Mode Management Limited & Anor v AXA Insurance UK PLC [2025] EWHC 2035 (Comm)

[2025] EWHC 2035 (Comm)Case No LM 2024-000257
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (KBD)
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 31 July 2025
Before
Lesley Anderson KC
Between
AXA INSURANCE UK PLCDefendant
Richard Chapman KC (instructed by Ozon Solicitors Limited) for ClaimantsAidan Christie KC and Martyn Naylor (instructed by DAC Beachcroft Claims Limited) for DefendantHearing Hearing date:  23 July 2025 (remotely by Microsoft Teams)
Approved JudgmentThis judgment was handed down remotely at 10:30am on 31 st July 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.Ms Lesley Anderson KC sitting as a Deputy High Court Judge:Introduction
[1]This is my reserved judgment following the hearing (held remotely by Teams) of the application by the Defendant, AXA Insurance UK Plc (“AXA”), by application notice dated 20 March 2025, for summary judgment against(1) Mode Management Limited (“Mode”) and(2) Gary Tregunno (“Mr Tregunno”) pursuant to CPR rules 24.2(a) and 24.3 on the basis that they have no real prospect of success and there is no compelling reason why they should be disposed of at trial; alternatively, for an order striking out the claims pursuant to CPR rule 3.4(2)(a) and/or (b) on the basis that the Claim Form and Particulars of Claim disclose no reasonable grounds for bringing the claims against it and/or constitute an abuse of the process of the Court (“the Application”).[2]In summary, by their Claim Form dated 26 September 2024 and Particulars of Claim dated 23 January 2015 Mode and Mr Tregunno seek:(i) declaratory relief in connection with a “Property Investor’s Protection Plan Insurance” policy with AXA number LS PPP6962434 (“the Policy”);(ii) specific performance of the underlying insurance contract and/or equitable damages in lieu of specific performance;(iii) damages pursuant to section 138D of the Financial Services and Markets Act 2000 (“FSMA”);(iv) all necessary declarations, accounts and inquiries, further or other relief, and(v) costs.

The Factual Background

[3]The underlying claim concerns a fire which took place on 7 February 2018 (“the Fire”) which destroyed one and severely damaged two of the industrial units (“the Units”) on premises at Hereford House, Lower Dunton Road, Dunton, Brentwood CM13 3SN (“the Property”). Mr Tregunno is the freehold owner of the Property and the sole director of Mode. At the time of the Fire, the relevant policy period was from 12 February 2017 to 11 February 2018 but this was extended until AXA confirmed it was no longer in force on 9 March 2018. Mode (the corporate entity) was the sole named policyholder on the Policy.[4]In the course of its investigations into the Fire, AXA says it discovered various matters which led it to conclude that there had not been a fair presentation of the risk by Mode prior to inception of the Policy including alleged misrepresentation and non-disclosure. AXA’s concerns at the time were as to:(i) Mode’s insurable interest in circumstances where the Property was in fact owned by Mr Tregunno;(ii) whether there was a planning permission in place for renovations being carried out at the Property and(iii) various county court judgments having been entered against Mr Tregunno. When asked about these matters, Mr Tregunno initially said that there was a lease in place between him and Mode (in a letter dated 18 July 2018). However, Mode’s pleaded case in paragraphs 1.1 to 1.4 of the Particulars of Claim is that it holds its interest in the Property on bare trust for the trustees (“the Trustees”) of the Buckingham Administrators Remuneration Trust (“the Trust”) in accordance with a fiduciary services agreement dated 7 July 2016 made between (1) Mode and (2) Buckingham Administrators Limited on behalf of the Trustees (“the FSA”). Although these documents were in evidence before me, it is right to record that Mr Chapman KC (who appeared on behalf of the Claimants) accepted (and I agree) that the deed of declaration and FSA were “somewhat opaque”.[5]By its letter dated 28 September 2018, AXA purported to avoid the Policy ab initio. Mode and Mr Tregunno challenged the decision by AXA to avoid the Policy in correspondence (in 2018/2019 and again through a different firm of solicitors in 2021/2022) and by bringing two complaints to the Financial Ombudsman Service (“FOS”) but these were rejected on 26 May 2020 and 22 August 2022 respectively. Although the Claim Form was issued on 26 September 2024, it was only on 24 January 2025 that Mode and Mr Tregunno (acting now through their current solicitors Ozon Solicitors Limited) served the Claim Form and Particulars of Claim.[6]Although Mode and Mr Tregunno challenge AXA’s entitlement to avoid the Policy that is not an issue which is capable of being determined in the course of this application and Counsel for AXA properly invited me to proceed on the assumption that the Claimants’ case on avoidance is correct.

The Application

[7]AXA elected to bring the Application prior to serving its Defence. The Application is supported by two witness statements of Daniel Richard Abbey (“Mr Abbey”), a solicitor and partner in DAC Beachcroft Claims Limited (“DAC”), dated 20 March 2025 and 28 May 2025. In broad terms AXA:(i) challenged the primary claim under the Policy on the grounds that it was statute barred under section 5 of the Limitation Act 1980 because the 6 year limitation period ran from the date of the Fire on 7 February 2018 and became time-barred from February 2024;(ii) said the other claims were all either time-barred or had no real prospect of success and(iii) that in any event Mr Tregunno could have no claim because he was not named on the Policy.[8]The Application is opposed by the witness statement of Mr Tregunno dated 23 April 2025. Although he challenged in a broad sense the relevance of Mr Abbey’s evidence, Mr Tregunno accepted that the Application largely turns on documents before the Court. His short witness statement was directed principally to clarifying the position with the County Court judgments and the status of Mode.[9]I have been considerably assisted by the sequential nature in which the Skeleton Arguments have been exchanged. Although the grounds of opposition to the Application were initially wide-ranging, by the time of the hearing before me, it was clear that many of the pleaded issues were no longer being pursued by Mode and Mr Tregunno.[10]Thus, although not reflected in any draft amended pleading, in his Skeleton Argument Mr Chapman KC (whose name does not appear on the Particulars of Claim) accepted that:a. Mode’s common law claim for damages for breach of contract is time-barred;b. Mode does not now pursue a claim under section 13A of the Insurance Act 2015 (“the 2015 Act”);c. Mode does not now pursue a claim for damages in lieu of specific performance;d. Mr Tregunno’s claim is now limited to a claim under section 83 the Fire Prevention (Metropolis) Act 1774 (“the 1774 Act”) but this does not give him any freestanding rights under the Policy because it is dependent on Mode’s claim for specific performance.[11]I will deal with the proper disposal of these abandoned claims at the end of this Judgment.[12]In light of this, although Counsels’ respective formulations of them slightly differed, the scope of the issues before me was much narrower and requires me to determine:a. Whether Mode’s claim for specific performance - not of the primary liability under the “hold harmless” promise under the Policy - but of AXA’s secondary liability to put Mode in its pre-loss position has a real prospect of success, including whether the claim is barred by laches (“the Specific Performance Claim”);b. Whether Mode’s claim for damages under section 138B of FSMA has a real prospect of success (“the FSMA Claim”);c. Whether Mr Tregunno’s claim under section 83 of the 1774 Act has a real prospect of success (“the 1774 Act Claim”).

The Law – Strike out/Summary Judgment

[13]Unsurprisingly, there was no dispute between the parties as to the relevant legal principles applicable to the court’s power to strike out and/or to enter summary judgment. Under CPR 3.4(2), the court has power to strike out a statement of case, or part thereof,(a) if it appears to the court, that the statement of case, or part thereof, discloses no reasonable grounds for bringing or defending the claim or(b) if it appears to the court that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings.[14]Under CPR rule 24.3, the court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if:(a) it considers that the claimant has no real prospect of succeeding on the claim or issue, or that the defendant has no real prospect of successfully defending the claim or issue and(b) there is no other compelling reason why the case or issue should be disposed of at trial.[15]The principles were classically formulated by Lewison J. (as he then was) in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] and, more recently, by Floyd LJ. In TFL Management Services Ltd v Lloyds Bank plc [2013] EWCA Civ 1415, [2014] 1 WLR 2006 at [26]-[27] and are summarised in the current edition of Civil Procedure (volume 1) at [24.3.2]. In particular, at [27] Floyd LJ. stated: “Moreover, it does not follow from Lewison J’s seventh principle that difficult points of law, particularly those in developing areas, should be grappled with on summary applications: see Partco Group Ltd v Wragg, para. 28(7)”.[16]I was referred to the decision of Roger Ter Haar KC (sitting as a Deputy Judge of the High Court) in Benyatov v Credit Suisse Securities (Europe) Limited [2020] EWHC 85 (QB) at [60] to similar effect, namely that it may not be appropriate to strike out a claim in an area of developing jurisprudence or where its legal viability is sensitive to the underlying facts.[17]The same is true of difficult points of contractual construction – see the observations of Lord Hodge in Hallman Holdings Ltd v Webster and another [2016] UKPC 3 at [17]: “… it will often be appropriate to determine a dispute about a short point of law or the construction of a simple contract by summary judgment, where the legal issue between the parties is straightforward and the court is satisfied that there is no need for an investigation into the facts which would require a trial: Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), para 15 propositions (v) – (vii) per Lewison J. Where, in the absence of any factual dispute, more complex legal issues arise, including difficult issues of contractual construction, they may be determined on an application for a preliminary issue …”.[18]It is also right to consider whether defects in a statement of case may be cured by an appropriate amendment (see the observations of Warby J. in Duchess of Sussex v Associated Newspapers Limited [2020] EWHC 1058 (Ch) at [33](2)) and if necessary, whether the relevant application ought to be adjourned to enable an application to amend to be made.

The Policy

[19]The Policy was, as I have said, a “Property Investors Protection Plan”. According to the Policy Schedule (“the Schedule”):a. The Insured is described as Mode Management Ltd and the Property is identified as its address - Mr Tregunno was not a party to or otherwise mentioned on the Policy;b. The “Business Description” is as “Property Owner” and I note the reason for issue is said to be “New Business”;c. The premium was £3,772.38 (inclusive of IPT);d. Under the heading of “Your cover summary” 11 separate premises are listed and the cover includes “Property cover”, “Terrorism cover” and “Public liability” (which is stated later to have a limit of £5,000,000);e. The sum insured for buildings cover on Unit 1 was £349,409 and the rental income cover was £36,000 (over 24 months). The sum insured for buildings cover on Unit 2 was £209,645 and the rental income cover was £26,000 (for 24 months). The sum insured for buildings cover on Unit 3 was £209,645 and the rental income cover was £24,000 (for 24 months).[20]So far as the Policy terms and conditions (“the Policy Terms”) are concerned:a. “Buildings” is defined to mean “buildings at the premises shown in the Schedule” including landlord’s fixtures and fittings and tenant’s improvements for which the insured is responsible;b. “Business” is defined to mean “your ownership of the premises shown in the schedule”;c. “Rental Income” is defined to mean “the money paid or payable to you for tenancies and other charges for services provided in the course of your business at the premises”;d. Section 1 deals with Buildings Cover and provides for an “Alternative basis of settlement” – “We agree that if any of the buildings shown in your schedule are damaged, we will pay you the value of the buildings at the time of its damage or at our option reinstate or replace the buildings or any part of it”; for “Consequential loss” meaning “Loss, resulting from interruption of or interference with the business as a result of damage to property used by you, at the premises, for the purpose of the business” and under the heading “What is covered” – “We will cover you for damage occurring during the period of insurance to any of your buildings. We will pay you for the value of the buildings at the time of its damage or for the amount of the damage or at our option reinstate or replace the buildings or part of it”;e. Section 2 deals with Rental income and “loss of rental income cover” is for “loss of rental income if the premises covered under Section 1 – Buildings is damaged during the period of insurance and as a result your business is interrupted or interfered with”;f. Section 3 deals with Public liability.[21]There is a “Third party rights condition” that “The rights under this contract will not be enforceable by any third party other than you or us because of the Contract (Rights of Third Parties) Act 1999.”

The Specific Performance Claim

[22]There are two aspects to the Specific Performance Claim: first, whether Mode’s claim for specific performance - not of the primary liability under the “hold harmless” promise under the Policy - but of AXA’s secondary liability to put Mode in its pre-loss position has a real prospect of success; secondly, whether the claim is in any event barred by laches. But it is important not to lose sight of the reason why Mode needs to fashion the claim in that way.[23]First, Mode accepts that the “hold harmless principle” applies here. As to this Mr Christie KC referred me to the very recent decision of Popplewell LJ in Sky UK Limited and Another v Riverstone Managing Agency Ltd [2025] EWCA Civ 1567 (emphasis added) (“Sky”) at [43]:
“A contract of insurance against damage to property is a contract of indemnity, which is often described as a contract to hold someone harmless. A layman might think that it involves a promise by the insurer to pay money representing the diminution in value or cost of repair of the insured damage. That is not, however, the nature of the insurer’s promise. The promise is to hold the assured harmless in the sense that the insurer promises that the assured will not suffer the insured damage. It is in the nature of a warranty that the insured damage will not occur, such that the insurer is in breach of the promise the moment the damage occurs. That promise represents the insurer’s primary obligation under the contract of insurance. If and when the insurer fails to perform the primary obligation, it comes under a secondary obligation to pay damages for breach of the primary obligation. This is the same secondary obligation to pay damages which applies to all contract breakers. That is why a property insurance claim is not at common law a claim to enforce a promise to pay money, as the layman might think, but has by long and well-established authority been held to be a claim for unliquidated damages: see the authorities considered by Megaw J in Chandris v Argo Insurance Co Ltd [1963] 2 Lloyd’s Rep 635 at pp. 73-74 and The Fanti per Lord Goff at p. 35. That is why at common law the assured could not recover for losses caused by the insurer’s wrongful refusal to pay a valid claim: the contract contains no primary obligation consisting of a promise to pay, and the law does not recognise a claim for damages for nonpayment of damages: … The particular injustice of assureds suffering irrecoverable loss as a result of insurers’ unreasonable delay in payment of valid claims … has been remedied by s. 13A Insurance Act 2015, which provides that it is an implied term that an insurer will pay a claim within a reasonable time, but otherwise the nature of a contract of insurance against property damage and a claim under it remains unaffected (s. 13A does not apply to the Policy in this case which was written before it came into force).”
[24]Secondly, Mode did not challenge the general principle that the insurer is held to be in breach of the policy as at the date of the loss irrespective of the fact that some loss was suffered (or continues to be suffered) after the date when the initial event insured against occurs - see the judgment of Lord Sumption giving the judgment of the Court in The Renos [2019] UKSC 29, [2019] 2 Lloyd’s Rep 78 at [10].[25]Thirdly, Mode accepts that its claim for common law damages (the secondary obligation within the meaning set out in that passage of Popplewell LJ’s judgment in Sky) is statute barred because the relevant cause of action accrued on the date of the Fire (7 February 2018) and proceedings were commenced only in September 2024.[26]Fourthly, Mode also accepts that the fact that the Policy provided an option as to how to satisfy its indemnity (the option for AXA to indemnify by payment or to reinstate the property) cannot be deployed to construe the contract of insurance as delaying the date when the right to an indemnity arises. I was referred by both Counsel (but for slightly different purposes) to the decision of Sir Peter Webster (sitting as a Judge of the High Court) in Callaghan v Dominion Insurance Co Ltd [1997] 2 Lloyd’s Rep 541 at 544-545 (“Callaghan”) which makes this point clear:
“I note in parenthesis that when a policy expressly provides that the insured will be compensated by payment of an amount specified in the policy, usually expressed as a limited indemnity, so that the insured is to be regarded as under a liability to pay a sum certain – or may be so regarded in certain circumstances – that liability also arises prima face on the happening of the event. But I return to this policy which, although it obliges the insurer to pay “such sums as may be agreed in accordance with the schedule”, is clearly a policy of indemnity with limits, not a policy to pay a sum certain – see the words “limit of indemnity” which occur more than once in the schedule. Unless, therefore, there are clear words in the policy which have a contrary effect, liability under this policy, being a policy of indemnity insurance, arises immediately loss is suffered as a result of the happening of the relevant event. Before considering whether there are sufficiently clear words in this case to take this policy out of the general principle, it is necessary to bear in mind the passage in the judgment of Mr. Justice Megaw in the Chandris case at p. 74 to the effect that the quantification of the amount of the plaintiff’s claim is not a pre-requisite to a cause of action. Thus there is a primary liability, that is to say to indemnify, and a secondary liability, that is to say to put the insured in his pre-loss position, either by paying him a specific amount or it may be in some other manner.The fact that the insurer has an option as to the way in which he will put the insured into his pre-loss position does not mean that he is not liable to indemnify him, in one way or another, immediately the loss occurs.”
(emphasis added).[27]However, Mr Chapman KC submits as follows.[28]Callaghan does not preclude a claim for specific performance. Rather Callaghan supports the proposition that there is a primary liability to indemnify and a secondary liability to put the insured in his pre-loss position (which he accepts is different from the secondary obligation/liability articulated in Sky) and it is this secondary liability which Mode is seeking to enforce by its claim for specific performance.[29]A claim for specific performance does not require delaying the date when the right to an indemnity accrues.[30]The primary and secondary liabilities referred to in Callaghan are still capable of being performed here, as AXA can still provide an indemnity (the primary liability) and can still put Mode into its pre-loss position (the secondary liability) because AXA has not yet elected between them (and instead avoided the Policy) – if as Mode contends the Policy has not been properly avoided it can still be performed and Mode has not accepted the repudiatory breach as terminating the contract.[31]The potential for separation of the primary liability and secondary liability has been recognised in academic literature and he cites Colinvaux and Merkin’s Insurance Contract Law at C-0247.[32]The existence here of a time-barred common law damages claim does not in itself bar a claim in equity for specific performance.[33]There is no authority for the proposition that specific performance can never be available in respect of an indemnity policy.[34]All that is required for equitable intervention is a contractual obligation regarded as valid and enforceable in equity and it is not necessary for there to have been a breach of contract – see Contractual Duties: Performance, Breach, Termination and Remedies,4th edition, 2023 by Andrews, Tettenborn, and Virgo (“Andrews”) at [27-011].[35]The existence of the jurisdiction to award specific performance is distinct from the practice of the Courts – Andrews at [27-019].[36]In principle, specific performance is available even for money obligations – Andrews at [27-035] and [27-036].[37]As a matter of discretion here, Mode has a legitimate interest beyond pecuniary compensation for the breach – see the observations of Lord Neuberger in Cavendish Square Holding BV v Makdessi [2016] AC at [30].[38]Specifically, that(i) AXA’s obligation to restore Mode to its pre-loss position means it either has to reinstate (which is more advantageous to Mode because it will be done at AXA’s expense more cheaply) or pay an indemnity to Mode;(ii) Mode has a legitimate interest in AXA being required to make a reasoned decision either way;(iii) if AXA chooses instead to satisfy the indemnity by payment, that is not damages but a reflection of AXA’s election;(iv) Mode might otherwise have to disclose to future insurers that AXA had avoided the Policy and in any event,(v) there will be better evidence of all this if there is a trial.[39]As to the issue of laches, Mr Chapman submitted as follows.[40]The expiry of the limitation period for a common law damages claim does not of itself give rise to a defence of laches and should not be applied by analogy – see the observations of Moore-Bick LJ in P&O Nedlloyd BV v Arab Metals Co (No 2) [2007] 1 WLR 2288 at [47] (“P&O”).[41]It is generally necessary to establish something more than mere delay (for example an adverse effect of some kind on the defendant) at least until the adjacent statutory limitation period has expired – P&O at [61] – “The question for the court in each case is simply whether, having regard to the delay, its extent, the reasons for it and its consequences, it would be inequitable to grant the claimant the relief he seeks”.[42]Contrary to the approach in Chitty on Contracts (35th edition, 2024) (“Chitty”) at [32-145] the modern approach is to show greater flexibility including consideration of the extent, impact and reasons for the delay (which I note is also mirrored in the passage in P&O above).[43]Acquiescence in itself is not sufficient as it is necessary to show that it has caused prejudice – see the observations of Sir Kim Lewison in Cenac v Schafer [2016] UKPC 25 at [31].[44]On the facts here, Mode has a real prospect of defeating a defence of laches because:(i) AXA has not claimed to have suffered any prejudice from the delay;(ii) the parties have not even set out their respective cases on laches because of the timing of the Application;(iii) Mode did take issue with the avoidance of the Policy and(iv) there may be better evidence on the issues of delay and prejudice at trial.[45]It is fair to characterise AXA’s response to all of this as being “robust” although there was plainly an element of shadow-boxing in its initial Skeleton Argument in circumstances where, despite requests on its behalf for the Claimants to explain their position in response to the Application, they had declined to do so. By way of example, Counsel for AXA had set out in detail why specific performance of a claim for an indemnity under the hold harmless principle did not work only to be faced with a responsive Skeleton Argument from Mr Chapman KC which made clear that was not the way that Mode was putting its case on specific performance.[46]So far as AXA is concerned, Mr Christie KC submits as follows.[47]The starting point is the “hold harmless” principle which is central to the construction of the Policy (as recently endorsed in the Sky decision) and the explanation of the primary obligation (the insurer’s promise that the insured damage will not occur) and, the secondary obligation (if and when the insurer fails to perform the primary obligation), to pay common law damages which is no different from the secondary obligation that applies to all contract breakers.[48]The insurer is held to be in breach of the policy as at the date the loss is suffered and this is not affected by the fact that the Policy here provided an option for the insurer to carry out reinstatement or that the loss might be suffered after the date of the Fire.[49]The claim for an indemnity (primary liability) or common law damages for breach of contract (secondary liability) is accepted to be statute barred pursuant to section 5 of the 1980 Act.[50]The only pleaded case is for an indemnity (or a declaration that AXA is liable to indemnify Mode) and that is also statute barred for the same reason – the court cannot entertain a claim for a declaration if such a claim is made when the claim for the underlying debt or damages is statute barred – see per Longmore LJ in Woodeson v Credit Suisse (UK) Ltd [2018] EWCA Civ 1103 at [21]-[24].[51]Specific performance cannot be ordered where the primary liability of the insurer cannot be the subject of specific performance.[52]If and insofar as specific performance of the “hold harmless” obligation was still being pursued, it was impossible for specific performance of that obligation to be ordered because the Fire rendered performance impossible.[53]Whilst it reserves the right to argue otherwise in the event that this goes further, AXA accepts that the P&O decision is authority for the general proposition that a claim for specific performance may not be statute-barred, there is no real prospect of the Court making an order for specific performance in this case which, as least as presently pleaded, concerns the alleged breach by AXA of the “hold harmless” promise.[54]The new way in which Mode now puts it, whereby it seeks specific performance of AXA’s so-called secondary obligation to put the insured in its pre-loss position or to elect whether to reinstate the damaged Property is not pleaded at all and is not supported by any authority.[55]The passages in Callaghan relied on by Mode simply do not support Mode’s case – in particular, having considered the option there to reinstate the property the Judge said at page 119: “I cannot conclude that those words have the effect of postponing the insurer’s primary liability; they merely indicate the alternative ways in which that liability may be satisfied”.[56]The decision to reinstate was AXA’s alone and there is no real prospect, having avoided the Policy in 2018 and where the indemnity claim is itself statute barred, that AXA will elect to reinstate and even if it did, that does not give rise to a fresh contract – see Hemsworth: Law of Insurance Contracts at [29-2A] and [29-2B].[57]Even if the claim was capable of being reformulated in that way, there is simply no prospect of specific performance being granted because damages are plainly an adequate remedy because, in a claim under an insurance policy, that is precisely the type of remedy that is envisaged.[58]In any event, a claim for specific performance is barred by laches in circumstances where:(i) Mode delayed in issuing its claim (issued 26 September 2024) for more than six years after the Fire (on 7 February 2018);(ii) Mode delayed for about six years from AXA’s avoidance letter (on 28 September 2018);(iii) the last activity prior to service of the Claim Form and Particulars of Claim (in January 2025) was the receipt of the FOS complaint (in August 2022) and(iv) no (or no good) reason has been advanced for that delay.[59]As to this, in my judgment the correct position is as follows.[60]Mr Chapman KC may well be right that in principle the existence of a common law damages claim does not in itself bar a claim for specific performance – indeed the extract from Colinvaux and Merkin at [C-0247] would support that position. Moreover, Mr Christie KC for AXA accepts that on the current authorities at least a claim for specific performance may not be statute barred.[61]However, it seems to me that extract is dealing principally with the distinct situation where the insurer is guilty of a breach which is not related to the occurrence of the loss itself (for example, where the loss arises from a separate repudiation of the policy for non-disclosure or misrepresentation) - the extract goes on to refer to Callaghan and to draw a distinction between proceedings for the loss (which could not be reinstated) and relief against the avoidance of the policy (which would not have been statute barred).[62]The Judge in Callaghan, by referring to a secondary liability to put the insured in his pre-loss position was not intending to create a separate route to liability -indeed at the end of the extract I have already quoted, the Judge goes on to make clear that the fact that the insurer has a choice does not mean that he is not liable to indemnify “in one way or another, immediately the loss occurs”.[63]There is no support in the authorities for the availability of specific performance in order to circumvent the effect of the claim for an indemnity or the common law claim for damages being statute barred in the way suggested on behalf of Mode. For example, Callaghan was specifically cited before HHJ Pelling KC (sitting as a Judge of the High Court) in Griffiths v Liberty Syndicate 4472 [202] EWHC 948 (TCC) [2020] Lloyd’s Rep IR 485, a case directly concerned with whether an insurance claim was statute barred, but this important route of avoiding that consequence was apparently missed.[64]Here, the fact that the Policy specifically contemplates a choice for the insurer between payment and reinstatement does not give rise to a fresh contract which is capable of enforcement.[65]Perhaps more significantly, even if the remedy of specific performance is theoretically available in relation to an indemnity claim, I am satisfied for the reasons submitted by Mr Christie KC that there is no real prospect of the Court here exercising that power because damages are an adequate remedy. It is of the essence of the obligation of the insurer to pay damages. I also accept that to allow enforcement of the secondary obligation to pay damages for breach of contract, by specific performance, would have the effect that no claim in respect of a breach of contract would ever become time-barred. Although Mr Chapman KC attempted to answer this by saying that, in this case, AXA had not elected between payment and reinstatement and Mode had not accepted the breach as a repudiation of the contract, I cannot see that this truly meets Mr Christie KC’s point.[66]Further, I also accept Mr Christie KC’s submission that to permit the use of specific performance to circumvent that, for limitation purposes, would be an example of equity acting inconsistently with the common law.[67]So far as laches is concerned, in my judgment Mode also has no real prospect of defeating the defence of laches. Even taking into account the more modern flexible approach urged upon me, there is simply no explanation in the evidence here for the delay and this was the time for Mode to bring forward evidence on that. Whilst it is right that Mode took issue with the avoidance of the Policy, the last substantive steps in that regard was in August 2022 when the FOS complaint was dismissed. It seems to me self-evident that AXA would suffer prejudice if the claim was now permitted to proceed although I accept Mode’s point that there is no specific evidence on the point.

The FSMA Claim

[68]The FSMA Claim is set out in paragraphs 4.4, 5 to 9, 11.2, 11.3, 12, 13, 16, 17, 18 and 19 of the Particulars of Claim. The claim is for damages pursuant to section 138D of FSMA.[69]According to its Skeleton Argument, Mode’s position is that the relevant breach is the unreasonable rejection of its claim (including by terminating or avoiding a policy) pursuant to ICOBS 8.1.1(3) R. Although no defence has currently been filed by AXA for the reasons identified, it is clear from the evidence that AXA would in due course deny that its avoidance of the Policy and/or its refusal to meet Mode’s claim constitutes a breach of ICOBS. The purported avoidance of the Policy was on 28 September 2018 which is within the six years prior to the issue of the proceedings for the purposes of section 9 of the 1980 Act and, unlike other claims, AXA does not suggest that this claim is statute-barred. It is not in dispute that AXA is an authorised person within the meaning of FSMA.[70]Section 138D(2) FSMA provides that:
“A contravention by an authorised person of a rule made by the FCA 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.”
Regulation 3[71]The test for what constitutes “a private person” is contained in Regulation 3 of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (“the 2001 Regulations”):
“(1) In these Regulations, “private person” means – any individual, unless he suffers the loss in question in the course of carrying on – (i) any regulated activity; or (ii) any activity which would be a regulated activity apart from any exclusion made by article 72 (overseas persons) …. of the Regulated Activities Order; any person who is not an individual, unless he suffers the loss in question in the course of carrying on business of any kind ..”
[72]Accordingly the central question under Regulation 3 is whether Mode is a “private person” and whether Mode has a real prospect of success in arguing that Mode was not “carrying on business of any kind”.[73]On the second question, it is common ground that the test is an expansive one – it is the carrying on of any business rather than a business of a particular type connected to the Policy or the loss suffered – see Titan Steel Wheels Limited v The Royal Bank of Scotland [2010] EWHC 211 (Comm); [2010] 2 Lloyd’s Rep 92; Camerata Property Inc v Credit Suisse Securities (Europe) Limited [2012] EWHC 7 (Comm) per Flaux LJ at [98]; Grant Estates Ltd v Royal Bank of Scotland plc [2012] CSPH 133 and Bailey v Barclays Bank plc [2014] EWHC 2882 (QB).[74]So far as the evidence on this is concerned in paragraph 39(a) of his first witness statement in support of the Application is concerned Mr Abbey states that Mode “was plainly acting in the course of business in relation to the Policy”. In paragraph 39(b) of that witness statement, Mr Abbey refers to a letter from Griffin Law, on behalf of Mode, dated 26 November 2021 in which Mode has intimated a claim for the rental income it was able to collect. Mr Tregunno’s witness statement is silent on this issue.[75]Although Mr Chapman KC submitted that Mode was not carrying on business of any kind, for the purposes of Regulation 3, it seems to me that this was wholly untenable. I am entirely satisfied that Mode has advanced a claim not just as “property owner” but that the Property was owned and operated as a business. Part of the claim was in respect of rental income which was defined in the Policy as “money paid or payable to you for tenancies and other charges for services provided in the course of your business at the premises”. The loss which Mode has suffered as a result of the Fire was loss which it suffered in the course of carrying on business. Regulation 6[76]Regulation 6 of the 2001 Regulations provides (“Regulation 6”): “6(1) The definition of “private person” in regulation 3 is prescribed for the purposes of section 138D(6) of the Act (and so the contravention by an authorised person of a rule is actionable at the suit of a person who falls within that definition and who suffers loss as a result of that contravention). A case where any of the conditions specified by paragraph (3) is satisfied is prescribed for the purposes of section 138(D)(4) of the Act (and so in such a case the contravention of a rule is actionable at the suit of a person who is not a private person). The conditions specified by this paragraph are that –(c) the action would be brought at the suit of a person (who is not a private person) acting in a fiduciary or representative capacity on behalf of a private person and any remedy would be exclusively for the benefit of that private person and could not be effected through an action brought otherwise than at the suit of the fiduciary or representative”.[77]Accordingly, the central questions on the application of Regulation 6 are whether Mode was acting in a “fiduciary or representative capacity on behalf of a private person” and whether the remedy sought would be “exclusively for the benefit of that private person”.[78]The evidence on this is as follows.[79]The operative provision of the deed of declaration provides: “The Declarant hereby declares and affirms that it has at all times held the Assets as trustee subject to a trust to return the same to the trustee upon termination of the Fiduciary Services Agreement, and that the Declarant has no beneficial interest of its own for the purposes of Part 3 Finance Act 2013 and Schedule 25 Finance Act 2013”.[80]So far as material, the relevant part of the FSA provides:
“2.1 During the Period of Appointment the Fiduciary shall have all rights to apply and deal with the Property and the income and capital thereof and all accumulations thereto as if it were the beneficial owner thereof and the Principal shall have no right or power over the Property and the income and capital thereof and all accumulations thereto. 2.2 The Fiduciary shall be entitled to charge reasonable remuneration for its fiduciary services from time to time.”
[81]Mr Chapman KC submitted that Mode had a reasonable prospect of being able to rely upon Regulation 6 because:(i) whether trustees are “private persons” for the purposes of s.138D FSMA has not yet been tested in any case;(ii) there is authority to say that s.138D may apply to claims made by a partnership because a partnership does not have legal existence separate from the individual partners and(iii) this raises a point of law which is of wider significance and which ought to be tested against the factual findings at trial, rather than in the context of an application for summary judgment/strike out.[82]I am prepared to accept for the purposes of this application that Mode has a real prospect of establishing that trustees, in general, may be “private persons” for the purposes of s.138D FSMA. However, whether that is true in any specific case is highly fact-sensitive.[83]The difficulty in this case is that the Particulars of Claim does not even refer to Regulation 6 and there is no application before me to amend and Mr Chapman KC accepted that the evidence on behalf of Mode is generally deficient and would require to be supplemented at trial explaining the full nature of Mode’s operations and interests. It was incumbent on Mode on the hearing of this Application at the very least to bring forward a proper explanation as to the circumstances in which the Trust was created and as to the manner and terms of its operation and it has simply failed to do so.[84]I also accept Mr Christie’s submission that, at least on the face of the evidence before me, regulation 6 would appear not to apply because this remains a claim under a policy of insurance between Mode and AXA and thus it cannot be said that “any remedy would be exclusively for the benefit of that private person”.[85]In my judgment, on the basis of the evidence, Mode does not have a real prospect of establishing that it falls within regulation 6.

The 1774 Act Claim

[86]Mr Tregunno accepts that the 1774 Act claim does not confer any freestanding rights under the Policy and is relevant only if specific performance is granted in favour of Mode. For the reasons already set out, I am satisfied that Mode has no real prospect of succeeding in its claim for specific performance and so this head of claim also falls away.

Disposal

[87]In light of this judgment, I am satisfied that in relation to the remaining claims that Mode and Mr Tregunno have no real prospect of succeeding and the entirety of their respective claims should be struck out and/or summary judgment should be granted in favour of AXA. I am also satisfied that there is no compelling reason why those claims should be disposed of at trial.[88]I cannot immediately see that anything turns on whether the disposal is for strike out or summary judgment and I am content for both to be included in the order which I have approved.[89]Finally I am very grateful to all counsel for the helpful and incisive submissions and to their respective instructing solicitors for co-operating with the preparation of the bundle and the authorities to enable this case to be held efficiently and remotely.