents Watch pink gold” and a “Chopard Happy Diamond Dress Watch in white gold”. The former was claimed in the sum of £14,400 and the latter was claimed in the sum of £22,968. The claim contained the note “See Letter” in Mr. Parker’s writing. That letter was dated 20 September 2007 and was sent by Mr. Parker to Mr. Austen. It enclosed the claim form “for my Pate Philippe watch and Barbara’s Chopard Jewellery”.

In his evidence Mr. Parker said, when cross-examined, that he vaguely recalled dictating this letter to one of his personal assistants and asking her to check the details with Robert Dunleavy or Stephen Austen. He said that he may have earlier mentioned that the lost watch was a “World Time” watch and suggested that Mr. Dunleavy or Mr. Austen, having consulted the watch details kept by Dunleavy and Jennings, decided that the “World Time” watch which had been lost was the Patek Philippe World Time watch rather than the Breitling World Time watch. Mr. Dunleavy found this suggestion extraordinary and said that he would never have guessed the identity of the lost watches. Mr. Austen gave similar evidence. He said that he would have required specific information of exactly what had been lost before completing the form. He said that he must have filled in the details in the claim form having been told the details by someone who did know the details.

Mr. Parker’s oral evidence was much fuller than his written evidence. It had the appearance of being embellished in the witness box. Mr. Dunleavy’s and Mr. Austen’s evidence accorded with the probabilities. It is most unlikely that an insurance agent would identify the allegedly stolen watch from the information he had available. Both the “World Time” watches were expensive. It is more likely than not that Mr. Austen wrote in the claim form such details as he had been given. It is more probable than not that the source of Mr. Austen’s information was Mr. Parker. Mr. Parker’s statement dated 7 July 2011 which stood as his examination in chief made no mention of the possibility that Mr. Parker’s PA may have spoken to Mr. Austen. Even if the PA had done so it is likely that she would have received her information from Mr. Parker.

The previous day, 19 September 2009, Mr. Parker had written to his travel agent or tour operator, Mr. Cooper-Smith, and to British Airways (care of the tour operator) complaining of the service provided by his tour operator and British Airways. In that letter he complained that his flight had been over-booked, that the luggage of his party had not travelled to San Francisco on the same flight as he and his party had, that he and his party had to stay a night in San Francisco, that he had to hire a vehicle to drive to Reno (a 5 hour trip) and that when his luggage arrived 3 days later one case had been forcibly opened and damaged. He said that the “financial implications” amounted to £2,719.03 and that he expected a full refund of those costs together with some offer of compensation. There was no mention that any watches which had been in his luggage were not in his luggage when it arrived in Reno.

On the same day Mr. Parker made a claim on a travel insurance policy and submitted details of his expenditure in San Francisco when he and his party were without their luggage.

On 29 September 2007 Mr. Cooper-Smith forwarded Mr. Parker’s letter dated 19 September 2007 to British Airways. He requested British Airways’ urgent attention to the complaint.

On 4 October 2007 the travel insurers credited Mr. Parker’s account with £564.27 (or $1,144.67) in full and final settlement of his claim.

On about 10 October 2007 Mr. Parker was interviewed by Mr. Orringe of Crawford & Company, Loss Adjusters. Mr. Orringe’s note of the interview records that Mr. Parker told him that the watches had been carefully wrapped in shoes in a suitcase. When the luggage eventually arrived at Reno the smallest bag had been tampered with. The missing watches were described as a Ladies Jaeger Lecoultre watch and a Patek Phillipe watch. So it appears that Mr. Parker must have corrected the identity of the ladies watch which had been stolen from the Chopard to the Jaeger Lecoultre. In his oral evidence he claimed to have also corrected the name of the other watch from a Patek Philippe to a Breitling. However, in the light of Mr. Orringe’s note I am unable to accept that evidence.

In his preliminary report dated 18 October 2007 Mr. Orringe said that he understood that Mr. Parker had written to British Airways about “the loss”. Mr. Orringe considered that the loss was “nothing other than fortuitous”.

On 12 November 2007 BA refunded Mr. Parker the sum of £549.80 (or $1,144.67) in respect of essential items which he and his party had to pay when they were without their luggage and the sum of £657.40 (or $1,368.54) in respect of the hotel costs in San Francisco and care hire to Reno. BA also said that each member of his party would receive a cheque for £200.

Thus Mr. Parker recovered his expenditure in San Francisco of $1,144.67 both from his travel insurers and from BA. He accepted in cross-examination that he had not passed on his recovery from BA to his travel insurers.

On 3 December 2007 Mr. Parker wrote to BA. He referred to the letter dated 12 November 2007 (mistakenly dating it 12 December 2007) and said “despite your assurances to the contrary, nobody from your Replacement Luggage Department have contacted me with regards to the above claim.” A BA electronic note records that on 4 December 2007 BA telephoned Mr. Parker, apologised and said that Antler would call him that day. In cross-examination Mr. Parker said that Antler sent him a new suitcase.

On 12 December 2007 Mr. Orringe reached agreement with Mr. Parker and agreed to pay him £55,000 in respect of his claim. £16,072 was paid in respect of the gentleman’s watch and £38,928 in respect of the ladies Jaeger Le Coultre watch. His report recorded: “Prior to checking in for the outbound flight to the USA Flight BA0285 the policyholder and his party all carefully packed their valuable items within the suitcases the smallest bag containing two wristwatches one belonging to the policyholder and one to his wife.” Mr. Orringe’s understanding of the position with British Airways was that Mr. Parker had claimed compensation for the “lost items”, that British Airways had offered a replacement suitcase, that the offer had been rejected and that therefore the claim had been submitted to the NFU. This information can only have come from Mr. Parker. Mr. Orringe advised that solicitors be retained to advise on and pursue a recovery action against British Airways.

On 25 February 2008 Browne Jacobson LLP, on behalf of the NFU, wrote to Mr. Parker in connection with a potential recovery action against BA. They asked him when he had complained about the theft and to provide copies of his letter and any reply. On 12 March 2008 Mr. Parker replied enclosing the “originals of all documentation between British Airways and myself”.

On 16 December 2009 Mr. Parker attended a conference with counsel and Browne Jacobson in connection with NFU’s potential recovery action. Browne Jacobson were anxious to find out why the watches were in the suitcase. Browne Jacobson’s attendance note records the information given by Mr. Parker as follows:

“At the time he was travelling airport security had gone through the roof following the 9/11 attack. Normally he would carry on any jewellery as hand luggage but the airline said do not bring any hand luggage at all. He was worried about it and called British Airways and they said the bags would be okay………….The only bags that are allowed on for hand luggage is a see-through plastic bag. He was trying to play a low profile and would not want to take such items in a see-through bag. ”

Mr. Parker is noted to have told counsel that he had reported the theft to the police in San Francisco and to the BA agent in San Francisco. But he is also noted to have said that he never told BA that the watches were stolen. “He thinks he did not do so because the loss adjusters said not to.”

On legal advice NFU decided not to issue recovery proceedings against BA. The stated reason was the inability to prove that the watches were stolen whilst in the custody of BA rather than whilst in the custody of the hotel in Reno.

Over the weekend of 5/6 December 2009 Mr. Steele was away visiting a friend. However, Mr. Parker accepts that he, Mr. Parker, was at the property both during Saturday and late on Saturday night after attending a dinner party with Mrs. Parker. He gave evidence that he was back home at The House and in bed just before or just after midnight. Mrs. Parker gave evidence to the same effect.

On 6 December 2009 at 1.24am a fire was reported at Crossfield by a neighbour.

It is now common ground that the cause of the fire was arson. The fire expert, Dr. Goudsmit of Burgoynes, reached this conclusion because he found evidence of over-pressure and intense low-level damage in the property consistent with the ignition of accelerant.

Dr. Goudsmit was unable to say whether the arsonist had been a key-holder or had had to force an entry to the house. However, he made the following observations which have featured in counsel’s submissions. (i) The key that operated the lock in the conservatory door was found in the outside lock. The mechanism was in the unlocked position. There was a lack of smoke deposits on the key. (ii) There were blue marks on one of the conservatory doors (iii) A safe which had been secured by fixings in a cupboard had been removed from the cupboard and was on the floor. The carpet on which it was found had not been fire-damaged.

On 19 January 2010 Mr. Parker submitted a claim form in respect of the fire which he described as a suspected arson attack. The cost of rebuilding was put at £1m. and the contents lost at £30,000. The claim form referred to a letter dated 13 January 2010 which Mr. Parker had sent to Mr. Hurry of Cunningham Lindsey, the loss adjusters. In that letter he indicated that in addition to claiming for the rebuilding costs and the loss of contents he would make a claim for loss of rent.

This is the first of the principal disputes of fact.

The burden of proving that no watch was lost in 2002 lies on the NFU. It seeks to discharge that burden of proof notwithstanding that a loss adjuster investigated the claim in 2002 and settled it on the basis that it was based upon a genuine loss of a watch. The points relied on, as set out by counsel in his closing submissions, are these:

The fact that Mr. Parker did not report the loss of the watch to the police in 2002 is evidence that the watch was not lost. The fact that he only insured one Breitling watch suggests that he only had one such watch. Since he had a Breitling watch after 2002 (it was specified in the schedule to the 2003 policy and he asserts that a Breitling watch was stolen in 2007) this is further evidence that a Breitling watch was not lost in 2002.

I do not regard any other matters relied upon by counsel as evidence that the watch was not lost.

Mr. Parker had an explanation for his failure to report the loss of the watch to the police. He did not realise until he got home that the watch had been lost. This was long after he had reported the incident to the police. Of course, there is a case for saying that since he had concealed the watch in a side pocket of his suitcase one would expect him to have realised immediately that if the suitcase was stolen that he had lost the watch. But, at a distance of 10 years from the events in question, the court must, I think, be cautious before drawing such conclusions. Similarly, in circumstances where the 2007 list of watches in Mr. Parker’s collection includes three Breitling watches one must be cautious before concluding that the Breitling watch or watches in his possession after 2002 included the one alleged to have been stolen in 2002.

Whilst there is evidence that a Breitling watch was not lost in 2002 I have also to bear in mind that in 2002 the claim was investigated, agreed and settled by the NFU. The loss adjuster, Mr. Allaway, saw no reason to deny the claim.

In the result, and bearing in mind the serious nature of the allegation being made against Mr. Parker,, namely, that he made a fraudulent claim, I am not persuaded that it is more likely than not a watch was not stolen in 2002.

As with the 2002 incident the burden of proving that no watch was lost in 2007 lies on the NFU. It seeks to discharge that burden of proof notwithstanding that a loss adjuster investigated the claim in 2007 and settled it on the basis that it was based upon a genuine loss of two watches. The points relied on, as set out by counsel in his closing submissions, are these:

In my judgment the two most striking features of the evidence are, first, the failure of Mr. Parker to mention the loss of the watches in the letter to BA and, second, the failure of Mr. Parker, on his own case, to identify the lost watches correctly.

When Mr. Parker wrote to BA (care of Mr. Cooper-Smith) on 19 September 2007 he knew, on his evidence, that the watches he had packed in the suitcase had been lost. Yet, although he mentioned that one suitcase, when returned, had been forcibly opened and damaged and set out the financial implications of BA’s faults in the sum of £2,719.03 he did not mention that any watches had been lost. That omission is cogent evidence that no watches had been lost because one would expect such loss to be mentioned in such a letter, had it in truth occurred. It strongly suggests that his evidence to the court that two watches were lost is untrue.

Mr. Parker’s explanation for not mentioning the loss in his letter was that, in circumstances where he did not believe the watches to be insured (because they were not being worn and were not in a safe) he received advice from several persons (Mr. Bolshaw (a friend), Mr. Cooper-Smith and Mr. Dunleavy) that he should get BA to accept liability and say as little as possible until he had received legal advice. He therefore deliberately made no reference to the watch theft and simply limited his claim to “travel inconveniences. In the first instance I wanted to get the airline to accept liability for the baggage loss first.”

Counsel for the Claimants submitted that Mr. Cooper-Smith gave supportive evidence. Mr. Cooper-Smith said that he had advised Mr. Parker to write to BA “confirming the basics of the incident but take legal advice before going into too much detail.” When he saw the letter of complaint he assumed that there was no mention of the lost watches “because he had decided to follow my initial advice as to whether he had a claim against British Airways or not.” Counsel also pointed out that Mr. Dunleavy had accepted that he may have given advice to Mr. Parker to pursue his watches claim “through solicitors”.

Mr. Parker’s explanation for not making a claim on BA for the loss of his watches makes no sense. First, whilst there may have been a need for legal advice as to whether the alleged theft of the watches was covered by the insurance policy (in view of the reference in the policy to his watch collection being “kept in HOME locked safe when not worn”) it is difficult to see, on Mr. Parker’s evidence, what legal advice was required before making a claim on BA by letter. He made other claims on BA without seeking legal advice. Second, it is one thing to complain that luggage has not been carried on the same flight as the passengers and that, when the luggage was eventually delivered, one item of luggage had been forcibly opened and to say that details of the resulting out-of-pocket expenditure and any stolen items would be given later. It is another thing to make the same complaints but at the same time to identify the “financial implications” in a specific sum and seek a refund and “some offer of compensation”. In the first case the complainant would be expected at a later date to give full details of his claim without inviting any adverse comment. In the second case the complainant would be regarded as having given full details of his claim. If, thereafter, the complainant were to say that watches, several times more valuable than the stated “financial implications”, had been lost such a statement would be bound to be treated with some suspicion. Mr. Parker would surely have appreciated that.

It was appreciated by Mr. Cooper-Smith. He said in cross-examination that he would advise a client, when making a claim, to identify what had been lost. In the light of this clear and sensible evidence I am unable to regard what he said in his witness statement as supporting Mr. Parker’s explanation. What he said in his witness statement was that he had advised “confirming the basics of the incident but take legal advice before going into too much detail.” In the light of his evidence in cross-examination such advice cannot be regarded as advice to withhold information as to what had in fact been lost when making a claim on BA. The “basics” must surely include the loss of valuable items. I am also unable to accept his evidence that on seeing the letter of complaint he noted that the theft of valuable items had not been mentioned and assumed that Mr. Parker had decided to follow his advice. This cannot be so in the light of his clear and sensible evidence when cross-examined. His comment on the letter of claim in his witness statement is likely to be the result of a misunderstanding of the contents of the letter to BA.

Mr. Dunleavy’s evidence does not materially assist Mr. Parker. He merely said that, in circumstances where he could not recall his conversation with Mr. Parker in 2007, it was possible that he may have given advice to pursue the watches claim though solicitors.

Mr. Bolshaw did not support Mr. Parker’s evidence in this regard.

In my judgment the only credible explanation for Mr. Parker’s failure to mention the loss of watches to BA is that such loss did not occur. I am unable to accept that Mr. Parker would go to the trouble of making a claim for a refund in a defined sum without seeking a refund in respect of the much more valuable watches, if it were true that such watches had been missing from his suitcase.

Furthermore, it is to be expected that, if he had packed two expensive watches in his shoes in his suitcase, he would be able easily to identify them. Indeed he accepted, when cross-examined, that he would have known the correct identity of the watches before writing his letter to the NFU. Yet in his letter to Mr. Austen he identifies the watches as a Patek Philippe and a Chopard, which was, he accepts, an error. He claims that the watches in fact lost were a Breitling and a Jaeger. For the reasons I have already given Mr. Parker must have been the source of the detailed names of the watches inserted by Mr. Austen into the claim form. Mr. Parker continued to be mistaken about the identity of one of the watches. When being interviewed on 25 January 2010 by the loss adjuster investigating the fire Mr. Parker said that the lost ladies watch was a Chopard. That was also stated in a statement drawn up at that time which he approved on 28 January 2010. (Mr. Parker did not accept when cross-examined that he had identified the lost ladies watch as a Chopard in 2010 but he clearly did so.) These mistakes are very strongly suggestive that in truth no watches had been stolen and that he had difficulty in remembering which watches he said had been stolen. Again, in my judgment, the only credible explanation for these mistakes is that in truth no watches were lost in 2007.

What evidence is there (apart from Mr. Parker’s own evidence) that two watches were missing from the open and damaged suitcase when it reached Reno ? There is evidence from other persons present in Reno that Mr. Parker told them that watches were missing. Thus Mrs. Parker gave evidence that on the plane Mr. Parker told her that he had packed “just a fancy watch” and that in Reno he was angry when he discovered that “the jewellery” had been stolen. Thomas Parker, one of Mr. Parker’s sons, gave evidence that after the suitcases had arrived Mr. Parker complained that “stuff had been taken out of his suitcase”. On arrival back in England he asked his father what had gone missing and he was told that some jewellery had been taken. Mr. Andrew Welch, a brother-in-law of Mr. Parker, who went on the trip to Reno gave evidence that he remembered Mr. Parker saying that “stuff was missing” and that a couple of days later Mr. Parker told him that two watches had gone missing.

I am unable to accept their evidence. There is powerful evidence, to which I have referred, that no watches were stolen. Each of the witnesses gave evidence as to what they recall Mr. Parker saying almost 5 years ago. There is no challenge to the evidence that one of the suitcases, when it reached Reno, was open and damaged. Mrs. Parker, Matthew Parker and Andrew Welch can probably recall the disaster over the luggage and that one piece arrived open and damaged. That event has no doubt been the subject of discussion amongst Mr. Parker and his family. Mr. Parker has almost certainly made clear to them his suggestion that two watches were stolen. It seems to me likely that they have convinced themselves that Mr. Parker said at the time that watches had been stolen. Counsel for the NFU submitted that they were lying. I do not consider that he has made good that serious charge. But I do not find their evidence reliable.

Counsel for Mr. and Mrs. Parker also relied upon the evidence of Mr. Cooper-Smith. He said he recalled a conversation with Mr. Parker by telephone from Reno in which he told him that certain valuable items of jewellery were missing from his luggage. Mr. Cooper-Smith claimed to have remembered the conversation because he was shouted at by Mr. Parker and no other client had had a theft from his luggage. Despite this I do not find his evidence reliable. I do not doubt that Mr. Parker remonstrated with Mr. Cooper-Smith about the over-booking by BA, the failure of the baggage to arrive on the same flight as Mr. Parker and the fact that one suitcase was open and damaged on its arrival. However, the event and conversation were almost 5 years ago. Mr. Cooper-Smith knows that Mr. Parker claims that two watches were stolen from his suitcase and has probably convinced himself that he was told this at the time, along with the other complaints which Mr. Parker undoubtedly made at the time. In his own letter to BA dated 29 September 2007 Mr. Cooper-Smith made no mention of the suggested theft. I do not accept, as submitted by counsel for the NFU, that Mr. Cooper-Smith lied on oath but I consider that he was mistaken in his evidence.

For these reasons I am persuaded that no watches were stolen from Mr. Parker’s luggage in 2007. I accept that the NFU has made an allegation of fraud by Mr. Parker and that therefore the evidence in support of the allegation must be commensurate with the gravity of the allegation of fraud. But I consider that the failure by Mr. Parker to include the suggested loss in his letter of complaint to BA at a time when, if his evidence were true, he knew of the theft and his admitted errors as to which watches had been stolen are only realistically explicable by there having been no theft of watches. I must therefore reject Mr. Parker’s evidence that two watches were lost as untrue.

Before leaving this part of the case there is a further point which I must mention. Much forensic effort was expended in exploring the reasons that have been given at different times for the suggested presence of watches in the hold luggage. It was said that the lack of consistency indicated that the account is not rooted in truth. The explanation put forward in these proceedings was that at the airport Mr. Parker and his party were required to have no hand luggage save a see-through plastic bag and as a result the watches, which had been in hand baggage, had to be repacked in the hold baggage. Although this explanation is not set out in terms in Mr. Orringe’s report dated 18 October 2007 he accepted in cross-examination that he had been told something along the lines that the passengers had been told that they had to repack their baggage. The note of the conference with counsel in December 2009 is equivocal but does record that the only hand luggage allowed was a see-through plastic bag. The record of what Mr. Parker told the loss adjusters in January 2010 suggests that the party had to repack their hand baggage in the hold luggage at the airport. In April 2010 an outline of the incident supplied by Mr. Parker to his solicitors said that “normally, Barbara would travel with a fair amount of jewellery, carried within hand-luggage but, on this occasion, because the jewellery was hidden within our luggage, she only took two watches on this trip, and very little in the way of other jewellery, apart from what she was wearing.” It was suggested that this was a different explanation, namely, that the watches had from the outset been packed in the hold baggage.

I have not relied upon this aspect of the case in support of my finding that no watches were stolen in 2007. The evidence of different explanations being given is not entirely clear. The account in the April 2010 can be viewed as a different explanation from that given in evidence and in 2007, 2009 and January 2010 but it is not clearly different.

Another argument was that the account that hand baggage had to be in a see-through plastic bag must be untrue. Evidence was adduced from BA and from BAA that in September 2007 that there was no policy in operation which restricted hand baggage to one see-through plastic bag. However, neither of the witnesses from BA and BAA had specifically investigated what had happened on 12 September 2007. Miss Goody, the solicitor who attended the conference in December 2009, recalled Mr. Parker’s account of a see-through bag because when she had travelled “close to 9/11 ….we had been asked to put items into see-through bags.” It was unclear whether she was referring to 9/11/01 as counsel for the NFU suggested or an anniversary of 9/11 as counsel for Mr. and Mrs. Parker suggested. Whilst the account given by Mr. Parker as to having to re-pack hand baggage in the hold luggage may have been untrue I was not persuaded that it was untrue. So I did not rely upon this point either.

It is the case of the NFU that the tenancy of Crossfield signed by Mr. Parker and Mr. Steele was a sham. A “sham” is a document which is:

“intended by [those who signed it] to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations(if any) which the parties intend to create …….for acts or documents to be a “sham”… all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating (per Diplock LJ in Snook v London & West Riding Investments [1967] 2 QB 786 at p.802).

That definition is to be regarded as “encapsulating” the legal concept of a sham; see Stone v Hitch [2001] EWCA Civ 1224 26 January 2001 at paragraphs 62-69 per Arden LJ. Whether a document is a sham requires a careful analysis of the facts, including the parties’ explanations and circumstantial evidence. The court must be careful to distinguish between a situation where the parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. The former is not a sham. The latter is.

It is not disputed that on 19 September 2009 Mr. Parker and Mr. Steele signed a lease in respect of Crossfield in respect of which Mr. Steele was to pay £2,500 per month for a fixed term of three months expiring on 19 December 2009.

On the previous day Mr. Parker had telephoned Mr. Dunleavy of the insurance agency and requested him to write a contents policy in respect of Mr. Steele’s possessions, starting on 19 September 2009. Mr. Dunleavy’s note of the call records that Mr. Steel was going to move in “tomorrow”. Mr. Steele’s possession included clothes, a computers, jewellery and DIY tools.

Mr. Steele gave evidence, as did Mr. Parker, that Mr. Steele paid three months rent of £2,500 per month in advance in cash on 19 September 2009. There is in evidence a note signed by Mr. Parker and dated 19 September 2009 recording that he had received £7,500 in cash from Mr. Steele for the rent. Mr. Steele said that he had brought about £8-10,000 in cash back to England from Panama and had given it to Mr. Parker to keep in his safe. When he signed the lease the rent was paid from that cash.

If this evidence is true Mr. Steele kept this store of cash secret from others. He took handouts from Mr. Bolshaw who said: “I was letting him have little bits of money every now and again to try and help him out.” Mrs. Parker regarded him as “scrounging, borrowing, seeking support from some friends.”

By a letter dated 22 August 2009 which it was agreed should have been dated 22 September 2009 Mr. Parker informed Mr. Dunleavy that Mr. Steele’s possessions included £2,000 of cash which “he hides in his accommodation.” That was to be included in the £40,000 contents insurance which was being arranged. It is possible that the £2,000 of cash was what was left of Mr. Steele’s cash after paying three months rent to Mr. Parker.

On 27 October 2009 South Bucks District Council invoiced Mr. Steele for council tax as from 19 September 2009.

Mr. Steele tried to find a job. His evidence that he registered with many agencies and applied for many jobs was not challenged. It is probable that he did seek to find a job.

However, those attempts were not successful and Mr. Steele himself accepted that by the end of November 2009 there was no “earthly chance” of his being able to pay £3,500 per month.

There is therefore cogent evidence that Mr. Steele had no actual ability to pay rent of £3,500 per month when, on 27 November 2009, he and Mr. Parker signed a document by which he agreed to pay rent of £3,500 per month for 12 months. Mr. Steele said that he expected to be able to do so because he expected to obtain a decent job which would enable him to pay it. However, he never did obtain such a job in England.

After the fire at Crossfield he moved into another property of Mr. Parker’s and agreed to pay rent of £800 per month. He never did so even though he received housing benefit in respect of his rental liability.

It is more probable than not that Mr. Steele had no intention of paying £3,500 per month from 19 December 2009. However, what must be shown is that Mr. Parker also appreciated that and that both actually intended a different arrangement. What was suggested by counsel for the NFU was an arrangement by which Mr. Steele had a roof over his head and Mr. Parker had the benefit of Crossfield being occupied. It was never intended that money would change hands.

Mr. Parker said that he was sceptical as to whether Mr. Steel would be able to pay £3,500 per month. But he did not accept that neither he nor Mr. Steele actually intended that such payments would be made. He said that Mr. Steele was confident of getting a job and that he had an investment which provided income.

There are certainly grounds for suspecting that Mr. Parker did not intend that Mr. Steele would pay rent of £2,500 per month on 19 September 2009 and that Mr. Parker did not receive £7,500 in cash. Those grounds are (i) that Mr. Steele gave every impression of being short of cash, (ii) that Mr. Steele’s evidence about the cash being part of an “emergency” fund did not sit happily with it being used to pay rent on a house much greater than Mr. Steele required and (iii) that there is no record of the £7,500 going into a bank account or being spent. Mr. Parker said it was put back in his safe and used to pay wedding expenses. There are also grounds for suspecting that, by 27 November 2009, Mr. Parker did not intend that Mr. Steele would pay rent of £3,500 per month, namely, that Mr. Steele’s finances had not improved and he had not found a job.

However, the NFU accepted that the lease was in fact signed on 19 September 2009. The question therefore arises: Why was it signed at that time if it was not because it was a genuine lease ? It was suggested to Mr. Parker that he signed it to enable him to increase the financial advantage to him as and when the house was destroyed. Mr. Parker did not accept that. Assuming that Mr. Parker did set fire to Crossfield the suggestion therefore is that he was planning to do that in September 2009, almost three months before the fire. That is I suppose possible but there is a large element of speculation involved. It was not alleged that Mr. Steele had anything to do with the fire and so he must have had a different reason for signing the lease. None was suggested to him. It was suggested in argument that the advantage to Mr. Steele in signing the lease was that it was a stepping stone to being released from liability for council tax. But it was accepted that there was no evidential basis for suggesting that a lease assisted in getting relief from council tax.

In these circumstances, although I accept that there are grounds for suspecting that the lease dated 19 September 2009 was a sham and that £7,500 was not paid by Mr. Steele to Mr. Parker, I do not consider that the NFU has proved those allegations.

There are grounds for suspecting that the agreement dated 27 November 2009 was a sham. Mr. Steele accepted that he had no “earthly chance” of being able to pay £3,500 per month for 12 months and Mr. Parker must have known that Mr. Steele’s attempts to find a job had proved unsuccessful. Moreover, the suggested motive for Mr. Parker signing a sham agreement on 29 November 2009 is more credible (because the agreement was signed just the week before the fire). However, it is still difficult to identify a motive for Mr. Steele to sign a sham agreement.

Since the suggested motive for Mr. Parker signing a sham agreement depends upon him having planned to destroy Crossfield by fire I can only reach a decision as to whether the agreement was a sham after deciding whether the fire was set by Mr. Parker or those acting under his direction.

In McGregor v Prudential [1998] 1 Lloyd’s Rep. 112 Mr. Geoffrey Brice QC, sitting as a deputy judge of the High Court, considered an allegation of arson by an insurer against the assured. He approached the case

“on the basis of determining whether the established facts drive one to the only probable conclusion that the plaintiff (a man of hitherto good character) was guilty of arson and that there is no other credible explanation……..Speculation as to, or even strong suspicion of, the plaintiff’s guilt is insufficient for the insurer’s case to succeed…….Thus if in the present case the evidence available led to such uncertainty as to the identity of the arsonist that one really could not determine whether it was the plaintiff or some unknown third party who was guilty (even if both hypotheses were equally probable) then the defendant’s case would have failed (see pp.114-115).”

I will follow the same approach.

It is common ground that the cause of the fire at Crossfield was arson. Counsel for the NFU submitted that there were a number of indications of Mr. Parker’s involvement in the admitted arson of Crossfield. They included (i) evidence that entry into the property was facilitated by a keyholder, (ii) evidence that the scene had been set to make it look as if the property had been targeted by thieves, (iii) Mr. Parker’s movements on the evening of 5 December 2009 and (iv) inferences to be drawn from the evidence that the tools allegedly loaned to Mr. Parker had not been loaned to him.

When Dr. Goudsmit inspected the burnt out shell of Crossfield on 8 December 2009 he observed that the key that operated the lock in the conservatory door was found in the outside lock. The mechanism was in the unlocked position. There was a lack of smoke deposits on the key.

Mr. Parker gave evidence that when he visited the property on Saturday 5 December 2009 he went through the conservatory doors onto the terrace. When he left he locked the conservatory door and left the key on the inside of the door.

Counsel for the NFU submitted that the absence of smoke deposits on the key showed that it had not been on the inside of the door during the fire, that it was implausible that anyone with access to the key would have moved it during the fire and so the court can be confident that the key was in the outside lock throughout the fire. He further submitted that it was implausible (a) that anyone attempting to gain access from outside would have removed the key from the inside lock and repositioned it in the outside lock and (b) that anyone inside the conservatory would remove the key from the inside lock in order to reposition it in the outside lock and unlock the door. Counsel submitted that the most probable explanation was that the key was used in the lock from the outside to gain access to the building and had been provided by a keyholder to the person who used it to gain access.

Counsel for Mr. and Mrs. Parker accepted that the key had been on the outside of the lock during the course of the fire. But he submitted that it would have been remarkably inept of Mr. Parker to leave the key on the outside of the conservatory door and so open up the possibility of an argument that the arson had been instigated by a key holder. He also relied upon the accepted fact that Dr. Goudsmit himself had been unable to exclude the possibility of a forced entry into the property.

The presence of the key in the outside lock of the conservatory door throughout the fire is consistent with the key having been used to open the conservatory door before the fire began. It is difficult to contemplate a scenario in which an intruder, having gained entry to the building in some other way, then, before starting the fire, unlocks the conservatory door and places the key in the outside lock. I therefore regard the key in the conservatory door as some evidence that whoever set the fire had access to the key and used it to enter the conservatory. I accept that whoever left the key in the outside lock thereby left evidence which pointed to access having been gained by assistance from a key holder but arsonists do sometimes leave clues, albeit unintentionally, as to what happened.

It was suggested by counsel for the NFU that two matters observed by Dr. Goudsmit were part of an attempt by someone to make it look as if an intruder had forced an entry to the property for the purposes of theft.

The first observation was of blue marks or paint on the face of one of the French windows and marks on the edges of the doors. Dr. Goudsmit did not consider that these marks were associated with a determined attempt at forced entry because he would have expected to find marks on both the leading edge of the French window and at the corresponding position on the frame, probably at the location of the locks. There were no such marks. Dr. Goudsmit was unable to explain the marks but in his opinion they were not associated with forced entry.

There was no expert evidence to the contrary. However, Dr. Goudsmit’s notebook recorded that the Scenes of Crime Officer thought that there was clear evidence of an attempt to gain access and that comment had been made as to evidence of the use of a jemmy bar. Dr. Goudsmit understood that this was a reference to the blue marks though he did not ask the Scenes of Crime Officer about this (or note the officer’s opinion in his statement).

The photograph taken by Dr. Goudsmit shows some slight horizontal blue marks. In circumstances where Dr. Goudsmit cannot explain them I do not consider that the court can confidently conclude that they were “an incompetent attempt to make it look as if someone had attempted to force an entry into the premises”. If there had been such an attempt I would have expected clearer evidence.

The second matter relied on was a safe found on the carpet in the dressing room floor on the ground floor. It is accepted that it had been removed from its fixings in a cupboard. The absence of fire marks on the carpet beneath it suggests that it had been prised out of its location before the fire and placed on the carpet. Counsel for the NFU said that it was inherently improbable or at any rate surprising that a genuine intruder would have gone to the trouble of removing the safe from its fixings and then simply abandoned it. He said it was evidence of setting the scene to make it look as if burglars had been present. Whilst the observation of the safe is open to this interpretation it is also open to the interpretation that it is evidence of a genuine burglary. There may be one or more reasons why a burglar might decide, having removed the safe from its fixings, to leave it.

There is no dispute that Mr. Parker went to Crossfield on the Saturday evening, first, before attending a dinner party with Mrs. Parker and, second, late on the Saturday night, before midnight, after the dinner party. This part of the NFU’s case focuses on Mr. Parker’s reasons for his visit which, the NFU says, defy credibility and require the court to assume an extraordinary level of irrationality and insensitivity to others. The account he gave in his witness statement may be summarised a follows:

The aspect of this explanation which is challenged is the suggestion that Mr. Parker attempted to engineer the opportunity for him to drink at the dinner party. This is challenged because there is other evidence that Mr. Parker does not drink.

On 7 December 2009 Mr. Hurry of the loss adjusters spoke to Mr. Parker. Mr. Parker told him that he had collected the Land Rover at about 11:30 pm on Saturday 5 December 2009. Mr. Hurry gave evidence that he asked Mr. Parker whether he had been drinking that night. His notes record that Mr. Parker replied “neither had been drinking – he doesn’t drink – but that’s another story.” Mr. Hurry accepted in cross-examination that Mr. Parker may have been seeking to tell him that he did not generally drink. However, since the note is a contemporaneous or near contemporaneous note which Mr. Hurry had no cause to falsify it is likely to be an accurate record of what Mr. Parker said.

Dr. Goudsmit recalled a conversation with Mr. Parker at Crossfield on 8 December 2009 when “Mr. Parker informed me that Ms.Cooke would be driving.” Dr. Goudsmit recalled saying that this would mean that Mr. Parker could have a drink and that Mr. Parker replied saying: “Neither of us is much of a drinker.” However, he had no note of the conversation because it was peripheral to his investigation. He accepted that he was not confident in his recollection which was vague as to the words used.

Mr. Russell-Price, also of the adjusters, gave evidence that he had had a discussion with Mr. Parker about drinking. He recalled being told that Mr. Parker did not drink or could only drink a little amount. However, he accepted that he had no specific recollection of it and had no note of it.

Mr. Bolshaw, who was hosting the dinner party attended by Mr. and Mrs. Parker, said that Mr. and Mrs. Parker “don’t drink as much as the rest of us”.

There is obviously a tension between, on the one hand, the evidence of Mr. Parker that he endeavoured to ensure that his wife drove back from the dinner party so that he could drink and, on the other hand, the evidence of Mr. Hurry and Mr. Bolshaw. But it is also to be noted that Mr. Parker said in re-examination that what he meant by what he told Mr. Hurry was that he “seldom” drank for medical reasons. Moreover, Mr. Bolshaw, who knows Mr. Parker (and whom counsel for the NFU accepted was an honest witness) did not say that Mr. Parker never drank. If the true position is that Mr. Parker sometimes drank then his explanation of his movements that evening is not to be disbelieved on the grounds that he never drank.

However, his explanation is odd. Several points were put to Mr. Parker in cross-examination. Why did Mr. Parker not simply decide to go to the dinner party in the Jaguar and drive the Land Rover to Crossfield in the morning with the chain saw and other equipment ? Since they were running late was it not sensible to go to the dinner party in the Jaguar rather than go via Crossfield in two cars ? Mr. Parker had no coherent answers to these questions. In so far as he had an answer it was that he had made up his mind to put the chain saw in the Land Rover and drop it off at Crossfield that night. “So end of story as far as I am concerned.” To this extent I accept that his explanation was irrational. Mrs. Parker accepted that Mr. Parker’s stated plan was “completely illogical” but said that was how he often behaved. I do not doubt that Mr. Parker could be obstinate and determined but his explanation for his conduct was irrational and that must throw doubt on its truthfulness. It is possible that his explanation also demonstrated a degree of insensitivity to his wife who was not feeling well and concerned that they were running late for the dinner party. However, whilst this is surprising I do not consider it gives further ground to doubt the truthfulness of Mr. Parker’s explanation.

Mr. Parker’s explanation for his presence at Crossfield on the Saturday morning was that he wished to bleed the radiators and ensure that certain petrol powered tools, which he had borrowed from Ranger Plant Hire, were ready to be used on the Sunday when he planned to work in the garden. The tools, along with petrol in jerricans, were stored in the family room at Crossfield.

In support of that evidence Mr. and Mrs. Parker called evidence from Mr. Philpin, the owner and director of Ranger Plant Hire from whom Mr. Parker said he borrowed the tools. Counsel for the NFU submitted that Mr. Philpin’s evidence was untrue and that no such equipment had been loaned to Mr. Parker in 2009 or that if it had it had not been stolen.

Mr. Philpin, when told by Mr. Parker that the equipment had been stolen or lost in the fire and that Mr. Parker would pay for the loss, raised an invoice which he sent to Mr. Parker by letter dated 6 January 2010. According to this invoice Mr. Parker had borrowed a generator, a pump, two chain saws, a disc cutter and two strimmers. Each item of equipment was given a fleet (or stock) number.

In his witness statement Mr. Philpin said that he chose fleet numbers that he thought would match the items borrowed. In cross-examination he said that he “guessed” the numbers. He said that he chose numbers that were in the system save for the chain saw and strimmer which had never been given a fleet number. He accepted that he “plucked numbers out of the air.” He said that he thought that the computer required a fleet number in order to produce an invoice. But he now accepts that his understanding was wrong.

Ranger Plant’s equipment also had serial numbers. Mr. Philpin accepted that if he had been asked for the serial numbers of the lost equipment the only truthful answer would have been that he could not supply such numbers because he did not know precisely which items had been lost. There was no document recording what equipment had been loaned to Mr. Parker or when.

Mr. Russell-Price of the loss adjusters asked Mr. Philpin to supply the serial numbers of the equipment on 18 March 2010. By a letter dated 22 March 2010 Mr. Philpin supplied serial numbers for the generator and pump. He said he did not have serial numbers for the other equipment. The serial numbers he gave for the generator and pump related to the fleet numbers he had used in his invoice. Mr. Philpin accepted that he did not know the fleet numbers or the serial numbers of the equipment which had been loaned to Mr. Parker. However, he did not say that to Mr. Russell-Price in March 2010 or in August 2010 when he had a discussion by telephone with Mr. Russell-Price in which he told him that “we gave you all the information we had regarding the kit.” When asked whether “any of the kit had ever turned up” he replied “No, it hasn’t.”

So far as concerned the equipment listed in Mr. Philpin’s invoice is concerned, the generator bearing the fleet number 66 was in fact hired by the loss adjusters in August 2010 so it cannot have been loaned to Mr. Parker and lost on the night of 5/6 December 2009. Mr. Philpin said that the generator loaned to Mr. Parker must have been the one with the serial number 65. But Ranger Plant’s records show that that generator was on hire to Mika Utilities for the period 1-31 December 2009. Mr. Philpin said this was in error because Mika Utilities hired 2 generators and returned both of them in September 2009. However, this evidence seems deeply improbable because Ranger Plant’s records show that Mika Utilities paid for the hire of generator no.65 for the period 1-31 December 2009 and that the total period during which generator no.65 was on hire to Mika Utilities was from 25 February 2009 until 29 September 2010.

The disc cutter bearing the fleet number 151 was found by the police at the premises of Ranger Plant on 1 April 2011. Mr. Philpin accepted that that disc cutter could not therefore have been on loan to Mr. Parker and lost on the night of 5/6 December 2009. He accepted that he could not identify the disc cutter which he said he had loaned to Mr. Parker.

The fleet number given for the Honda pump was in fact a fleet number for a Honda generator. Mr. Philpin accepted that he had not been able to identify the Honda pump said to have been loaned to Mr. Parker. The fleet numbers given for the strimmers and chainsaws were false because they had no fleet numbers.

Mr. Philpin said that the mistakes he made were honest errors. It is very difficult to accept that. Although Mr. Philpin said that tool hire was a very small part of his business it strains credulity to accept that he is unable to identify the valuable equipment said to have been loaned to Mr. Parker and then stolen. His evidence that he “guessed” the fleet numbers when producing the invoice at Mr. Parker’s request in January 2010 strains credulity. This was an invoice in support of a sum of £4,482.63 in respect of equipment said to have been stolen. One would expect an honest businessman to be anxious to ensure that accurate information was given. When Mr. Philpin was asked for the serial numbers by loss adjusters in March 2010 one would expect him to have said that he was unable to give the serial numbers of the lost equipment because he was unable to identify what had been lost. He himself accepted that the only truthful answer would have been that he could not supply such numbers because he did not know precisely which items had been lost. Yet he gave serial numbers for the generator and pump in the accuracy of which he can have had no confidence. When it was brought to his attention that the loss adjusters had hired generator no.66 he told Mr. and Mrs. Parker’s solicitors in October 2010 that the generator loaned to Mr. Parker was number 65. Yet reference to his company’s records would have shown that they were inconsistent with that suggestion.

Mr. Philpin accepted that Mr. Parker made loans to Ranger Plant and is Ranger Plant’s landlord. Mr. Parker had told the loss adjusters that he was Ranger Plant’s private banker and that they paid him £30,000 per month. Although Mr. Philpin did not think he had ever paid Mr. Parker £30,000 a month it seems that on both their evidence there was a close financial connection between Mr. Parker and Ranger Plant. Indeed in January 2010 they entered into some sort of arrangement by which in return for a discounted lump sum Mr. Parker could hire equipment for work at Crossfield.

I have considered carefully the submissions made by counsel for Mr. and Mrs. Parker to the effect that it is improbable that Mr. Philpin would agree to provide untrue information in 2010 concerning the equipment alleged to have been loaned to Mr. Parker in 2009 and then perjure himself in the witness box in 2012.

However, the only credible explanation for Mr. Philpin putting into circulation the erroneous invoice dated 6 January 2010, for failing to explain in March 2010, August 2010 and October 2010 that he could not honestly say what were the fleet or serial numbers of the equipment said to have been loaned and for saying in October 2010 that the generator loaned bore the fleet number 65 when his firm’s records contradicted that, is that he was willing to make statements which he knew to be untrue. His conduct cannot realistically be viewed as a succession of honest mistakes. The reason that Mr. Philpin was willing to put into circulation an invoice containing untrue information and to give untrue evidence probably lies in the financial connection between Ranger Plant and Mr. Parker.

Counsel for the NFU submitted that Mr. Parker must have asked Mr. Philpin to give untruthful evidence to support Mr. Parker’s evidence as to the reasons why he attended Crossfield, to support the suggestion that there had been a theft of the equipment by intruders and to explain why petrol was in the house. I accept that this is probable because there is no other reason why Mr. Philpin should have given untrue evidence.

However, I am not persuaded that Mr. Parker did not store some equipment in the house. Mr. Dunleavy, gave evidence, supported by his contemporaneous note, that on 18 September 2009 Mr. Parker, when speaking to him about insuring Mr. Steele’s possessions at Crossfield, informed Mr. Dunleavy that in a room at Crossfield there were “strimmers and chainsaws - £2,000”. Mr. Dunleavy gave evidence that he recollected that Mr. Parker told him that he was going to store some strimmers and chainsaws in a room at Crossfield.

It seems to me that this evidence supports Mr. Parker’s evidence that “after discussions with Robert Dunleavy, [equipment] was stored in the house rather than in the outbuildings for security reasons.” It is possible that this equipment was borrowed from Ranger Plant.

But if equipment loaned by Ranger Plant to Mr. Parker had been stolen as alleged by Mr. Parker it is most unlikely that Mr. Philpin would be unable to identify the fleet or serial numbers of the equipment said to have been loaned to Mr. Parker and then stolen. This suggests that there was no theft as alleged by Mr. Parker. Indeed two of the items said to have been stolen by Mr. Philpin were found at the premises of Ranger Plant in 2010 and 2011. The generator was hired by the loss adjusters in August 2010 and the disc cutter was found there by the police in April 2011.

In my judgment the NFU’s case that the fire was set by Mr. Parker or by persons acting on his instructions is supported by the following matters:

The inference which may be drawn from point (iii) above is that the irrational explanation masked another reason for attending Crossfield. The inference which may be drawn from points (ii) and (iv) is that Mr. Parker assisted those who set fire to the property by providing them with the key to the conservatory. The inference which may be drawn from point (v) is that Mr. Parker asked Mr. Philpin to give untrue evidence so as to corroborate Mr. Parker’s untrue suggestion that the equipment had been stolen by intruders.

Counsel for Mr. and Mrs. Parker submitted that the case that the fire was set by persons acting on behalf of Mr. Parker was improbable and that the above inferences cannot properly be drawn because:

Mr. Parker’s wealth is connected with the question of motive. It was said that it would be to Mr. Parker’s financial advantage if the costs of demolition and reconstruction were funded by the insurance policy. Against that it was said that this was unlikely to be a motive in circumstances where Mr. Parker was wealthy. Whilst I bear this in mind I am unable to give it much weight in circumstances where I have found that, notwithstanding his wealth, he was prepared to pursue a fraudulent insurance claim in respect of the alleged loss of watches in 2007. In any event, fraud is not the preserve of persons of without wealth.

The more difficult question for the NFU with regard to motive is that Mr. Parker was not the owner of Crossfield and so the insurance proceeds would be payable to Mrs. Parker, not him. At the time of the fire they were not married, though they were planning to marry in April 2010. The most that can be said is that if the property had not been damaged by fire the costs of demolition and reconstruction would or might have been met out of the resources of Mr. and Mrs. Parker. The fact that Mr. Parker would not have directly benefited from the insurance claim (in the sense of being entitled to payment of the proceeds) is something which the court must bear in mind. However, the court’s finding must depend upon the evidence as a whole and not just on the question whether a strong direct motive has been established.

Another motive was suggested; that the destruction of the property would enable Mr. Parker to achieve his wish of demolishing Crossfield in circumstances where Mrs. Parker did not wish to demolish Crossfield. However, Mrs. Parker was willing to see the property demolished. She would not otherwise have applied for planning permission to do that. In the economic climate of 2009 she favoured renting out but I was not persuaded that there was such a dispute between Mr. and Mrs. Parker in late 2009 as to the development of the property that Mr. Parker had a motive to burn the house down as means of resolving that dispute. It would be a surprising motive for Mr. Parker in circumstances where he intended to marry Mrs. Parker in April 2010.

Related to the question of motive is the fact that Crossfield was a property much loved by Mrs. Parker and therefore, it may be said, a property which Mr. Parker was unlikely to damage. It is true that she loved the property having brought up her family there. However, she had applied for planning permission to demolish it and so she was plainly willing, at some stage, to see it demolished. Thus, whilst Mrs. Parker’s affection for the property is a relevant matter to bear in mind I do not consider that it can be given much weight in circumstances where she was willing to see it demolished at some stage.

I bear in mind that Mrs. Parker does not doubt her husband. However, the court must view the matter objectively on the basis of all of the evidence before the court. Mrs. Parker’s confidence in her husband is just one piece of evidence.

I also bear in mind that the police have brought no charges against Mr. Parker arising out of the fire but, again, the court must consider the totality of the evidence before it.

A very serious crime is alleged against Mr. Parker, against whom no similar charge of dishonesty has been brought before. These are the reasons why the evidence relied upon by the NFU must be commensurate with the gravity of the allegation made against him.

It is true that Mr. Parker has pursued this claim to judgment and so risked an adverse finding. However, assuming that he has sought to defraud his insurers, he would not be the first such person to pursue his claim to judgment. In any event in circumstances where Mrs. Parker was the owner of Crossfield and against whom no allegations of arson are made she would, presumably, have had to bring the claim even if Mr. Parker preferred not to.

Counsel for Mr. and Mrs. Parker relied on other arguments, including the following:

I have considered these arguments but am unable to give them much weight.

There was a report of a fire in a stable in Crown Lane, Farnham Royal on 30 November 2009 and of arson in Burnham on 18 June 2009 but there was no evidence to connect these fires with the fire at Crossfield on 6 December 2009.

Having considered all of the evidence but, in particular, the evidence which supports the NFU’s case, the evidence of Mr. Parker and the arguments made by counsel as to the improbability of Mr. Parker having set fire, or having directed others to set fire, to Crossfield I have come to the conclusion that the only probable explanation of the fire is that Mr. Parker directed one or more persons unknown to set fire to the property. The evidence which enables that inference to be drawn is, in essence, the common ground that the cause of the fire was arson, Mr. Parker’s presence at the property on the Saturday evening, the irrationality of Mr. Parker’s explanation for visiting the property before the dinner party, the key in the outside lock of the conservatory door and the evidence that Mr. Philpin lied at the request of Mr. Parker as to what equipment had been loaned to Mr. Parker.

To reject the NFU’s case would require, in circumstances where it was common ground that the fire had been caused by arson, that the following were mere innocent coincidences:

Such innocent coincidences are so improbable that I am persuaded that the only probable explanation for the fire is that Mr. Parker must have been responsible for it. I must therefore reject Mr. Parker’s evidence that he was not responsible for the fire. I also conclude that those setting fire to the property sought to give the impression that there had been a burglary by removing the equipment stored in the family room and removing the safe from its fixings.

I have reached the conclusion that there is no credible explanation for the fire on the evidence before the court other than it was set by persons on the direction of Mr. Parker. It is unlikely that he himself started the fire because he appears to have been home sometime before the fire w as reported. The evidence before the court is of a cogency commensurate with the finding of arson at the direction of Mr. Parker. The evidence goes beyond establishing, merely, strong suspicion of Mr. Parker’s involvement. Its cogency is such that any difficulties the Claimants may have in establishing a direct benefit to Mr. Parker from a successful insurance claim are overcome. The only reasonable inference from the evidence is that the fire was set by one or more persons acting on the direction of Mr. Parker.

I can now return to the question whether the 27 November 2009 agreement by Mr. Steele to pay a monthly rent of £3,500 was a sham. It is more likely than not that Mr. Parker was planning the fire on or before 27 November 2009 when he signed the agreement with Mr. Steele. It was only a week before the fire. Mr. Parker cannot therefore have had any expectation that Mr. Steele would in fact pay £3,500 per month in accordance with the apparent agreement to that effect because he planned to destroy the house by fire. It is however likely that he intended to use the agreement to base a claim against the NFU for loss of rent.

By this time Mr. Steele had not found a job. There is no evidence that he could pay the suggested rent. Given that he never paid the much lesser rent due on the property rented after the fire there are strong grounds for believing that he could not pay the rent and did not expect to pay the rent as it fell due.

Agreeing to pay £3,500 per month was therefore, at the very least, most unwise for Mr. Steele. Since it is not suggested that he was party to any conspiracy to set fire to the house he cannot have shared Mr. Parker’s motive to sign the agreement. Why therefore did he agree to pay it ? It was not suggested to him that he was assured by Mr. Parker that he would not be expected to pay. Indeed no motive was suggested to him for signing the agreement. In these circumstances the only likely explanation for Mr. Steele signing the agreement is that, although it imposed an obligation upon him to pay, he was happy to sign the agreement because he needed somewhere to live and hoped that he could avoid paying what he was legally obliged to pay. That is after all what he did after the fire when he assumed an obligation to pay for alternative accommodation but never paid the rent due.

I am therefore not persuaded that the agreement to pay £3,500 was a sham. There was no common intention that the lease was not intended to create the legal rights and obligations which they give the appearance of creating. Mr. Parker did not expect that Mr. Steele would have to pay the rent because he intended to burn the house down. Mr. Steele hoped to avoid paying, not because the house would be burned down, but because he is the sort of person who hopes to avoid his legal liabilities.

The agreement to pay rent of £3,500 per month was therefore an agreement which was unfavourable to Mr. Steele. It was not a situation where Mr. Parker and Mr. Steele intended that some other arrangement would bind them.

Having determined the principal issues of fact the court can now determine the claims of Mr. and Mrs. Parker.

The schedule to the policy of insurance described Mr. Parker as “joint policyholder”. Counsel for the NFU submitted that this was sufficient to determine the question whether the policy was a joint or composite policy insurance. In my judgment the description of Mr. Parker in the schedule is a relevant matter to take into account but it is not determinative of the question whether the policy was a joint or composite policy. For there can be no joint insurance where the different interests of several persons are insured in the same policy. Such a policy is a composite policy; see Central Bank of India v Guardian Assurance (1936) 54 Lloyd’s Rep. 247 at p.260 per Lord Maugham, General Accident Fire and Life Assurance Corporation v Midland Bank [1940] 2 KB 388 at pp.404-405 per Sir Wilfrid Greene MR, State of the Netherlands v Youell and Hayward [1997] 2 Lloyd’s Rep. 440 at pp.447-448 per Rix J (who described Sir Wilfrid Greene’s judgment in General Accident as “the classic statement of the difference between a joint and a composite insurance” which, although obiter, has “been regarded as authoritative for more than 50 years”), and New Hampshire v MGN [1997] 1 Lloyd’s Rep. 24 at pp.56-57 per Staughton LJ (where a policy was held to be composite notwithstanding a clause in the policy entitled “joint assured”).

Mr. and Mrs. Parker (who, it is to be recalled, were not married when the policy was taken out or when Crossfield was destroyed by fire in 2009) had different interests. Mrs. Parker was the owner of Crossfield. Mr. Parker had had an interest in Crossfield but he had sold that interest back to Mrs. Parker in 2007. It is difficult to identify any interest of his in Crossfield in 2009. If he had some form of equitable interest (which was not the subject of any detailed investigation or submission) it was different from Mrs. Parker’s interest in Crossfield. He may have owned some of the contents of Crossfield in December 2009 but it is likely that most of the contents were owned by Mrs. Parker. He may have had an insurable interest in the rent legally payable by Mr. Steele pursuant to the November 2009 agreement (because the rent was payable to a bank account in the name of “Mr. M. Parker and Ms. B. Cooke”) but he presumably would have held such rent as trustee for Mrs. Parker who was the owner of Crossfield. I therefore consider that the interest of each of Mr. and Mrs. Parker was different and the policy therefore evidenced an obligation on the part of the NFU to indemnify each assured in respect of the individual loss which each suffers. The policy is a composite policy.

Counsel for the NFU submitted that some pieces of evidence suggested the policy was a joint policy (for example, the claim did not discriminate between the interest of Mr. and Mrs. Parker, Mr. Parker paid for the reconstruction of the house, the lease signed by Mr. Steele was in Mr. Parker’s name, and their solicitors said in a letter that Mr. and Mrs. Parker “share all their assets” – though they added that “it is possible that Mr. Parker has an equitable interest in Crossfield” which might indicate that they were not saying that they shared Crossfield). I have considered these matters but remain of the opinion that, having regard to the earlier purchase and subsequent sale of an interest in Crossfield by Mr. Parker, his interest in Crossfield, if any, in 2009 was different from that of Mrs. Parker.

When he asked to be added to the policy in September 2009 as an assured he failed to disclose that he had made a fraudulent claim in 2007 with regard to the alleged loss of two watches. This was plainly material to the risk and I accept the evidence of Mr. Dunleavy and Ms. Jennings that, as is probable, they would have referred any disclosure of dishonesty to the regional office. I also accept the evidence of Mr. Spencer that, as is probable, the NFU would not have written the risk if informed of the fraudulent watches claim. It follows that Mr. Parker’s failure to discuss his previous fraud induced the NFU to add him to the policy as an assured.

The NFU was therefore entitled to avoid its obligation to indemnify Mr. Parker.

Further, since the destruction of Crossfield by fire was caused by the wilful misconduct of Mr. Parker he could not in any event make any recovery in respect of the loss caused by the fire.

It was accepted by counsel for the NFU that the NFU could only avoid its obligation to indemnify Mrs. Parker if she herself was aware that Mr. Parker had made a dishonest claim in respect of the alleged loss of watches in 2007 and so had failed to disclose that fraud when renewing the policy in 2007. For the reasons I have already given I do not consider that the NFU has established that Mrs. Parker was herself aware that Mr. Parker had made a dishonest claim in 2007. The NFU was therefore not entitled to avoid its obligation to indemnify Mrs. Parker.

The NFU did not allege that Mrs. Parker was party to any conspiracy to set fire to Crossfield. Thus there was no case that the fire was caused by her own wilful misconduct. Since the policy was a composite policy her right to claim is not affected by the wilful misconduct of Mr. Parker who was also insured under the policy; see Samuel v Dumas [1924] AC 431 at pp.445-446.

It follows that, unless the NFU can take the benefit of any other defence, Mrs. Parker is entitled to an indemnity in respect of the loss caused by the fire.

It was submitted that the claim for loss of rent was supported by the submission of a sham agreement of Mr. Steele to pay rent of £3,500 per month. It was accepted on behalf of Mrs. Parker that if that document was a sham then, since it had been submitted by Mr. Parker on behalf of Mrs. Parker Mrs. Parker could not recover; see Direct Line Insurance v Khan [2002] 1 Lloyd’s Rep. 364 at paragraphs 43-45. However, in the light of my finding that the agreement was not a sham this potential defence does not arise.

It was also submitted that lies were told by Mr. and Mrs. Parker, in answer to questions raised in the course of the NFU’s investigation of the fire, that two watches were stolen in 2007. However, whilst this was said on behalf of both Mr. and Mrs. Parker by their solicitor, it cannot be said that Mrs. Parker was lying in the sense that she said something which she knew to be untrue. Mr. Parker was lying but since the policy was a composite policy his lie does not prevent her from recovering in respect of her loss.

There remains the alleged breach of a policy condition, observance of which was said to be a condition precedent to recovery under the policy. The General Conditions of the policy provided as follows:

“Your rights to policy benefit

To qualify for benefit YOU or any other person seeking benefit under this POLICY must keep to the terms and conditions of the POLICY.

……….

How to claim

If anything happens which might result in a claim, YOU must do the following:

………

•

provide all the written details and documents that WE ask for; …………”

It was not disputed that this clause rendered the provision of documents asked for by the NFU a condition precedent to recovery under the policy.

By a witness statement signed on 28 January 2010 Mr. Parker asserted that he had sufficient money in the bank to pay for the demolition and reconstruction of Crossfield. His exact words were, having referred to plans for the building of Crossfield: “I’ve got the money in the bank and demolition starts on Monday.”

By two letters letter dated 8 March 2010 the NFU’s solicitors requested Mr. and Mrs. Parker to “provide us with copies of your bank statements for the period October 2009 to date to evidence the availability of funds for the rebuild.” The letters drew attention, expressly, to the obligation imposed by the policy to provide all the written details asked for by the NFU. The NFU reserved the right to treat any failure to provide the information sought as breach of the policy which would entitle the NFU to repudiate any liability which might otherwise have arisen.

Mr. and Mrs. Parker’s solicitors replied to those letters on 6 April 2010 in these terms: “Our clients see no reasons to supply you with complete bank statements. You only want to know if our clients have access to sufficient funds. We therefore attach confirmation from our clients’ bankers that there are sufficient funds available to rebuild.” The confirmation provided was an email dated 9 March 2010 from the Allied Irish Bank to Mr. Parker which stated: “I am pleased to confirm that across the numerous accounts and businesses that you maintain with Allied Irish bank (GB) that you have either access to funds or funding, or that funding could be put in place for you at sufficient level to enable you to generate £500,000, which funding I understand you may require to facilitate a project your are currently considering.”

The NFU say that this was a breach of the condition in the policy that the assured must provide all the written details and documents that the NFU asks for. This was first alleged in the Defence and Counterclaim served on 16 November 2010.

In the course of disclosure in this action Mr. and Mrs. Parker disclosed certain bank statements from Coutts and Allied Irish Bank for October and November 2009 and a statement of a credit card account from Allied Irish Bank for the period October 2009 until February 2010.

It thus appears to be the case that bank statements for the period October 2009 to March 2010 were not provided as requested. Indeed Mr. and Mrs. Parker’s solicitors stated on their behalf that they saw “no reasons to supply you with complete bank statements.” Thus there was a refusal by each of Mr. and Mrs. Parker to supply the documents that had been requested. The email from the Allied Irish Bank was not a bank statement. I must therefore conclude that Mr. and Mrs. Parker did not provide the bank statements requested. (The only bank statements which were later provided in the course of disclosure related to October and November 2009. The credit card statement was not a bank statement showing the availability of funds.) The fact that no reliance was placed upon this failure until service of the defence does not disable the NFU from relying upon the failure. No statement was made before service of the defence waiving the right to claim that a condition precedent had not been complied with.

Mrs. Parker seeks to avoid the consequence of this breach of condition in two ways: first, by saying that the provision in the general conditions making compliance with the NFU’s request for documents a condition precedent was unfair and therefore not binding upon her pursuant to the Unfair Terms in Consumer Contract Regulations 1999 and, second, by saying that the NFU, in breach of an implied term of the policy, unreasonably rejected the claim in breach of the Insurance Conduct of Business Sourcebook (“ICOBS”).

It is common ground that The Unfair Terms in Consumer Contracts Regulations 1999 apply to the policy of insurance in this case. Regulations 5, 6, 7 and 8 provide as follows:

Unfair Terms

5.(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

…………

Assessment of unfair terms

6.(1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods and services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependant.

(2)

In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate-

(a)

to the definition of the main subject matter of the contract, or

(b)

to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.

Written contracts

7.(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language. ……….

Effect of unfair term

8.

(1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.

(2)

The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.

Thus, pursuant to regulation 8, an unfair term in the policy is not binding on the consumer, Mrs. Parker. It was submitted on her behalf that the general condition in the policy which rendered compliance with the NFU’s request to provide such written details and documents as the NFU asks for a condition precedent to Mrs. Parker’s right to benefit from the policy was unfair in that it had not been individually negotiated and caused “a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”; see regulation 5. It was submitted that the general condition was unfair because (i) the requirement to produce all written details and documents was unlimited to any requirement of materiality, relevance or reasonableness, (ii) the condition required strict compliance with the insurer’s request and (iii) the condition precedent to liability created by the general condition automatically discharged the insurer from liability (without the necessity for communication to the assured or opportunity to remedy the breach) however immaterial, irrelevant or trivial the alleged breach might be. It was therefore said that the condition was onerous and non-reciprocal and provided the NFU with the means of avoiding performance of its obligations under the policy.

I was referred to Director General of Fair Trading v First National Bank [2002] 1 AC 481 which concerned the Unfair Terms in Consumer Contracts Regulations 1994, the predecessor of the present regulations. At paragraph 17 Lord Bingham explained the concept of causing “a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”; He said:

“The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in his favour………The requirement of good faith in this context is one fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps.”

Although there are difference in the wording of the 1994 and 1999 regulations I consider that Lord Bingham’s explanation of the 1994 regulations illuminates the 1999 regulations since both contain the concepts of “a significant imbalance in the parties’ rights and obligations arising under the contract” and “the requirement of good faith”.

I am not persuaded that the general condition caused “a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer” such that the general condition is to be regarded as unfair. First, since the assured, rather than the insurer, will be in possession of relevant documents the insurer’s right to ask for relevant documents redresses an imbalance in the possession of relevant documents. The discretion to ask for written details or documents must not be exercised unreasonably. Whenever a discretion is afforded to a party by contract it is an implied term that it must not be exercised unreasonably; see The Vainquer Jose [1979] 1 Lloyd’s Rep. 557 and Gan v Tai Ping Nos. 2 and 3 [2001] 1 Lloyd’s Rep.667 at paragraphs 62-66. It must follow that, at the very least, a request for documents must be relevant to the claim being made by the assured. Second, pursuant to ICOBS 8.1.1. (to which I will refer later in this judgment) the NFU must not unreasonably reject a claim. Thus, the NFU cannot rely upon a failure to comply with the general condition as a reason for denying liability under the policy when it would be unreasonable to do so. Third, it was not suggested that the general condition was not expressed in “plain, intelligible language” as required by regulation 7 or that it did not state clearly the effect of a failure to comply with the terms and conditions of the policy in breach of the requirement of good faith.

It was suggested that the general condition was unfair because it purported to require “strict compliance” with the request for documents and because the condition precedent to liability created by the general condition automatically discharged the insurer from liability (without the necessity for communication to the assured or opportunity to remedy the breach) however immaterial, irrelevant or trivial the alleged breach might be. However, these possibilities are avoided by the obligation on the insurer, pursuant to ICOBS 8.1.1, not to reject a claim unreasonably.

I was referred to Bankers Insurance v South [2004] 1 Lloyd’s Rep. 1 in which it was held (at paragraph 34) that the clause in that case, which had the effect of a condition precedent to liability, caused a significant imbalance in the parties’ rights and obligations because it may “deprive an assured of the benefit for which he bargained or provide the insurer with a bonus, simply because the insured has transgressed procedurally, but without prejudice to the insurer.” However, in my judgment that reasoning is inapplicable once account is taken of ICOBS. Reliance upon a mere procedural transgression which did not prejudice an insurer to reject a claim would be unreasonable and therefore beyond the insurers’ powers.

For these reasons I do not consider that the general condition was unfair. It follows that it is binding upon Mrs. Parker. It did not cause a significant imbalance in the parties’ rights and obligations.

ICOBS rule 8.1.1 provides as follows:

“An insurer must:

……

(3)

not unreasonably reject a claim (including by terminating or avoiding a policy).

ICOBS rule 8.1.2 further provides:

A rejection of a consumer policyholder’s claim is unreasonable, except where there is evidence of fraud, if it is for:

……..

(3)

breach of warranty or condition unless the circumstances of the claim are connected to the breach ………….

It was submitted that the provisions of ICOBS were implied terms of the policy of insurance by reason of “necessity”. This submission was not developed. It was opposed by counsel for the NFU who said that there was no necessity to imply ICOBS into the policy because the regulatory scheme crated by the Financial Services and Markets Act 2000 provided its own remedy; see section 150(1) which provides that a contraventions of ICOBS “is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.”

The aim of ICOBS is to promote standards in the insurance industry. They are binding upon the insurers and a civil action exists for breach of ICOBS. They may also be enforced by disciplinary action and by rulings of the Financial Ombudsman Service; see MacGillivray on Insurance Law 11^th.ed. para.17-105 (and the second supplement).

The scheme of the Financial Services and Markets Act 2000 does not purport to make the standards of conduct set out in ICOBS implied terms of policies of insurance (cf the Sale of Goods Act which makes certain of its provisions implied terms of contracts of sale). However, those standards are legally binding upon the NFU and can be enforced by civil action. In those circumstances, whether or not they are implied terms of the policy, the NFU cannot claim to be entitled to exercise a right to reject a claim under a policy of insurance otherwise than in accordance with those standards.

The court must therefore consider whether the NFU’s rejection of the claim based upon Mrs. Parker’s breach of the general conditions was unreasonable.

This is a case where, in the language of ICOBS 8.1.2(3), the breach of condition was connected to the breach. The NFU considered that there was evidence that the fire was deliberate and that Mr. Parker was involved in it. The bank statements requested by the NFU were relevant to the question of motive. This is not therefore a case where the NFU’s rejection of the claim is deemed to be unreasonable pursuant to ICOBS 8.1.2.

Further, I do not consider that the NFU’s rejection of the claim based upon the breach of condition was unreasonable. When making the request for information the NFU’s solicitors drew attention, expressly, to the obligation imposed by the policy to provide all the written details asked for by the NFU and reserved NFU’s right to treat any failure to provide the information sought as a breach of the policy which would entitle the NFU to repudiate any liability which might otherwise have arisen. This was a clear warning as to the consequences of a failure to provide the requested information. In circumstances where the request was made in the context of the NFU’s investigation of the fire, where the NFU was concerned that the claim might be fraudulent and where Mr. Parker had said that “I’ve got the money in the bank and demolition starts on Monday”, the request for bank statements was relevant and connected with their concerns. The response to the request was a refusal to provide the requested bank statements. Mrs. Parker did not say she was unable to provide the requested bank statements. She refused to do so. Instead, an email from the Allied Irish Bank was provided. That email did not state what was in the bank account. Instead it said that Mr. Parker either had “access to funds or funding, or that funding could be put in place for you at sufficient level to enable you to generate £500,000, which funding I understand you may require to facilitate a project you are currently considering.” This answer said nothing about how much money, if any, was “in the bank”. Thus the email provided in lieu of the requested bank statements did not supply the information which would have been contained in the bank statements.

The rejection of Mrs. Parker’s claim on the grounds of her failure to comply with the condition of the policy has, or may have, serious financial consequences for Mrs. Parker but in the circumstances of this case the rejection was not unreasonable.

It follows that Mrs. Parker’s claim for an indemnity must be dismissed. Her failure to comply with the terms and conditions of the policy means that she does not “qualify for benefit” under the policy.

It is unnecessary, in the light of my conclusion, to make a declaration as to the NFU being subrogated to the rights of Mrs. Parker as against Mr. Parker upon payment of Mrs. Parker’s claim. However, in the event that my decision dismissing Mrs. Parker’s claim to an indemnity for breach of the terms of the policy is wrong and she is in law entitled to recover an indemnity from the NFU I would hold that the NFU, on payment to Mrs. Parker, would become subrogated to her rights against Mr. Parker and entitled to recover from damages from Mr. Parker in the sum of the NFU’s liability to Mrs. Parker; see Samuel v Dumas [1924] AC 431 at p.445-446. It was said that there was no authority for a “pre-payment declaration of entitlement to be subrogated.” However, in circumstances where (i) the right to be subrogated arises on payment, (ii) Mr. Parker would be liable to Mrs. Parker for the damage he caused to her property and (iii) the making of a declaration would avoid the need for fresh proceedings to be issued by the NFU against Mr. Parker it would, in my judgment, be just and convenient to grant the declaration sought.

On the basis of my findings the NFU is entitled to judgment on its counterclaim against Mr. Parker in respect of its claim for restitution of the sums paid out in respect of the 2007 watches claim together with compound interest thereon. The court has jurisdiction to award compound interest pursuant to its jurisdiction in equity.

The NFU is also entitled to damages in respect of its costs of investigating the fire together with simple interest. That was not disputed.

It is unnecessary for the court to make findings as to the quantum of the claim but in case my decision rejecting the claims of Mr. and Mrs. Parker is wrong I shall set out shortly what my findings would have been.

It was common ground that the measure of indemnity was, pursuant to the terms of the policy (in circumstances where Crossfield was not replaced but a rather different and larger house was built), the lesser of the cost of repair or replacement and the loss in market value. The costs of repair or replacement were agreed in the sum of £538,681.77. The NFU said that there was no loss in market value with the result that the measure of indemnity was nil. The Claimants said that the loss in market value was £700,000 with the result that the measure of indemnity was £538,681.77.

Each side’s case stemmed from the evidence of an expert valuer. Mr. and Mrs. Parker called Mr. Greene of Strutt and Parker. The NFU called Mr. Adams-Cairns of Savills. I considered that each witness was qualified to express an expert opinion and that each did so carefully and conscientiously.

Mr. Greene thought the market value of Crossfield before the fire was about £1.2m. In reaching that view he relied on a number of comparables adjusting them as necessary to reflect certain features of the property. Mr. Adams-Cairns thought the market value of Crossfield before the fire was about £925,000. In reaching that view he relied on one comparable only but he also relied on evidence that in April 2007 an offer was received for Crossfield in the sum of £900,000. He adjusted that downwards for the fall in values between 2007 and 2009 but adding something for the increase in value likely to be caused by the grant of planning permission in 2009. Mr. Greene did not think that the offer history was sufficiently firm to be taken into account.

I consider that the offer history, although in an email sent some time after the event, was a relevant matter to be taken into account. Similarly, I consider that the other comparables identified by Mr. Greene ought to be taken into account notwithstanding that none can be described as a good comparable.

In those circumstances I consider that the value of the property before the fire is best to be judged as falling about midway between the two valuations, that is about £1,050,000.

Mr. Greene considered that the value of Crossfield, or rather the site on which the ruin sat, after the fire was about £500,000. He formed this opinion by using the “residual valuation method” set out in a paper of the RICS. The method is found in a computer programme used by all the major valuers. However, Mr. Greene was not able to explain with clarity how the programme worked or how it produced a “residualised price” of £522,713 for the site in question. Further, he accepted that the residual valuation method was extremely sensitive to the inputted figures and that the results should therefore be treated with caution. He therefore took into account certain comparables but none related to December 2009. That was because the market for development land was very poor at that time. Mr. Adams-Cairns considered that the value of the site after the fire was between £950,000 to £1,000,000. He reached that opinion having considered several comparables. However, none was contemporaneous with the period in question and so they had to be adjusted to reflect the change in the market between December 2009 and the date of the comparables, August to October 2011. Also, there were differences in the size of the plot and none had planning permission. He thought that the residual method should only be used when there were no reliable comparables. Moreover, he thought that the plot on which Crossfield sat might be sold to a private purchaser, not to a developer who would not require to see a profit on the transaction (which is what the computer programme allowed for).

The valuation of the site after the fire is particularly difficult because, having regard to the poor state of the market, there was no reliable, contemporaneous comparable.

I was left in doubt that the residual valuation method gave a reliable value. On the other hand in the absence of contemporaneous reliable comparables (because the market for development was so poor at the time) it must be a starting point. The comparables used by Mr. Adams-Cairns, adjusted to take account of the movement in the market, suggested a value of between £950,000 and £1,000,000. That is almost double the £500,000 value suggested by the residual valuation method. I consider it to be very optimistic given the state of the market at the time.

Doing the best I can on the meagre material available to assess the value of the plot in December 2009 post-fire I consider that it was about £625,000. That reflects the possibility that a private buyer might have been found who was willing to pay more than the “residual valuation”. That appears to have happened with the comparable noted by Mr. Greene when a dilapidated house was offered in September 2009 for development at up to £650,000 but was sold to a family for £720,000. I have therefore increased the residual valuation to reflect this possibility.

It follows that the reduction in market value as a result of the fire was about £425,000 (£1,050,000 - £625,000). Since that is less than the agreed costs of reconstruction it would represent the measure of the NFU’s liability to indemnify in respect of the damage to Crossfield.

For the reasons already given there was no prospect that Mr. Steele would pay the agreed rent of £3,500 per month. It follows that no rent was lost by reason of the fire.

The quantum of the contents claim was agreed in the sum of £20,000.

For the reasons I have given the claims of Mr. and Mrs. Parker must fail and the counterclaim of the NFU against Mr. Parker for restitution of the sums paid out in respect of the 2007 watches claim must succeed, as must the claim for damages in respect of its costs of investigating the fire. I shall ask counsel to agree the quantum of the successful counterclaim.