Mandalia & Anor v Beaufort Dedicated No2 Ltd [2014] EWHC 4039 (QB)

Case No HQ12X04529[2014] EWHC 4039 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 28 November 2014
Before
MR GERARD McDERMOTT QCSITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Between
(1) ARVIND MANILAL MANDALIAClaimants(2) BINA ARVIND MANDALIAClaimantBEAUFORT DEDICATED NO.2 LIMITEDDefendant
Mark James (instructed by Messrs Leigh Day) for ClaimantJulian Field (instructed by Messrs Berrymans Lace Mawer) for DefendantHearing Hearing dates: 23-27 & 30 June; 4 August 2014
JudgmentGerard McDermott QC :
[1]This is my Judgment in this case between the Claimants, who are and were, the owners of shop premises and the flats above at 287-289 Burnt Oak, Broadway, Middlesex, and the Defendant insurance company.[2]Those shop premises, at the time of the events which give rise to this claim, were divided into(a) a takeaway restaurant called “Lick’N Chick’N” and(b) a general grocery shop called United Cash and Carry.[3]The claim form reveals a claim which was initially put at £295,931.58 but which has since been revised downwards.[4]The claim, essentially, is about the extent of the insurance coverage that the Claimants had under a commercial combined insurance policy issued by the Defendant or rather by Evergreen Underwriting Services which is now Beaufort Underwriting Services and the extent to which that cover should respond to the claim made upon the same. The Defendant says that the real dispute arises because there is a misapprehension on the part of the Claimant as to the extent of the coverage and also the extent of losses that are payable under that cover.

Background

[5]The Claimants bought the premises in the 1980’s and traded from the premises as “Mandalia Cash and Carry”. They had initially traded with the First Claimant’s brothers but ultimately the Claimants bought them out and they continued to run the business on their own from that time.[6]It seems that the business was quite successful and over the years they were able to buy first, one and then the other flat above the premises and to knock them through creating a home for themselves above the shop.[7]Unfortunately the Claimants have suffered from ill health (the details of this are set out at paragraph 11 of the Second Claimant’s first witness statement) and the running of the cash and carry business became too much for them. Initially they had intended to start a restaurant which they thought would require much less of their own manpower if they had reliable staff and on 24th May 2004 they obtained planning permission to alter the use of the premises from retail to mixed use of retail and the sale of hot food and drink.[8]As their health continued to deteriorate they decided to market the shop lease instead.[9]On 3rd May 2005 the Claimants enter into a 12 year lease of the premises with Mr Balasingam Kaskiran and Mrs Anthea Pirathavan. These became regarded by Mr and Mrs Mandalia as the “bad tenants”. These tenants split the premises into a fast food takeaway called Lick’N Chick’N and a general grocery store called United Cash and Carry.[10]The lease had required the tenants to carry certain fit out works by 2nd November 2005 and these were identified by reference to two plans. The works included dividing the premises and installing an extractor fan and ducting.[11]The relationship between landlord and tenants was very much less than satisfactory and the tenants failed to carry out the fit out works by 2nd November 2005 as had been agreed. They also carried out a large amount of unauthorised work. As a result of this the Claimants served section 146 LPA notices and then on 2nd June 2007 commenced proceedings for possession against the tenants. The Particulars of Claim in that action contain extensive allegations of breaches of the lease which include unauthorised building work. During the course of that action a Mr Harold True, a chartered building surveyor, was appointed as a single joint expert to report on the complaint that work had been carried in breach of the specific terms of the lease agreement.[12]There was a three day trial of the Claimants’ action against the tenants on 16th to 18th December 2008. Judgment was handed down on 13th February 2009 and an order was made on 13th March 2009 giving relief from forfeiture provided they paid: i) £55,000 of arrears by 13th March 2009 together with interest of £2,385,46; and ii) Carried out certain specified work at the premises by 10th April to the satisfaction of Mr True. iii) The order (p1935 of the bundle) also provided for Liberty to apply in relation to the date for completion of the works;[13]The tenants failed to pay any of the arrears of rent or interest by 13th March 2009.[14]Thereafter what has been referred to in the expert reports as “the event”, took place. On 5th April 2009, which it had been erroneously suggested was Easter Sunday, the tenants entered the ground floor premises and stripped out much of the contents. They removed their own fixtures and fittings but also, on the Claimants’ account, stole a lot of fixtures, fittings and items belonging to the Claimants whilst at the same time causing significant damage to the property.[15]It is the occurrence of the event and what flows from that which gives rise to these proceedings and, in the first instance, gave rise to a claim under the policy. The focus of this Judgment will be upon what happened on that day, what the consequences are in terms of the insurance coverage available to the Claimants and what losses are recoverable by them against the Defendant.[16]The day after the event the Claimants contacted their brokers, WB Tidey and Co who in turn contacted Paul Southcott at Special Risks Group Limited, who are loss adjusters but who also had delegated authority from Evergreen to confirm or repudiate claims and to settle claims up to a value of £250,000.[17]The claim was originally presented as one of malicious damage and there was a conversation between Mrs Mandalia and Tidey on 9th April 2009 in which she explained about the ongoing Court action and the arrears of rent and unauthorised alterations to the property. Thereafter there was a conversation between Tidey and Special Risks during which Special Risks confirmed that the issues in the ongoing Court action and their tenants were not matters for Evergreen.[18]On 15th April 2009 Mrs Mandalia wrote a long letter to Tidey (page1153 E ) about the events of 5th April 2009 and what happened thereafter. One of the main concerns in that letter appears to be in relation to rotting food stuffs and notices that had been served by the Council. Jamie Greig of Special Risks confirmed to the Claimants’ son Amar Mandalia, that the environmental health issue was not something that insurers would become involved with.[19]Thereafter a site visit took place on 24th April 2009 at which were present, Mrs Mandalia, Amar Mandalia, Jamie Greig and the police. The issue of theft by the tenants of furniture and fittings from the premises was raised on that occasion. The insurers at that stage took the view that the damage was not malicious – see the report dated the 12th day of May 2009 at page 939.[20]In that report Mr Greig came to the view that the damage was not malicious and was damage caused as a consequence of either: i) The tenants’ failure to keep the landlords fixtures and fittings clean and in good repair; or ii) The hurried removal of the tenants’ own fixtures and fittings resulting in inevitable secondary damage to the landlords’ fixtures and fittings which in normal circumstances the tenant would be required to make good under the terms of the lease.[21]Thereafter Mrs Mandalia sent an email on 16th June 2009 and also a list of items missing or damaged by the tenants (p1276 – 1277 (c)). This referred to an order of 9th June 2009 by which the Claimants were granted possession of the premises from the tenants and also noted “that the process of clearing rotten food was underway”. In her email Mrs Mandalia requested Jamie Greig to arrange for fumigation and other work to be done to the property so that it could be put back on the market for letting. Jamie Greig replied on 19th June 2009 (p1159 also a copy at 1278) stating that whereas the list of missing/damaged items appeared to detail every defect or omission recorded after the Claimants eventually regained possession of the premises, it was necessary to be very clear as to what aspects could receive consideration of the policy as opposed to being separate contractual/civil issues that had already been or needed to be pursued with the tenants. Jamie Greig went on to say that the insurers were solely concerned with damage caused by theft or malicious persons.[22]I pause here to note that it will be important, in considering the issues in this case, to distinguish between damage which may have been caused by the tenants during the course of the lease and/or which was incidental to their occupation of the premises or their departure from the same and damages which can be brought with the meaning of the insurance policy and for which the Defendant is required to indemnify the Claimants. That is not an entirely straight forward task and is one that I will turn to later in this Judgment. It may be impossible to be precise, particularly at this distance in time, on the evidence that I have, about how to attribute individual items of loss or damage.[23]There then followed quite a lot of correspondence between the parties, some from Mrs Mandalia and some from her son Amar Mandalia, in relation to the claim and on 17th July 2009 Jamie Greig wrote to Amar Mandalia confirming that the underwriters’ view was that, with a possible exception of the back door and frame, what was claimed for as “damage” had not been caused maliciously, that a claim for theft would be considered but only in respect of those items for which the forcible and violent entry or exit requirement was satisfied and that the loss of rent claim was rejected as, with the possible exception of the back door and frame, the only insured peril which had relevance was theft and any loss of rent could not be attributed to that.[24]The Defendants opening submission makes reference at paragraph 28 to a number of correspondence items which it says are of note: i) A suggestion by Amar Mandalia that the damage to the premises was new damage that had been caused on 5th April 2009 and was not the same as the subject matter of the earlier proceedings that had been brought against the tenants; ii) A comment by Mrs Mandalia that because Evergreen were to some extent aware of the Claimants problems with the tenants by February 2006, they should have taken steps to ensure compliance by the tenants with their obligations under the lease (p1236); iii) A suggestion that Evergreen were negligent and in breach of contract and that Evergreen were responsible for the full reinstatement costs of the premises ( p1243)[25]A complaint to Lloyds about Evergreen’s handling of the complaint was made and this was dealt with in November 2009 and January 2010 and dismissed. Thereafter I note that in March 2010 the Claimants also made a complaint to the Financial Ombudsman Service.[26]The adjudicator at the FOS , James Ward, construed the policy and the cover for the respective theft and malicious damage and the accidental damage extension and on 8th July 2010 dismissed the complaint upholding the insurer’s contention that the claim was not covered.[27]The matter was referred to the ombudsman who upheld the Claimants’ complaint. The Defendant says that this was first by “rewriting the policy” and then by making a finding that there had been a forcible and violent entry. That of course is not binding upon me. I note that an award of £100,000 was suggested which Evergreen agreed to be bound by but the Claimants were not prepared to accept having regard to the extent of what they saw as their losses.

The Issue of Fraud

[28]The Defendant says that there is fraud in the making of this claim and the way in which that arises is set out in the Defendant’s opening submission skeleton at paragraph 68 to 74. The plea of fraud is also raised at paragraph 21 of the Re-Amended Defence. In essence the plea of fraud is based on the following matters.[29]The Claimants made various complaints against the tenants in their earlier action: i) Having made a hole in the wall in order to install ventilation ducting, had thereafter installed a lintel badly; ii) They had also laid floor tiles over manhole covers; iii) There was an absence of appropriate gas and electrical safety certificates.[30]An order for possession having been made on 13th of March 2009 it was a condition of relief from forfeiture that certain works were carried out to the satisfaction of Mr True, a surveyor who had been appointed as a single joint expert in those proceedings and whose report is included in the material before me. His main report is dated 31st July 2008 and it appears (amongst other places) at p593 to 604 of the bundle annexed to the Second Claimant’s statement.[31]The order of 13th March 2009 required the tenants to remedy a number of those matters by 10th April 2009.[32]The Defendant’s opening submissions note that following the initial presentation on 16th June 2009 of a list of missing or damaged items, Jamie Greig’s response was that the list included not just loss and damage said to have arisen on 5th April 2009 but everything complained of by the Claimants against the tenants including matters that had formed part of their action against the tenants (see above). He therefore asked for the claim to be represented, listing just those items claimed to have been “stolen” or “maliciously damaged”. The Claimants did this through their son, Amar, on 22nd June 2009 (1280 to 1283). Included among the matters that on the revised list the Claimant specifically identified as having now excluded from the claim were the lintel and exposing the manhole covers. It should also be noted that this communication also included details of the “malicious” damage – see p1282.[33]The Defendant says that by the time consideration of the Claimants’ claim reached Berrymans, the solicitors appointed by it to handle the claim, matters that had been the subject of the claim against the tenants had been added back in.[34]This was noted and objected to by Berrymans in their letter to Amar Mandalia on 12th November 2009. The Defendant says that his response on 25th November 2009 was to argue there was cover for such matters though I am not sure it can in fact be read in that way.[35]On the 2nd December 2009(p1228) Berrymans noted that costs of these items had clearly formed part of the previous claim and that the Claimants were not entitled “to claim again”.[36]On 1st January 2010 (p1229) Amar wrote again indicating that all items of work as per the order of 13th March 2009 had been made good and that “… although the damage as per this insurance claim may seem to be similar to those [against the tenants] they are not. This insurance claim has only involved items of damage that were done on 5th April and have no bearing on past orders, were made good and or repaired prior to 5th April 2009”.[37]On 28th January 2010 Berrymans indicated they disagreed and made specific reference to the lintel and the manhole covers. They also referred to “overlap” between the two claims.[38]Amar’s response on 27th February 2010 was to repeat that the items had been repaired but were damaged again on 5th April 2010. At the same time Amar offered to withdraw the cost of those items from the insurance claim saying:
“To avoid any further confusion and debate, prior to the 5th April 2009 the damages at their peak were valued at £ 4800 + VAT. To ensure that these claims are not duplicated and ensure this claim is independent of any previous damage we are more than happy to dissolve the damages that you believe to have been present at a cost of £ 4,800 + VAT as per Mr True’s report and the judgment order of Judge Dean QC”
[39]The Defendant’s case is that Amar’s statements in relation to the work to the lintel and to uncover the manhole covers having been completed prior to 5th April 2009 and then re damaged on that occasion were untrue. It is suggested that they were made fraudulently and were made in order that the Claimants might fraudulently recover as part of the claim in respect of damage that occurred prior to the 5th April 2009.[40]I will deal with this matter later in my Judgment but at this stage pause to observe that it does not seem to me that Amar was bringing anything to the Defendant’s attention in any underhand way but rather that there may have been a dispute as to what was covered between the parties.

The Policy Terms

[41]Although I have referred to some parts already it may be convenient to set out here the relevant sections of the insurance policy. I should say that some of the framework and layout of the insurance policy makes construction less than straightforward.[42]The policy is at page 785 of the bundle. At page 794 the policy provides as follows: SECTION A MATERIAL LOSS OR DAMAGE COVER Loss or destruction or damage (hereinafter termed “Damage”) to the Property Insured described in the Schedule which occurs during the period of Insurance at the premises by any of the following Perils which are applicable only if the letter set against them appears on the Schedule subject to the sums insured, terms, conditions and exclusions of this Section. Perils (A)… (B)… (C)… (D) RIOT, CIVIL COMMOTION, STRIKERS, LOCKED OUT WORKERS OR PERSONS TAKING PART IN LABOUR DISTURBANCES OR MALICIOUS PERSONS excluding Damage(i) Arising from confiscation…(ii) Arising from cessation of work…(iii) (a) In the course of theft or attempted theft. (b) In respect of any building which is empty or not in use directly caused by malicious persons not acting on behalf or in connection with any political organisation This rider clearly applies to D(iii) from the way in which it is set out in the Policy . (E – N) no relevance to this case (N) THEFT or attempted theft including Damage to the premises for which the Insured is responsible arising from theft or attempted theft but excluding damage (i) which does not involve (a) entry to or exit from that part of the building occupied by the Insured for the purpose of the Business by forcible and violent means, or: (b) actual or threatened assault or violence. (i) from any part of the building not occupied by the Insured for the purpose of the Business. (ii) from the open or from any outbuilding. (iii) to property in transit.(iv) to Money and securities of any description.(v) Caused by or in collusion with the Insured or any partner, director or employee or the Insured or any member of the Insured’s family or any other person lawfully on the premises. (P) (Not relevant to this claim). (Q) (Not relevant to this claim). ….. SECTION F – BUSINESS INTERRUPTION COVER Loss in respect of each item in the Schedule resulting from interruption or interference with the Business in consequence of loss, destruction or damage (hereinafter termed “Damage”) to property used by the insured at the Premises for the purpose of the Business by the section A perils (if the letter set against them appears on the Schedule) or by Section A Extension 1 (if the extension is shown as included on the Schedule) which occurs during the period of insurance. SECTION A MATERIAL LOSS OR DAMAGE COVER Perils (i) Arising from confiscation… (ii) Arising from cessation of work… (iii) (a) In the course of theft or attempted theft. (b) In respect of any building which is empty or not in use directly caused by malicious persons not acting on behalf or in connection with any political organisation This rider clearly applies to D(iii) from the way in which it is set out in the Policy . (i) which does not involve (a) entry to or exit from that part of the building occupied by the Insured for the purpose of the Business by forcible and violent means, or: (b) actual or threatened assault or violence. (i) from any part of the building not occupied by the Insured for the purpose of the Business. (ii) from the open or from any outbuilding. (iii) to property in transit. (iv) to Money and securities of any description. (v) Caused by or in collusion with the Insured or any partner, director or employee or the Insured or any member of the Insured’s family or any other person lawfully on the premises. (i) from any part of the building not occupied by the Insured for the purpose of the Business. (ii) from the open or from any outbuilding. (iii) to property in transit. (iv) to Money and securities of any description. (v) Caused by or in collusion with the Insured or any partner, director or employee or the Insured or any member of the Insured’s family or any other person lawfully on the premises. SECTION F – BUSINESS INTERRUPTION

COVER

[43]There are a number of extensions and section A reads as follows: SECTION A, EXTENSION 1 ACCIDENTAL DAMAGE The Underwriters agree to insure the Property Insured specified in the Schedule against ALL RISKS OF ACCIDENTAL PHYSICAL LOSS OR DAMAGE occurring during the Period of Insurance of the Premises and subject to the sums specified in the Schedule excluding 1. Damage by any of thea. the Perilsb. the causes expressly excluded from the Perils specified in paragraphs A- Q or Extensions 2-4 (whether or not insured) 2. Damage to any property caused by ……..[not relevant to this claim] 3. Damage caused by [not relevant to this claim] 4. to 7. – Not relevant to this claim. SECTION A, EXTENSION 1 ACCIDENTAL DAMAGE a. the Perils b. the causes expressly excluded from the Perils specified in paragraphs A- Q or Extensions 2-4 (whether or not insured)

SECTION A, EXTENSION 1 ACCIDENTAL DAMAGE

[44]At page 853 and 853 A there appears the schedule. 853 A appears to be the first page. It identifies the Perils covered which includes the malicious damage peril and the theft peril and also identifies the following sums as being included in the sum insured:• Buildings / rebuild sum insured £450,000• Landlords contents £10,000• Documents and records in unalarmed outbuildings £10,000• 36 months’ rent sum insured £120,000• There are excesses provided of £250.00 for each and every claim.[45]The renewal schedule is at page 853b and appears to be dated the 1st October 2008, again it has the same sums insured as set out above and provides that the perils applicable should again include D and N and in relation to business interruption again provides that the sum insured is £120,000 for the maximum indemnity period of 36 months.[46]An endorsement of the 1st October 2007 is at page 856A where it is provided that in relation to section A, Material Loss or Damage, it will include under perils A and B, fire as a result of the activities of tenants including cooking and Peril D will include malicious damage or malicious fire caused by tenants.

The Claim

[47]The essence of the Claimants’ case is that on the 5th April 2009 the tenants maliciously damaged the premises and stole the various items referred to in their claim and put the premises into such a state that they could not be let out. Their claim comprises the costs necessary to put the premises back into a lettable condition and for loss of rent over a 3 year period. They say the value of the claim (before taking into account interest) is as set out in their closing submissions at para 80. Namely a) Loss of rent £ 96,666.67 This makes allowance for the fact that the property might have been let within 7 months of the tenants leaving and the fact that the maximum indemnity period starts on the 5th April 2009 and ends 3 years later so that 29months rent is due b) Repairs to the property £ 84,236.40 c) Stolen or damaged chattels £ 10,000.00 d) Additional losses £ 7,211.27 e) Sub total £ 198,114.34 f) Less excess £ 250.00 g) Total £ 197,864.34

The Defendant’s case

[48]The Defendant says that very little of the damage identified by the surveyors amounts to malicious damage within the meaning of the policy. What the tenants were about was not a “spree” of criminal damage as suggested by the Claimants See para 15(3) C’s opening skeleton. but rather the removal of their own property or perhaps the removal of the Claimants’ property so far as that can be made out alternatively the bulk of the damage was caused prior to April 5th 2009 and/or amounts to dilapidations under the lease.[49]The Defendant’s case on the policy construction is largely set out in the opening at paragraphs 47 onwards. This observes that Peril D covers damage caused by “malicious persons excluding damage in the course of theft or attempted theft… directly caused by malicious persons.” See para 42 above for the full extract from the policy[50]It will be appreciated that in order to succeed under this head the Claimants would, on the Defendant’s case, have to show that the damage was caused by malicious persons and even if it were it would be excluded damage if caused in the course of theft or attempted theft caused by malicious persons.[51]The Defendant makes the following points in that regard i) The works on which the claim is based are works that Mr Schofield thinks it would be necessary to undertake for the premises to stand a reasonable chance of being re-let. That includes for example putting right or undoing works to the premises carried out by the tenants during their tenancy and prior to 5th April 2009. The Defendant says that even if it could be said that the tenants work constitutes “damage” plainly it was not done maliciously but pursuant to the tenants use and occupation of the premises. Other items, for instance, overhauling of heaters and security shutters were clearly not damaged. ii) As regards damage to the premises that may have occurred on 5th April 2009 the Claimants’ case (says the Defendant) is that “..On the 5th April 2009 the tenants were engaged in stealing the Claimants’ property. Unfortunately, it is not unknown for wanton acts of vandalism to take place during thefts. According to the Claimants, that is what was happening on this occasion. However malicious damage occurring during the course of theft or attempted theft is excluded from cover. iii) Again according to the Defendant “By the very fact that items removed from the Premises included fixtures and fittings, the process of removing them will inevitably have caused damage to the Premises. However damage caused to the premises as a result of removing fixtures and fittings is not malicious” iv) As regards stolen or damaged chattels which are claimed for the Defendants say they cannot be covered because of the exclusion for damage in the course of theft or attempted theft.[52]Dealing with perilN, the Defendant says that this relates to “THEFT or attempted theft including Damage to the premises arising from theft or attempted theft”. Damage being defined as “loss, destruction or damage”. i) However cover under peril N is, the Defendant says, excluded if the entry or exit to the premises did not involve forcible and violent means. That was not the case here, says the Defendant, because the tenants had keys to the premises. ii) Cover under peril N was also excluded, says the defendant, in the case of persons lawfully on the premises. That was also the situation here it says. The tenancy did not come to an end until the Claimants obtained their order for possession against the tenants on 9th June 2009. They were still the lawful tenants and legally entitled to be at the premises.

Accidental Damage

[53]Cover under the accidental damage extension is, says the Defendant, subject to inter alia, the same exclusions as other perils. Therefore the exclusions referred to under Perils D and N also apply to cover the accidental damage extension.[54]Other points made by the Defendant are i) That there is a breach of condition precedent relating to the pre 5th April 2009 damage. ii) In relation to other points in relation to cover under section A, a) There are separate limits of cover for the different items of property insured under section A – the stolen damaged chattels fall within item 2 – machinery, plant and all other contents, the limit of cover for which is £10,000, however the claim advanced this is £59,247.11 so that average would apply This is now accepted by the Claimants . b) The claims under section A are advanced on the basis of reinstatement i.e. new for old, so that the schedule of loss claims a replacement cost of the stolen chattels and claims the full cost of the remedial work to the premises without any allowance for wear, tear and depreciation.[55]As to the loss of rent claim the Defendant says that the Claimants have done little to clear the premises and efforts to market the same have been ineffective. They also say that full re instatement is not necessary since much would be addressed by any new tenant’s fit out works.[56]In terms of loss of rent, this comes under business interruption which is set out under section F of the policy (p818) The Defendant notes that the loss resulting from the interruption or interference of the business must be “in consequence” of loss, destruction or damage to the property at the premises by the section A peril. The Defendant therefore contends that if there is no cover under section A for material damage then the loss of rent is not covered.[57]The Defendant goes further and says that the Claimant acted unreasonably in relation to the state of the premises and their attempts to re-let. That was, says the Defendant, the true cause of the Claimants’ loss of rent and the Defendant relies upon that as a failure to mitigate.[58]The Defendant says that if any material damage is found to be covered then the way to deal with that would be by way an additional rent free period allowed to the tenant.[59]The maximum indemnity period for loss of rent is three years and the limit indemnity of £120,000. There is an issue between the parties, which I will deal with when dealing with the surveyor’s evidence, as to whether or not £40,000 per annum is the appropriate rental figure or £26,500 per annum or some other figure.

The Claimants’ case

[60]The Claimants’ starting point is that the tenants caused this damage maliciously.[61]In support of this the Claimants say: i) The tenants chose Easter Sunday to ransack the premises This is in fact wrong – it was not ii) The tenants cut through a mains gas pipe on the garage at the back of the premises; iii) The tenants cut through the gas pipe from inside the premises; iv) They vandalised the gas meter rendering it unusable; v) They vandalised the electricity meter rendering it unusable vi) They pulled down extensive amounts of electrical wiring from the ceiling; vii) They left raw chicken and other food products all over the floor; viii) They blocked the drains and toilets; ix) The whole exercise was carried out in an atmosphere of intimidation; The Claimants say at para 13 of their opening that it is difficult to characterise these actions as anything other than malicious. The inference is, they say, that the tenants decided not to carry out the work but instead to retrieve their own fittings and ransack the premises, incidentally stealing some of the Claimants’ property.[62]In relation to damage caused before the 5th April 2009 as I understand paragraph 16 of the Claimants’ opening they their suggest that all the damage caused by unauthorised works prior to 5th April 2009 is encompassed in Mr True’s report and that the total value is £ 6,300.00[63]The Claimants deal with “malicious persons” at paragraphs 24-32 of their closing. They urge upon me that “maliciously” means an actual intention to cause a particular kind of harm or recklessness as to whether such harm was done. It is irrelevant they say whether it was done with ill will or spite. The Claimants say it does not matter precisely how I approach it since there is “no doubt” that the tenants’ actions were premeditated and involved a considerable amount of planning. I pause only to observe that the planning - getting hold of flatbed lorries, having somewhere to store the goods and the tools to remove kitchens and so on - would also be the planning that would be required if they were simply removing themselves and the equipment from the premises. I am not sure if this assists me at all in considering that this was “malicious”. The Defendant contends that damage to the premises caused in and about the removal by them of their own fixtures and fittings is not damage caused by malicious persons in the meaning of peril D.[64]Alternatively the Claimants say it means “in the spirit of malice or ill will” or “evil and wicked” – see the OED. They say it does not matter which definition is used.[65]The Claimants set out again at paragraph 30 of their closing in this matter a similar list to that set out at paragraph 61 above[66]I should also observe that there is an issue as to whether the damage might fall within the “accidental damage” – the Defendant’s case on this is set out above.[67]The Claimants also say that if the tenants stole property belonging to the Claimants then this would bring into play the perils insured under Peril N.[68]The Defendant of course says that damage caused “in the course of theft or attempted theft” is excluded if it does not involve entry to or exit from that part of the building occupied by the insured for business purposes by forcible and violent means or actual or threatened assault or violence.[69]The Claimants accept that the entry appears to have been effected using keys (see para 37 of C’s closing) however it is suggested that the exit took place in an atmosphere of intimidation: they cut the gas pipe and damage was caused to the frame of the door at the front of the shop and Amar was assaulted by the tenants’ solicitor.[70]Further, says the Defendant, this cover will not assist the Claimant where the theft was caused by any person lawfully on the premises.[71]The Claimants (para 40 closing) say this is aimed at collusion claims. Alternatively the tenants were not “lawfully on the premises” – see the extract from Halsbury’s Laws at para 42 ibid.[72]Leaving aside issues of quantum the essential battleground is as set out above. I therefore turn to the issues I have to decide. It may be convenient to consider first the issue of fraud in the claim which, it is said arose because of the conduct of Amar Mandalia.

The issue of Fraud

[73]The matters said to have given rise to fraud on the part of Amar Mandalia have been set out above at paragraphs 28 to 40 above.[74]I have considered this matter carefully since the making of allegation of fraud is of course of serious matter, as, of course would be such conduct if made out. In particular I have considered the terms of the correspondence, the report of Mr True and the evidence of Amar Mandalia.[75]I bear in mind the various references I have been provided with and in particular Aviva v Brown [2012] Lloyd’s Re. 211. I have also taken account of the case of Savash v CIS [2014] EWHC 375 (TCC) to which I was referred by the Defendant.[76]There are a number of dicta in various cases that I am familiar with as to what the test is in terms of proving fraud. It remains a matter which is to be proved on the balance of probabilities. The extract from Lord Nicholls speech in Re H at para 18 of Savash is one such formulation. That case involved the standard of proof in cases involving the abuse of children but the dicta is generally accepted to be of wider application. The fact is that the standard of proof remains the balance of probabilities however there is some flexibility in its application and, as Lord Nicholls says in his speech “… this does not mean that where a serious allegation is in issue the standard of proof is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred”. .[77]In considering this issue I also of course take into account the elements of fraud as identified by the Claimant – that is to say did Amar act in such a way that the Insurer can show that he made a claim knowing that he (or his parents) suffered a lesser loss than he claimed or did he make the claim without belief in its truth or in circumstances where he was reckless as to its truth or falsity.[78]When Amar Mandalia gave evidence I paid particular attention to the way in which he gave his evidence and the way in which he dealt with this aspect of the case[79]However I start from the basis that it does not seem to me that the dispute contained or set out in the correspondence referred to above has the hallmark of someone seeking to deceive an insurer but rather of someone seeking to make robust points in relation to a claim that has been made when he or she knows that the insurers are taking issue with whether or not the subject matter of the dispute, that is to say the manhole coverings and the damage to the lintel, is indeed a real area of dispute.[80]It is also the case of course that there was a real dispute as to what was to form the subject of the claim and what fell within it. This was not a question of someone seeking to use subterfuge or deceit to include in the claim something that the insurer would not be able to challenge.[81]This is of course also a claim in which the Claimants clearly feel very disappointed by the insurers response to their claim and were seeking to put their claim with as much vigour as they reasonably could. Mr Mandalia is not a lawyer and was a comparatively young man at the time that he wrote these letters. He was also, in my judgment, clearly seeking to do the best he could for his parents. In relation to whether he knew at the time at the lintel had been repaired or not prior to Judgment in the earlier action and also whether or not the manhole covers had been released from having been covered up, his evidence was that he believed by reference to the pictures one could show that there was new plaster around the lintel area and that persuaded him that the work had been carried out prior to 5th April. When he was asked about the question of what might amount to dishonesty in an insurance claim I found that he gave his answers openly and without any gloss. He was pressed on these points for some time and maintained his position which was that his belief was that the works had already been carried out and after Mr True’s report and that the basis upon which possession was ordered was the failure to pay the £55,000.[82]He maintained his position that the particular items had been rectified prior to the events of 5th April 2009 and it seems to me that the letters referred to reflect his understanding at the time and a rational approach to the claim that was made. The letter in which he refers to “dissolving the claim” in particular seems to be an appropriate letter to have written. It is plain to me that he believed that there was a real dispute between the parties as to whether it had been carried out or not. I do not think that it is proper to characterise that as dishonest in any way and I find that the Defendant falls far short of showing that Mr Mandalia was dishonest or fraudulent in his own conduct or on behalf of the Claimants in relation to this. It would be right to say that at some stages during his cross examination he became somewhat defensive however his demeanour throughout was thoughtful, respectful and in my judgment was the demeanour of a witness trying to help the Court in addressing the questions being put to him. The allegation of fraud fails.[83]I should add that the cross examination of Mrs Mandalia appeared to me to be probing the question of whether she too was dishonest. Whilst perfectly proper by way of cross examination I did indicate to Counsel for the Defendant during the course of this that if he was going to allege fraud against Mrs Mandalia that had to be done plainly and that the purpose of the trial was not simply to allow exploration of matters that had not been pleaded. In any event no amendment has been sought and I need not consider that further. Suffice to say that in considering her evidence as a whole I think that the Defendant is right in suggesting that she is a competent business woman and has a clear knowledge of insurance matters. In considering, so far as I need to, questions of her credibility, I should also add that her answers in relation to the reason for her asking the insurance brokers not to break down what the insurance costs were in the relevant year, were less than convincing and in fact it is a proper inference to draw that she did not want the tenants to see that those insurance costs included the cost of legal expenses insurance to deal with the claim against the tenants themselves. This is a matter covered by Mr Field at paragraph 3 of his closing submissions.

The evidence overall

[84]In fact much of the evidence in relation to the question of whether the damage was caused maliciously or is otherwise caught or covered by one of the perils insured is circumstantial rather than being a matter of direct evidence from either the Second Claimant or her son. I also need to rely on some of the photographic evidence in coming to a view as to whether individual items were the subject of malicious damage. As noted above ( and as of course is my function) I will need to take a view overall.[85]I turn to the question of damage and loss and what (if anything) the Claimants should be indemnified for. Throughout this Judgment and throughout the case, I have tried to keep a keen focus on the question of what it was that gave rise to the state of the premises as they were found after 5th April 2009 and when they were inspected some significant time later by the various expert witnesses who have given evidence in this case. Leaving aside the construction of the insurance policy, it seems to me that a core point that I have to consider and bear in mind at all times is whether or not damage that was found or repairs that were needed, were caused either as a result of malicious damage or during the course of theft by the tenants and/or whether they are matters in respect of which the Claimants should be indemnified or whether , in the alternative, damage which was found to have occurred was as a result of either unsatisfactory attempts at altering the state of the premises or damage incidental to removal of property or tenants fixtures and fittings from the premises. I am conscious also that many of the matters that are referred to are said by the Defendant to amount to the sort of dilapidations that a tenant would be required to deal with at the end of the lease. I have borne that in mind as I go on to consider the question of what damage the insurers might be responsible for if I find that they are liable to indemnify the Claimants in relation to these events.[86]I have had the benefit of expert evidence in regard to the state of the premises from two surveyors, Mr Schofield and Mr O’Brien. Mr Schofield’s report, it should be said, is really quite short whereas Mr O’Brien has tried to put some interpretation on what damage has been caused and how that damage was caused. In cross examination he was asked whether or not he could identify what damage had been caused maliciously and it was suggested that he could not deal with the malicious element. Whilst that may be correct in terms of the strict point of seeking to use his evidence to show that any individual acted maliciously, I do find his interpretation to be very helpful in seeking to distinguish, for the purposes of this action, that damage which may have been caused by malicious or deliberate intent and equally that sort of damage or dilapidations that one might commonly expect perhaps from a careless tenant, when a lease comes to the end. That is underlined in a case such as this where the ending of the lease was far from amicable and indeed where very little rent had been paid through the lease and the tenants in the earlier action were found to be in breach of the lease. I return to this below. “Malicious” in the context of this case[87]As to what is meant by malicious I do not think that the extract from Archbold provided by the Claimants assists me very much. As noted in the extract the word is used quite frequently in the definition of statutory offences. But the use of the word “malicious” in the context of an offence of wounding – see s20 of the Offences Against the person Act 1861 is, it seems to me, quite different from here. In a typical case the Defendant in a criminal case may be reckless as to the impact of his or her actions whilst not intending that serious consequences may flow from it. Nonetheless is will be no defence that he or she did not have any specific intent and the word malicious has, in my judgment, in those cases a different meaning. Absent self defence (or perhaps accident) if one causes a wound by an assault with or without a weapon it may be difficult to argue that it was not “malicious” to some degree or another. However in the context of damage to property it may be a quite different matter. The question of whether this might amount to criminal damage in the formal sense of that phrase was not canvassed before me and I will not consider it in detail.[88]I anticipate that if asked about this the tenants might well say that some damage was caused in the course of removing items which they either honestly believed to be their chattels or fixtures and fittings or that, whatever the reality in terms of ownership, such damage was a necessary incident of removal. Almost certainly they would want to argue that removal was lawful and indeed it can be seen from the lease itself at Clause 3.5(A)(vi) there is a covenant to make good all damage caused by the removal of fittings ( see p867) and also by Clause 3.5.(A)(ii) to reinstate the premises to the state and condition they where in prior to the making of the alterations.[89]The Claimants themselves also concede that the OED definition imports “in the sprit of malice or ill will” or “evil or wicked”.[90]The Defendant does not urge any specific meaning of the word “malicious” upon me and refers me to the OED definition of malice which it is said is “ the desire to harm someone; ill-will”.[91]I need not consider this further at length. It is plain to me, and I find that, the use of the word “malicious” in this policy was intended to connote an ill intent. In the context of this case it seems to me that I can only find malicious behaviour and damage where I decide that there was no reason for the item to be damaged in the course of the tenants removing property or fixtures from the premises and it was done with some deliberation with the intention that the same be damaged. To elaborate further in terms of definition is not helpful it seems to me, particularly in circumstances where, as I find below, the proper inference from the limited information I have is not that in most instances any damage was caused not by a decision to “ransack” the premises ( see para 13 of the Claimant’s opening) but rather in the course of the tenants removing items including fixtures that they felt they were entitled to remove. As will be seen below I find that the Claimants have failed to make out much of their claim and the real remedy would have been to pursue the tenants for failing to deliver up the premises in a proper state.[92]In the course of dealing with the extent of damage caused to the premises and/or the state in which the premises are left, I have to bear in mind all of the evidence I have seen including the videos that were played to me and the pictures that form part of the bundle. As will be seen below I have come to the view that the Claimants can only recover in relation to items that were maliciously damaged. As will also be seen I have concluded that much of what is set out as part of the Claimants’ claim would be better suited to a schedule of dilapidations or the like that the tenants might expect to have to deal with (or have dealt with) at the conclusion of the lease ( however it was concluded). As will also be seen the Claimants have failed to persuade me that much of the claim as presented is recoverable under their insurance either.[93]Insofar as the Claimants can make a recovery in relation to the physical damage as against the Defendant it is, in my judgment, only on the basis that they can bring themselves within Peril D. Insofar as they can recover they can also only recover if not excluded under the exclusions within that section of the Policy. Insofar as I make findings below that they are entitled to so recover my conclusions also amount to a conclusion that the “exclusions” do not operate. However where I find there is no recovery in relation to damage said to have been caused it is on the basis that there was no malice or malicious act involved rather than because of the exclusions.[94]As for those exclusions the Defendants says that if damage arises in the course of theft (caused by malicious persons) then it is excluded. The Claimant seeks to argue that the extension (referred to by me at paragraph 46 above as an endorsement and referred to also by the Defendant as such) is itself disapplied by the “extension”. I disagree since, as the Defendant says, this in reality simply makes plain that “malicious” persons can include tenants. In any event, in the light of my findings below this may be of no import.[95]As for Peril N insofar as it is alleged that damage to the property occurred as a result of theft or attempted theft I simply do not see that this Peril comes into play as a result of the events of the 5th April 2009. There are a number of reasons for that: i) I cannot see that any of the damage to the property has been shown by the Claimants to have resulted from theft or attempted theft; ii) In any event I do not accept that there was forcible entry to the property ( now acknowledged at para 37 of the Claimant’s closing) ; iii) As to forcible or violent exit it is said that exit took place in an atmosphere of intimidation (para 37 again). However both as a matter of fact and of construction I do not accept that the atmosphere at the time ( some of which can be gauged from the video of the Police at the shop which includes the altercation with the tenant’s solicitor ) amounts to a forcible or violent exit. iv) Likewise whatever the cutting of the gas pipe may amount to I am not satisfied that either as a matter of fact or in terms of construing this policy that this comes within the definition or that the Claimants have proved that it does; v) Further I do not accept that the assault by the tenants’ solicitor was connected with any theft or attempted theft. A theft involving violence – threatened or actual will generally amount to robbery and there will be a connection between the use or threat of violence and the actual theft. This assault was completely incidental and in any event was at the hands of the tenants’ solicitor not the tenants. The events shown by the video evidence do no credit at all to the tenants’ solicitor but they do not assist the Claimants in showing that this was a malicious course of action; vi) Finally there is exclusion (vi) which, it seems to me , can and should be read disjunctively. There is a dispute as to whether the tenants were or were not lawfully on the premises.[96]In considering what these exclusions cover I have considered whether “Damage” referred to under peril N might be construed as “Damage arising as result of theft” in the sense of seeking to limit the exclusions to physical damage arising as a result of theft (see for instance my starting point at para 95(a) above). However the definition of “Damage” in this section of the policy is “Loss or destruction or damage” and in my view that also means losses arising as a result of the theft itself.[97]Thus I find that losses said to have been incurred by the Claimants as a result of theft are excluded on the basis of the rationale set out above.[98]As to the accidental damage endorsement, I do not believe the Claimants can or have satisfied me that they can bring the damage to the property under this extension. No evidence has been adduced so far as I can tell that would begin to persuade me that the damage to the premises occurred as a result of accidental damage. In any event it would, in my view be excluded insofar as it might otherwise be properly considered under the named perils or the exclusions therefrom.

Was the damage malicious?

[99]As noted above the Claimants set out a list of points which showed that the damage complained of was malicious. They repeated it – with some additions – in their closing. i) The tenants chose Easter Sunday to ransack the premises This is in fact wrong – it was not ii) The tenants cut through a mains gas pipe on the garage at the back of the premises; iii) The tenants cut through the gas pipe from inside the premises; iv) They vandalised the gas meter rendering it unusable; v) They vandalised the electricity meter rendering it unusable; vi) They pulled down extensive amounts of electrical wiring from the ceiling; vii) They left raw chicken and other food products all over the floor; viii) They blocked the drains and toilets; ix) The whole exercise was carried out in an atmosphere of intimidation; x) Mr O’Brien said (in an answer to me) that it was very unusual for commercial premises to be damaged in this way.[100]As to those points I comment as follows: i) It was not Easter Sunday – in any event I cannot see that this is of relevance at all; ii) Whatever the true interpretation of these CCTV extracts they do not, in my view, establish malicious behaviour in the rest of the building; iii) In isolation this might possibly point to malicious intent but it is also material in considering whether the tenants were simply a little less careful than they might have been in removing their equipment, again the Claimants have not satisfied that I should regard this as malicious; iv) See above – and there is no indication as to when this was done; v) See above again; vi) This is, on the evidence of Mr O’Brien and taken as a whole entirely consistent with removing installations put there by the tenants; vii) This is consistent not so much with vandalism or malicious intent as being evidence that the tenants were in a hurry; viii) The blocking of the toilets and drains may have been malicious; ix) I have dealt with this point above when dealing with the assault. However one describes the atmosphere it does not show that damage was malicious; x) I have reviewed my notes, which are very full, and do not have a note of this. That may be because I did not think it so telling – in any event it is not really a factor that weighs with me when considering the question of malicious intent;[101]As noted above I heard evidence from Mr Schofield, a surveyor instructed by the Claimant and from Mr O’Brien for the Defendant.[102]The two surveyors were unable to reach any agreement – to the extent of not even being to able agree the contents of a joint statement.[103]Turning to the evidence of the state of the premises in terms of the approach to the task I found Mr O’Brien’s approach much preferable to Mr Schofield since he sought, in a fairly detailed report, to address the issues of the extent of damage and its causation individually rather than simply giving an estimate for works to be carried out.

(b) The anticipated cost of re instating the property

[104]It should be noted of course that Mr True was undertaking a different task – see 1.2 of his report at p 1505, where he indicates that he was asked to report on complains that that tenants were “in breach of specific terms of the lease agreement”. It will also be noted that he observed that some matters would need to be dealt with as part of any dilapidations claim at the end of the lease ( see e.g. 4.1.10 of his report).[105]Mr Schofield also observes that he was hampered by the conditions on site and the interval before his inspection which took place on 8th January 2014.[106]His report incorporates a schedule in which he says he sets out “what I think the works would cost”. However the schedule covers “ WORKS REQUIRED TO BE UNDERTAKEN IN ORDER TO RESTORE [THE PREMISES] TO A LETTABLE CONDITION”. This is not the same, it seems to me as the task he was asked to carry out.[107]Mr Schofield said he did no think it was possible to identify what works might have been caused by the various possibilities at section 5.0 of Mr O’Brien’s report on p373 save perhaps to identify what might have been caused prior to 5th April 2009 (item a)[108]Mr O’Brien produced a more substantial report. I also note that he is a quantity surveyor rather than a building surveyor though it appears from his report that he now acts as a loss adjuster though specialising in the quantum of claims. I found his report more thorough and more helpful, perhaps because he had been asked to address causation where he was able to do so.[109]As noted above Mr O’Brien was challenged as to whether he could give evidence as to causation and whether he accepted that he was not an expert in malicious intent. However I think those criticisms are of limited value. I found his report to be a helpful guide from someone with experience in the field and who had visited the premises and sought to identify what might properly be regarded as damage which was out of the ordinary and for which no obvious excuse could be found. I remind myself that it is for the Claimants to prove on a balance of probabilities what (if any) damage was caused maliciously, a point that was agreed by their counsel during this cross examination. The decision on that is of course mine alone but I make it plain that I have been much assisted by Mr O’Brien’s evidence in this regard.[110]As to the evidence from the Claimants themselves as to what damage was caused by the tenants it is in fact quite limited. I have reviewed the photographs in the bundle, and of course saw the video evidence of the damage to the gas pipe that was shown to the court and also the video evidence taken when the Police were at the premises. I have also reviewed Amar’s evidence and the schedule attached to his statement. Likewise I have reviewed Mrs Mandalia’s evidence and the numerous photographs I have been provided with.[111]Having considered all that evidence from Mr O’Brien and Mr Schofield and the evidence from the Claimants, I have come to the view that however I approach it the following items are the only ones that I can say were items attributable to malicious intent on the part of the tenants when they left these premises. i) The toilets were smashed and it is to my mind clear that this was not likely to have been either accidental or incidental to the removal of items of equipment. It is a proper inference to suggest that this was carried out maliciously; ii) The kitchenette does appear to have been removed forcibly and it is a proper inference to take the view that this was removed at the time of the event or that and that this was malicious as well. I had some hesitation in this regard however I note the evidence of Amar that he believed it to have been in good order and I find that there was no good reason to remove it; iii) Whilst it may be possible to argue that the pipework and radiators were in fact the tenants and that they were taking their property with them, it does seem to me that to take them out in this way was probably malicious and that the cost of replacing them should be dealt with; iv) The cost of cleaning might not be itself all attributable to the malicious acts but it is plain that even if the malicious acts were limited to those set out above there would have been required some cleaning.[112]In relation to these items I adopt the figures used by Mr O’Brien. They are taken principally from the schedule at p428A and I am working from a further copy of that which was provided to me in A3 format and from which the column with “agreed comments” has been removed. This gives rise to the following figures: i) Refurbishment of kitchenette, toilet and washbasins £3,250.00; ii) Replacement of heating radiators and pipework £ 4,500.00; iii) Cleaning (put at £ 500 in the schedule at p428A but £ 2,500 in the body of the report Apparently because it was more extensive) ) which I assess at £ 750.00. iv) A total of £ 8,500.00 from which should be deducted the excess of £ 250.00. This produces a total of £ 8,250.00 in this regard.[113]I should note that in a draft judgment sent to the parties I had added Vat to the above items. It has been pointed out to me that, at p371 of Volume 2 ( p6 of his report), Mr O’Brien suggested that the figures referred to at para 112 (i) and (ii) above were inclusive of VAT. I think it appropriate to accept that as a correction. Whilst the issue of VAT on the cleaning is not as clear it does seem to me that he was seeking to express his figures as including VAT and so I propose to make an award of £ 750 in that regard inclusive of any VAT.[114]It was urged upon me by way of further submission by the Claimants that I should add sums to the figures at para112 above for site preliminaries and profit. I decline to do so: i) It does not seem to me that this would be appropriate in circumstances where these are isolated and comparatively modest jobs as priced; ii) In any event and perhaps of equal importance it seems to me that this goes beyond mere correction of my judgment and is an attempt to reopen the same.[115]In relation to the other matters I should deal with them so far as I can and make specific findings. i) The damage to the garage amounts to dilapidations; ii) Although there were substantial cables at ceiling level (see page 4 of Mr O’Briens report – page 369) which were installed, they were untidy but not damaged or vandalised according to Mr O’Brien whose evidence I prefer on this point. iii) In relation to the suspended ceiling, this was it seems to me, something that was installed by the tenants and it would fall into consideration as a matter of dilapidations when they moved it even if it caused some damage; iv) The damage to the shop front and rear is not damage, it seems to me, that amount to damage as a result of any malicious act. The suggestion that the locks had been drilled out and replaced is a suggestion that I accept, as Mr O’Brien suggests, is common upon resuming possession of leased premises. v) In relation to electrical works, again in so far as the electrical wiring could have been carried out badly, it will need to be replaced but this does not arise as any malicious act on the part of the tenant but rather, I find, is a question of dilapidations. vi) In relation to gas and plumbing works, then it seems to me that the preponderance of this amounts to dilapidations save for the items set out above. I do not find that cutting off of the gas main was malicious and accept the analysis in this regard set out in the Defendant’s closing; vii) In relation to the disposal of all ceilings to gain access to re wiring and the like it seems to me again this amounts to dilapidations and works will be required to rectify work undertaken by the tenant which did not comply with good practice. viii) Likewise in relation to the fast food unit, the building works, removing and disposing of all ceiling tiles is again work to rectify bad work undertaken by the tenant in the course of this. ix) It is plain that removal of the cookers and the like and the way in which they were dealt with in relation to the removal of the gas and electric supplies, was carried out somewhat hurriedly and in a way that may have caused unnecessary damage. However again it seems to me that the proper interpretation is that this would have been provided for by dilapidations under the lease – see above; x) There is no evidence that tampering with the meters was done on the 5th April 2009. .

The stolen property

[116]I have reviewed all the evidence in this regard including Mrs Mandalia’s evidence, her witness statement, the lease and her cross examination. I am far from convinced that the Claimants really regarded themselves as owning most of the remaining property that was in the premises when given to the tenants save for those items referred to in the Lease. Many items were very old and would have no material value it seems to me.[117]In any event by reason of the decision I have come to in relation to the Theft section of the policy there will be no award in relation to items stolen.[118]If my interpretation were different then it seems to me that the items identified in the lease would be covered. The costs of replacing these is set out in the schedule.[119]The Claimants concede that average would apply to the theft claim. I do not need to decide this point since I make no award under this head – however it seems to me that if I had made an award then since I would not have found anything but this covered then applying average might make no difference to the sum claimed.

Loss of Rent

[120]I turn then to the question of lost rent. The claim for this is the maximum of the indemnity of £120,000 but was varied downwards to £96,666.67. In the course of the opening and in the written documents it is suggested that the Claimants have lost five years rent. I do not doubt for a moment that these hard working Claimants have suffered very badly by reason of not re-letting the premises and being left without the rent that was presumably going to be an essential part of their income. However as the Defendant points out, this is a case about the extent of insurance coverage and the Claimants’ perception of what they were covered for is not the same as the Defendant’s, nor is it the Court’s.[121]The reality is that most of the works that may be required to put this property into a “lettable condition” arise out of and still arise out of, the neglect of the tenants in the way in which they carried out work or left the premises but the preponderance of those works do not arise from malicious damage as I have found. It seems to me appropriate to allow a short period of loss of rent to cover the period during which it would have been necessary to put the premises out of action whilst the toilets, kitchenette and heating system were repaired. The idea that three or five years loss of rent flows from that, is to my mind wholly disproportionate.[122]I deal also with the question of impecuniosity. Whilst that might have been an issue had I found that most of the works argued for by the Claimants were matters that the Defendant ought to deal with it does not seem to me to be an issue on the basis of my findings: i) The reason why the premises have not been re let is not the failure to carry out the works I have identified as being matters the Defendant should pay for but rather the more extensive matters that need to be dealt with as a result of the tenants’ failures under the lease; ii) In any event the Claimants were ( through Amar) able to undertake some works and they have not satisfied me that they could not have undertaken these comparatively modest works, whatever be the situation in relation to the more substantial works that they say would need to be undertaken; iii) In any event as I understand the evidence of the valuation experts at least some of the works identified at paragraph 112 above might be appropriately covered by allowing an additional rent free period allowing incoming tenants to make their own provision in these regards;[123]However, as noted, in relation to the overall inability to let the premises it arises as a result of the more substantial matters which are not damage that falls at the insurers door and I find as a matter of causation the Claimants claim to lost rent fails save for a period of, say, three months, during which they would have been prevented from letting the premises by reason of the need to deal with the damage caused maliciously.[124]I therefore turn briefly to the evidence of the valuation surveyors. Given the comparatively modest amounts involved this is less important than it might have been. It has clearly proved impossible for the parties to agree any element of this claim which, in the context of the modern approach to Litigation, is at least disappointing. Whilst of course it is the function of the Court to determine any matter in dispute the question of what rent might be achievable is one area that the parties might have removed from the battle between them.[125]I listened carefully to both expert witnesses as to valuation. Each is well experienced and with an established firm.[126]Mr Shapiro sought to suggest that the shop in question lay in a “micro market” and that the presence of the local hospital was a particular selling feature – on the basis that visitors to hospitals often bring trade with them.[127]Mr Hewetson’s view on this was that this was trying to compare the rent of the premises with what might be achieved further down Watling Avenue and it was different with much more footfall in that area.[128]Whilst Mr Shapiro was very persuasive experienced and clearly had quite a lot of local knowledge, it seems to me that he has not been as scientific in his approach as Mr Hewetson. In particular because I was persuaded by Mr Hewetson that there was no real “micro market” in play here I prefer Mr Hewetson’s evidence overall though of course he gave a range with between £25,000 and £30,000 per annum as the lettable value of this premises. Having regard to my findings above, I find that the upper end of that range is the figure I should choose. The Claimants are entitled to three months loss of rent at £7500.[129]In considering my Judgment in this case and in reviewing all the papers I have of course been alive to the fact that the financial wellbeing of the Claimants has of course been very badly affected by the whole of this episode. However my function is to assess the evidence and the arguments put to me and the result of my finding and my analysis is that I find that, in reality most of this loss has been caused not so much by any failure on the part of the Defendant insurer to pay out but rather by the fact that as the Claimants themselves acknowledge, these tenants were “bad tenants”. They failed to pay the rent, they carried out work to an unsatisfactory standard, they left the premises in a much worse condition than it might have been but all those matters were matters to be taken up with the tenant, they are not matters, in my judgement, covered by the insurance policy. In the result there will be Judgment for the Claimants for £15,750.00. As to questions of interest or the like I await submissions before making any determination in that regard.