Yeganeh v Zurich Plc

This is a claim under a buildings and contents insurance policy. The Claimant’s house burned down and he seeks the cost of reinstating the building and of the contents which were lost and destroyed. The Defendant insurance company denies liability claiming that the Claimant deliberately caused the fire and made a fraudulent claim in respect of his losses.

The Claimant is a property owner and developer. In August 2006 he purchased Whitefriars, Salthill Road, Fishbourne Village, Chichester, West Sussex, a large two storey house set in about one acre of land. On the night of 14 September 2007 there was a large fire at the property. The cost of reinstatement, including the expense of scaffolding is over £270,000.

On 28 September 2006 the Claimant entered into a policy of insurance with the Second Defendant (“Zurich”) covering, in conventional terms, damage to property and contents caused by various perils including fire. The First Defendant has played no part in this case so I will refer to Zurich simply as the Defendant. It is agreed that the terms of the policy are as set out in the Notice of Renewal and in a written Home Solutions Insurance Policy. Among the “Conditions which apply to the whole of your Policy” are three provisions relied on by Zurich:-

No point of law arises about the wording of the policy. Mr Maxwell-Scott for Zurich submits that the wording follows the general law which requires that as soon as there is any fraud in the claims process the whole insurance claim is fraudulent (see Axa General Insurance Ltd v Gottlieb [2005] EWCA Civ 112, CA). Mr Elkington for Mr Yeganeh accepts that that is the legal position. He emphasises, by reference to a passage from MacGillivray at 16-2 that fraud is “a serious allegation, which must be clearly substantiated, and must not be confused with carelessness, however gross that may be”. He also emphasises that whilst the standard of proof for fraud is the balance of probabilities the more serious the allegation the less likely it is to have occurred and hence the stronger the evidence should be before the court concludes that the allegation is established. He relies upon observations by Stuart-Smith LJ, in an insurance context, in The Ikarian Reefer [1995] 1 Lloyd’s Rep. 459. Mr Maxwell-Scott in turn submits by reference to The Captain Panagos DP [1989] 1 Lloyd’s Rep. 33 at 43, CA that it is unlikely that there will be any documentary or other direct evidence of an insurance fraud and it is open to the court to draw appropriate inferences from the circumstantial evidence.

Mr Yeganeh owns over 50 properties as part of his business. He was 38 years old at the time of the fire on 14 September 2007. In October 2005 he was living in a flat in Southsea. He began a relationship with Ms Tina Courtnell who lived with her daughter in a house in Portsmouth. As Mr Yeganeh spent more time at Ms Courtnell’s house he rented out his flat in May or June 2006 leaving some furniture behind and moving the rest to Ms Courtnell’s house. Mr Yeganeh bought Whitefriars in August 2006.

Whitefriars is a detached two storey, four bedroom brick house with a hipped tiled roof and ground floor extensions to the east and west. There are two entrance doors to the ground floor. Behind one is a hallway with a timber staircase leading up to the first floor on the left hand side. From the hall there are doors leading off to the living room, to the dining room used as an office, and to a store room, to a second living room which leads in turn to a porch, the kitchen, the sun lounge and into the study. There is a cloakroom behind the stairs. On the first floor the stairs lead to a landing. This leads to a cloakroom above the one on the ground floor and then a bathroom, three bedrooms, one with an ensuite bathroom, and from there on to a balcony.

After the purchase Mr Yeganeh moved in to Whitefriars some of the furniture and belongings that he had kept at Ms Courtnell’s house. This was so that he could stay there occasionally. But he continued to spend most of his time at Ms Courtnell’s house. In September 2006 the Claimant sold his flat in Southsea and moved the furniture he had there to Whitefriars. On 29 September 2006 the Claimant received planning consent to build a single storey rear extension at Whitefriars. He apparently changed his mind about this work as in January 2007 he applied for permission for a different extension providing attic rooms and a new front porch and this was granted in March. On 19 March 2007 planners acting for Mr Yeganeh made a preliminary enquiry about subdividing the land at Whitefriars to enable him to build an additional house of similar size. On 30 March Chichester District Council replied making clear that for a series of reasons this further development would not be permitted. At about this time the Claimant and Ms Courtnell split up. The Claimant moved the belongings he had in her house to Whitefriars and says he began to live there on a more permanent basis. The Claimant says that he spent time in a hotel he owned in Portsmouth and also in London with a cousin. The Claimant and Ms Courtnell say that in May 2007 they got back together and decided to live at Whitefriars. They recall that they decided that before moving in and while considering what alterations to make to the house they would redecorate, stripping some rooms and painting others white.

It is unclear quite how much time Mr Yeganeh and Ms Courtnell spent at Whitefriars. Unfortunately, the Claimant made untruthful claims to Chichester District Council to evade Council tax. On 5 February 2007 he wrote:

“Building works are due to take place very soon on this property as it is currently uninhabitable, not just empty ...”

Mr Yeganeh had become responsible for Council Tax on 8 August 2006. On 19 October he applied for empty property exemption with effect from 8 August. That exemption lasts for a maximum of six months. On 7 February the Claimant wrote to the Council. On 1 March 2007 the Claimant applied for exemption due to building works. This was to be carried out by a firm owned by Mr Yeganeh and /or his business partner Mr Chris Burt. He provided correspondence from the firm to confirm this on 22 March and was exempted from tax from the date the work was due to start on 22 April 2007. On 31 May 2007 the Council approved the structural design details for the proposed improvements. It was not until 17 October 2007 after investigations into the fire were well underway that Mr Yeganeh telephoned the Council to say that the works were never started and that he moved into the property on 30 April 2007 as sole occupier. At that point the Council were waiting for Mr Yeganeh to apply for single resident discount.

Ms Courtnell recollects that she often spent weekends at Whitefriars with Mr Yeganeh and her daughter, it being a pleasant place to visit particularly in the summer time. She recalled that he also spent time at Whitefriars during the week. There is no clear picture of how much time Mr Yeganeh spent at the property. He seems to have told the Fire Brigade that he only went there to collect the mail. He told Zurich that he was there ‘most days’.

The decoration work was to have been done in July but the painter, Mr Cyril Burt, the father of Mr Yeganeh’s business partner, was unable to attend to this because of his health. The Claimant arranged for the decoration to be carried out in September by Mr Steve Patrick. Preparations were made for this work. Some of the photographs confirm that before the redecoration started Mr Yeganeh placed some old furniture at the bottom of the garden to be burnt. He grouped other possessions together in the middle of rooms and covered them with old sheets and curtains. This exercise included placing clothes and other items on the double bed in the middle of the master bedroom. Mr Patrick, who did not give evidence for either party, started work. The Claimant says that he stayed at Ms Courtnell’s house whilst the redecoration work was carried out. By 14 September the work was largely finished apart from some internal woodwork.

The Claimant visited Whitefriars in the afternoon of 14 September in order to do some work which involved his computer. He recalls that when he left he inadvertently left his laptop behind and so he returned to fetch it that evening around 7pm.

At about 11.30pm a policeman in the area noticed smoke and called the fire brigade. There was a major fire. Four fire engines were needed before the fire was brought under control just before 5.00am. So much water was needed to put out the fire that the rear garden was found to be still saturated three days later. The police sergeant who called the fire brigade forced the front door open but did not go further because of the severity of the fire. He broke a pane of glass in the nearby French doors and also in the similar doors at the back. He told Mr Brown, the Fire Brigade Investigation Officer that, apart from this, the house was secure. A green petrol container was found on a worktop away from the corridor where the fire probably started and this was empty or almost so. Mr Yeganeh told the Defendant’s expert, Mr Fuller that the container had petrol for the lawnmower (but apparently in his first statement said that it was for a boat he used to own).

The experts agree that the fire originated in the ground floor hallway close to a radiant halogen heater which was connected to the mains electricity supply by an extension socket. The lead was connected to a single socket on the edge of an understairs cupboard. A telephone base unit and an internet wireless router were also plugged in to the extension socket. Mr Yeganeh had apparently obtained this heater from Ms Courtnell so that it could be used by the decorators to help ventilate rooms and dry the paint. Mr Yeganeh recollected that the heater was originally on the first floor but he decided to move it into the hall as the weather was turning cold and the decorator could use it when painting the woodwork. The hall also contained some bags of waste resulting from the redecoration piled up close to the heater. Mr Yeganeh says that the extension lead would have been plugged in because it would have been used to operate the computer.

From the work carried out by Mr Brown and his colleagues and from their own observations the experts agreed about some features of the fire. It was not caused by an electrical fault or by smokers’ materials. On the evidence available to the experts Whitefriars was secure before the fire so the fire could not have been deliberately started by an intruder. There was no evidence of multiple points of ignition which sometimes characterise a deliberate fire. It is possible that a flammable liquid was used to help the fire along but there is no reliable evidence either way. There was no forensic investigation of the site immediately after the fire. Mr Brown’s Fire Investigation Report dated 19 November 2007, albeit brief, ticked, under “Supposed Cause” the Accidental not the Deliberate box.

The fire caused extensive damage to the upper part of the house. The roof was totally destroyed and large sections collapsed into the bedrooms below. The staircase was completely destroyed and the hallway greatly damaged. The downstairs rooms were affected by smoke and soot but not damaged greatly by fire itself. These rooms were, however, severely affected by water damage resulting from the efforts of the Fire Brigade to extinguish the fire.

As the photographs graphically illustrate this was a substantial fire but it is unnecessary to describe the damage in greater detail as the cost of reinstatement has been agreed by experts for the parties at £226,055.98 plus VAT. The Claimant has also incurred scaffolding costs of £46,294.40. There is a claim for the cost of alternative accommodation which is not much in dispute. This is for the cost of a house in Portsmouth rented by the Claimant for £1,250 per month until October 2008 and £600 per month after that. There is a claim for contents of £51,253.81 (after taking account of some uncontroversial adjustments). However the limit of cover under the policy for contents is £40,000.

On 17 September 2007 insurers appointed Davies Loss Adjusters. They retained Mr John Fuller of Burgoynes who carried out inspections of the scene and of the heater over the next few days. Munters, loss restoration specialists appointed by insurers, made visits to Whitefriars. Mr Yeganeh visited the site and on 16 October 2007 gave a statement to Mr Pedley of Zurich. On 19 October Mr Yeganeh wrote to Zurich to complain about aspects of the statement process and to make some amendments. The dispute about the process is irrelevant to the issues the court has to decide but, as I pointed out at trial, it seemed to me that Mr Yeganeh’s approach was a reasonable one.

In mid October Mr Yeganeh appointed Morgan Clark, claims consultants to act on his behalf. Zurich asked the Claimant to prepare his schedule of contents of the property. This was uncontroversial for the contents of the ground floor because these were capable of being inspected and had already been listed by Munters. The contents of the first floor were more difficult to list because, as a result of the fire, there was no access except through a window.

In his witness statement taken by Zurich, which he corrected and approved, Mr Yeganeh said this:

“Two of the bedrooms upstairs had furniture/contents in and again, it was all placed in the centre with sheeting and old curtains over it the protection of the furnishings in each room was still in existence as I was waiting for a separate painter to come ...

I have not as yet provided an itemised list of items that were upstairs but there was my diving gear, skiing gear, clothing, an ironing board and an iron together with personal belongings.

All of my contents were in the house. I do not have any other contents stored elsewhere, except 3 watches which I keep in a safe at the hotel.”

On 14 December Morgan Clark submitted a draft schedule of Mr Yeganeh’s contents claim followed up on 18 December by “the latest draft version of the contents claim. The claim is based upon the disposal list provided by Munters and the first floor contents are based on the Insured’s recollection of what was there at the time of the fire”. Mr Yeganeh emphasises that this was inevitably only an estimate.

These Contents Schedules each contained 13 categories of items found on the first floor to a value of £12,465 including 7 Boss suits at £500 each and 30 Boss and Armani shirts at £92 each.

On 21 December Mr Yeganeh went to the house with Mr Fuller and explained to him that the contents of the master bedroom had been placed in a heap on and next to the bed. The heap had been covered by a blanket or something similar. Nothing had been hanging on the clothes rail. Mr Fuller could find no trace of any of the claimed clothing apart from some sports clothing, one pair of trousers and two velvet suits without labels. There is a difference of recollection between Mr Yeganeh and Mr Fuller about the meeting to which I will return. Mr Fuller examined what he could see of the room and went over the bed itself and also a channel about a foot wide all round it. He spent about an hour and a half on this task but saw no other items of clothing on the bed or in the channel or protruding from the debris in other areas of the bedroom. His view was obstructed to some degree by hanging debris as the ceiling had fallen in.

On 2 May 2008 Zurich wrote to Mr Yeganeh’s then solicitors voiding the policy of insurance from 14 September 2007 and declining to meet any losses. The letter relied on the fact that Zurich did not consider “that the fire was fortuitous so far as Mr Yeganeh is concerned and was caused deliberately either by him or someone acting on his behalf”.

Zurich also claimed that for reasons set out in the letter “Mr Yeganeh has lied in the claims process to exaggerate his claim and this was in breach of General Condition 4 and in breach of the general duty of utmost good faith”. These allegations were firmly denied.

On 18 July 2008 Mr Clifford Christie of Geoffrey Hunt & Partners, the expert instructed by Mr Yeganeh went to the house and inspected the master bedroom. He found numerous items of clothing not identified by Mr Fuller. As the photographs show Mr Christie found well over 50 items. He also recovered the remains of a further 50 or so items of clothing which had been damaged by the fire so much that they could not be individually identified.

Mr Christie moved large items of overhanging debris and also examined what was spread across the floor. Mr Fuller had done neither of these things not expecting to find anything there given what Mr Yeganeh had told him about the whereabouts of the clothes and other contents.

Mr Christie, like Mr Fuller, is an experienced and able expert of unquestioned integrity. Mr Yeganeh twice gave to Mr Christie halogen heaters which he said were identical to that which he took to Whitefriars. Mr Yeganeh was clearly wrong in saying that but it is right to say that the different makes are extremely similar and easy to confuse with each other.

Zurich sought documentary records to show the purchase of the clothing lost in the fire and that purchased in replacement afterwards. I accept that Mr Yeganeh might well not have kept receipts for months and years in the period leading up to the fire, few of us would. Shortly before the trial he submitted bank statements and receipts on which he had highlighted entries “relating to clothing”. He was cross-examined about these records. He put forward as having been purchases of clothes, entries which ,when examined, turned out to be for money spent on bars and restaurants, civil enforcement agents, an hotel, a skiing holiday, a withdrawal of money from a bank in Bulgaria and expenditure at the Goodwood Club. These records also contained genuine records of clothes purchases, 18 transactions, totalling £2,289.65 in 38 months.

Apart from some handwritten receipts from Mirage, a clothes shop, which though puzzling on their face, were not the subject of any evidence from Zurich, there are no records of purchases made to restock Mr Yeganeh’s wardrobe after September 2007. While one might not expect to receive receipts in the pre fire period it is surprising that Mr Yeganeh did not collect these when he knew that a claim would be put forward for his lost clothing.

The trial took place over four days from 22 March. The court heard evidence from Mr Yeganeh and Ms Courtnell for the Claimant and from six witnesses for the Defendant.

Mr Yeganeh was adamant that he had not set fire to the house and that he had no motive to do so. He said that when he brought the heater down from the first floor there was a lot of decorator’s debris and he may have inadvertently placed it at a slight tilt because of something under the base, a possibility which was illustrated by a demonstration in court from Mr Elkington. As a result of using his broadband connection two days before the fire he would have switched on, at the hall/stairs socket, an extension lead which had the heater plugged in. The heater produces a bright visible light as soon as it comes on. It did not come on while Mr Yeganeh was in the house on the day of the fire.

He pointed out that a “clotheshorse” referred to by the experts is in fact a small shoe rack. He said that the heater was not on when he walked through the hall to leave the house. He said that the front door used to stick slightly because of the draught excluder around the edge and this would cause him to slam the door slightly when closing it.

Mr Yeganeh said that he was very keen on clothes and goes shopping two or three times a month. He said that he now has in his wardrobe about the same number of items as he had before the fire. The initial list was put together from memory as he did not have access to the first floor. If some of the items claimed are not exactly right they are what he honestly believed was present at Whitefriars and destroyed in the fire. He said that at the meeting in December 2007 Mr Fuller had seemed in a hurry and unenthusiastic about doing the task so close to Christmas.

In cross-examination Mr Yeganeh accepted that he had been untruthful about Council Tax. He also accepted that he had made “mistakes” when highlighting items in his bank statements and similar records as being purchases of clothes. He accepted that he had now twice provided Mr Christie with a heater on the basis that it was identical to that used in the fire. In fact neither heater was identical. He denied a number of allegations put to him by Mr Maxwell-Scott to which I will refer when summarising the final submissions of the parties.

Ms Tina Courtnell finally separated from Mr Yeganeh in 2008. She described the growth and deterioration of her relationship with Mr Yeganeh between 2006 and 2008. She explained that he had a lot of clothes and that these had largely filled the spare room of her house at one time. In 2007 they would both stay at Whitefriars for the “occasional weekend” and Mr Yeganeh would stay there from time to time during the week. Ms Courtnell recalled that she and Mr Yeganeh had spent an hour and a half at the house the day before the fire. Mr Yeganeh had not recalled this.

The Defendant called six witnesses. Mr Lol Pedley and Mr Antony Rawlins are investigators with Zurich. Mr Dennis Young and Mr Gavin Lindsell work as loss adjusters for Davies. These four witnesses dealt with the investigation of the claim and events leading to Zurich’s decision to void the policy. It was clear from their evidence and from the documents which had been disclosed only on the eve of and during the trial that initially Zurich had concluded that this was an accidental fire or, at the least, not one which they would allege had been deliberately caused by Mr Yeganeh. These issues were important to the parties as they have dominated events leading up to the trial. By the hearing the relevant evidence which these witnesses had to give was largely uncontroversial.

The Defendant called Mr John Leach, a neighbour of the Claimant. From what he could see Mr Yeganeh did not live at Whitefriars full time and would go there perhaps two or three times a month. Whitefriars did not have the look of a property “that was being lived in”. Mr Leech referred to the decorating job being carried out for Mr Yeganeh as being “slap dash” but this appeared to refer only to the fact that the Claimant had chosen to paint everything white and not in a more imaginative selection of colours and hues. Mr Sean Pople, another neighbour, gave evidence by witness statement and produced some striking and helpful photographs of the fire and of the Fire Brigade tackling the blaze. Evidence from another neighbour, Mr Philip Haddow was in the event agreed.

Mr Michael Bedford of Bedfords and Mr James Jamieson of Thompson Cole, chartered surveyors, produced a joint memorandum recording their agreement on the relevant issues. As a result neither expert was called.

I have already referred to the helpful evidence the court received from Mr Christie and from Mr Fuller. As I have pointed out both experts provided admirable assistance and I have no reason to doubt their expertise. Mr Fuller’s experience appears to be even greater than that of Mr Christie.

I have referred to the agreement of the experts that the fire could well have been caused by the ignition of combustible waste material caused by the halogen heater in the hall. The experts also agreed that if this had happened the waste materials must have been very close to or touching the front of the heater.

They also agree that for the heater elements to be energised the on/off button must be in the “on” position and the trip switch at the base of the heater be engaged. That means the switch contacts are closed allowing current to pass to the elements. The trip switch operates when the heater is tilted to a certain extent so that the contacts open to prevent the passage of current. It is also agreed that the switch contacts move from closed to open and from open to closed at the same position. It is possible that if the heater is switched on but tilted so that the switch contacts have only just opened a very small and even imperceptible movement of the heater may cause those contacts to close and for the heater to go on.

Mr Fuller considers that it is most unlikely that the heater could have been in that unique position. In his view if the heater was tilted further than the position at which the tilt switch contacts would open it is unlikely that any significant slumping of material upon which the heater rested would have occurred on the day of the incident only a few days after the heater was placed in the hall. Mr Christie finds it impossible to estimate the likelihood of this scenario arising because of the factors on which it depends.

Neither expert was aware of a comparable case where an accidental fire had started following a tilt switch, which had caused an ‘on’ heater to be ‘off’, being caused to switch it back ‘on’.

Having read the reports and heard the experts I consider, without as yet addressing submissions about the surrounding facts, that it is possible but very unlikely that an accidental fire would be started because a heater, switched on, was in the unique position where it was tilted so that it was ‘off’ but could, as it were be untilted to come back on again. The heater would have to be left on but tilted so it was ‘off’ but at one unique position. It would have to be close to inflammable material and also on that material or perhaps on a ridge of carpet. The heater would have to be tilted back again imperceptibly by movement of the waste material or perhaps slamming of the door. It would have to happen uniquely on the night of 14 September despite opportunities for it to occur over the previous couple of days. It is common ground that only an imperceptible movement of the heater is required to cause it to energise. It is only the fact that the slamming of the door or other very minor movement might be enough to untilt the heater that leads me to conclude that this cause is very unlikely rather than impossible.

Mr Elkington, Counsel for Mr Yeganeh, points to well known indicators of insurance fraud being wholly absent in this case. The cover had been in place for over a year and there had been no increase in the sums insured which were not excessive. There was no delay in notification and Mr Yeganeh was cooperative throughout. There was no suggestion from the Police or the Fire Service that the fire was started deliberately. Mr Yeganeh has never sought cash payment but only reinstatement. He has no adverse insurance history or mortgage arrears and is in no financial difficulty. It is improbable that he would put so much at risk to commit a serious crime. He would not have redecorated a house before he burned it down or removed furniture and placed it in the garden reducing the value of any claim. He would not have driven up to the house in daylight, he would have committed the crime at night and would not have left petrol containers in the house and garden. The suggestion that Mr Yeganeh might burn down the house to increase his options for the site does not stand up. By the time of the fire he had been told that he could not build a second house on the site and his evidence was that he already knew this when he bought Whitefriars. An indemnity under the insurance policy would not have changed his planning position. There was no reason to doubt the evidence of Mr Yeganeh or Ms Courtnell that they had planned to live in Whitefriars as their home and had loved the original features at the house which would be and were destroyed in the fire.

There were several possible causes of the fire. Although the experts agreed on the material before them that Whitefriars was secure before the fire, arson by an intruder could not be excluded. This would have been easy as Whitefriars is in a remote location and the fire occurred at night. The police sergeant has never been interviewed and not all the forcing of the doors and windows found by Mr Fuller was explained by Sergeant White. Mr Fuller reported that it was “unlikely” that the fire was caused by an electrical fault but this remains a possibility. The next possibility is accidental combustion with materials by the heater which, as Counsel’s demonstration showed, can be triggered by a slight wrinkle in a carpet, with material close to or against the heater.

Finally, Mr Elkington points out that when presented with more than one possible cause of the fire the law does not permit or require the court simply to choose the one which it considers the more likely. He cites The Popi M [1985] 1WLR 948 where the House of Lords was not able to endorse the reasoning of Mr Sherlock Holmes that “When you have eliminated the impossible, whatever remains, however improbable, it must be the truth”. As Lord Brandon points out at 955H “A judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. No judge likes to decide cases on burden of proof if he can legitimately avoid having to do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on a burden of proof is the only just course for him to take.”

Mr Maxwell-Scott, Counsel for Zurich, submits that in the light of the expert evidence there are only two possible causes of the fire; an accident resulting from the positioning of the halogen heater or deliberate acts by the Claimant. The accident theory is improbable. The explanation that a heater was brought to Whitefriars to dry a room out after painting is not credible and the suggestion that the heater was one of two identical models bought by Ms Courtnell is untrue. There was no reason for the heater to be placed at the ideal point for starting a large scale fire. The Claimant should have seen that the heater was on when he brought it downstairs and there is no good explanation for why he plugged it in. Furthermore the ingredients for such an accident were all in place two days before the fire. Further by 14 September any settlement of the materials on which the heater may have been placed would have occurred and the Claimant and others would have been in and out closing or slamming the door in that period. The fact that the accident could only occur if the heater was in a unique position makes the theory wholly implausible.

The Claimant is a dishonest person as his evidence about clothing purchases and his conduct over the Council Tax demonstrates. He would have no qualms about burning Whitefriars down. The Claimant was not happy about Whitefriars in the state in which he purchased it. He obtained two planning permissions and enquired about selling off part of the land and building an additional dwelling. His decision to whitewash every wall does not fit in with what he said about his taste in decoration.

It is for the Defendant to show that the Claimant started the fire and to do so clearly given the seriousness of the allegation. I bear in mind the legal principles referred to above and also recognise that if arson is committed it is most unlikely to be documented.

There is no direct evidence that Mr Yeganeh started the fire. As the incident was not regarded as suspicious by the Fire Service or by the Police, or initially by the Defendant, the forensic analysis was limited. There are doubts about the honesty of Mr Yeganeh and the truthfulness and accuracy of his evidence. There is however no evidence to contradict or undermine his denials of guilt and his statements about where he was and what happened in his presence. There is no evidence of multiple points of ignition but arson is not always started in that way. The experts agree that it is possible that a flammable liquid was used to encourage the fire but there is no physical evidence of that.

Although Mr Elkington sought in cross-examination to advance the case for arson by an unknown intruder or accident caused by electrical fault the material he relied on was thin. Further evidence has not undermined the experts’ joint view about that. One is left, as Mr Maxwell-Scott submits, either with accident due to the operation of the tilt mechanism of the heater, or with a deliberate act by Mr Yeganeh. As I have found, it is possible but very unlikely that the fire was caused by the accident of the halogen heater.

Mr Yeganeh has never sought the funds to reinstate the house and in evidence said that if he were successful he would use the money only for this purpose. Mr Elkington’s list of reasons why Mr Yeganeh would not wish or have a motive to burn down his house is a powerful one. The most likely motive for arson by Mr Yeganeh would be connected with his hopes to develop the property to build another house. I was unconvinced by his evidence and that of Ms Courtnell about their personal commitment to Whitefriars and as it happens a relationship which had its ups and downs ended finally in early 2008. It is fanciful to suggest that the decision to paint the house white was a sign that Mr Yeganeh did not intend to keep and develop it as his home. Furthermore it is difficult to see how arson followed by reinstatement of the house would advance any planning ambitions Mr Yeganeh had for the site. Of course people do unwise things sometimes for silly reasons but, owning so many properties and being involved in development, Mr Yeganeh probably has good knowledge of the planning realities.

Despite the absence of direct evidence of arson I might, had there been sound evidence of a motive for Mr Yeganeh to burn down his house, have concluded that this was arson because the likelihood of the only other possibility, accident with the halogen heater, was so remote. However given that lack of motive, the burden of proof and the guidance given in The Popi M, I find that Zurich has not proved that Mr Yeganeh burned down the house. Arson is a very serious crime in quite a different league, in terms of execution as well as gravity, from making dishonest claims for payment or to save money.

It is important to be clear what this allegation amounts to. Zurich says that Mr Yeganeh knew when he submitted the Contents Schedule on 14 December 2007 and the Revised version a few days later that they claimed for items which had not been present at Whitefriars at the time of the fire and had not been damaged by it. Zurich relies on the limited findings of clothing made by Mr Fuller in his investigation. Mr Yeganeh counters this with his evidence and in particular by what Mr Christie found on his visit made in July 2008 after Zurich had refused cover in May.

The experts addressed the fact that although Mr Yeganeh’s evidence was that all the clothing had been on the bed, many items were recovered by Mr Christie from debris all over the room.

Mr Christie considered that these items could originally have been on the bed and have been moved to other areas by the action of high pressure water from the hose reels pointed into the room during fire fighting. In Mr Fuller’s view high pressure hose reels would not have moved the items from the bed. Mr Fuller thought it likely that the fire spread into the master bedroom as a result of burning roof timbers and tiles collapsing through the ceiling. These were heavy and present throughout the room and covered any items that were present in that room before the collapse. The timbers and tiles would have prevented items present in the bedroom before the collapse from being moved by the force of fire fighting water. He also considered that any jet of water would have moved those items on the outside of the pile on the bed which would be those most severely affected by the flames. So they would have been severely charred. Yet among the items found by Mr Christie were three pairs of shoes that had suffered little or no damage.

Mr Christie considered that it was more likely that there was a progressive roof collapse. At least one of the photographs shows a fire in the bedroom at the same time as a fire in the roof. The fire in the master bedroom was intense and Mr Fuller found only part of the bed covered by curtains or blankets. In response Mr Fuller pointed to the absence of any items of clothing in the channel of a foot or so which he had cleared on all four sides of the bed.

Neither witness had any experience of clothing or similar items being moved across the room by water in the way suggested by Mr Christie. Mr Fuller denied that he had been in a hurry or over hasty when he examined the bedroom.

Mr Elkington says that this allegation attacks the honesty both of Mr Yeganeh and of Ms Courtnell since she gave evidence of the mountain of clothes on the master bed on the day before the fire and had helped him prepare the list for submission to Zurich. It is also improbable that Mr Yeganeh would have been fraudulent at a time when his claim was to his knowledge under close scrutiny and was being taken forward by Morgan Clark. Further the value of claims accepted, other than the clothing, was £38,788 almost as much as the £40,000 limit of indemnity.

Mr Christie’s inspection was more detailed than that of Mr Fuller and it is not surprising that he found many more items. Amongst these were 50 items so badly burned as not to be identifiable. It follows that if Zurich’s claims are true Mr Yeganeh must have burned items deliberately and then hidden them in the master bedroom between December 2007 and July 2008. Mr Elkington suggests that Mr Fuller’s theory about the ceiling and roof collapse cannot apply for the reasons put forward in cross-examination. Mr Christie’s theory for the spreading of the clothing throughout the room as a result of the force of water should be accepted. Further, Mr Yeganeh should be given the benefit of the doubt because Zurich have neither interviewed nor brought as witnesses the individuals responsible for fighting the fire (or indeed sought any forensic analysis of the additional items found in the bedroom).

The Schedule of contents was prepared as an estimate from recollection. Mr Yeganeh did his best. His estimate, as one would expect, may well have had errors but this is not fraud.

Mr Maxwell-Scott submits that the starting point is that it is common ground that all items within the bedroom had been placed on the bed in the middle of the room and covered. As a result there are only two plausible explanations for what Mr Christie found in July 2008. Either the fire and the fire fighting process caused items to be spread around the room or Mr Yeganeh planted them after Mr Fuller’s inspection.

Neither Mr Christie nor Mr Fuller knew of a case where a stack of clothing had been separated and distributed as is now suggested. Further the theory requires the stack to have been separated by the water jets before the ceiling and roof had fallen in or for this to have happened while the ceiling above the bed fell in progressively. But both experts agree that the fire entered the bedroom from above. The Fire Service would have concentrated on the flaming fire not on other areas. There is no evidence that water jets were applied before fire had spread into the bedroom. There are similar objections if the ceiling above the bed fell in progressively. Another reason why this hitherto unknown phenomenon did not occur is that if it had some items would have been found in the foot wide channel cleared by Mr Fuller around the bed. Further it is very surprising that larger items protruding through the debris seen by Mr Christie in other areas of the bedroom were not noticed by Mr Fuller when he had spent an hour to an hour and a half looking over the room. Zurich submits that by July 2008 the Defendant was becoming desperate. His claim had been refused by letter on 2 May and planting clothes in the bedroom would bolster his case.

Mr Maxwell-Scott suggests that the court is presented with a choice of one simple cause behind each of the two aspects of the claim on the one hand or two different complex ones each dependent on a different and improbable scientific theory. That is attractively put but the claim has two separate aspects and is not cumulative. It may be said that the coincidence is striking but there is no need for a double improbability for either claim to succeed.

First I bear in mind that the burden of proof lies on Zurich and also the other legal considerations mentioned above.

Secondly I conclude that it is very unlikely that clothes were spread around the bedroom as suggested as a possibility by Mr Christie.As I have already pointed out I accept the truth of the evidence of each expert witness. I reject the claim by Mr Yeganeh that Mr Fuller was reluctant or in a hurry when he visited the site in December 2007. Mr Fuller would have had no reason to take that approach. Mr Yeganeh had a reason to suggest that Mr Fuller’s inspection was not as thorough as it should have been. During his time in the room Mr Fuller would have noticed any items protruding from the debris unless directly covered by material falling from the ceiling. It is also very unlikely that if materials had been spread as a result of the fire hoses at least some items would not have been left in the one foot channel around the bed examined by Mr Fuller.

Mr Christie’s theory that the Fire Brigade activity could have dispersed the clothes round the room is not borne out by any practical experience of either expert. That leads me to prefer the view of Mr Fuller. As with the cause of the fire Mr Yeganeh’s position (recognising of course that the burden of proof is on Zurich) depends upon the occurrence of an unlikely but just possible event. The strongest support for Mr Christie is perhaps his discovery of so many fire damaged items. It is unlikely that forensic examination of these items, the absence of which is criticised by Mr Elkington, would have cast much light on this. One possibility is that some items were indeed concealed in the debris and others not. Another possibility is that Mr Yeganeh burned them directly or indirectly. The balance of the evidence tells against Mr Christie’s view and the position as I see it becomes still clearer when other matters are taken into account.

Thirdly Mr Yeganeh’s evidence was unsatisfactory. I bear in mind his evidence that he has dyslexia. But it is difficult to see how that condition explains the relevant untruths identified by Zurich. Mr Yeganeh’s evidence about the source and identity of the heater was given with confidence but not correct. His accounts of how much time he spent at Whitefriars and what he did on the day of the fire have not been consistent over time. His approach to the contents claim was at best careless. Until July 2008 he had included pine bedroom furniture until this was found in a shed. His claims that Mr Fuller was in a hurry when examining the bedroom were clearly untrue. Further as the correspondence showed, Mr Yeganeh lied to the Council in order to evade Council Tax. When giving evidence about that matter he sought to explain his conduct by suggesting that an associate had telephoned the Council using his name, this sounded obviously untrue. When the bank statements and receipts he had submitted highlighting entries relating to clothing were put to him, he prevaricated before eventually conceding there had been what he described as “mistakes”. These were mistakes only in the sense that they were carelessly dishonest. Unfortunately Mr Yeganeh has not hesitated to be untruthful when he has seen it in his financial interest to do so. Of course the fact that Mr Yeganeh has this habit does not of itself mean that his insurance claim was fraudulent but it does make it difficult to accept the truth of the assurances of innocence which he has given to the Court.

Fourthly there is an absence of credible evidence about the replacement purchases of clothing after the fire. From an early stage Mr Yeganeh knew that the claim would be scrutinised but apart from the Mirage receipts over which a question hangs there is little evidence of his replacement wardrobe.

Fifthly Mr Yeganeh’s conduct over Council Tax and particularly when putting forward false claims for purchases of clothing goes, in my judgment, to more than his credibility as a witness. It points to a tendency consistent with the fraud alleged by Zurich. As I have already held it would be wrong to conclude from the fact that a person is dishonest in one respect that he would intentionally burn his house down. But these allegations are not only less grave albeit very serious, they refer to a category of conduct that Mr Yeganeh has been involved in with other aspects of Whitefriars. The Claimant is the sort of person who is casual about the truth. He has been content to state untruths that serve his purpose even where others might anticipate that they would be found out and where the amount to be gained is not high. It was not necessary for the Claimant’s case, for the reasons given by Mr Elkington, for a dishonest claim to be made for the cost of clothing. But similarly it was not necessary for the Claimant’s case for him to identify false entries in bank statements as relating to clothing. He did however not hesitate to do this. The specific sums at issue were trivial, given the £40,000 limit. But by May 2008 Mr Yeganeh knew that his whole claim might fail on account of this issue.

Mr Yeganeh had an incentive to plant clothing in the bedroom to restore the integrity of the contents claim which Mr Fuller’s investigation had demolished. For the reasons I have set out I conclude that he did this, directly or indirectly. The argument that Mr Yeganeh has not shown that he originally gave his best honest estimate when preparing the Schedule remains. If Mr Yeganeh had made an honest estimate Mr Fuller’s findings would have been different. Further the attitude of mind that led Mr Yeganeh to interfere with the contents in the bedroom applied equally to his contents claim. This was not the first time he had made a dishonest claim for limited financial advantage.

I therefore conclude that Zurich has established that Mr Yeganeh made a false claim for the clothing contents and that this defence succeeds.

Zurich has failed to establish that Mr Yeganeh deliberately set fire to the house. Zurich has established that Mr Yeganeh made a claim in respect of the contents which was partly fraudulent and/or false. It follows that the entire claim fails. There is a counterclaim for a total of £24,818.32 which was little discussed at the hearing and this may or may not be affected by the point on which the Defendant was successful. I shall be grateful if the parties will let me have a note on these and any other matters arising and details of corrections of the usual kind not less than 48 hours before judgment is handed down.