Tonkin & Anor v UK Insurance Ltd. [2006] EWHC 1120 (TCC)

[2006] EWHC 1120 (TCC)

Case No HT-05-103

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

St Dunstan’s House

Venue 133-137 Fetter Lane

Date 18 May 2006

London, EC4A 1HD

Before

HIS HONOUR JUDGE PETER COULSON QC

Between

MARK TONKINClaimants

MARIE LOUISE TOUREAUClaimant

UK INSURANCE LIMITEDDefendant

Mr Jeffrey Terry (instructed by Davies Wallis Foyster) for Claimants

Ms Rosemary Jackson & Mr Jonathan Selby (instructed by Travers Smith) for Defendant

Hearing Hearing dates: 13, 14, 15, 16, 20, 21, 22, 23 and 24 February, 2 March 2006

Judgment

[1]On 29 September 2002, a major fire destroyed the Claimants’ home, Curls Barn, in the village of Ripe in Sussex (“the property”). Almost all the property was destroyed in the fire. The Claimants had insured both the building and its contents with the Defendant. With their three children, they moved into a small separate building adjacent to the ruins of the property, known as The Gallery, and waited for the property to be rebuilt. Extraordinarily, 3½ years on, that has yet to happen. One of the principal issues in this case is how it has come about that, to paraphrase an old insurance slogan, a drama has been turned into such a significant crisis.

[2]Although the Claimants had insured the property and the contents with the Defendant, it quickly became apparent that, on their own case, the Claimants were under-insured in respect of both of their principal heads of loss. The limit on their contents insurance was £43,000, a sum paid out in full by the Defendant; the actual loss was put at more than twice that figure, at £93,355.

[3]The scale of the under-insurance in respect of the reinstatement costs of the property itself depends on what figure is finally identified as the reasonable cost of the reinstatement works. That was the main issue at the trial. The cap in the Policy in respect of reinstatement costs was originally £450,000 which, because it was index-linked, had increased to £504,000 by the time of the fire. At one point, the Claimants’ pleaded claim in the action sought £714,645.22 in respect of construction costs, with only a deduction of £30,000 to reflect the cap.

[4]Since the fire, the Defendant has made various payments to the Claimants under the Policy. I have already referred to the £43,000 paid out in respect of the contents, although this sum is irrelevant to my assessment of the Claimants’ remaining claims in the action. I find on the evidence that the sums which have been paid out in respect of their reinstatement claim comprise £12,278.75 in respect of emergency works (including site clearance); £2,000 for the oak frame design; £1,715.50 in respect of scaffolding hire and purchase; and £15,193.12 in respect of professional fees (see paragraph 380 below). In addition, in the summer of 2003, the Defendant paid £25,915 in respect of the ground works that were then carried out in advance of the rest of the reinstatement works. Regrettably, there is now a major dispute in respect of that ground works claim, dealt with at Section F2 below. Thus a total of £57,102.37 has already been paid out in respect of the reinstatement claim. Furthermore, in the summer of last year, pursuant to my order of 29 July 2005, the Defendant made a further interim payment to the Claimants of £60,800. Thus, from any gross sums which I find due to the Claimants in respect of their claims in these proceedings, the sum of £117,902.37 must be deducted to reflect the sums already paid.

[5]The process by which the Claimants made their claims under the Policy, in order that such claims could be considered and paid out by the Defendant, did not run at all smoothly. In particular, there were persistent difficulties with the perceived quality and extent of the proposed reinstatement scheme(s) put forward on behalf of the Claimants. By the middle of 2003, there was already an atmosphere of mistrust and antagonism between the parties. There was an important meeting to discuss the claims on 14 August 2003 which the First Claimant (to whom I shall refer hereafter as Mr Tonkin) secretly tape-recorded. After that, as the parties reached an impasse, Mr Tonkin complained about the Defendant to both the Financial Ombudsman Service (“FOS”) and his MP, and when the outcome of the FOS complaints procedure was not in his favour, he accused that organisation of bias.

[6]Following other events which I examine in greater detail below, on 1 May 2004, the Defendant repudiated liability under the Policy because of what it said was a lack of proper information and documentation in support of the Claimants’ claim. It is properly accepted by Ms Jackson, who appeared (together with Mr Selby) on behalf of the Defendant, that this repudiation was wrong in law and unjustifiable. This repudiation, however, remained in existence at the time that these proceedings were commenced on 8 February 2005, and it was only on 15 July 2005, following an order of this court, that the Defendant admitted liability under the Policy.

[7]During the litigation the principal issue between the parties, namely the quality and reliability of the information provided by the Claimants in support of their claim, has remained precisely as it was in the two years or so before proceedings were commenced. I am told that there was an unsuccessful mediation in August of last year. Thereafter, in the run-up to the trial, there was a certain amount of realignment/readjustment of their respective positions by both sides, but very little agreement. As a result, by the start of the trial, there remained a dauntingly long list of issues extant between the parties.

[8]The Claimants’ claim, both before and during the litigation, has been based entirely upon the reinstatement scheme produced on their behalf by Delavals, their construction consultants, in September 2003. Until a few weeks before the trial, the quantification of this major element of the Claimants’ claim relied upon tenders obtained in October 2003 by Delavals, and based upon this scheme. However, at the very last minute, the Claimants sought to rely on a different, lower figure produced by their expert quantity surveyor. The consequences of that late change of position are examined below. The Claimants also make a series of other claims, many of which depend upon a finding that the Defendant was in breach of the terms of the Policy for failing to deal promptly and/or reasonably with their claims. Their total claim, as put forward in their final schedule of damages, was £707,998.53.

[9]The Defendant maintained, both before and during the proceedings, that the Delavals Scheme of September 2003 was hopelessly deficient as a reinstatement scheme. Instead, the Defendant put forward its own scheme, produced by their expert engineer, Mr Beale, which was then costed by their expert quantity surveyor in the sum of £298,449.47. That represented the Defendant’s primary case on the reinstatement costs. The Defendant’s secondary case on the reinstatement costs identified a figure of £373,346.60, this being their expert’s costing of the Delavals September 2003 Scheme. As part of both these alternative approaches, the Defendant denied that it was in breach of the terms of the Policy or that, if it was, such breach was causative of any recoverable damages.

[10]It is impossible not to have considerable sympathy for the Claimants and the predicament in which they now find themselves. As private individuals they must have been horrified at the time and effort (to say nothing of the cost) required by civil litigation of this sort. I have endeavoured to ensure that at all times that they were not at a disadvantage in their dispute with the insurer Defendant. Amongst other things, I allowed their application, made on the first day of the trial, to rely on a fourth witness statement from Mr Tonkin, as well as further expert material from their expert engineer, Mr Orrell and further quantity surveying evidence from their expert, Mr Ireland. I also allowed their application, made at the same time, to rely on a third witness statement from Mr Stillman, from Delavals, which had been provided a few days before the trial. In addition, on the second day of the trial, I allowed the Claimants to amend their pleadings to raise a potentially crucial allegation of estoppel. That is a matter to which I shall return below in Section F.

[11]The other significant event during the trial was the allegation of fraud, made by the Defendant, arising out of certain evidence given by Mr Tonkin during his cross-examination. I deal with that part of the case in detail in Section E below. However, I made clear to the Claimants, at the completion of the closing submissions on 2 March 2006 that, although I had grave concerns about many aspects of their claim, I was satisfied that the allegations of fraud had not been made out. My detailed reasons for that view are set out below.

[12]It is appropriate to deal first with the Policy and the relevant principles of law that arise in respect of it (Section B below). Then, having set out the relevant events (Section C below), I deal with three general matters that have arisen: the proper approach to reinstatement claims of this sort (Section D below); the allegations of fraud (Section E below); and the Claimants’ case as to estoppel (Section F below). Thereafter I deal with the parties’ respective cases as to the most appropriate and reliable reinstatement scheme (Sections G and H below). I then deal briefly with the issues as to the responsibility for delay (SectionI below), since my findings on that issue have an impact on a number of the different claims put forward by the Claimants. Lastly I deal with each of those claims in Sections J – Q below. Section R of this Judgment sets out a summary of my Conclusions. B. THE POLICY AND THE RELEVANT PRINCIPLES OF LAW B1. Buildings

[13]The Policy conditions in respect of buildings were as follows:

“STANDARD COVER The SUM INSURED under this Section of the Policy is £504,000 A. LOSS OR DAMAGE We will pay for loss of or damage to the buildings caused by … fire. … WHAT IS COVERED … 4. Fees and Clearance Costs We will pay for: (a) the costs of architects, surveyors, consultants and legal fees (b) costs necessarily incurred with our consent to clear the site and make it and the Buildings safe in the repair or reinstatement of the Buildings following damage recoverable under this Section but not fees for preparing any claim under the policy 5. Local Authority Requirements We will pay for the extra costs of reinstatement or repairs of the damaged part of the Buildings incurred solely to comply with any Government or local authority requirement following damage recoverable under this Section but not if you were notified of the requirement before the damage occurred. 6. Alternative Accommodation and Rent We will pay in addition to any other amount recoverable under this Section (a) if You occupy Your Home the cost of reasonable alternative accommodation for You, Your Family and domestic pets … Any claim payment will not be more than 20% of the sum insured by this Section.”

The SUM INSURED under this Section of the Policy is £504,000 A. LOSS OR DAMAGE WHAT IS COVERED We will pay for: but not fees for preparing any claim under the policy but not

We will pay in addition to any other amount recoverable under this Section

[14]Clause E of this part of the Policy was important. It read as follows:

“E. BASIS OF CLAIMS SETTLEMENT 1. We will pay for the cost incurred in reinstatement or repair of that part of the Buildings which is damaged by any of the causes insured by this Section without any reduction for wear and tear provided that at the time of such damage the Buildings are in a good state of repair. But not for the cost of replacing or repair to any undamaged items solely because they form part of a set, suite, group or collection of items of a uniform design, nature or colour. 2. If the damage to the Buildings is not reinstated or repaired or the Buildings are not in a good state of repair then We will pay at our option: (a) the cost of reinstating the damage less a deduction for any wear and tear of betterment, or (b) the difference between the sale value of Your Home in the open market immediately prior to the damage and its residual value following such damage. 3. The most we will pay for any one claim will be the total sum insured shown in Your Schedule plus any amount payable under Items 5, 6 and 7 [above]. … 7. The insurance premium charged is based upon the sums insured shown on your policy schedule/confirmation. If in our opinion the sums insured do not accurately reflect the rebuild cost of the risk on cover, at our option, we reserve the right to reduce any claims payment by the amount of the percentage of underpayment of premium due to this under-estimation of value.”

[15]It is plain that, as a matter of construction of these provisions, the Claimants were entitled to the costs of reinstatement/repair up to the sum of £504,000, together with fees (item 4 above); any extra costs of complying with Local Authority requirements (item 5 above); and alternative accommodation (item 6 above).

[16]Of these potentially additional items, the only one that generated a dispute of principle was the entitlement to the extra costs caused by Local Authority requirements. As we shall see, there are certain elements of the Claimants’ claims which appear to be predicated on the assumption that they are entitled to extra costs over and above the £504,000 for complying with Local Authority requirements, even if what the Local Authority require is precisely what was there before the fire. That plainly cannot be right; if taken to its logical conclusion, it would mean that the Claimants could argue that they were happy to live in a small one-room building on the site of the original property and that, because the Local Authority were insisting on the barn being rebuilt to its previous dimensions, all the costs of such rebuilding work were part of this additional entitlement, thereby rendering otiose the £504,000 cap. In my judgment, this argument is misconceived.

[17]It seems to me clear that item 5 of the Policy, concerned with Local Authority requirements, is designed to ensure that the Claimants are not penalised by the £504,000 cap if, when reinstating the barn, they are required to incur additional cost to meet a particular Local Authority requirement which was not in place when the property was built, and which, therefore, would have had no relevance to the Claimants until they had to grapple with the consequences of the fire.

[18]Furthermore, it is important to note that this potential way of recovering sums in addition to the £504,000 is only referable to the extra costs of any Local Authority requirement. Thus, if the Local Authority required a particular material to be used which would have cost the same as the reinstatement material, then there is no extra cost and this clause is not triggered.

[19]There was an argument about whether Clause E1 or E2 applied in this instance because, 3½ years on, the property has not been reinstated. My primary conclusion was that this argument went nowhere because, on the facts of this case, there was no essential difference between the Claimants’ entitlement whether E1 or E2 was the correct trigger. The only potential difference between the two is in respect of wear and tear (since no claim for betterment could arise in any event) and I do not regard any of the Defendant’s arguments as giving rise to a deduction for wear and tear. However, for the avoidance of doubt, it seems to me that, in the present case, the Claimant’s entitlement arises under Clause E2. That is because no costs have been incurred (other than those identified above) in respect of reinstatement or repair. The vast bulk of the reinstatement works have yet to be carried out. Thus the damage to the building has not been reinstated or repaired and Clause E2 must apply. B2. The Correct Date of Assessment

[20]There was a much more important argument relating to the correct date on which the reinstatement costs should be assessed. The Defendant argued that the correct date was the date of the fire. The Claimants, on the other hand, say that the costs should be measured as at October 2003, when the second set of tenders was obtained. They maintain, in addition, a further claim for the increase in costs since that date. That further claim is dealt with as a matter of principle in Section B5 below.

[21]Ms Jackson submits that there is extensive authority for the proposition that the reinstatement costs must be assessed at the date of the fire. In Leppard v Excess Insurance Co Ltd [1979] 2 Lloyd’s LR 91, the Claimant’s cottage was destroyed by fire. The policy was in very similar terms to the policy in the present case. The Court of Appeal held that the relevant date for the ascertainment of the amount of the loss was the date of the fire. A similar result was obtained in Sprung v Royal Insurance [1999] Lloyd’s Rep IR 111. The analysis adopted by the Court of Appeal was to treat reinstatement clauses, such as the clause in the present case, as a classic indemnity provision, with the insurers being held to be in breach of those indemnity provisions at the moment of the fire. The claim under the Policy is thus more accurately categorised as a claim for damages against the insurer for failing to keep the insured free from harm. In this way, the only conclusion is that the right to damages accrued at the date of the loss.

[22]The Claimants seek to argue that, in the present case, damages ought to be assessed at a different (and later) date by reference to two submissions. The first seeks to rely on Clause E1 and amounts to a submission that the use of the word “incurred” in the first part of that clause meant that this was, in some way, not an indemnity provision and entitled the Claimants to an assessment of their loss at some date after the date of the fire. It seems to me that this argument is wrong for two reasons. First, as I have noted above, the claim does not arise under E1 because the costs have not been “incurred”. But secondly, and in any event, I do not consider that there is any substantive difference between the provision at E1 (if it were relevant) and the clauses considered in Leppard and Sprung cited above. In my judgment, this was a straightforward indemnity provision.

[23]The second way in which the Claimants seek to argue that their losses should be assessed at a date after the date of the fire is by reference to a passage in The Law of Insurance Contracts, by Malcolm Clarke, at paragraph 30-9D. There, the learned author states:

“When the insurer performs his promise of indemnity, the amount of indemnity is normally calculated on values at the time of loss (point 1), even though the insurer may not be obliged to pay until later (point 2), when the claim has been investigated. The traditional rule of contract law is to assess damages at the time of breach (point 2). Recently, however, courts mindful of inflation have stressed the basic aim of contract damages to put the plaintiff in as good a position as if the contract had been performed, and have based damages on values at the date of the hearing (point 3), “unless it can be said that the plaintiff ought reasonably to have mitigated by seeking an alternative performance at an earlier date, in which event the appropriate measure would … be the cost of the alternative performance at that date”.”

[24]The difficulty with this passage is that it does not address the older authorities on the point, or even Leppard, and Sprung. No authority was cited by Mr Terry, on behalf of the Claimants, which holds that, under a policy of this kind, the damages should be assessed at a date after the cataclysmic event which triggered the liability under the policy in the first place. Indeed, as the learned author of The Law ofInsurance Contracts makes plain in an earlier passage at paragraph 28-4:

“In principle, loss is assessed on the basis of values at the time loss occurred. It is irrelevant that the values have changed since the time the insurance was contracted, or since the time of loss, or that they are likely to change in the foreseeable future.”

[25]It seems to me that I am bound by the Court of Appeal authorities referred to above and that, consequently, the reinstatement losses must be assessed at the time of the loss, namely the fire, and not thereafter. Even if I were not constrained by authority, I should add that, as a matter of construction, I consider that this is the correct interpretation of the Policy.

[26]This finding gives rise to the next issue of principle: even if the loss is to be assessed at 2002 prices, can the Claimants make a claim for damages or interest because of what they say is the Defendant’s breach of contract in failing to deal with their claim promptly or reasonably? I deal with that issue in Section B5 below. B3. Contents

[27]Section 2 of the Policy related to Contents. That made plain that the sum insured under that section of the Policy was £43,000.

[28]On 20 December 2002, after the fire, the Defendant’s loss adjusters, Capita McLarens, wrote to the Defendant to point out that, although the Claimants had not provided anything to support the claimed value of a number of the items pursued under this part of the Policy, the total value of the claim was in the sum of £93,355. Accordingly, Mr Jones of Capita McLarens suggested that, since the limit on the Policy was only £43,000, the maximum sum insured should be paid out. That is precisely what happened.

[29]Regrettably, for reasons which will become apparent below, I have concluded that the Claimants have made additional claims for items which were within (and therefore covered by) the £43,000 payment under other parts of the Policy. This is dealt with at Section L2 below. B4. Personal Possessions

[30]In the bundle of Policy documents with which I have been provided, there is a schedule dealing with the Claimant’s insurance position from 30 October 2002 (namely after the fire). That schedule makes plain that, in addition to the contents cover, there was additional cover for personal possessions in the sum of £8,960. The documents also reveal that a premium was paid for this cover of £79. However, the schedule to the Policy that was in existence at the time of the fire is dated 2 July 2002. That schedule contained no additional personal possessions cover and there is no record of any additional premium being paid in respect of such cover before the fire. I find that the schedule of 2 July 2002 reflected the insurance position at the date of the fire. I am therefore bound to find that, on the documents that I have, there was no cover in respect of personal possessions at the time of the fire.

[31]Mr Tonkin said in evidence that he had telephoned the insurers at some stage before the fire and had arranged this cover. The difficulty with this evidence was that there was absolutely nothing in writing that supported it. It was, in any event, very vague. The Defendant’s principal witness, Mr Rudelis, said that, if there had been such a telephone call, his experience suggested that there would have been a contemporaneous note of it completed by the Defendant’s employee who took the call. There was no such note.

[32]Accordingly, it seems to me that there is no credible evidence to support the contention that the Claimants had additional personal possessions cover at the time of the fire. There is nothing to indicate a telephone conversation, of the sort identified by Mr Tonkin before the fire; neither is there anything to suggest that he paid any premium for this additional cover before the fire. Furthermore, as he himself accepted, the relevant schedule of insurance did not show any personal possessions cover. For all those reasons, I find that, at the time of the fire, the Claimant’s insurance cover did not extend to personal possessions. B5. General Obligations B5.1 The Claimants

[33]The principal general obligation on the part of the Claimants was set out in Condition (5)(b)(i) of the ‘Conditions which apply to the whole policy’. That made plain that:

“For any loss or damage claim You must … at Your expense provide Us with such information and evidence as We may request including written estimates and proof of ownership or value…”

Accordingly, as both parties accepted, it was always for the Claimants to provide proper information in support of their claims. As previously noted, this dispute has come to trial because the Defendant maintains that the Claimants have failed to comply with this condition. Whether or not that submission is right is explored in some detail later in this Judgment. B5.2 The Defendant

[34]At the end of the Policy there was this provision:

“Caring For You We will always try to be fair and reasonable whenever you have need of the protection of this Policy. We will also act quickly to provide that protection.”

Both parties agreed that, as a result of this provision, there was an express obligation on the part of the Defendant to be fair and reasonable and to act “quickly” when dealing with the claim. The existence of such a provision gives rise to the final point of principle between the parties on the terms of the Policy.

[35]It is the Claimants’ case that the Defendant was in breach of this provision and that, accordingly, they are entitled to damages – reflected in the increased construction costs and other specific heads of claim identified below – in consequence of this breach. It is the Defendant’s case that, as a matter of law, there can be no claim for damages by way of consequential loss arising out of an insurer’s unjustified refusal to pay a valid claim. In this respect, the Defendant relies on the Court of Appeal decision in Sprung, referred to above.

[36]In Sprung, the Court of Appeal had to consider whether the Claimant had a claim for damages because of the Insurers’ failure to pay out promptly on a policy. The Court of Appeal held that there was no such cause of action. By reference to the decision of Hirst J in The Italia Express (No.2)

[1992] 2 Lloyd’s Rep 281

and the decision of the House of Lords in President of India v Lips Maritime Corporation

[1988] AC 395

, they concluded that there was no such thing as a cause of action in damages for late payment of damages. Accordingly, in the present case, the Defendant contends that precisely the same principle must apply and that, even if, which they deny, they were in breach of contract for failing to pay the sums promptly, any loss could only be measured by reference to interest, and not by reference to damages.

[37]The Court of Appeal decision in Sprung is slightly unsatisfactory because the plaintiff was arguing the case in person. Moreover, it appears that Evans LJ did not believe that there was a complete bar on such claims. He said:

“As a matter of law, it seems to me that the decisions already referred to show that there cannot be a claim for damages of this sort where the breach of contract relied upon is the late payment or non-payment of a sum of money by way of damages. But on the other hand, if as a matter law the plaintiff is able to show that the defendants have committed some other and separate breach of contract, and if specifically he can show that the defendants were in breach by failing to accept liability or to approve of the reinstatement at an early stage, then the recovery of damages would not be restricted to the discretionary award of interest which exists in the other case. Since this line of argument requires identifying a legal obligation other than the payment of interest, and since the statement of claim in fact refers only to the non-payment of what was called the claim for indemnity, it does seem to follow that the defendants are entitled to object that no such claim is set out in the pleaded case, nor was it brought specifically to the attention of the learned Judge.”

[38]That said, the statement of general principle set out in his judgment is extremely clear, and is binding on me. For that reason, I have concluded that, prima facie, the claims for damages which the Claimants seek to make in the present case fall foul of the principle identified in Sprung, and the authorities there cited. The Claimants’ main claim here is based on the Defendant’s failure to pay their claims under the Policy. Thus I consider their “delay” claims to be claims for damages for failure to pay damages, which is just the sort of claim which the authorities noted above hold to be invalid. It is difficult to conclude that there is here another or separate breach of contract arising out of the general obligation (set out at the end of the Policy) of the sort referred to by Evans LJ. Accordingly, as a matter of principle, I find that the Claimants have no entitlement to make their claims for delay and consequential damages.

[39]However, I accept that the position is not entirely clear cut, for the reasons identified by Evans LJ in Sprung. Thus, in Sections I and N below, I deal with the delay claim on the facts, assuming that, contrary to my finding of principle, the various claims for delay/damages are at least open to the Claimants on the law. B6. Interest

[40]The parties are agreed that, subject of course to the facts, the Claimants may be entitled to interest on any sums due, if it can be shown that the Defendant wrongfully failed to pay the claim earlier. The position is summarised at paragraph 19-67 of McGillivary on Insurance Law 10th Ed. 2003, as updated by the first supplement of 2005, as follows:

“As a general rule the court will award interest from the date at which the insurer is in default for not paying the claim, because the basic function of an award of interest is to compensate the Claimant for being kept out of his money. In indemnity insurance this is, strictly speaking, the date on which the assured’s cause of action arose, and in property insurance this will be the date of the casualty, at which according to the established but unrealistic analysis of a claim for an indemnity as one for damages for breach of contract, the insurer is deemed to be in breach of an obligation to hold his assured harmless against loss caused by an insured peril. In practice, the courts are sometimes prepared to postpone the running of interest not only to the date at which a claim is notified to the insurers … but to that at which a reasonable investigation of the claim ought to have been completed. In cases where the claim is inadequately formulated or documented the time for a reasonable investigation may well be extended in consequence. … The court may abridge the period for the running of interest or reduce the rate of interest to mark its disapproval of the claimant’s delay in bringing or pursuing his claim, although this has the effect of providing a windfall to the insurer who should not have had the use of the money. It can be explained on the basis that the assured’s unreasonable delay becomes a cause of the money remaining unpaid.”

[41]Accordingly, the question of the Claimants’ entitlement to interest in the present case, and the extent to which such a claim should be allowed or not, will depend on the facts. It is another reason why the causes/reasons for delay, and the parties’ respective liabilities for that delay, become so important. Delay is dealt with in Section I below and the claim for interest is dealt with in Section Q below. C. THE RELEVANT EVENTS C1. The Original Conversion Works

[42]In the early 1980’s, before Mr Tonkin bought the property, it consisted of a Main Barn running east-west, and a Small Barn adjoining its western end at right angles, running north-south. The property therefore formed an ‘L’ shape. It is unclear the extent (if at all) to which the property was, at that stage, habitable. It appears that the Small Barn was derelict and the Main Barn was used principally for storage. The eastern end of the Main Barn was open from the ground to the roof. The western end had a first floor extending no more than halfway down the Main Barn. Mr Tonkin, who purchased the property in 1986, agreed that at this stage the Main Barn had been only partly converted and that the Small Barn was derelict. It appears that there was no existing planning permission in respect of the conversion of the property.

[43]In 1987 Mr Tonkin applied for and obtained conditional planning permission. There is some doubt as to the precise scope of the work for which planning permission was obtained because the Local Authority, Wealden District Council, have lost almost all the relevant papers. There is, however, a drawing which seems to set out the basis on which planning permission was granted. There is also a drawing which appears to form the basis of the building regulation consent. Both drawings were signed on behalf of Mr Tonkin.

[44]These drawings might have provided useful contemporaneous evidence of what was there before the fire. However, it is clear that the proposed works shown in these two drawings were not carried out by the Claimants. For example, the structure in the crook of the elbow formed by the Main Barn and the Small Barn (which was eventually built as a kitchen with additional structures to act as the porch and the larder) was shown on the drawings as one rectangular space to be occupied by a dining room. The plans also show the full conversion of the Main Barn with a double volume living room at the eastern end and bedrooms in the first floor at the western end. The building regulation drawing showed a ground floor slab with footings in the Main Barn. None of this was ever carried out. The same drawing showed a timber frame configuration which would have made it very difficult to use the second floor of the Main Barn for any purpose at all since this loft was shown without a staircase, without insulation, without a secondary means of escape and without any windows. This drawing showed the roof of the Small Barn at 45 degrees with no first floor accommodation within that roof space at all.

[45]The conversion work actually carried out by the Claimants before the fire is not shown on any drawing or other contemporaneous document, although Mr Tonkin later produced two retrospective drawings purporting to show those works, to which I refer below. However, on the basis of all the evidence, I make the following findings about that conversion work. Save for the existing (flint) western wall, the Small Barn was rebuilt from scratch to a dimension that was wider than shown on the planning/building regulations drawings. Importantly, a first floor was added to the Small Barn in which were situated the bedrooms for the children. As I have already said, instead of a dining room, the structure in the elbow was a kitchen, together with a separate pantry and porch. The eastern end of the Main Barn was not converted into a living room and seems to have been the subject of very little work. It was used as a games room. The ground floor at the western end of the Main Barn was used as a workshop and the space above was used for storage and what was called ‘an office’. It appears that a staircase was put in to a second floor at the western end of the Main Barn.

[46]It does not appear that the conversion work which was actually completed by the Claimants was ever the subject of a completion or compliance certificate from the Local Authority. Mr Beale’s researches indicated that the building inspector made some visits in 1990 and 1991 but that thereafter he saw very little progress. The impression from the notes made by Mr Beale was that the conversion works rather petered out. Mr Tonkin later carried out further researches which showed a number of further inspections by the Council in the latter part of 1990 which had not been identified by Mr Beale. However, it appeared to be common ground that, despite these further inspections, there was no completion or compliance certificate.

[47]I find on all the evidence with which I have been provided that the conversion work that was carried out by the Claimants prior to the fire was not in accordance with the planning consent and not in accordance with the building regulation consent granted by Wealden District Council. At the tape-recorded meeting in August 2003 Mr Tonkin admitted this, accepting that, following the initial approval of the drawings, things were changed on site. He said this about one of the most important changes, namely the addition of the first floor of the Small Barn:

“Now, if somebody’s trying to say that there was no upstairs or somebody is trying to infer that there was no upstairs and the local authority didn’t know about it … I’m not a great lover of authority. If they didn’t know about it, I’m not sorry. You know, it doesn’t worry me …”

[48]The absence of a pre-fire building that complied with the existing planning consent and the existing building control consent is important to this story, not least because, when Wealden District Council came to consider the application for planning permission to rebuild the property after the fire, such permission was granted only on the basis that the property was rebuilt in accordance with those plans: see Wealden’s notice of 20 May 2003. The Parish Council took the same view. There were obvious difficulties for the Claimants as a result of this approach: in particular, as Mr Tonkin argued in a bitterly critical letter of 14 May 2003 to his consultants, Delavals, his application to rebuild in 2003 was, in his view, “not considered on its merits, it was considered in comparison to something which was 12 years ago”.

[49]Accordingly, it is not unfair to note that, at the very outset, even before the fire, Mr Tonkin did not greatly worry about the basis on which he received planning or building control consent and, by his own admission, he was quite prepared to deviate from such documents if he considered that it was to his advantage. C2. The Inspection By Mr Francis

[50]In 2000, the Claimants wished to raise money by way of a mortgage. In consequence, the property was valued by a Mr Francis on 26 June 2000. It was he who produced the rebuilding estimate of £450,000 which, as noted above, was then the basis for the rebuilding figure in the insurance policy at the time of the fire of £504,000.

[51]Mr Francis was, therefore, the only third party to inspect the property before the fire who gave evidence before me. It is clear from the transcript of the meeting on 14 August 2003, and other documents, that Mr Tonkin placed great store by his evidence. On analysis, however, it was obvious that, for wholly understandable reasons, Mr Francis could not really recall the property at all, which he had inspected for about half an hour, six years ago. His evidence was therefore wholly dependent on his valuation report dated 26 June 2000 and was no better, and no worse, than what he had written there.

[52]The following important points emerged from Mr Francis’ report and oral evidence during the trial: a) Mr Francis valued the property in its “current condition” at £300,000. He described the physical condition of the property as “average”. b) He did not consider that the Main Barn was really habitable at the time of his inspection. c) He thought that there was a good deal of work still to be carried out at the property but that, once that work was completed, the value of the property would be £550,000 (which was £250,000 more than his estimate of its current value). d) He described the property as being “currently in the throes of being completely refurbished”. e) The rider to his report identified some of the works still to be carried out. This included “some repair to the timber frame” and “a new roof covering”. He agreed in cross-examination that that must have been a reference to the Main Barn. He also identified the need for “a complete internal refit”.

[53]The other relevant part of Mr Francis’ evidence was his notes of the floor areas. He concluded that the total floor area was 395 m sq. There were then a number of dimensions noted in manuscript, although those dimensions did not make clear to what part of the property they related. It was a source of surprise to me that Mr Francis signed a witness statement which not only purported to correlate his manuscript floor areas to particular parts of the property (something his actual report did not do), but also suggested that there were parts of the property that he had failed to measure and which required to be added to his total. However, it was clear following his cross-examination by Mr Selby that this witness statement was produced only after Mr Francis had had detailed conversations with Mr Tonkin. It was apparent that it was Mr Tonkin, not Mr Francis, who was the source of this suggestion.

[54]I reject the suggestion that Mr Francis failed to measure certain parts of the property when he completed his report. There is nothing in that report to indicate any such omission. Mr Francis could not himself remember whether the floor areas he measured and noted were complete or not. Mr Francis could not recall the measurements that he had undertaken and could not say whether or not they were complete. Thus, to the extent that his statement said definitely that there were areas that he had not measured, I consider such evidence to be unreliable and I do not accept it. C3. Lay-Out and Condition Just Before The Fire C3.1 The Property

[55]Mr Tonkin accepted in cross-examination that very little work was done at the property after the inspection by Mr Francis. Accordingly, I find that all the works that Mr Francis noted as being outstanding, outlined in paragraph 52 above, had not been carried out at the time of the fire.

[56]Although I set out in detail particular aspects of the condition of the property just before the fire in Section G2 below, I summarise the position as follows: a) The Main Barn was, in Mr Francis’ words “not really habitable”. It housed a games room and a workshop with an office above. It was unheated. b) The Small Barn had been rebuilt by Mr Tonkin during the 1990s. The ‘old’ element was the flint wall that ran the length of the western side of the Small Barn and had a short return along the northern side. Despite the absence of planning permission or building control approval, the Small Barn had two storeys. On the ground floor, going from north to south, there was a bedroom, a music room, a bathroom and wc, and a living room. Coming out of the living room there were stairs going up to a first floor. There would have been very narrow headroom for the stairs. On the first floor there was a void above part of the living room, meaning that it was effectively a double volume room. There were three further bedrooms on this floor, with roof lights. Two of them would have been very small. All of them would have had very confined headroom. c) In the crook of the elbow formed by the Small Barn and the Main Barn there were three rooms in a stepped structure. There was a kitchen, a porch and a pantry: the last two were of modern construction. There was no first floor over these three rooms.

[57]Following the meeting on 14 August 2003, it was agreed that Mr Tonkin would produce some drawings indicating precisely the lay-out of the property at the time of the fire. There are two drawings which he produced as a result of this agreement, and which he signed as representing the layout “prior to the fire on 28 September 2002”. I accept these drawings as being the best record of the layout of the property at the time of the fire. They accord with my findings at paragraph 56 above. I reject the later attempts to refine/alter these drawings and, in particular, Mr Tonkin’s later evidence that the staircase as shown in the drawings was in some way not accurately represented.

[58]I should also note that the only evidence as to the layout and condition of the property (aside from that of Mr Francis) came from the Claimants. Mr Tonkin accepted that, on these matters of detail, the court only had his word. This was a slightly surprising result given that Mr Tonkin had previously made plain to the Defendant that, if there was doubt as to a particular aspect of the layout or condition of the property, he could produce evidence from others who had visited it prior to the fire. In the event, there was no such evidence.

[59]As to the condition of the property before the fire, I find the following: a) At the western end of the Main Barn, there were three flint walls. These walls comprised half the southern wall of the Main Barn; the whole of the western wall of the Main Barn; and a small return forming the first part of the northern wall of the Main Barn. The remainder of the Main Barn (principally the eastern end) had an oak frame and the infill panels between the timber members comprised thermalite blocks. b) The roof of the Main Barn was made of concrete tiles. The floor was largely built straight out of the ground using bricks, and without insulation. The Main Barn was not heated. c) There was a first floor at the western end of the Main Barn which extended not more than halfway along the Main Barn. There was a second floor above that which may not have extended the full length of the first floor. d) The Small Barn, rebuilt in the 1990s, comprised timber stud walls and timber joists, with a natural slate roof. Only in that sense could it be described as timber framed: it did not have a traditional barn timber frame, unlike (for instance) the eastern end of the Main Barn. e) There were roof lights in the first floor of the Small Barn, which were of course essential given that, contrary to the planning documents, the first floor of the Small Barn comprised the Claimants’ principal bedroom accommodation. f) It appears that the kitchen in the elbow was a conversion of the pre-existing room there. The porch and the larder were of modern construction. The cat-slide roof above, which had been required by the planners, did not extend all the way along the north elevation of the Main Barn. C3.2 The Gallery

[60]There was another building, also owned by the Claimants, adjacent to the property. This was a small barn known as The Gallery. There has never been any planning permission to turn this into habitable accommodation. However, prior to the fire, the Claimants carried out extensive work to The Gallery, including the provision of a new roof, a concrete floor, chipboard flooring and new windows and dry-lined walls. This building got its name because Ms Toureau used it as a pottery shed, and it was also used as an occasional art gallery, to which the public were invited. There is a suggestion that, by the time of the fire, the Claimants had embarked on a scheme to turn The Gallery into habitable accommodation, with or without planning permission. That was certainly the view of Wealden District Council: after the fire, on 29 November 2002, they wrote a long letter complaining about potential breaches of the building regulations on the part of the Claimants and their failure to comply with the existing planning consent, which letter concentrated largely on the unauthorised works to The Gallery. C4. The Fire

[61]Shortly after midnight on Sunday, 29 September 2002, Mr Tonkin awoke in the Small Barn and saw that the Main Barn was on fire. He and Ms Toureau collected their children and went out through the porch into the garden. As they watched, the fire destroyed almost all the property, with the exception of the flint walls referred to in paragraph 59 a) above. When, later that day, Mr Tonkin contacted the Defendant, he stated, without exaggeration, that he had only the clothes he stood up in.

[62]As is common in the event of a catastrophic fire of this kind, the Defendant instructed forensic scientists to report on the cause of the fire. The Defendant instructed Burgoynes, probably the best-known forensic scientists in the country. Unfortunately, their report was not provided until 27 January 2003. Whilst I consider that, prima facie, this delay was unjustified, it was not the fault of the Defendant that Burgoynes took this time to complete their report.

[63]The report was inconclusive. Dr Cook of Burgoynes identified one possible cause of the fire as the bonfire of the Claimants’ neighbours, Mr & Mrs Bishop, situated just beyond the south wall of the Main Barn, which had burned during the afternoon of Saturday, 28 September. That accorded with Mr Tonkin’s view. However, Dr Cook also refused to rule out the possibility that the fire was caused either by the electrical lighting in the Main Barn or electrical equipment within the workshop, possible causes which would have been the responsibility of Mr Tonkin. The difficulty, as Dr Cook explained, was that “the extensive damage to the premises as a result of the fire precluded the identification of the origin of the fire from the physical evidence”. As his correspondence made plain, Mr Tonkin was extremely upset that Dr Cook’s report failed to conclude that the cause of the fire was the Bishops’ bonfire.

[64]Following the production of the Burgoynes’ report, the Defendant indicated in a letter dated 12 March 2003 that it would accept liability under the Policy. All three witnesses of fact called on behalf of the Defendant (Mr Jones of Capita McLarens; Mr Hulejczuk of Focus, a chartered surveyor retained by the Defendant; and Mr Rudelis of the Defendant) were cross-examined on the basis that there was an unacceptable delay on the part of the Defendant in providing this preliminary acceptance of liability. I reject that criticism. As I have already indicated, it was entirely reasonable for the Defendant to instruct Burgoynes and any delay on the part of Burgoynes was not the responsibility of the Defendant. I consider that the time between 27 January and 12 March 2003 was not an unreasonable period for the Defendant to consider all the relevant material, including the report, and conclude that liability under the Policy would be accepted.

[65]Furthermore, for the reasons explained below, I am in no doubt that if (contrary to my view) there was an unreasonable delay before the provisional acceptance of liability on the part of the Defendant on 12 March 2003, this was not causative of any critical delay at all. During the period up to 12 March 2003, the Claimants’ advisers were working towards the obtaining of planning permission and the completion of the proposed reinstatement scheme just as if liability under the Policy had already been accepted. C5. The Immediate Aftermath Of The Fire

[66]There was a meeting at the property the day after the fire, 30 September 2002, between Mr Jones of Capita McLarens, the Defendant’s loss adjusters, and the Claimants. At that meeting Mr Jones’ colleague, Mr Smith, noted down rough measurements of the footprint of the property and these measurements were later transferred onto a sketch plan. The measurements were paced out; measuring tape was not used.

[67]At this meeting, it appears that the Claimants suggested that, instead of going to other accommodation, they should stay in The Gallery and the Defendant should pay to convert that building into residential accommodation. This was noted in Mr Jones’ letter to Mr Tonkin of 1 October 2002. This is what happened; it was this proposal that led Wealden District Council to complain about possible earlier breaches of planning permission and building regulation controls.

[68]Also in attendance at the meeting on 30 September 2002 was Mr Hulejczuk, a surveyor with Focus, a firm of surveyors regularly recommended by Capita McLarens to act on behalf of the insured in producing a reinstatement scheme. On 2 October, Mr Hulejczuk wrote to Mr Tonkin indicating what would be involved in the overall reinstatement process and attaching an instruction/payment mandate giving Focus authority to act on his behalf. Mr Tonkin did not sign the mandate. I agree with Mr Tonkin on this point: I consider that the mandate, which was apparently in a standard form produced by Capita McLarens, was very widely drawn and delegated too much authority to Focus and Capita McLarens. Unfortunately, although Mr Tonkin did not sign the mandate, he did not make it plain for many weeks that he did not want to use Focus on the reinstatement scheme.

[69]Whilst Mr Tonkin was entirely free to choose his own representatives to produce the reinstatement scheme, it is difficult not to conclude, at least with hindsight, that the fundamental problems between the parties began at this early stage. Instead of instructing a firm of surveyors well–used to acting for insurers and producing reinstatement schemes of this sort, the Claimants eventually chose Delavals who, as we shall see, had no relevant experience at all. The end result was the September 2003 scheme which Delavals produced, and which the Defendant never accepted.

[70]Because Focus thought, for some weeks, that they would be instructed on behalf of Mr Tonkin, they carried out certain works on his behalf. These included getting the views of Gyoury Self, a firm of consulting engineers, who concluded that the remaining flint walls should be demolished, but that, if the Local Authority insisted that they be retained, additional temporary propping was required. At the same time, on 3 October, Mr Hulejczuk received a letter from Wealden District Council which indicated that the flint walls should be retained.

[71]Also early in October 2002, Mr Hulejczuk produced a programme for the reinstatement works. This envisaged a planning application being made by 23 January 2003, following a detailed design process; the instruction of the contractor by 22 March; and a construction period from 7 March 2003 to 4 September 2003, a period of 26 weeks. Accordingly, Mr Hulejczuk envisaged that the reinstatement works would be completed by the autumn of 2003. There was no evidence to suggest that this timetable was unduly optimistic or unrealistic; on all the evidence that I heard, I have concluded that it was an entirely realistic programme. Accordingly, I find that the reinstatement works should have been completed by the autumn of 2003. One of the principal issues for me to decide is why that did not happen and how it is that the reinstatement works have still not really started.

[72]During the September/October period, it appears that Focus considered that they would probably be retained by Mr Tonkin to act as his adviser. However Mr Tonkin was requiring more and more information from Focus as to their services and experience (see Mr Hulejczuk’s letters of 10 October 2002 and 22 October 2002 to Mr Tonkin). Although Focus did not know it, Mr Tonkin was considering appointing others to carry out this important task. According to his evidence in cross-examination, he obtained a list of contractors from Wealden District Council. The third name on their list was Delavals, a firm of construction consultants. According to their letter to Capita McLarens of 22 October 2002, Delavals had by this time already visited the site and been instructed by the Claimant. Mr Jones of Capita McLarens agreed to the appointment of Delavals in writing on 29 October 2002. At the same time, Mr Hulejczuk belatedly realised that he would not be offered this work. Mr Rudelis confirmed in evidence that it was entirely reasonable if the client – as he put it – “wanted to go off-piste” in this way.

[73]Three points need to be made at the outset about Delavals’ involvement. First, it was suggested both at the time and subsequently that Delavals were architects. They were not. The firm comprised two men: Mr Stillman, who had no formal qualifications but plenty of experience in the construction industry, and Mr Tetley, an architectural technician. As we shall see, for this project, they also engaged the services of Mr Ward, a consulting engineer.

[74]Secondly, as Mr Stillman confirmed, Delavals had never acted in an insurance claim before. It might be thought, therefore, that they were an odd choice for Mr Tonkin to make, particularly given his detailed questioning of Focus about their previous experience. However, it does seem that he was concerned that Focus, having been recommended by Capita McLarens, might not be sufficiently independent from the insurers. There is no doubt that Delavals were independent; the question marks over their involvement always remained their inexperience and their capacity to produce what was needed.

[75]Thirdly, it was very curious that there was almost no documentation in the trial bundles that had been generated between Delavals and Mr Tonkin. Mr Tonkin was an inveterate letter writer. He wrote long, often bitter, letters of complaint to just about everybody involved with the attempts to reinstate the property after the fire. I simply cannot accept that he did not write letters to Delavals expressing his views forcefully as time dragged on and the reinstatement works did not commence. However, no such documents were ever disclosed, despite the acceptance by Mr Stillman in cross-examination that it was likely that such documents existed. The absence of these documents has created the impression, which may not be accurate, that, throughout this saga, Mr Tonkin was willing to criticise everybody except Delavals, who in truth had the greatest responsibility of all for getting the property rebuilt.

[76]As late as 5 November 2002, Focus were still involved, principally with the conversion work to The Gallery. They had produced an initial schedule of works about which Mr Tonkin was again highly critical. The works did not go ahead on the basis of that schedule. Instead, the works to The Gallery were carried out by a contractor chosen by Mr Tonkin, David Johns Associates (“DJA”). It appears that, even at this stage, Mr Tonkin had not told Mr Hulejczuk directly that he was not going to engage him to design and oversee the reinstatement works, although Mr Hulejczuk had began to realise that he was not going to get the work. Mr Hulejczuk’s letter of 5 November 2002 to Mr Jones concludes with his prophetic warning:

“With respect to our continuing role therefore, I believe that Mr Tonkin will be utilising other consultants to design the building to be reinstated. Obviously we respect his decision, although I am somewhat disappointed with the prompt attention I personally provided him with that he has not advised one way or the other whether he would wish to utilise our services. From your point of view I suspect that his architect will not be familiar with the reinstatement process of insurers, and there may well be a cost control issue in this regard.”

C6. The Gallery

[77]As noted above, the Claimants had suggested at the outset that they could continue to live at the property in The Gallery. Mr Hulejczuk’s letter to Mr Tonkin of 7 October 2002 revealed that Wealden District Council were not enthusiastic about this and made it clear that any works undertaken to The Gallery would only be approved on a temporary basis, to be removed when the property had been rebuilt.

[78]As noted in the letter from Mr Jones of Capita McLarens to Mr Tonkin of 17 October 2002, the loss adjusters considered that the DJA costs were higher than they had expected, but they were prepared to accept them because the total was still less than the likely total of a claim for alternative accommodation.

[79]The work to The Gallery started some time in October 2002. On 5 November 2002 Mr Tonkin complained to Mr Jones that the works were progressing at “an agonisingly slow pace”. It was the view of Mr Hulejczuk, expressed in a letter to Mr Jones of 11 November 2002, that the works were not in accordance with the discussions with the Local Authority, and “are out of keeping with the proposed temporary occupation of the building”. It was clear that the Senior Building Control Officer was also unhappy with the works carried out by DJA and threatened to issue a non-compliance certificate. Mr Hulejczuk’s letter of 21 November 2002 to Mr Jones indicated Mr Tonkin’s exasperation with the Local Authority, a situation exacerbated by the letter from Wealden District Council of 29 November 2002, referred to above, in which they complained about the earlier work to The Gallery and what they saw as the failure to comply with planning consent. This led to a lengthy letter of justification and complaint from Mr Tonkin dated 16 December 2003. At about this time, the Claimants and their children moved into The Gallery, where they have lived ever since.

[80]Since Focus had no formal role in the carrying out of works to The Gallery, it appears that the works were mainly overseen by Mr Tonkin himself. This led to a situation in which Mr Tonkin came to separate arrangements with DJA in respect of both the physical works being carried out at The Gallery, and the payment for those works. This process, described by Mr Tonkin as “netting off”, involved using the money from the Defendant for items which were not in the schedule which the Defendant had approved (such as under-floor heating) in exchange for materials (and, in one instance, the actual kitchen itself) that were supplied direct by Mr Tonkin. It was these events, and Mr Tonkin’s evidence about them during the trial, which led to the allegations of fraud, with which I deal in Section E below.

[81]On 22 March, DJA sent to Mr Jones of Capita McLarens a final account in the total sum of £28,649.48. Most of this was paid by the Defendant and there is no further claim in respect of the conversion works to The Gallery. However, the final account document sent to the Defendant was very different to an account provided to Mr Tonkin by DJA which recorded some of their private “netting off” arrangements. The discrepancies were never fully explained or accounted for.

[82]Mr Tonkin was unhappy with the standard of work produced by DJA, and was extremely concerned when a fire was caused by the under-floor heating which DJA had put in (although that was not part of the schedule of work approved by the Defendant). He fell out with DJA and on 23 May 2003 wrote to them stating that “my patience is wearing dangerously thin”.

[83]When communication finally broke down between Mr Tonkin and DJA in the summer of 2003, Mr Tonkin purported to turn the whole matter over to Focus, describing DJA’s work as diabolical and saying that “Focus were put in charge of this aspect of our insurance claim”. That was of course quite wrong: Mr Tonkin had refused to engage Focus, so they had no involvement in any of the works at the property following Mr Tonkin’s decision to use Delavals. It was perhaps typical of Mr Tonkin’s approach that he only reverted to Focus when his own contractors had, in his view, failed to do what he wanted. The saga was not concluded until 21 January 2004 when, in a lengthy email to Mr Tonkin, Mr Buckthorpe of DJA set out the basis of a concluded agreement between the parties. C7. The Reinstatement Works

[84]There was, surprisingly, no note or written record of the brief from Mr Tonkin to Delavals. The instructions were apparently all oral, which meant that there was some uncertainty as to precisely what Delavals were doing, and why. In any event, having received their instructions, the next step was for Delavals, the consultants specifically chosen by the Claimants to undertake this task, to produce a detailed design and bills of quantity or a specification of works for the proposed reinstatement of the property. Mr Hulejczuk had indicated in his programme that such work should be completed by 9 January 2003.

[85]At some stage in January 2003, Delavals did produce what they called a schedule of works, together with some drawings. This documentation was not, at this stage, sent to Capita McLarens or the Defendant. The drawings were not detailed and contained no dimensions. The schedule contained no quantities.

[86]In my judgment, the January 2003 scheme produced by Delavals was simply not detailed enough to allow meaningful tenders to be obtained. It also contained numerous errors, not least because it sought to install a first floor across the whole length of the Main Barn, which had simply never existed before. It is, however, unnecessary for me to set out in detail my views as to how and why this January 2003 scheme was inadequate because, in this litigation, the Claimants do not rely on this scheme in support of their claim.

[87]However, since the ‘refinement’ of this scheme into the September proposals is an important part of the story, I should add that, at paragraph 68 of their closing submissions, Ms Jackson and Mr Selby make what I consider to be an extremely telling point in respect of the January scheme. They say that, once the preambles from the schedule of work are stripped away, the rebuilding work is summarised in just three items which could not be expressed in more general terms. They are as follows:

“Item 3.01 Allow to construct the building annotated as the north-south wing and shown on the contract drawing. Provide all materials, labour and plants associated with same. All work to comply with the Building Regulations. All work to comply with the Specification herein. Item 4.01 Allow to construct the building annotated as the east-west wing and shown on the contract drawing. Provide all materials, labour and plants associated with same. All work to comply with the Building Regulations. All work to comply with the Specification herein. Item 5.01 Allow to construct the building annotated as kitchen - housing the proposed new kitchen shown on the contract drawing. Provide all materials, labour and plants associated with same. All work to comply with the Building Regulations. All work to comply with the Specification herein.”

[88]I therefore find that, for the avoidance of doubt, the Delavals scheme of January 2003 was a wholly inadequate reinstatement scheme which was not capable of generating any meaningful tenders.

[89]By reference to Mr Hulejczuk’s programme, the planning submission should have been made by 23 January 2003. Allowing a month or so for planning permission to be granted, the work on site could then have started on 7 March 2003. However, in the event, Delavals failed to meet this programme. It appears that, according to Delavals’ letter to Mr Tonkin of 3 March 2003, the application for planning permission was only put in on that date. There is a suggestion in that letter that the delay in making this application was somehow linked to an absence of permission from Capita McLarens to make the application for planning permission. That point was therefore put to Mr Stillman in cross-examination. Mr Stillman accepted that there was no delay on the part of Capita McLarens and that the application for planning permission did not require their permission in any event. Accordingly, there was no explanation or excuse offered as to why Delavals failed to make a planning application for their January scheme until March 2003.

[90]Despite the fact that Delavals had not even sought planning permission, and were only just sending out documents to obtain tenders, in February 2003 Mr Tonkin made a complaint to the Financial Ombudsman Service (“FOS”) about the Defendant. His complaint concerned their failure “to give the permission for builders to start work”, and an unrelated complaint about the payment in respect of the contents. It seems very strange that Mr Tonkin went to the time and effort of complaining to the FOS about the Defendant’s alleged failure to give permission for builders to start work when, at this stage, it was Delavals (his own advisers) who had failed to apply for (let alone obtain) planning permission; who had no builders ready to start work because they had not yet obtained any tenders; and who had failed to produce a proper scheme on which reliable tenders could, in any event, be obtained. These points were put to Mr Tonkin in cross-examination. He accepted that his complaint had “jumped the gun”. Not for the last time, Mr Tonkin had complained about the Defendant’s performance when the fault lay with his own advisers.

[91]It was not only the Defendant who was being singled out by Mr Tonkin for criticism and complaint in the spring of 2003. In March 2003, at a meeting of the Parish Council, the Claimants complained about the refusal of the planning application to rebuild the property. As noted above, the problem was that the Parish Council wanted the property to be rebuilt in accordance with the previous planning consent. This was, of course, no good to the Claimants because they had not complied with that previous consent. Mr Tonkin “wanted it to be on record that he thought the Council had acted in bad faith.” This led to further angry exchanges of correspondence. It is difficult not to conclude that, however unwittingly, Mr Tonkin was making it more difficult to bring about the reinstatement of the property as a result of his incessant criticisms of anyone who did not agree with him. C8. The June 2003 Tenders

[92]It appears that Delavals apparently sent out tender enquiry letters, to three prospective contractors, in April or May 2003. Regrettably, these letters have never been produced. Although Mr Stillman said in his evidence that he thought they existed and he would try to find them, they were not forthcoming. It seems safe to assume that they included the January 2003 schedule of works and the undimensioned drawings referred to in paragraphs 85 to 87 above. Since the proposed ground works were included within the schedule of work, it is more likely than not that the tenders that were eventually received in May/June 2003 also included an allowance for the ground works.

[93]There is a corresponding vagueness about the three tenders allegedly received. A one page form of tender, dated 7 May 2003, from a contactor called B Cornford, was included in the court bundle. The tender was in the sum of £543,400. The contract period was identified as 26 weeks. No other tender documents have been made available. Two other tenders were allegedly received. There was apparently one from Homan Construction in the sum of £584,486 and another from a contractor not even named in the Delavals’ documents in the sum of £602,256. These figures come from a one page document, described as tender cost analysis dated 30 May 2003, and produced by Mr Stillman of Delavals. This recorded the Cornford tender figure in the (different) sum of £532,682. No other documentation whatsoever has been provided to enable an analysis of these three tenders to be carried out.

[94]On 5 June 2003, Mr Stillman sent Mr Jones of Capita McLarens the one page analysis of the tenders. The letter said that Cornford had been asked for their detailed costings “in order that we can consider areas where potential saving could be made.” It seems that no such costings were ever obtained from Cornford.

[95]In his reply of 16 June 2003, Mr Jones said this:

“I note your comments and am certainly somewhat alarmed that the projected cost of the reinstatement works is in excess of the sums insured particularly as this will undoubtedly result in a further financial cost to be borne by the client. As you will appreciate, I am unable to give approval to commencement of the works without sight of the detailed specification of the proposed works such that I may verify that the intended works are those purely required to reinstate the building and that there are no additional aspects which will obviously fall outside the scope of policy cover. I will also require a detailed breakdown of costs in order that I may undertake a cost analysis and complete my quantum enquires.”

As I have already noted, Mr Jones was never provided with a detailed breakdown of the costs. In addition, his reference to the need for “a detailed specification of the proposed works” made plain something which Mr Jones in cross-examination said was extremely important to him, namely the provision by Delavals of a detailed specification, with quantities and prices.

[96]It was only then, in their response to this letter of 23 June 2003, that Mr Stillman of Delavals actually sent Mr Jones the schedule of work of January 2003 and the undimensioned drawings that accompanied it (“in the meantime I am able to enclose a copy of the original tender documents and drawings”). I have no idea why Delavals kept these documents back for almost six months: certainly no explanation was offered in the evidence of Mr Stillman. Whilst it is true that some of the drawings (and possibly parts of the schedule of work) showing the ground works had been provided to Capita McLarens at the end of March (see Section C10 below) that represented only one part of the proposed reinstatement scheme.

[97]The documents comprising the January 2003 scheme were soon the subject of specific criticism. In Mr Hulejczuk’s letter of 25 June 2003 to Mr Jones, he describes the drawings as “totally inadequate”. He also stresses the importance of the need for “a detailed specification”.

[98]On 26 June, Mr Jones wrote to Mr Stillman of Delavals saying that he was currently considering the specification that he had now been provided with. He sets out his understanding that the specification was being revised “in line with comments you have received from the insured and the planning consent which has now been received”. Mr Jones therefore suggested that the revised specification should be presented to all three prospective tenderers, not just Cornford. Surprisingly, this suggestion was brushed aside by Mr Stillman in his reply of 2 July, in which he stated that:

“We feel that going back to all three contractors to re-price the project will merely delay a start date. Furthermore, it is unlikely, and quite understandable, that the already unsuccessful contractors will be reluctant to waste their time on a project that they already failed to secure. Without doubt it is our opinion that we should continue negotiations with Cornford only.”

The letter makes plain that Delavals were not planning to revise the (wholly inadequate) schedule of work, despite the fact that they knew that the existing document contained major errors, such as the proposal to install a full first floor in the Main Barn.

[99]For the avoidance of doubt, I consider that this response from Delavals was wholly inadequate. All they had was a one page document from Cornford, which showed a price based on an inadequate schedule of work and a set of undimensioned drawings. The schedule contained errors and had been superseded by the conditions attached to the planning consent. Delavals’ attempt to open negotiations with just one contractor on the basis of such deficient documents seems to be a reflection of the pressure that Mr Tonkin was now imposing on everybody to try and get the works started on site. Given the inadequate nature of the proposed contract documents, it was obviously wrong for Delavals to dismiss the suggestion that the documents should be revised and then sent back to the three original tenderers.

[100]In July 2003, Focus produced a more detailed report on the documents produced by Delavals. This report expressed:

“… serious concerns regarding the suitability of the drawings and specification currently prepared as being adequate for the size and complexity of the project. We would therefore suggest these documents be augmented or re-written and additional drawings provided in this respect.”

The report also indicated that the proposed scheme, when compared to the ordnance survey map of the original property, was on a larger footprint.

[101]On 23 July 2003 Mr Jones wrote to Mr Stillman setting out his concerns about the documents which Delavals had produced. He said:

“My own particular concern is that the schedule of works presented is not sufficiently detailed for me to verify that the works proposed are those required to reinstate the property and that there won’t be any future increases in cost. I would suggest that in the very least the schedule of works should be revisited and that you continue to chase Cornford for a breakdown of their costs.”

In all the circumstances, I consider that Mr Jones’ comments were really quite mild and that his proposals were entirely constructive. Again, they were ignored by Delavals.

[102]C9. Timber Frame

[103]At the same time as Delavals were working on the specification in respect of the reinstatement works, they were also considering the question of the timber frame for the Main Barn. It appears that, although a timber frame had existed for only part of the Main Barn before the fire (the eastern end), Delavals and Mr Tonkin had decided that the Main Barn should be rebuilt with a timber frame throughout. As early as 27 December 2002, Mr Ward, the engineer who was effectively acting as a sub-consultant to Delavals, wrote to at least two timber frame designers/contractors (Green Oak Carpentry and Crown Oak Buildings) seeking tenders. Crown Oak’s estimate for the work was £44,200 (see their estimate dated 15 January 2003). Mr Ward said in cross-examination that this was a fair estimate for the cost of the work. Despite this, and for reasons which were never explained, there were no further dealings with Crown Oak Buildings.

[104]It is not known whether Green Oak replied to that first quotation but, on 18 June 2003, Mr Stillman wrote to them again in respect of the timber frame. This letter makes it quite clear that what was now being proposed was not to replace or reinstate what had been there before. Mr Stillman said in the letter:

“Our clients are most anxious that the frame “looks right “ and they wish to have the main posts 250 x 250 even if that means they are over-designed. Furthermore they have not as yet decided on the arrangement of rooms at either ground or first floor but the positions of windows and doors on the external walls are fixed (due to planning conditions). We are therefore looking to have totally uninterrupted floor space on both the ground floor and the first floor.”

The letter went on to identify further “improvements”, including the use of a curved raised tie at second floor level in order to give maximum headroom in the loft. Again, it is impossible not to conclude that this proposal was expressly designed so as to allow the second floor of the main barn to become habitable accommodation.

[105]Green Oak’s response was dated 26 June 2003. The quotation was in the sum of £68,900 excluding VAT. However, the letter made plain that this was an over-estimate because, for example, it included for the first floor entire with floor joists and a panel in-fill system (which was in fact to be provided by the main contractors). The letter makes plain that their removal would represent “a substantial saving”. However, these proferred cost savings were never taken up by Delavals or Mr Ward.

[106]Extraordinarily, the Claimants’ claim now in respect of the oak frame is by reference to a quotation from a third timber frame company called Oakwrights dated 3 September 2003, in the still higher sum of £72,565. This was therefore the most expensive of the three tenders received in respect of the oak frame. It again included items which were also allowed for (and priced) in the main contractor’s schedule of work, including the in-fill panels. It included an oak frame for the Small Barn, which was never part of the Delavals design. Even more surprising was the fact that the Defendant paid £2,000 to Delavals, for onward transmission to Oakwrights, because Delavals has said that Oakwrights wanted that money in order to do a detailed design of the oak frame. Although the money has been paid, no detailed design has ever been provided. C10. The Ground Works

[107]The other element of the proposed reinstatement works that was treated separately was the ground works. It appears that, on 22 February 2003, Delavals sought a tender for the ground works only from Cornford. They did this without the consent of Capita McLarens and at a time when Capita McLarens had not seen any part of the schedule of work or drawings. It appears from the evidence that the drawings that were sent with this tender enquiry numbered five in all and were undimensioned. They were mainly concerned with the Small Barn. Cornford’s tender was provided four days later on 26 February, in the sum of £25,915 plus VAT. Everybody agreed that this was considerably more than the price that would have been obtained if the ground works had simply been treated as part of the reinstatement scheme.

[108]Two days later, on 28 February, showing an urgency which was missing in respect of other aspects of their work, Delavals wrote to Capita McLarens seeking permission to appoint a ground work sub-contractor. In the letter they said they had sought prices from three local contractors and “we are now in a position to appoint”. On the face of it, this was untrue. Two other tenders in respect of the ground works were obtained, but these were dated 10 March and 21 March respectively. They were both for sums in excess of the amount quoted by Cornford. It is from the first of these quotations, namely the one from Homan Construction of 10 March, that I find a reference to the specific documents sent to Homan on which they were asked to tender. There is no tender enquiry letter from Delavals in which the tender was sought or which would conclusively identify the documents sent to the contractors.

[109]On 14 March, Mr Jones sought a sight of the costings from the three contractors before he gave approval to the ground works. On 25 March he confirmed to Mr Tonkin that he had asked Delavals to provide him with details of the ground works to be undertaken along with competitive costings.

[110]On 26 March 2003, Delavals sent to Capita McLarens certain documents relating to the ground works. It appears that these included at least some of the undimensioned drawings referred to in paragraphs 85 and 86 above, although it is unclear whether any part of the schedule of work was sent and, if so, what part. Delavals did send the three estimates. They made it plain that they regarded the ground works as a matter of urgency.

[111]On 6 May 2003, Mr Jones of Capita McLarens, on behalf of the Defendant, said that there were no objections to the ground works being carried out by Cornford in the sum of £25,915. In his cross-examination Mr Jones made it quite clear that he took it “in good faith” that the proposed ground works were appropriate, and, in particular, that they would reinstate the property to the same footprint as it had occupied before the fire. He had not been told anything different, nor could anything different be gleaned from any of the documents which he had been sent. Accordingly, it seems to me that Mr Jones was quite entitled to assume that the proposed ground works that he was approving would reinstate the property to its original footprint.

[112]It seems clear that at least one of the reasons for the haste with which the ground works were identified and carried out in advance of the rest of the reinstatement works was Delavals’ need to placate Mr Tonkin’s growing impatience. This is apparent from their letter to Capita McLarens of 5 June which refers to the ground works having started “so we now have a happy client!” It appears that the ground works were completed by the end of June 2003 (Cornford’s final account bears that date and is in the sum of £25,915). C11. The Meeting on 14 August and its Aftermath

[113]By July 2003 Mr Tonkin was, quite understandably, becoming extremely frustrated at the delays, although, for reasons which are much less easy to follow, he seemed to believe that this was the fault of the Defendant. He suggested a meeting on site and a meeting was eventually fixed for 14 August 2003. Mr Tonkin took the decision to record that meeting but he did not tell anybody, not even Delavals, that that was what he proposed to do. Mr Tonkin was cross-examined as to why he had secretly taped the conversations and he candidly replied that he had done so because, if those present knew that they were being taped, they would not have said what they said at the meeting. In other words, it appears that he hoped to trap those acting for the Defendant into agreeing things which they might not otherwise have done if they had known the meeting was being taped, and then prevent them from changing their position thereafter. Indeed, as we shall see in Section F below, where I deal with the estoppel arguments, that is precisely what has now happened.

[114]It would be unnecessary, in what is already an over-long Judgment, to set out all the relevant exchanges from the transcript of this meeting. It is important, however, to note that there was a detailed discussion about the fact that the new foundations installed by Cornfords for the eastern wall of the Small Barn had not been put in where the previous foundations had been. Instead, both Mr Stillman and Mr Tetley of Delavals said that the foundations had been put in slightly to the east of the existing foundations, thereby making the Small Barn bigger. It was the first time that this had been revealed. The reason given at the meeting was that this was a requirement of the Local Authority. Furthermore, it was said to give rise to a “miniscule” increase in size. As we shall see later, both of these statements were untrue. However they presaged one of the main themes of this meeting, at which Mr Rudelis of the Defendant was persistently harassed to agree that the reinstatement works could proceed on the basis of the footprint as now set out in the ground. On any fair reading of the transcript it can be seen that this was a topic that was revisited on a number of occasions by Mr Tonkin and Delavals. Mr Rudelis inspected the ground after the meeting and agreed the footprint “in principle”.

[115]As a result of the meeting, it was agreed that three things would happen. First, it was agreed that Mr Francis would be approached to see if he could give any helpful evidence as to the condition and size of the property before the fire. Secondly, it was agreed that Mr Tonkin and Delavals would provide drawings to indicate the layout before the fire. As I have indicated at paragraph 57 above, such drawings were produced. Thirdly, it was agreed that Delavals would revisit the documents and produce an improved specification.

[116]It is plain that this final point was the most important. Mr Rudelis explained in his cross-examination that he had originally expected to get proper bills of quantities from Delavals. When he did not get that he realised that it was hopeless to expect Delavals to provide such a document. Instead, he said, he was prepared to make a concession and, instead of bills, to require Delavals to produce a detailed specification which contained blanks so that the tendering contractor could fill in not only the rates but the quantities that they estimated in respect of each item of work. This requirement was clearly recorded in Mr Tonkin’s secret transcript and is referred to at paragraphs 274-277 below. In the event, Delavals failed to produce such a document.

[117]One of the attendees at the meeting was Mr Beale, an engineer instructed by the Defendant to consider the reinstatement scheme. Mr Rudelis was very frank about the reasons for his appointment. He was concerned that Mr Hulejczuk, because he had not got the original job, might not be viewing the Delavals scheme objectively and that there might be an element of sour grapes about his criticism. Accordingly, Mr Rudelis said, he got Mr Beale involved to give a completely independent view of the Delavals scheme. Mr Beale’s concerns with the first Delavals scheme were set out in writing on 18 September 2003. Mr Beale eventually became the Defendant’s expert engineer and gave evidence to me which was entirely consistent with those original criticisms.

[118]Although, as I have indicated, the meeting on 14 August ended with the agreement that Mr Tonkin and his advisers would carry out three specific tasks, this did not deter Mr Tonkin from making a further complaint about the Defendant to the FOS. This complaint was made at the end of August/ beginning of September. Again, it seems extraordinary that, whilst there were important matters outstanding which the Claimants had agreed at the meeting in August that they and/or their advisers would put in hand, they were complaining about the Defendant’s delay in settling the claim. This was put to Mr Tonkin in cross-examination. Again he accepted that he had acted prematurely. Unhappily, this second, unjustified complaint began a disastrous sequence of events for the Claimants.

[119]Pursuant to the FOS procedure, a complaint of the type made by Mr Tonkin required a Final Response from the Defendant. Thereafter, it was then up to Mr Tonkin whether he triggered the formal complaints procedure which would lead, eventually, to an adjudication. The Defendant’s Final Response letter was dated 23 September 2003. Mr Tonkin, despite the absence of the necessary documentation from Delavals, said that he was not happy with that Response and, on 15 October 2003, wrote a 20 page letter which contained a number of outlandish allegations, variously describing the Defendant’s conduct as “sneaky”, “cynical”, “outrageous” and accusing them of “threats and intimidation”. I have no doubt that all of these allegations were wholly unfounded. Coming as they did from a man who secretly taped a meeting, at which the Defendant was deliberately not given all the relevant information, and who now wishes to rely on that tape to prevent the Defendant from advancing a position based on the information that had been withheld, it might be thought that they are descriptions which are more appropriate to the letter’s author than its recipient.

[120]The real problem, however, was that, because Mr Tonkin had chosen to activate this procedure, the Defendant had to comply with the FOS Rules. As was made clear to the Claimants in correspondence at the time, and as Mr Tonkin accepted he understood, the Defendant’s entire file went to the FOS and they were prohibited from communicating further with the Claimant. In essence, the whole of the claim process was then frozen until the outcome of the FOS adjudication procedure. This delay was, therefore, entirely self-inflicted by the Claimants. Worse still, the FOS did not complete their deliberations until November 2004. C12. The October 2003 Tenders

[121]At the same time as Mr Tonkin embarked on his disastrous course involving the FOS, his advisers were producing a new specification for the works. As noted above, as far as Mr Rudelis was concerned, this was to be the most important document to come out of the meeting on 14 August. It appears from Delavals’ letter to Capita McLarens of 11 September 2003 that the document was completed by that date. It was sent to Mr Jones a week later on 18 September. In that letter Delavals went on to say that they wanted to send out the tender documentation on Monday 29 September, giving a tender return date of Monday 20 October. This effectively gave Capita McLarens just 11 days to consider the new documentation.

[122]The documents that were sent under cover of this letter are extremely important because they consist of the schedule of work/specification and the drawings on which is based the Claimants’ reinstatement claim in these proceedings. I therefore deal with the adequacy or otherwise of these documents in detail in Section G below. However, as a general comment, I should note that the schedule of work/specification, although expanded from the version of January 2003, fell a long way short of the requirements that Mr Rudelis had expressly set out at the meeting on 14 August. It did not contain quantities or allow for the contractor to insert his own estimated quantities. The drawings that were attached to the letter sent to Capita McLarens were again not dimensioned.

[123]On one view, it is perhaps unsurprising that the documents produced by Delavals in September 2003 did not represent any great step forwards. Mr Tonkin said that he believed that the exercise which Delavals undertook after the August meeting would simply involve the “smartening up” of the January documents. Mr Stillman gave evidence to the same effect. However, given the clear indication by Mr Rudelis at the meeting on 14 August that the Defendant wanted a much more detailed set of documents, it is hard to understand why Mr Tonkin and Mr Stillman had formed such a view. Mr Rudelis had made clear the very least that he required, but an analysis of the September revamp demonstrates beyond doubt that he had not been given it.

[124]On 29 September, Capita McLarens informed Delavals that they would not be in a position to instruct them to go out to tender until Friday October 3 at the earliest. In their letter of 29 September Delavals appeared to insist that they received the decision by the 3October at the latest. In reply Mr Jones of Capita McLarens made plain that he was going to have a meeting with Focus (to go through the detailed documents) which was scheduled for the 3rd and that he hoped to advise them of the outcome either late on Friday the 3rd or on the morning of Monday the 6th.

[125]Remarkably, on 2 October, Mr Stillman of Delavals informed Mr Jones that he was not going to wait these few days and that the tender documents were going to be sent out in any event. He said that any comments that Capita McLarens or Focus might have could be dealt with “by way of a letter of instruction to the invited contractor”. The urgency having been removed, Mr Jones cancelled his meeting with Focus. The following day, 3 October, without Capita McLarens’ approval of the September scheme and the documents which contained it, Delavals sent out the revised scheme for tender. It is impossible to understand, in all the circumstances of this case, how or why Delavals felt justified in such a course of action. In view of the delays which had occurred, for which they were principally (if not wholly) responsible, they must have seen that it would have been better to get the work scope documents agreed before they went out to tender, rather than sending them out to tender unapproved, and in the hurried fashion which they adopted. It is again difficult not to conclude that this was all part of an approach which was endeavouring to “bounce” the Defendant into agreeing an inappropriate scheme.

[126]There was – again - huge confusion over the documents that were actually sent out for tender in early October 2003. In particular, there was debate as to whether the tender documents contained dimensioned drawings. It seems to me, having heard the evidence of Mr Stillman and Mr Ward, that it was more likely than not that the drawings that were sent out were not dimensioned. This certainly seems to be the effect of Mr Stillman’s letter to Capita McLarens of 13 October 2003 which said that the tender documentation had been sent out “in the form and manner” that the documents had been sent to Capita McLarens. Those documents definitely did not include dimensioned drawings; on that basis, I must assume that the documents sent to the contractors also did not include dimensioned drawings. Other evidence from Mr Stillman and Mr Ward only served to create confusion over precisely what was sent out: in truth, neither man knew, and neither could point to anything in writing which indicated that the drawings that had been sent out were dimensioned.

[127]The tender period was said to be three weeks. I consider, on the evidence, that this was too short given the nature of the proposed works and the sketchy nature of the Delavals documentation. The documents were sent to three contractors chosen by Delavals: Cheesmur; Booker & Best and Cornfords. Another firm of contractors, JR Tasker Ltd, were belatedly sent the documents at the request of Capita McLarens but they considered that their truncated tender period was too short and did not return a tender. The extension to the tender period which they sought from Delavals to 4 November 2003 was not granted.

[128]Whilst waiting for the tenders to be returned, Mr Hulejczuk of Focus had carried out a review of the revised specification and drawings. He wrote to Mr Jones on 24 October to say:

“Having reviewed the specification and drawings sent out to tender to the contractors I would also point out that the specification is still poorly written, and the drawings are completely inadequate for such a complex building being merely sketched 1:100 to drawings blown up to 1:50 scale. If we were appointed to act as Contract Administrator with the current information available we would have to start again to produce the required tender documentation and would then produce detailed drawings at 1:50 scale together with a suitable specification of works based on NBS Standard Preliminary and Preamble Clauses including Materials and Workmanship Sections and a detailed Schedule of Works.”

[129]Tenders were received from the three contractors chosen by Delavals. The lowest was the tender from Cheesmur in the total sum of £429,192 on the basis of a 35 week contract period. Their tender was qualified in their covering letter of the same date, and there was no dispute that these qualifications meant that the tender was non-compliant. In addition, Cheesmur included in their tender a list of provisional sums said to amount to £115,420.

[130]On 28 October 2003, Delavals wrote to Capita McLarens enclosing a one page analysis of the three figures and identifying that Cheesmur were the lowest tender. When making allowances for the oak frame, the ground works and the fees, the total net building costs were said to be £559,672.

[131]On 1 November, Cheesmur produced a breakdown of their tender sum. This breakdown was not passed on to Capita McLarens although, on 6 November 2003, Delavals wrote to complain that:

“We have now delivered everything that we contracted to provide and are beginning to feel frustrated by the lack of progress.”

I understand their frustration, but it seems to me that they were the cause of the problems. They had not begun to provide “everything that we contracted to provide” and their statement to the contrary reveals an alarming failure on their part to understand just what it was they needed to do.

[132]On 12 November 2003 Mr Hulejczuk of Focus wrote directly to Mr Stillman asking for a breakdown of all three tenders. Mr Stillman’s handwritten notes suggested that these had already been sent to Capita McLaren. As the evidence in cross-examination made plain, this was untrue. A breakdown of the three tenders was never sent to Focus or Capita McLarens.

[133]Almost immediately, there were internal difficulties with the Cheesmur tender. On 14 November 2003, completely out of the blue, they wrote to Delavals to say they had made “a fundamental mistake” in their tender. Their tender price was then increased to £458,297.18. There was no explanation of what the alleged mistake was or how the changes to the figures could be justified. In cross-examination Mr Stillman agreed that, from a contractual point of view, Cheesmur either had to stick with their original tender or withdraw. C13. The FOS Investigation

[134]As I have indicated, the claim process under the policy was effectively frozen by Mr Tonkin’s letter of 15 October 2003. On 27 October 2003 the FOS asked for the Defendant’s original files. When, on 3 November 2003, Mr Tonkin complained to Mr Rudelis that nothing had happened on his claim for over a month (despite knowing that this was the inevitable consequence of his decision to activate the FOS complaints procedure), Mr Rudelis responded, two days later, saying that he was going to ask the FOS not to adjudicate and that the matter “is better suited [to] the evidential process of a court of law”. Mr Tonkin did not agree, and so the FOS adjudication process continued.

[135]On 28 November, Mr Tonkin wrote a particularly bitter letter to the Chief Executive of the Defendant company, complaining that the FOS complaint procedure (which, contrary to Mr Rudelis’ advice, he had initiated) was now being used as “an excuse for further obfuscation”. Mr Tonkin asked “why we should be singled out as the ones who must suffer for Mr Rudelis’ amusement”. The tone of this letter was not only regrettable, but, for the reasons which I have set out, it was also entirely unfair. In the response, dated 4 December 2003, the Defendant pointed out that the FOS rules when a formal complaint was made were quite clear and that there should be no further contact between the parties in dispute.

[136]Thereafter, Mr Tonkin complained to his MP, Norman Baker, who wrote a number of critical letters to the Defendant’s Chief Executive and threatened to raise the matter in the House of Commons. It is plain from the face of his letters that the information with which he was provided by the Claimants was misleading and, in some instances, quite wrong. It is clear that his intervention only served to increase the feeling of antagonism and suspicion on both sides.

[137]The year 2004 was largely taken up with the FOS adjudication. On 5 February 2004, the FOS wrote to Mr Tonkin to apologise for not yet completing their assessment of his complaint. On 25 February the FOS wrote again, this time seeking further information from Mr Tonkin. By March 2004, Mr Tonkin had instructed solicitors and they began sending lengthy letters to the FOS Adjudicator on his behalf. C14. Repudiation And After C14.1 Repudiation

[138]On 4 March 2004, the Claimants’ solicitors wrote to the Defendant seeking “to re-address any ongoing concerns and difficulties with a fresh mind and approach”. It appears that this letter led to discussions between the parties. In his cross-examination Mr Rudelis referred to an offer that he had made to the Claimants at about this time, and there is also a reference in his letter of 1 May 2004 to the FOS to “my offer”. I do not know what the offer was and I have properly been provided with no other information concerning this part of the story. At all events, it appears that the parties were not able to reach agreement on the basis of this offer.

[139]As a result, on 1 May 2004, Mr Rudelis wrote to the Claimant’s solicitors in these terms:

“The key problem with this case throughout has been your client and his agent’s inability or unwillingness to submit a properly framed claim. We have made an offer on the best information available to us. It is not our duty to provide these figures to you; it is your client’s duty to prove his claim. It is now clear he has no intention of doing so. Therefore the offer is withdrawn and the claim repudiated for breach of general condition 5B(i) after waiting 19 months for the proper particulars.”

[140]At the same time, Mr Rudelis wrote to the FOS Adjudicator providing further information and expressing his willingness for the Defendant:

“…to meet the costs of a consultant surveyor or structural engineer to review and advise you independently on the adequacy of the specification.”

[141]Thereafter there was further correspondence between Mr Rudelis and the Claimants’ solicitors but the parties were again unable to settle their differences. C14.2 The Result of the FOS Adjudication

[142]The result of the adjudication was not provided to the parties until 8 November 2004. The Adjudicator, Mr Smith, concluded:

“Having considered all the reports and other evidence submitted, it is my opinion that the complainant has not adequately discharged his responsibility to provide proof of the extent of his loss, whereas the firm has produced considerable evidence to demonstrate that the specification for the reinstatement of the property includes substantial betterment both in the size and specification from the original pre-fire situation. Consequently, in view of the technical nature of this dispute, I consider that the most appropriate resolution to the dispute that has been brought to this service is for the complainant and the firm to jointly appoint an independent architect to review all the documents produced to date and to prepare a detailed specification for the build of the complainant’s property based on his expert consideration of the pre-fire specification, and for both the firm and the complainant to fully accept the independent architect’s conclusions in this matter.”

[143]The Claimants were unhappy with that conclusion and pursued the matter further with the FOS. However, by this stage these proceedings had been commenced, and, as a result, the Ombudsman dismissed the complaint against the Defendant. C14.3 Expert Determination

[144]The Adjudicator’s conclusion, referred to in paragraph 142 above, for an independent expert to resolve the question of the works required to reinstate the property, was itself an echo of an offer that had been made quite openly by the Defendant’s solicitors to the Claimants’ solicitors two months earlier, on 3 September 2004. That offer was couched in these terms:

“…We consider that it would be best and most quickly resolved by involving an independent third party specialist, rather than through protracted legal correspondence. Therefore, we would propose that the parties jointly appoint an architect who specialises in barn conversions, with input from whatever other professionals he requires, to review the specifications, tenders, reports and other relevant documentation produced so far, with a view to providing an opinion as to the specifications of your client’s property prior to the fire, and preparing a detailed independent specification for the rebuild based on the architect’s conclusions as to the proper specification of your client’s property prior to the fire.”

[145]Regrettably, this sensible offer, like the Adjudicator’s later conclusion, was not accepted by the Claimants. Instead, their response to this offer comprised three separate letters from their solicitors all dated 29 November 2004. One of these letters was 29 pages long and the other was 18 pages long. Mr Rudelis, not unreasonably, described this correspondence as “turgid”. I cannot imagine how the Claimants’ solicitors thought that such a response to the simple offer that had been made was a helpful and meaningful way to try and resolve this dispute. C14.4 Repairs

[146]Because no works have been carried out on site, and because it appears that no protection has been put in place in respect of the existing flint walls, they have deteriorated. The continuing degradation of the properties was first noted in a letter from Delavals to Wealden District Council of 16 February 2005. On 25 April Wealden made plain that they were very concerned about the ongoing loss of the existing walls and how it was “vitally important” to keep the walls. Indeed they made plain that the planning permission was only granted on the basis that the walls were kept and that, without them, the proposed building would become a completely new dwelling which “would be contrary to policy”.

[147]It appears that, in the summer of last year, Cornford carried out some repair works to the existing flint walls and put a block work wall in on the existing dwarf wall on the inside of the western wall of the Small Barn. It is not wholly clear precisely what work Cornford did. Their account was in the sum of £14,125. C14.5 Proceedings

[148]As I have indicated, these proceedings were commenced in February of 2005. At that stage, the Defendant’s purported repudiation of 1 May 2004 was still said to be valid. Once the case was transferred to my list for case management purposes, the first thing I did was to require the Defendant to give a proper explanation as to how and why it claimed that the failure to provide the proper information entitled them to repudiate the policy. This led to the express acceptance by the Defendant in July 2005 that it was not entitled to repudiate the policy, and was therefore liable to the Claimants.

[149]As noted above, the value of the claim has gone up and down, which is slightly surprising given that the claim was said to be based on the Delavals documents and the tenders from, respectively, September and October 2003. Be that as it may, pursuant to another order of the court, the Claimants’ eventual claim was set out in their Final Schedule of Damages dated 27 January 2006. That document continued to base the reinstatement claim fairly and squarely on the Delavals documents of September 2003. However, for the first time, it sought to quantify the losses not by reference to the Cheesmur tender but by a cost budget figure produced by Mr Ireland, the Claimants’ expert quantity surveyor. The adequacy or otherwise of that new approach to quantification is examined in greater detail below. D. THE PROPER APPROACH TO REINSTATEMENT CLAIMS

[150]It seems to me that an insured in the position of the Claimants has a number of options when considering the best way to make a claim under a policy of this kind. I set out below those various options and I then go on to compare those options with the course that the Claimants took in the present case. D1. Option 1

[151]The first option, which I have called Option 1, is when the insured decides to reinstate the property to a lay-out and condition that, as closely as possible, mirrors what was there before. In those circumstances a bill of quantities, or a detailed specification, together with a full set of drawings, should be drawn up to identify the reinstatement works in as much detail as possible. Those documents should then be approved by the insurers. At the same time a budget cost should be prepared, so that both the insured and the insurers know, broadly, what the work will cost. Once the documents have been approved, they should be sent out to tender and, all other things being equal, the contract would thereafter be let to the lowest tenderer. The only complication that might arise in some cases would be if the Local Authority required particular materials or features to be incorporated within the proposed reinstatement works which gave rise to extra cost, but that is not a complication in the present case because of the express term of the policy at Clause 5, discussed in paragraphs 16 - 18 above. D2. Option 2

[152]The other main option open to the insured is generally to reinstate the building but, at the same time, to take advantage of its destruction to make certain minor changes so as to improve what was there before. I have called this Option 2. If the insured takes this option then he or she needs to make it plain to the insurer at the outset that the scheme will include some elements of improvement. Those improvements need to be clearly identified. Thus the bill of quantities or the detailed specification, together with the drawings, will be drawn up with this in mind.

[153]Again, it will then be necessary for the insured to get those documents approved by the insurers. It may well be that, if the improvements are relatively minor, the insurer may be prepared to bear the cost of them. In any event, even if the insurer considers that some of the improvements should be paid for by the insured, their clear identification by reference to a bill of quantities or a detailed specification will make the identification of the appropriate costing an easy task when the documents are sent out to tender. D3. Option 3

[154]Option 3 is where the insured wishes to take advantage of the destruction of the property to make significant changes to improve what was there before. This course of action is plainly open to the insured. But, of course, the insured cannot expect the insurer to pay for those significant changes. Therefore, if an insured chooses Option 3, it is vitally important that, from the outset, he makes it quite clear to the insurer precisely what he is doing.

[155]If the insured is pursuing Option 3 it is even more important to ensure that there is a priced bill of quantities or a detailed specification which is the subject of a priced breakdown by the tenderers. In order that the parties can identify what elements of the work are going to be paid for by the insurer and what elements of the work are going to be paid for by the insured, the bill of quantities/ priced specification needs to be as detailed as possible.

[156]Sometimes, the improvements that an insured might seek under Option 3 are so extensive that it is difficult to describe the proposed building scheme as a reinstatement scheme at all. In those circumstances it can be appropriate for a notional reinstatement scheme to be drawn up at the same time as the proposed scheme, which notional scheme can then be accurately measured and priced. That notional scheme would then be used solely to calculate the amount of the insurer’s contribution to the cost of the works. In such circumstances the cost of the actual scheme, if it is radically different to what was there before, would be met by the insured, assisted of course by the financial contribution from the insurer calculated by reference to the notional reinstatement scheme. D4. What An Insured Must Not Do

[157]It seems to me that what an insured must not do is to endeavour to choose either Option 2 (minor changes) or – particularly – Option 3 (significant changes) and then try and persuade the insurer that he has actually chosen Option 1 (no changes), or, even worse, sit back and wait for the insurer to spot the improvements/changes. It is never acceptable to be less than direct and open with insurers. At the worst end of the scale, such conduct can easily amount to fraud, which would, on the basis of the authorities, taint the whole claim, so that the insured then recovers nothing. Even if what happens cannot be said to be fraudulent, an insured’s attempt to “lose” clear improvements to the property within an overall reinstatement scheme, without making those improvements plain, will inevitably cause delay, suspicion and antagonism. It is a clear failure on the part of the insured to comply with his obligations under the policy. D5. The Claimants’ Approach In The Present Case

[158]For the reasons fully detailed below, I am in no doubt that the Claimants in the present case did precisely what they should not have done, and sought to make changes (in some instances, major changes) without telling the Defendant. They therefore opted for a scheme that was largely a mixture of Options 2 & 3, but sought at all times to pass it off as a reinstatement scheme under Option 1. Indeed, even at the trial, they purported to advance a case that the Delavals scheme was a reinstatement scheme, which should be paid for in full by the Defendant. Since it plainly included numerous improvements, both large and small, I cannot understand how and why the Claimants (and their advisers) did not adopt a more straightforward and direct approach long ago.

[159]I consider, on the evidence that I heard, that the attitude adopted by the Claimants (and their advisers) from the outset was wrong in principle. Mr Tonkin explained in his cross-examination that, if there were aspects of the original building that were unsatisfactory, there was no requirement to put them back as they were. He also maintained that, since the property was one large structure, the fact that he might put back the partitions within the property in different places was not something that was significant. Whilst he was right in principle on the first point, his second proposition would always turn on the facts; more importantly, he consistently ignored the potential cost consequences of his approach and the need for openness at all times.

[160]It was put to Mr Tonkin that, although he was seeking to take the opportunity of rebuilding the property to a considerably bigger and better specification, neither he nor his advisers had ever sought to identify the cost implications of any of these improvements. Mr Tonkin agreed that he wanted to make changes, but he did not accept that those were necessarily improvements or had any cost consequences. In any event, he said, he would expect to have any cost implications pointed out to him by the Defendant. It appeared that he considered that it was quite appropriate for him simply to make any claim he wanted, with the burden of demonstrating which parts of it were not a reinstatement scheme being switched to the Defendant.

[161]This wholly erroneous approach explains much of the unhappy saga that developed after the fire. There was an extremely instructive exchange during Mr Tonkin’s cross-examination on how it was that the foundations of the eastern wall of the Small Barn were put in 1.25 metres away from the existing foundation, making the Small Barn much larger in consequence:

“Q: So you did not get involved, and say, ‘well, it is bigger, but it compensates for something else’? A: I would not have had that discussion. Q: Did you instruct Delavals to have that discussion? A: I did not ask Delavals to get into a conversation about that.”

It seems to me that this was a plain admission; that Mr Tonkin felt that it was perfectly proper for him to put forward a scheme which featured numerous changes and improvements and leave it to the Defendant to identify what those changes and improvements might be. For the avoidance of doubt, I find that such an approach was wrong in principle and contrary to the Claimants’ obligations under the Policy. Q: Did you instruct Delavals to have that discussion? A: I did not ask Delavals to get into a conversation about that.”

Q: Did you instruct Delavals to have that discussion?

[162]Of course, Mr Tonkin was being advised at all stages by Delavals. I cannot help concluding that many of these problems came about because, as Mr Stillman accepted, this was the first time that they had ever worked for an insurance company. Delavals seemed only too happy to blame the Defendant when in truth it was they who, by their failure to produce proper and prompt contract documentation, were delaying the reinstatement works. Thus, it was particularly ironic that, in September 2003, Mr Stillman wrote to Mr Tonkin to point out what he called the “shameful” attitude of the Defendant when, at that very moment, almost a year after the fire, he was still working on an ‘improved’ specification for the reinstatement works.

[163]Mr Stillman’s inexperience was apparent on a number of occasions during his cross-examination. Indeed, it often appeared that, when working on his proposals, he had completely ignored the terms of the insurance policy altogether. He said that he took his instructions directly from Mr Tonkin. There was then this exchange:

“Q: He did not ask you to recreate what was there? A: We would build something similar [to what was there] which was acceptable to the Local Authority. Q: Did you discuss that with Mr Tonkin? Was he with you at all times? A: Yes.”

Q: Did you discuss that with Mr Tonkin? Was he with you at all times? A: Yes.”

Q: Did you discuss that with Mr Tonkin? Was he with you at all times?

[164]For the detailed reasons I set out below, I consider that the Claimants’ approach was wrong in principle. They were seeking to make numerous changes to the property without being clear and direct as to what those changes were, and without accepting any responsibility for the increased costs that resulted. In the light of that, I consider that the Defendant’s sceptical response to the Claimants’ reinstatement claim was entirely justifiable. E. THE ALLEGATIONS OF FRAUD E1. Background

[165]It appears that some concerns as to the honesty of the claims being put forward by the Claimants had been expressed by the Defendant during 2003. Indeed, these concerns were not all kept internally; at one stage, Mr Rudelis wrote to Mr Tonkin to make plain that, as a matter of law, deliberate exaggeration of an insurance claim amounted to fraud. However, no express allegation of fraud was made prior to the commencement of the proceedings, and nor was any such allegation made in the defence prior to trial.

[166]On the second day of the trial, during his cross-examination, Mr Tonkin gave certain evidence about his “netting off” arrangements with DJA in respect of the work to The Gallery. As part of this evidence, he was asked why he was making a claim in these proceedings for a new kitchen for The Gallery, when, on the documents, it was plain that the insurers had already paid for a new kitchen. Of course, that made such a claim untenable.

[167]The following day, Ms Jackson made an application to amend the defence to make two specific allegations of fraud; one in respect of the kitchen and under-floor heating, and one in respect of the television. Unsurprisingly, the application was opposed by Mr Terry. Having considered the arguments, I rejected the application to amend in respect of the television, but allowed the amendment in respect of the kitchen and under-floor heating.

[168]The following day, Mr Tonkin gave further evidence about these new allegations. This involved a document which had not previously been disclosed, and which revealed the extent of the financial arrangements between Mr Tonkin and DJA. As a result of Mr Tonkin’s evidence, it is the Defendant’s case that he acted fraudulently and that, in those circumstances, the whole of the Claimants’ claims must fail. E2. Are The Allegations Of Fraud Open To The Defendant?

[169]This jurisdictional point arose in this way. On the day after I had allowed the amendment, Mr Terry raised, for the first time, an argument that, since the Defendant had submitted to judgment on 29 July 2005 with “damages to be assessed”, it was not now open to them to raise the question of fraud. He argued that there was a final judgment which could not be re-opened.

[170]As I made clear in argument, I would be reluctant to decide the fraud allegations on this technical ground. But in any event, I do not think that, as a matter of law, it can be right. There is recent authority for the proposition that an insurer who has repudiated liability on incorrect grounds is entitled to rely on a fraud which, although he only discovered it later, had occurred by the date of that repudiation: see Bolton Metropolitan Borough Council v Municipal Mutual Insurance Limited

[2006] All ER (D) 66

, paragraphs 31-34. The purported repudiation in this case occurred on 1 May 2004 which was at least a year after the fraud.

[171]In addition, if there was fraud in this case, it means that the contract of insurance was unenforceable from the moment of the fraud. Since the alleged fraud preceded the Defendant’s acceptance of judgment on 29 July 2005, it would be contrary to common sense to suggest that the insurers were stuck with their later acceptance of liability no matter what had happened (without their knowledge) earlier.

[172]A third reason why I consider that it is appropriate for me to deal with the allegations of fraud is this: the principal issue for me at the trial was and is the assessment of damages, and, because of the fraud, the Defendant alleges that those damages should be assessed at nil. It cannot be right to prevent the Defendant from at least making that argument. It would be absurd to say, as Mr Terry invites me to do, that the Defendant can only pursue these allegations in the Court of Appeal.

[173]Accordingly, it seems to me that the allegations of fraud are open to the Defendant, notwithstanding the earlier acceptance of liability. The real question is whether the allegations of fraud have been made out. E3. Applicable Principles

[174]What is fraud? The classic definition was provided by Lord Herschell in Derry v Peek

[1889] 14 App CAS 337

376, where he said:

“Fraud is proved when it is shown that a false representation has been made (i) knowingly (ii) without belief in its truth or (iii) recklessly, careless of whether it be true or false.”

[175]Although the burden of proof in a civil case is the balance of probabilities, the court must be very careful when applying that burden to allegations of fraud. In In Re H

[1996] AC 563

, Lord Nicholls said:

“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and hence the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence … built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation. Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required 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. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance on probability, its occurrence would be established.”

[176]Is any fraud sufficient to negate the whole claim? Ms Jackson submitted that, pursuant to Condition 9 of the Policy, any fraud, however small, would be sufficient to taint the whole claim. Condition 9 states that “if any part of any claim is in any respect fraudulent or if any fraudulent means are used to obtain benefit under this policy, the policy shall become void and all benefit under this policy shall be forfeited.” However, Ms Jackson’s argument leads to a result that is different to the position at common law, where it must be demonstrated that the fraud was both material (Guardian Royal Exchange v Ormsby [1982] 29 SASR 498) and substantial (Galloway v Guardian Royal Exchange [1999] LRLR 209). In that latter case, the claimant had a valid claim for over £16,000 but the dishonest claim for a non-existent computer, valued at £2,000, tainted the whole claim because it was found by the Court of Appeal to be a substantial element of the whole.

[177]Mr Terry said that the common law position was also applicable to the contract provision in the present case and that, if I found that there had been fraud but that it was ‘de minimis’, then clause 9 could not operate to exclude the whole claim. He pointed out that in the case of Nsubuga v Commercial Union

[1998] 2 Lloyd’s Rep 682

a condition similar to Condition 9 was treated as imposing a regime to “much the same effect” as the common law. In addition, in Lek v Mathews [1927] 29 Ll.L.Rep 141, the House of Lords had reached a similar view on another contract of insurance with a very similar term.

[178]I consider that Mr Terry’s submissions on this point are right. The authorities demonstrate what I consider to be the common sense position: that it would be absurd if an entirely insubstantial element of a large claim, which is found to be fraudulent, could taint the entirety of that claim. What is substantial is obviously a question of degree and I consider that below. However, I do not accept Ms Jackson’s submission that, effectively, any fraud, no matter how small, would be sufficient to wipe out the whole of the Claimants’ claim under this Policy.

[179]Are there any other relevant principles which govern allegations of fraud in insurance cases? It is fair to say that the authorities demonstrate a degree of latitude allowed by the courts in relation to allegations of fraud in insurance cases. Plainly that latitude did not extend to the 12% of the whole claim identified in Galloway, or the 11% in the case of Direct Line v Khan

[2001] EWCA Civ 1794

which followed it. On the other hand, Thomas J in Nsubuga at page 686 expressed the view that it:

“… would not generally in those circumstances be right to conclude readily that someone had behaved fraudulently merely because he put forward an amount greater than that which he reasonably believed he would recover”

. In similar vein, in Orakpo v Barclays Insurance Services [1995] LRLR 443, Lord Hoffmann expressed the view that:

“In cases where nothing is misrepresented or concealed and the loss adjuster is in as good a position to form a view of the validity of the claims of the insured, there would be a legitimate reason that the insured was merely putting forward a starting figure for negotiation.”

[180]Accordingly, with those principles in mind, I move on to consider the allegations of fraud and the evidence in relation to those allegations to see if they have been made out. E4. The Allegations

[181]Essentially there are two allegations of fraud. The first is the simple point that a claim was made in these proceedings for a kitchen, and a kitchen sink, up to the third day of the trial, in circumstances where the Claimant knew or ought to have known that that claim had already been paid by the Defendant.

[182]The second allegation is more complicated. Effectively, the complaint is that the Defendant paid a claim, based on documents produced by DJA, which included for a kitchen, but the money that they paid out was not used for the purchase of a kitchen, because the Claimants had already purchased the kitchen themselves. Instead, the money paid by the Defendant was used by the Claimants to pay for the under-floor heating, which was an item which was excluded from the schedule of works approved by the Defendant. E5. Evidence

[183]The evidence in relation to these allegations came, of course, in two stages. The evidence on which the allegations were based came on the second day of the trial. In that passage of his cross-examination, Mr Tonkin admitted that he made changes to the specification without consulting Capita McLarens. He said:

“We paid for the kitchen. That was netted off against the under-floor heating … I would expect that to be in the paperwork.”

[184]As to the kitchen, it was put to him that he had been paid for the kitchen and that he therefore had no further claim for it in these proceedings. He admitted that it looked as if it had been claimed twice but he was quick to say that this was “not an important matter”. He maintained that it was “not in the slightest bit dishonest”.

[185]Once the amendment had been allowed, Mr Tonkin gave further evidence in chief the following day on the subject of “netting off”. Much of this evidence was by reference to the document which had never been disclosed before which showed the separate financial dealings between Mr Tonkin and DJA. It was impossible to reconcile this document with the DJA final account. As to the kitchen, Mr Tonkin maintained that the double claim was inadvertent and not intentional. He was cross-examined on the discrepancies between the DJA final account and the document which he had produced overnight. I am bound to say that his answers merely increased the confusion as to the status of the financial position between himself and DJA. E6. Conclusions

[186]I have reached the conclusion that the double claim in respect of the kitchen was clearly and obviously an inadvertent mistake. I do not accept Mr Tonkin’s glib response that it was not a matter of any importance; for the reasons that I have previously explained, it is always important if somebody exaggerates an insurance claim, even if there was no intention to defraud. However, in this instance, it seems to me plain that the exaggeration was inadvertent and not dishonest. To use the approach of Lord Hoffman in Orakpo, it was equally apparent to the Defendant that this was a double claim and therefore not at all likely to have been dishonest.

[187]As to the netting off position, it is clear to me that Mr Tonkin was less than open with the Defendant about his separate arrangements with DJA. Indeed, until the third day of the trial, it appears that the Defendant was completely in the dark about these arrangements, and the document which Mr Tonkin relied on on the third day of the trial should have been disclosed in accordance with the court’s directions as to standard disclosure. As I have already said, I consider that the Claimants’ failure to be completely open with the Defendant was and remains one of the principal reasons for this whole unhappy saga. But, notwithstanding that view, I have concluded that the “netting off” did not amount to fraud.

[188]In simple terms, it seems to me that it could not have been dishonest for the Claimants to spend their own money on item X and then, when their claim for item X was paid by the Defendant, to use that money, up to the value of item X, to pay for something else. That was simply an indirect way for the Claimants to pay for works outside the schedule out of their own pocket.

[189]It seems to me that in circumstances like this, it is appropriate to give the benefit of any real doubt to the Claimants. That, therefore, is what I do here in rejecting the allegation of fraud. I should also say, for completeness that, having found that any fraud would have had to have been substantial (in the sense of not being “de minimis”) I do not accept that, even if the claim in respect of the kitchen and under-floor heating was dishonest and fraudulent, that fraud would have tainted the whole claim. The alleged fraud appears to be worth no more than £2,000. That is, on any view, not more than about 0.3% of the entirety of the Claimants’ claim in these proceedings. I do not consider that that is ‘substantial’ in accordance with the authorities.

[190]For all these reasons, therefore, I conclude that the fraud allegations must fail. As I have previously noted, that conclusion is in accordance with the indication that I gave orally to the Claimants on 2 March 2006, at the conclusion of the last day of the trial. F. ESTOPPEL F1. History

[191]Throughout the claim process, and throughout this litigation, the Claimants and their advisers have always maintained that the Delavals September 2003 scheme was a reinstatement scheme. It was not until Mr Terry’s closing submissions that there was any express concession that the scheme was not entirely a reinstatement scheme, and, even then, the concession is not extensive (see paragraph 265 below). However, on a proper analysis of the Claimants’ final position, it is clear that, at least indirectly, the Claimants do now accept that, in at least one important respect, the Delavals scheme cannot be a reinstatement scheme. That is because, at paragraph 124 of Mr Terry’s closing submissions, the Claimant’s scheme is described as a scheme: “… To reinstate the Main Barn, kitchen and Small Barn on the footprint represented by the ground works already in situ in accordance with the Delavals’ revised spec/plan …” (my emphasis)

[192]In other words, the starting point for the Claimants’ case is that the scheme should go ahead on the basis of the ground works which are already in place. Why does that matter so much? Because, on any view, the ground works that were carried out in June 2003 did not reinstate what was already there. Prior to the fire, the northern wall of the Small Barn, which obviously dictated the width of the Small Barn, was 4.95 metres long. The new foundation for the east wall has been put in so as to make the northern wall of the Small Barn 6.2 metres long. In other words, on the basis of the ground works already in situ any new building built off those foundations will be 1.25 metres wider than what was there originally. That is not, on any view, reinstatement; that is a major improvement on what was there before. The building is considerably bigger: it will therefore cost more money to build.

[193]This major increase in the size of the Small Barn has come about in extraordinary circumstances, which are examined below. It appears to me, from all the evidence, that the Claimants wanted the greatly increased living space but did not want to pay for it. At no time have the Claimants ever accepted any liability for any element of the cost of this different, larger building. Accordingly, in order to maintain this uncompromising position, in Mr Terry’s written opening (but not before) the Claimants were driven to contend that the Defendant was estopped from denying that the position of the new foundations of the Small Barn represented a proper reinstatement scheme.

[194]Ms Jackson challenged this point on the first day of trial, saying that the estoppel argument had not been pleaded. Mr Terry accepted that and, overnight, produced an amendment (which I allowed) which alleged estoppel for the first time. But even that was not the end of the story. In his written and oral closing submissions, Mr Terry sought to expand the estoppel argument by arguing (again for the first time) that the Defendant was estopped from challenging the entirety of the Delavals September 2003 scheme because of things that were said at the secretly taped meeting in August 2003, and events thereafter. As he put it at paragraph 65 of his closing submissions, “the Claimants rely heavily on what was agreed at this meeting as establishing a way forward from which the Defendant should not be allowed to resile”. Both Ms Jackson and I were somewhat surprised by this development because it had not been foreshadowed in Mr Terry’s opening submissions or in the evidence. Ms Jackson again complained that this new case had not been pleaded, and I consider that she was correct so to submit.

[195]Despite these points, I do deal below with both these estoppel arguments. I consider them in some detail because, in the context of the case as a whole, they seem to me to be extremely important. Thus, at Section F2 below I deal with the estoppel point in relation to the width of the Small Barn; at Section F3 I deal with the wider estoppel point in respect of the entirety of the Delavals September 2003 scheme. F2. Estoppel/ Width of Small Barn F2.1 How Did The Increase In Width Come About?

[196]Mr Tonkin was asked how it was that the proposed width of the Small Barn had been increased by 1.25 metres. His answer was rather vague, referring to the decision of the engineer (Mr Ward). He said that he had understood that Mr Ward had increased the width of the Small Barn as “reasonable compensation for loss of space elsewhere”. It was in this passage of cross-examination that Mr Tonkin accepted that he had not made this decision clear to the Defendant and had not instructed Delavals to make it clear either (see paragraph 161 above).

[197]Mr Ward’s evidence about the increase in size (and how it had come about) was not contained with any clarity at all in his written witness statement. Thus it was necessary for Mr Terry to adduce this evidence orally, by way of examination in chief. Essentially, this was a prepared passage of oral evidence, coming on day 4 of the trial. Mr Ward said that, in his view, the overall Delavals scheme was going to result in a loss of floor space; in part, he said, this was a result of the new timber frame they proposed in the Main Barn (to which, for other reasons, the Defendant objects in any event). He therefore looked to see how he might re-achieve that alleged loss of floor space and he concluded that, if he made the Small Barn wider, this would make up for it. Therefore, he said, he had deliberately made the Small Barn wider to compensate for the alleged reduction in space in the Main Barn, and the ground works had been located accordingly.

[198]It appears that after the August 2003 meeting, Mr Ward was not only aware that the proposed Small Barn was much wider than the building that had been there before, but he had done a calculation which showed that the costs of the overall scheme proposed by Delavals would be something in the region of £40,000 greater as a result of the increase in space. This was demonstrated by his manuscript note of 18 September. This calculation was never passed on to the Defendant, something which Mr Stillman again accepted in cross-examination.

[199]Indeed, for reasons which, even now, I simply cannot understand, Mr Ward’s entire “re-achievement” of lost space was never notified, let alone explained, to the Defendant either at or after the meeting. Mr Stillman and Mr Ward both accepted that the decision to make the Small Barn larger was not passed on to Mr Rudelis of the Defendant, or to Mr Jones of Capita McLarens, or to Mr Beale, or to Mr Hulejczuk of Focus. It appears therefore that the Defendant and its advisers were deliberately not informed about the proposed increase in the size of the property.

[200]Still further, on the evidence that I heard, it appeared that the decision to increase the width of the Small Barn, was taken by Mr Ward in conjunction with Mr Tonkin, and was not even explained to Mr Stillman. When the increased width figure of 1.25 metres (a figure which is agreed by the experts) was put to Mr Stillman in cross-examination, he said that he was surprised it was so much. He said he thought that the new foundations had been put in as close as possible to the existing and that the new foundation was alongside the existing foundations. He thought that the increase was something like 300 mm. That would explain how it was that Mr Stillman, at the meeting in August 2003, erroneously represented to the Defendant that the increase in width gave rise to a “300 mm strip”, or a total of “4m 2”.

[201]However, whatever Mr Stillman’s imperfect knowledge, it seems that both Mr Ward and Mr Tonkin knew full well that the Small Barn would be 1.25 metres wider as a result of the new position of the foundation. They did not make that plain either before or at the meeting on 14 August. Instead, it might be thought that, on that occasion, they deliberately sought to mislead the Defendant’s representatives about the increase. At a number of points during the meeting, they referred to the additional increase in width as “miniscule” when, on any view, it plainly was much more than that.

[202]I have therefore reached the firm conclusion that Mr Tonkin and Mr Ward knew that the ground works had been put in at a location which was deliberately designed to increase the width of the Small Barn by 1.25 metres. I also find that, as a result of this, both Mr Ward and Mr Tonkin sought repeatedly through the meeting in August to try and get the Defendant to agree to this new footprint, without once making clear that the new foundation was designed to increase significantly the width (and therefore the size) of the Small Barn. Fraud and dishonesty are not alleged in relation to this part of the case and I make it clear that I make no finding of either. However, it seems to me that what was said to the Defendant about the foundations of the Small Barn at the meeting in August 2003 was very misleading, and it is difficult to see how the explanation for that could be innocent, given that, as Mr Ward said, the decision to increase the width was entirely deliberate. As an example of the misleading nature of the information that was provided at the meeting, I note that, at one point, it was being suggested that the width was the result of the requirements of the Local Authority. That was simply untrue, something which Mr Stillman accepted in cross-examination.

[203]I have already pointed out that the Claimants’ claim against the Defendant has suffered throughout from a lack of openness and directness. The obfuscation in relation to the deliberate decision to increase the size of the Small Barn, the failure to make that clear to the Defendant and its representatives, is perhaps the best example of that. Moreover, I note that this lack of candour did not cease after the August meeting. As I have said, it was only on the eve of trial that it was (rather grudgingly) admitted by the Claimants that the Small Barn was 1.25 metres wider than what was there originally. The lateness of this acceptance may have had something to do with the fact that, when Mr Orrell, the Claimant’s expert engineer, was first instructed in this matter, he was supplied by Mr Tonkin with four reasons why the Small Barn was wider. He set out those instructions in his report at paragraph 7.5.8.3. None of these alleged reasons began to explain why the Small Barn was actually 1.25 metres wider. They are all irrelevant or untrue. No mention was made by Mr Orrell of the ‘compensation’ point. Accordingly, it appears that the attempt to keep secret the real reasons for the widening even extended to the Claimants’ failure to inform Mr Orrell that the true reason for the increase in width was the alleged “re-achievement” of space lost elsewhere. F2.2 The Alleged Estoppel

[204]Mr Terry was properly aware of the difficulties with the Claimants’ case as a result of what was said at the meeting in August 2003. Accordingly in his closing submissions he carefully put the estoppel case as having arisen prior to that meeting. He submitted that the Defendant approved the ground works and their cost of £25,915 in June 2003 and, therefore, he submitted that that was when the estoppel arose. It would, he said, now be inequitable for the Defendant to contend that the work should have been carried out to a different footprint and/or at some lesser cost. He maintained that the state of knowledge of the Defendant when agreeing to the ground works was irrelevant, unless it could be shown that there was deliberate deception by the Claimants, and he contended that, since deliberate deception was not pleaded by the Defendant in this regard, there was no defence to the estoppel argument.

[205]There is no doubt that, as a general rule, the state of knowledge of the person making the statement relied on as giving rise to the estoppel (in this case the Defendant’s agreement to the carrying out of the ground works) is irrelevant: see the judgment of Oliver J in Taylors Fashions v Liverpool Victoria Trustees

[1982] QB 133

at 149. But, as Mr Terry accepted when I put it to him in argument, given that estoppel is an equitable remedy, it would be impossible for the Claimants to rely on the doctrine if the Defendant’s state of knowledge was the result of having been misled by the Claimants. Therefore, Mr Terry was obliged to contend that there was a difference between the situation in which the party seeking to rely on the estoppel is silent as to the true state of affairs, and the position where that party actively misleads the other party into making the relevant statement. In the former case, Mr Terry argued that the party asserting the estoppel can rely on the statement; in the latter case, he accepted that it could not.

[206]I am not sure that I necessarily agree with the distinction that Mr Terry sought to draw between the active and passive misleading of the party making the statement on which the estoppel is then based. Since estoppel is an equitable remedy, designed to prevent injustice, it seems to me that it would be very difficult for a party to rely on such a remedy in any circumstances where, even passively, he has misled the party into making the relevant statement or representation. However, I do not need to trouble too much about that distinction in the present case because I have reached the firm conclusion that the Claimants and their advisers actively misled the Defendant into agreeing the location and cost of the ground works in the summer of 2003.

[207]The relevant events are set out at paragraphs 107 - 112 above. From those it will be seen that Delavals were, at all times, providing information about the ground works to Capita McLarens as part of the Claimants’ claim for the cost of the reinstatement of the property. They did not, at any time, indicate that, in truth, these ground works involved a deliberate decision to increase significantly the width of the Small Barn. Of course, because the drawings were not dimensioned, the Defendant would have had no way of working that out on its own. Mr Stillman accepted in cross-examination that Capita McLarens would not have known the proposed width of the Small Barn in June/July 2003. The Defendant was therefore entitled to believe, in good faith, that the ground work proposals which they were being asked to approve in such a hurry would do what the Claimants and Delavals were always saying they would do, namely reinstate the property to the footprint which was there before. The ground works were approved by the Defendant on that basis. Thus I find that the Defendant was misled into approving the ground works carried out in June 2003 because it was not told that Mr Ward had deliberately decided that the Small Barn would not be reinstated to its former dimensions but would be significantly increased in size.

[208]Mr Terry rightly accepted that if I found, as a matter of fact, that the Defendant had been misled by the Claimants or their advisers into approving the location of the ground works, then the Claimants could not rely on the equitable doctrine of estoppel. That seems to me to be entirely right. Accordingly, for the reasons set out above, I have no hesitation in concluding that the estoppel argument in relation to the width of the Small Barn must fail. For completeness, I should say that the alternative (and unpleaded) argument advanced by Mr Terry at paragraphs 33 and 34 of his closing submissions, that there was some sort of binding compromise in respect of the new position of the Small Barn foundations and/or the payment of the £25,915, must also fail and for precisely the same reasons. In any event, it was clear that the sum was paid by the Defendant by way of an interim payment only, and could not therefore give rise to a binding agreement anyway.

[209]Even though the estoppel argument in respect of the Small Barn was not even pleaded until the second day of the trial, its failure seems to me to have a major impact on the Claimants’ claim. Without the estoppel, the Claimants’ starting point has to be that the scheme proposed by Delavals in October 2003 was not in fact a reinstatement scheme, because (if nothing else) it proposed to increase the width of the Small Barn by 1.25m over what had been there pre-fire. This was, on any view, a significant improvement on the building that had been destroyed in the fire, in part because this was the portion of the property in which the Claimants and their children actually lived. F3. Estoppel/The Entirety of the Delavals Scheme

[210]As indicated in paragraph 194 above, during his closing submissions, Mr Terry argued that there was a second, wider estoppel point. The argument seemed to go something like this. At the meeting in August 2003, Delavals were sent away to prepare a new specification and drawings, on the basis of an agreement, at least “in principle”, that the footprint represented by the new foundations was correct. Their September scheme was based on that assumption. In their letter of 16 October, Capita McLarens agreed that adjustments to the Delavals specification would be undertaken by variation. At no time prior to the breakdown of relations in November 2003 did the Defendant provide a detailed critique of the Delavals scheme. Therefore, it is said, the Defendant is now estopped from challenging the proposition that the Delavals scheme of September 2003 was a reinstatement scheme, with any variations to it being dealt with separately.

[211]Ms Jackson’s first objection to this argument is that it is not pleaded. As I have already indicated, I consider that she was correct: this point was neither pleaded nor advertised before the closing submissions. Nor was it pursued in evidence, which was a major omission given the importance which the Claimants, in their closing submissions, attach to events like the Capita McLarens letter of 16 October, and the alleged agreement that it contained. I find, therefore that this wider estoppel argument is not open to the Claimants on the pleadings. On one analysis, that is the end of the point. However, I am always reluctant to decide these sorts of issues entirely on the pleadings. In this instance, it is not necessary for me to do so because, for a whole range of other reasons, I have concluded that this wider estoppel argument is also untenable in principle and on the facts.

[212]The starting point for this wider estoppel argument is, of course, the increased width of the Small Barn: that was, after all, the principal reason for the increased footprint that formed the basis of the Delavals September scheme. For the reasons which I have already set out, the Defendant is not estopped from contending, as is manifestly the position, that the ground works which went ahead in June 2003 did not reinstate the Small Barn to its original size. Given the failure of that part of the Claimants’ case, it is difficult to see how the wider estoppel argument, which is based upon a scheme which takes as its starting point the wider Small Barn, can even get off the ground.

[213]The other fundamental difficulties with this argument, so it seems to me, are that there has been no relevant representation/statement by the Defendant; no reliance by the Claimants; and no detriment to the Claimants as a result of the production of the Delavals September 2003 scheme and the failure (if that is what it was) on the part of the Defendant to take issue with the detail of the Delavals scheme at the time that it was produced.

[214]Let us take detriment first. In respect of the Small Barn, it is clear that, if (contrary to my conclusions) the Claimants had been able to establish the necessary promissory estoppel, they could have shown detriment because the ground works have been put in 1.25 metres wider than the original and that work has been paid for. Therefore, but for the critical fact that the Defendant had been actively misled into agreeing that these works should proceed and be paid for, the other ingredients for estoppel may have been in place. But that is manifestly not the position in relation to the wider estoppel case.

[215]The wider estoppel case appears to proceed on the basis that, between the meeting in August and the breakdown of communications in November 2003, the Claimants’ advisers were operating on the basis that the existing footprint had been agreed. Let us assume that that is right. If it is, it follows that the work done by the Claimants’ advisers thereafter on drawings and specification was all based on that footprint. But no physical work was done or monies paid as a result of the Delavals September scheme, and therefore, in my judgment, there has been no irredeemable loss or detriment suffered by the Claimants as a result of the alleged estoppel. Mr Terry argued, at paragraphs 72 and 123 of his closing submissions that, but for the breakdown in the relationship towards the end of 2003, the works would have gone ahead in accordance with the Delavals scheme and that the court should “look on that as done which ought to have been done.” I do not accept that proposition at all: many of the Defendant’s general objections to the Delavals scheme were clear before the breakdown in relations, and if others have only become apparent thereafter, that is because, as in the case of the position of the new foundations, the true position was withheld from the Defendant. Even if it was right that the proposed work would have gone ahead on site, the Claimants would still only have been entitled to payment from the Defendant if they could show that that work represented a proper reinstatement scheme, which is, of course, the principal issue in the case. Accordingly, the argument was circular, and no detriment to the Claimants was identified.

[216]I also reject the suggestion that there has been the necessary representation/statement by the Defendant, or reliance on any such representation by the Claimants, that would support the wider estoppel argument. As his evidence, and his contemporaneous notes, made clear, Mr Rudelis’ agreement to the new footprint in August was only ever “in principle”; moreover, it is clear that, even if there had been no oral agreement to this effect in August, Delavals would still have produced a scheme based on that bigger footprint. Those, after all, were Mr Tonkin’s instructions, and they predated the August meeting. There was thus no unequivocal statement and no reliance.

[217]I was surprised at the emphasis placed on the Capita McLarens letter of 16 October 2003 in the Claimants’ closing submissions and the argument that this represented an agreement to the Delavals September 2003 scheme. That point was not pursued in evidence, and was strikingly omitted from the cross-examination of Mr Jones. Manifestly the letter is not an agreement to the Delavals scheme; it was written on the express basis that the Defendant’s advisers had not yet been through the Delavals scheme in detail, and was mainly concerned with questioning why Delavals were hurrying them to approve the scheme in circumstances where it had already been sent out to tender. Even if it was some sort of agreement to the Delavals scheme (and, since that was not even put to Mr Jones, it is difficult to see how it could be), it would clearly have been based on the understanding which Capita McLarens had at the time, namely that the footprint on which the Delavals scheme was based represented the pre-fire position. Of course, although Mr Jones did not have the relevant information at this time, it did not.

[218]On a more general note, it seems to me that the reality in this case is that, ever since June/July 2003, the parties have been in dispute as to whether or not the Delavals schemes represented valid reinstatement schemes. Accordingly, I am bound to rule against a proposition that in some way the Claimants should be prevented from denying that the Delavals scheme was appropriate (a point they have been making for almost three years) because of: i) a period of silence about the scheme in the autumn of 2003 when relevant information was known to the Claimants’ advisers but had not been provided to the Defendant; and ii) a reply to a letter on a point about timing, sent after the tender inquiry (with the Delavals scheme attached) had gone out to the prospective tenderers, and which was also written at a time when the author was not in possession of all the facts.

[219]At one point in his oral closing submissions, Mr Terry appeared to be arguing that the Claimants’ whole approach to the litigation had been coloured by the fact that at no time between the middle of August 2003 and November 2003 had the Defendant challenged the detail of the Delavals scheme. To the extent that this argument is maintained, I regard it as fanciful on the facts and wrong in principle. As to the facts, I have already said that, both before and after the autumn of 2003, the argument between the parties had always been that the Delavals scheme was not a valid reinstatement scheme. The Claimants have known full well what points have been taken by the Defendant in support of that proposition. For their part, they have, since before the August meeting, maintained that the Delavals scheme was a reinstatement scheme in every particular. It cannot now be suggested that their uncompromising position was in any way influenced by the failure on the part of the Defendant to point out in terms prior to November 2003 that the scheme was based on too big a footprint or was, for a myriad of other reasons, not a proper reinstatement scheme.

[220]In addition, I regard the wider estoppel argument as unsound as a matter of principle. It appears to suggest that, in the autumn of 2003, the burden of proof somehow irretrievably shifted from the Claimants to the Defendant, and it became the Defendant’s obligation to point out whether or not the Delavals scheme contained improvements and, if so, what those improvements were. For the reasons which I have explained above, I consider that such an argument is wholly untenable. The burden always remained on the Claimants to put forward a proper scheme. There was never anything in the documents which suggested that the Defendant accepted the Delavals September 2003 scheme as a proper or appropriate reinstatement scheme in any respect. Certainly the letter of 16 October did no such thing, having been written only because, as Delavals well knew, the Defendant’s advisers had not yet been through the new proposals in any detail.

[221]Accordingly, for all these reasons I conclude that the wider estoppel argument is hopeless. It was not pleaded and not pursued in the evidence. There was no relevant representation/statement by the Defendant, no reliance on any such representation/statement by the Claimants, and no detriment. I am in no doubt at all that the arguments before me about the competing merits of the schemes would have been just the same, whatever had happened and whatever had been said at the August meeting, and in the months thereafter. F4. Conclusions On Estoppel

[222]For the reasons set out above, I reject the Claimants’ rather belated estoppel arguments. This rejection alone puts the Claimants in considerable difficulty. As I have already pointed out, it means that they have to accept that the scheme that they put forward both before and during the litigation embraces, at the very least, a major increase in the width of the pre-fire Small Barn. From a wider perspective, it means that, rather than relying on what was said or done during 2003 (whether recorded in secret or not), the Claimants have to establish the validity or otherwise of their proposed scheme by reference to evidence of its inherent merits as a reinstatement scheme. If the Claimants had a good case on the merits of the Delavals September 2003 scheme, of course, that should be a relatively easy task. However, for the reasons set out below, they do not have any such case. G. THE CLAIMANTS’ PROPOSED SCHEME G1. What Scheme Do The Claimants Rely On?

[223]The purported reinstatement scheme relied on by the Claimants is that prepared by Delavals in September 2003. They rely on it as the basis for the money claim that they now make. Until shortly before the trial, the principal sum claimed in consequence was the Cheesmur tender figure which was said to have been based on this scheme.

[224]By the end of the trial, the position was rather more complicated than that. Although it appeared that the Claimants were still maintaining their reliance on the Delavals September 2003 scheme, their money claim had changed. They were no longer relying on the Cheesmur tender. They were instead relying on a Budget Cost produced by Mr Ireland in his report exchanged in December 2005, and set out on just one page. Following receipt of the Defendant’s opening, which criticised that one page breakdown, the Claimants then provided a further sheaf of documents which purported to be Mr Ireland’s calculation of his Budget Cost, although some of the figures were different from those in his Budget Cost.

[225]Moreover, when Mr Ireland came to give evidence, he accepted that there were elements of the Delavals scheme which were unclear. Accordingly, Mr Ireland had, in conversation with Mr Tonkin and others, worked up a specification for some elements of the work which he had then priced. He also took some items from the separate bills of quantity produced by the Defendant’s Mr Beale.

[226]The result of this mixing and matching process was a considerable degree of confusion. The strong impression was created that, at the last minute, the Claimants had lost confidence in the Delavals scheme and particularly the Cheesmur figures said to be based upon it. However, two basic things about the Claimants’ case remained intact. First, the Claimants continue to rely – at least in general terms - upon the Delavals September 2003 documentation. Secondly, as a matter of principle, the Claimants continue to maintain that those documents prepared by Delavals set out a reinstatement scheme which the Claimants are entitled to pursue under the terms of the policy. As I have previously noted, there was not at any stage (prior to the Claimants’ closing submissions) any indication that any part of the Delavals 2003 scheme contained improvements or changes, and there remains no concession at all that any element of that scheme be paid for in any respect by the Claimants. Accordingly, the Claimants maintained to the end that this was an Option 1 case (see Section D1 above). G2. Is It A Reinstatement Scheme? G2.1 Introduction

[227]For the reasons which are set out in detail below, I am in no doubt whatsoever that the Delavals September 2003 scheme was not a reinstatement scheme. The Defendant was therefore right to maintain throughout that the Delavals proposal was not a reinstatement scheme and thus not a proper basis for the assessment of the sums due to the Claimants. In addition, I find that the inadequacy of the Delavals September 2003 scheme as a reinstatement solution was and remains the root cause of all the principal problems in this case.

[228]Before going on to look at the reasons why, in my judgment, the Delavals 2003 scheme was not a reinstatement scheme I should say a word about square metreage. Much of the Claimants’ written opening was concerned with arguments about the square metreage of the proposed scheme and how the square metreage of the Delavals’ proposal was very close to the size of the pre-fire property. The way this argument was put in opening appeared to suggest that, if it could be shown that the square metreage of the Delavals scheme was the same (or almost the same) as the area of the property before the fire, this demonstrated that the Delavals scheme was truly a reinstatement scheme.

[229]I reject that argument as a matter of principle. It is plainly misconceived. The original building was an L shape. The same square metreage could have been achieved with an entirely square building. That would not, however, be a reinstatement scheme. Furthermore, reliance on square metreage takes no account of what the various parts of the property were used for, and what condition they were in, before the fire. As I have already pointed out, the part of the property in which the Claimants actually lived before the fire, namely the Small Barn, was comparatively small compared to the size of the property as a whole. An increase in the size of that area would therefore be a significant improvement to the property as a whole, whatever else happened to the larger, but relatively unused, Main Barn.

[230]It is difficult not to conclude that the Claimants’ original emphasis on square metreage was designed to divert attention away from the fact that the Delavals scheme actually included a large element of improvement/enhancement. Whilst I accept that some of the rough and ready calculations done by reference to square metreage can provide some sort of guide as to the possible cost of rebuilding the property, it seems to me that the square metreage point has no more profound significance than that. Even then, as Mr Ireland himself accepted during his cross-examination, nobody would seriously argue that the costs of the reinstatement work should, or could, be assessed by reference simply to the overall dimensions of the property.

[231]I also note that, after all the fuss about square metreage made in the Claimants’ opening, Mr Ward conceded in cross-examination that the Delavals’ proposals did indeed give rise to a bigger property than that which was there previously. It would appear from Mr Ireland’s report that the Delavals scheme is 36.7m 2 (or 10%) bigger than the pre-fire property. I find that this is, at least in part, explicable by reference to the increase in the width of the Small Barn.

(a) Width

[232]The Delavals September 2003 scheme involved widening the Small Barn to 6.2 metres from 4.95 metres, an increase in width of 1.25 metres. This was, on any view, a major improvement in the property, particularly as the Claimants and their children actually lived in the Small Barn.

[233]The particular benefits that came from widening the Small Barn were the increased amount of headroom and space in the first floor which, it will be recalled, had not previously had planning or building control consent and which, on the evidence, may not have complied with the building regulations anyway because, in its pre-fire state, the amount of headroom at first floor level was so limited.

(b) Roof Pitch

[234]Mr Beale’s view was that the original roof pitch of the Small Barn was 45 degrees by reference to the long black soot marks shown in one of the photographs. Mr Orrell accepts that what can be seen is a soot mark and that it is at 45 degrees but, for reasons which he did not explain, he felt unable to agree that that demonstrated the pre-fire roof pitch. However he did agree that there was no evidence of any other roof pitch. I accordingly find that the roof of the Small Barn was at a pitch of 45 degrees before the fire. I am supported in that view by Mr Stillman’s evidence to the effect that 45 degrees is the usual roof pitch.

[235]There is no dispute that the Delavals scheme increases the roof pitch to 50 degrees. This is a clear and obvious improvement because it increases the useable height of the first floor. This clear improvement should have been made plain to the Defendant, but it was not.

[236]There was an extraordinary argument, advanced by Mr Ward, to the effect that the 50 degree roof pitch was not an improvement because it was required by the planners. He was therefore cross-examined about this. It turned out that the 50 degrees had been shown on the Delavals drawing and the planners had simply approved that drawing. There had therefore been no requirement emanating from the Local Authority at all; they had just approved what they had been shown. Mr Ward’s willingness to argue this sort of point on such a flawed basis led me to doubt whether he was always giving proper advice to the Claimants (and to the court) as to the nature and extent of the Delavals scheme.

(c) Staircase

[237]The staircase had been indicated against the west wall on the drawing produced by Mr Tonkin in September 2003. Mr Ward admitted that, in the new scheme proposed by Delavals, the staircase was in a different position and was not located against the west wall. When asked why the location of the staircase had changed, Mr Ward said that he did not believe that it would comply with the building regulations if it was located against the west wall. This was, he said, because it would rise from a habitable room, and secondly because there might be headroom difficulties.

[238]In giving this evidence, Mr Ward was effectively agreeing with the evidence of Mr Beale who, doing his best on the information with which he had been provided, including in particular the information from Mr Tonkin, had concluded that the location of the pre-fire staircase was a breach of the planning and building control requirements.

[239]On the evidence available to me, I find, on the balance of probabilities, that the pre-fire position did not comply with either of the existing planning or building regulation consents. Mr Ward had changed the location of the staircase because the original position was untenable. That change, designed to ensure that the property complied with regulations with which it had not previously complied, must therefore constitute an improvement which would be at the Claimants’ account.

(d) Void

[240]Mr Tonkin’s evidence was that, before the fire, there was a void at the south end of the first floor of the Small Barn. The Delavals scheme turns the void into a bedroom with additional landing space and shows access from that landing into the Main Barn at first floor level.

[241]All of that work was not there before the fire. It was plainly and obviously an improvement. It could not be said to be reinstating that which was there before. In my judgment, there was not and could not be any argument to the contrary.

(e) Internal layout generally

[242]The internal layout of the Small Barn in the Delavals September 2003 scheme is very different to that which was there before the fire. Mr Tonkin accepted that the layout as shown on the drawings was “completely different”. He also accepted that the new proposal was more spacious and that the rooms were “bigger”.

[243]In the light of that evidence, it is again difficult to see how it could possibly be maintained that the scheme in respect of the Small Barn was a reinstatement scheme. It plainly was not. It appeared that both Mr Tonkin and Delavals considered that they could make as many changes as they liked to the internal partitioning because the cost consequences of such changes might be modest. That is a separate point, examined below. But, for the reasons set out in Section D above, the changes being proposed to the layout should have been demonstrated in the Delavals documents. In my experience, the common way in which this is done is by using transparent overlays. The failure to do this not only comprises further evidence of the lack of clarity and openness in the Claimants’ proposed reinstatement scheme, but has given rise to arguments about the costs consequences of changes to layout which may never have been necessary if the differences between the original and the proposed had been clearly identified at the outset.

(f) Framing

[244]There was no timber frame in the Small Barn before the fire. There were timber studwork walls: that is all. The new scheme proposed by Delavals appears to require a certain amount of timber framing in the Small Barn. That is an improvement and is not reinstatement.

(g) Summary

[245]The Small Barn was the principal area of the property that was inhabited on a day-to-day basis before the fire. I am in no doubt that the Delavals scheme represented a clear and obvious attempt to expand and improve that accommodation. Of course, the Claimants were perfectly entitled to redesign this part of the property in that way but it was incumbent upon the Claimants to make it quite clear that that was what they were doing, so that the respective cost contributions could be calculated. They did not do so; and they compounded that failure by continuing to put forward this scheme as if it were a reinstatement of the Small Barn. It obviously was not.

(a) General

[246]As noted above, the Main Barn originally had a timber frame at the eastern end. The western end was built off the flint walls, which Wealden District Council have insisted must remain.

[247]The Delavals scheme provides for a full – and extremely expensive – timber frame for the entirety of the Main Barn. That is plainly an aesthetic improvement on what was there originally. It is also clear from the letter to Green Oak of 18 June 2003 from Delavals that the Claimants were very keen to have an extremely attractive, fully timber-framed Main Barn building “even if the frame [is] over-designed”. They can of course decide to rebuild the Main Barn in that way, but they cannot do so at the Defendant’s expense, because that was not what was there before the fire.

(b) Additional Work to the Flint Walls

[248]A related feature of the Delavals scheme is the raising of the existing flint wall (that runs half way along the southern side of the Main Barn) by about 500 millimetres. Mr Ward said in cross-examination that it was necessary to build up the wall because, otherwise, the oak frame that had been identified would be higher than the existing wall. That then begged the question as to why the oak frame was higher than the existing wall. The answer, according to Mr Ward, was to allow for further headroom at the first floor level. Mr Orrell confirmed that there was no engineering reason why the wall has to be increased in height.

[249]Accordingly, not only does the Delavals scheme propose a timber frame throughout, but it proposes a timber frame which would increase the headroom at first floor level and therefore requires additional work to the flint walls. Again, it seems obvious that such work cannot fairly be described as reinstatement, but as an improvement for which the Claimants must pay.

(c) Structural stability

[250]There was a further argument that, in some way, the oak frame was needed to provide structural stability to the flint walls. It seems to me that this point really arises in connection with the alternative scheme proposed by the Defendant’s expert engineer Mr Beale and is therefore dealt with in Section H2 below.

(a) Original Condition

[251]As I have previously indicated, the Main Barn was effectively unconverted before the fire. On the balance of probabilities it seems likely that the first and second floors were made of soft wood, particularly as there is no debate that the joists and skirtings were soft wood. The second floor was a boarded loft and was probably not fully load-bearing. Mr Stillman said that the second floor was intended only to tie the roof together. Mr Tonkin said that it was used occasionally for “messy” jobs.

(b) The Delavals Scheme

[252]The Delavals scheme provides for full load-bearing floors at both first and second floor levels with substantial oak beams supporting oak joists and oak floor boards. It is therefore clear that this proposal represents substantial betterment. As I have indicated, there was no evidence (beyond Mr Tonkin’s assertion) to suggest that there was oak flooring on the second floor before the fire and I accept Ms Jackson’s submission that oak flooring would have been inconsistent with the use of the space for “messy” jobs. I also note that in cross-examination Mr Tonkin accepted that if oak flooring had been there originally he would have referred to it in the relevant enquiry letter to the oak frame contractors. It was not there.

[253]Accordingly, the Delavals scheme represented considerable improvement on what had been there before at both first and second floor levels. G2.5 Roof

[254]As noted in paragraph 52 e) above, the Claimants had always intended to replace the concrete tiles on the Main Barn roof but they had not done so by the time of the fire. The Delavals scheme proposes the use of hand-made Keymer clay roof tiles. This is plainly an improvement. At one point there was a suggestion from the Claimants that the Local Authority required the Keymer roof tiles but, on analysis, it turned out that all that was meant by this was that everybody was confident that the Local Authority would approve the “top of the range” Keymer tiles. What had not taken place was any attempt by Delavals to get the Local Authority to approve any less expensive tiles, which, if the Claimants had been paying for the work, they would obviously have wanted Delavals to do. Thus, as it stands, the change from concrete tiles to the hand-made Keymer roof tiles does not represent reinstatement but an improvement.

[255]Another clear way in which the roof of the Main Barn was not being reinstated but improved was the increase in the height of the Main Barn ridge. Mr Ward accepted in cross-examination that the ridge height of the Main Barn was being increased. Again this was said to be because of the desire to increase the headroom. Again, therefore, this was not reinstatement but improvement. G2.6 Floor Of Main Barn

[256]As noted above, there was an uninsulated brick floor at ground level in the Main Barn. Since the Delavals scheme proposed to make the Main Barn habitable, it will be necessary for that floor to be insulated first. In addition, the Delavals scheme proposed an oak floor throughout the ground floor level. Yet again, I find that this cannot be reinstatement: the installation of an oak floor on top of the new insulation would, on any view, be betterment. G2.7 Doors And Windows

[257]It appears that there was nothing particularly special about the doors and windows in the property before the fire. Mr Tonkin accepted that there were no glazing bars in the windows before the fire.

[258]The Delavals scheme appears to be based on the provision of purpose-made doors and windows throughout. Given that there are no existing non-standard openings left into which such doors and windows would require to be fitted, it is not understood why the Delavals proposal is based on purpose-made doors and windows. Inevitably, that will increase the costs.

[259]In addition, the scheme proposed by Delavals requires glazing bars on the windows of the east wall of the Small Barn. That is an improvement since, as Mr Tonkin accepted in his fourth statement, they were not in existence before the fire. G2.8 The Kitchen

[260]The original kitchen was relatively small. In it there were a number of doors and windows, a Rayburn, an American-style fridge-freezer, a dish washer and a washing machine. Therefore, the space for, and thus amount of, further kitchen fittings must have been limited. Mr Francis noted that the existing kitchen fittings were “dated”.

[261]The Delavals scheme is based on a bigger kitchen than was there before. In addition, the Delavals PC sum of £17,500 appears to be extremely high as a reinstatement figure, a proposition with which Mr Francis expressly agreed in cross-examination. On the balance of probabilities it appears that, if this sum could be justified at all, it could only be because the proposed kitchen was nearly twice the size of the pre-fire kitchen.

[262]There is a provision for a Rayburn which is what was there before. However, the Delavals PC sum is £8,200 which, by reference to the Rayburn catalogue, was plainly well over what such an item of equipment would cost. That was accepted by Mr Stillman. G2.9 Miscellaneous Items

[263]There was no utility room in the property before the fire. The Delavals scheme proposed a utility room in the Small Barn, with plumbed-in fittings. That is therefore an improvement, and not reinstatement.

[264]Mr Tonkin was clear that there was no central heating system in the property before the fire. The Delavals scheme proposed a central heating boiler and two radiators. When asked to explain this discrepancy Mr Stillman said that they were included because Mr Tonkin had asked for them. In addition, Mr Tonkin said that, before the fire, there was one TV and one TV point in the Small Barn. Under the new proposals there will be four TV points. Again that is clearly not reinstatement but betterment. G2.10 Summary

[265]There was a large amount of documentation, and a good deal of cross-examination, on the numerous points of difference between the parties as to whether or not the Delavals’ September 2003 scheme could be said to be a reinstatement scheme. I have dealt with what I consider to be the more important points above. It follows from this analysis that, in my judgment, it cannot possibly be said that the Delavals’ scheme was a reinstatement scheme. It plainly included some elements which constituted reinstatement, but it also included a large number of significant improvements and changes. These improvements and changes should have been expressly flagged up by Delavals and the Claimants at the outset. They were not. Indeed, it was only at paragraph 127 of Mr Terry’s closing submissions that it was conceded, for the very first time, that “there are differences between the Claimants’ proposals and the pre-fire building”. For the reasons I have given, I consider that this concession was too little, too late.

[266]I find that, so extensive were the improvements and changes involved in the Delavals’ September 2003 scheme, it is wholly impractical to use that scheme as the starting point for an assessment of what it is that is due to the Claimants pursuant to their reinstatement claim under the Policy. Too many important elements of the proposals put forward by Delavals are too different to the pre-fire property to allow their scheme to constitute a proper basis for my assessment of the sum due. G3. Is It Adequately Documented? G3.1 Introduction

[267]There was a completely separate strand of evidence and debate about the Delavals scheme. The Defendant contended that even if, which it did not accept, the Delavals September 2003 scheme represented a reinstatement scheme and could therefore form – in theory - the basis of a claim, the scheme was inadequately documented and thus could not in any event give rise to accurate or reliable figures. In other words, it was the Defendant’s case that, whatever view I formed of the merits of the Delavals’ proposals as a reinstatement scheme, it was, for design and specification reasons, a wholly inadequate basis for assessing the sum due under the policy.

[268]I have concluded that the Defendant’s case on this important aspect of the dispute is correct. The reasons for that are set out below. But essentially, what seems to have happened is that the Delavals January 2003 scheme – which was palpably inadequate – was never revamped in the way it should have been, and certainly not materially improved. Delavals always avoided discussing the scheme with Focus or Mr Beale or anybody else on the Defendant’s team, even though they had made it plain that they considered that the scheme was inadequately detailed. I am bound to note that although Mr Beale was asked some questions about these critical views in his cross-examination, Mr Hulejczuk, whose contemporaneous views on the same subject were extremely important, was not.

[269]It would be unnecessarily wearisome to identify each and every way in which the Delavals scheme was inadequately documented. I endeavour to set out in Section G3.2 below the principal deficiencies that I consider render the proposed scheme so flawed that even if, contrary to my finding, the Delavals’ scheme was – after all - a reinstatement scheme, it would not be appropriate to rely on it for the purposes of calculating accurate figures in any event.

(a) Inclusions Within the Specification

[270]Both versions of the Delavals specification asked the prospective tenderers to quote on the basis that what was required was a property that was “as good as or better” than what was there before. That was not, of course, what was provided by the Policy. Mr Stillman said that this provision was in there because a rebuilt building was bound to be of a better quality than that which had existed before. I did not understand that answer. Of course, a building when it is rebuilt must comply with modern regulations and standards so that certain aspects of the construction might be different and could be regarded as “better”. But those alterations would be specific and would be found in the individual items within the specification. The Delavals’ wording appeared to be a general invitation to the tenderers, whenever they were in doubt, to go for a higher grade material or a better feature than that which had been there before. It was inappropriate wording in the circumstances.

[271]Perhaps more importantly, the specification also imposed an express obligation on the tenderers to ensure that they had priced for everything, whether the item of work was identified in the specification or not. That was an extremely onerous requirement. On one view it rendered the specification wholly redundant. If the tenderer did as he was told, and took the risk of everything that Delavals might have missed, he would inevitably have loaded his tender to ensure that, to the extent that he could, he had included in his price at the outset for this indefinable risk.

[272]Although Mr Orrell maintained that this was quite a common provision, it seems to me that, if it was to be included in a specification, it highlights the importance of ensuring that the specification itself was as detailed as possible. The more detailed the specification, the less the risk to the contractor in a general clause of this sort. In my judgment, a general clause like this, added to a very general specification, was extremely dangerous and plainly meant that the Claimants ran the risk of obtaining an overloaded and overpriced tender.

[273]One final point should be made about the Specification. It includes a large number of PC sums. As explained below, Delavals used these PC sums whenever it was not clear precisely what work would be involved. Cheesmur illegitimately converted these PC sums into provisional sums. They constituted something like 25% of the Cheesmur tender. Thus, one quarter of the value of the works as represented by the Delavals scheme was not the subject of any clear or accurate description of the work to be carried out. It seems to me that that is an eloquent record of the inadequacy of the Delavals September 2003 scheme.

(b) Omissions From the Specification

[274]The principal thing missing from the specification was any detail as to the likely quantities of work. Mr Rudelis explained that he would initially have expected Delavals to produce a priced bill of quantities. Unfortunately, he said, it became apparent that he would not be provided with such a document. Accordingly, at the meeting in August 2003 he said that he made an express concession to allow Delavals to continue to operate on the basis that all that was required was a specification of work. However, as Mr Rudelis made plain at the meeting, “it needs to be a detailed specification ... it needs to be broken down” (see page 44 of the 67 pages of transcript).

[275]Mr Rudelis was cross-examined about this. He said that he expected detailed calculations, not just a contractor saying that his rate for plastering would be £x. It was put to him that he knew Mr Stillman was not going to provide a bill of quantities. Mr Rudelis accepted that by August 2003 he was aware of that, but he went on:

“But it needed a tightly worded specification. The tenderers would have to fill it in. It needed something that the tenderers could then fill in the figures. So that a quantity surveyor could then check it. A lot of people make basic errors.”

A little later in his cross-examination he reiterated this point. He said:

“I wanted a specification with unit areas put in. I expected blanks in the specification for the tenderers to fill in.”

[276]It was not suggested in these passages in Mr Rudelis’ cross-examination that he was wrong or unreasonable to expect a detailed specification with blanks for the quantities to be filled in by the tenderers, or that he was in error when he said that he made this requirement crystal clear at the meeting in August. Indeed, as he emphasised, that was the very least he required, given that he had already conceded that, contrary to what he regarded as the usual position, Delavals either could not or would not provide bills of quantities. It seems to me that Mr Rudelis’ expectation was entirely in line with his express requirement for a detailed and broken down specification set out at the meeting in August 2003.

[277]Mr Rudelis and the Defendant were to be disappointed. In this respect, the Delavals’ specification of September 2003 was not very different to the schedule of January 2003. It contained no measurements or quantities, and required the tenderers to provide none. It was therefore not in line with what Mr Rudelis had asked for at the meeting in August 2003. I find that it was too vague a document to produce a reliable tender figure. I also note that this major deficiency in the Delavals scheme, which goes to the heart of the central issue in the case, was not addressed at all in Mr Terry’s closing submissions.

(c) Drawings

[278]At least some of the detailed work that was proposed was, of course, contained in the drawings. The problem was that there was no register of drawings and therefore no clear record of what drawings were sent to whom. This was a particular obstacle in trying to work out whether or not dimensioned drawings were ever sent out. I have concluded, at paragraph 126 above, that dimensioned drawings were not sent to the contractors.

[279]Not only were undimensioned drawings sent to the contractors, but the drawings themselves contained very little detail. Indeed, I accept Ms Jackson’s criticism that, although the drawings were increased to a scale of 1:50, they contain barely any more detail than the previous drawings which were at 1:100. They have simply been blown up to twice the size. Given the lack of detail in the specification, the inadequacies in the drawings become much more important.

[280]The lack of detailed information on the drawings can be demonstrated by reference to the later evidence of the Claimants’ own experts. For instance, Mr Ward agreed that, on the documents sent out to the tenderers, there was nothing to define what types of doors were required and no drawings relating to sizes, materials or anything of that sort. It was all left completely up in the air.

[281]As a result of this, when, much later, Mr Ireland, the Claimants’ expert quantity surveyor, came to endeavour to produce detailed figures, he was obliged to go outside the Delavals scheme and try and come up with specific details for elements of the proposed work, either from Mr Tonkin or from other sources. The fact that Mr Irelandwas driven to do this so close to the trial was, in my judgment, a graphic illustration of the inherent deficiencies in the Delavals scheme. G4. Has The Delavals’ Scheme Generated Reliable Figures? G4.1 Introduction

[282]It seems to me that a good way of testing whether or not the Delavals scheme was adequate is to consider whether or not the scheme has produced reliable figures: after all, the only relevance of the dispute about the competing schemes was the extent to which I could use them to assess the sums due to the Claimants. It seems to me clear that the Delavals scheme has not generated any reliable figures. Delavals never produced their own budget cost, a clear failure to carry out their part of this project in accordance with the industry norm. The figures therefore put forward as having been generated by the Delavals scheme were, for a long time, an unhappy combination of the Cheesmur tender and the Delavals Prime Cost items. At the last minute, it appears that the inadequacies in those documents were recognised by the Claimants’ advisers, because the claim was then restructured to rely instead on Mr Ireland’s Budget Cost figure. This unfortunate sequence of events demonstrated to me beyond doubt that the Delavals scheme was inadequate and had wholly failed to generate any reliable figures. G4.2 Cheesmur Tender

[283]I have set out the relevant facts at paragraphs 129 – 133 above. The original Cheesmur tender was never broken down, despite the clear request for such a breakdown from both Delavals and Capita McLarens. Mr Ireland accepted in cross-examination that the absence of a breakdown meant that it was impossible to work out what it covered and what it did not. Erroneously, the tender treated Delavals’ PC sums as provisional sums and added profit to them. The tender figure was then rendered entirely meaningless by the letter of 14 November 2003 which suggested that the tender was based on “a fundamental mistake”. New figures were provided by Cheesmur without any explanation. It was impossible to correlate the new figures with the old, or to discern what the “fundamental mistake” might have been.

[284]The documents sent to Cheesmur required them to break down their tender by reference to the individual Bill pages (the reference to “Bills” comes from the Delavals specification itself). Mr Stillman accepted that Cheesmur had not done this exercise. He also accepted that they had apparently made mistakes in the tendering process. He said that the excuse that Cheesmur had given to him was that there had been a software error, but he frankly said that it was “more likely that the person doing the tender had made a mistake”.

[285]As a result of all this, the fairly obvious point was put to Mr Stillman that, in the circumstances, it would not be wise to rely on the Cheesmur figures. Mr Stillman appeared to accept that. He said that some of the Cheesmur figures were excessive: his point was simply that, in his view, none of this really mattered because they had not been awarded the contract. There was then this exchange:

“Q: So these figures were not set in stone? A: I think he says that here. Yes, you’ve answered the question.”

A: I think he says that here. Yes, you’ve answered the question.”

[286]This was consistent with the earlier evidence from Mr Tonkin that he regarded the Cheesmur figures as “approximations”. Accordingly, both Mr Tonkin and Mr Stillman were telling me that the Cheesmur figures could not be taken as reliable figures which identified as closely as possible the likely cost of any element of the work. I find that, in the light of this evidence, the Cheesmur figures were unreliable and could not form the basis of any assessment of the damages claim.

[287]I should also note that there was no evidence from anybody at Cheesmur. Mr Stillman purported to give hearsay evidence about what he had been told, very recently, by Mr Robert Taylor of Cheesmur. The Claimants maintained that this evidence was admissible because Mr Robert Taylor did not want to come to give evidence at trial. However, the reasons for his reluctance were not explained. Given the mess that Cheesmur made of tendering for this job in the first place, perhaps his reasons were self-evident.

[288]One final point should be made to demonstrate the unreliability of the Cheesmur tender. The final version of the Cheesmur tender in 2003 was £458,297. As we shall see in a moment, Mr Ireland’s Budget Cost figure was rounded up to £420,000 and then made the subject of a plus 5% margin to reflect what he said was an acceptable range of tender. The fairly obvious point is that the Cheesmur tender was beyond even that which Mr Ireland was prepared to say was an acceptable range of tender. Thus, even on the Claimants’ own evidence, the Cheesmur tender was wholly unreliable. In this context I respectfully agree with paragraph 167 of Ms Jackson’s closing submissions, which makes the point that this discrepancy in the figures is a tacit admission by the Claimants that Cheesmur’s sum was simply not reliable. G4.3 Delavals’ PC sums

[289]An important part of the Delavals documentation was their list of PC sums. They amounted to a total of about £80,000, and were therefore a major element of the estimated cost of their scheme.

[290]However, during Mr Stillman’s cross-examination, it quickly became apparent that he had, 2½ years ago, used the PC sums as a way of simply estimating, in very rough terms, what these undefined items of work might cost. His view was that ultimately these figures were irrelevant because, at the outset of the contract, all the PC sums would be omitted and the actual costs would then be included at a later date, when they were known. He made it plain that it was much easier to do it this way, particularly where the works were unclear, because, as he put it, “adjustments can be made later.”

[291]This was important for two reasons. First, it demonstrated that there were major elements of the work that had not been fully designed out by Delavals. That supports my finding above that the Delavals scheme was not, even on its own terms, fully set out in their documents. But secondly, it demonstrated that the figures were not to be taken as the likely costs of the work for the purposes of this damages claim. As Mr Stillman put it, the figures had to be realistic but no more than that. He accepted that they would be “over budget not under budget”. There was then this important exchange:

“Q: So you agree that, if at the end of the trial, the Claimants seek to make the insurers pay the precise amounts of these PC sums, you would agree that that was a misuse of the specification? A: Yes I would. Q: So it would be unfair to turn these PC sums into sums representing actual costs? A: Yes, it probably would.”

There were other exchanges with both Mr Stillman and Mr Ward to the same effect. A: Yes, it probably would.”

[292]Accordingly, the claim in these proceedings, which was for so long based squarely on these PC sums, was flawed. The works that were covered by these PC sums should have been the subject of a far more detailed specification, so that detailed costings could have been obtained. To use these PC sums as part of the damages claim was, in Mr Stillman’s own words, “an abuse” of his scheme. Again, this emphasises what I consider to be the fundamental failure of the Claimants’ pleaded claim in this litigation and at trial. Instead of relying on the September 2003 scheme come what may, as if the claim had to be frozen in time at the point that relations soured completely in November 2003, the Claimants should have been endeavouring to demonstrate how, in the intervening months and years, they had supplemented the Delavals scheme so as to give rise to a range of accurate figures. On the original pleaded basis of the claim (prior to the switch to Mr Ireland’s Budget Cost figure) it is plain that the Delavals September scheme had not generated reliable figures: does Mr Ireland’s evidence make any difference? G4.4 Mr Ireland’s new figures

[293]As I have indicated, Mr Ireland produced a Budget Cost figure in his report of December 2005 which came to less than Cheesmur’s quotation. At the time, the relevance of this exercise was unclear, given that the pleaded claim was based on the Cheesmur quotation. However, when they produced their final version of their schedule of loss on 27 January 2006, the Claimants, for the very first time, abandoned their reliance upon the Cheesmur quotation and purported to rely on the one page Budget Cost summary produced by Mr Ireland in his report. This change of approach was the subject of certain stinging criticisms in the Defendant’s written opening. To try and meet those points, the day before the trial started, the Claimants produced some further documents called an “Elemental Summary”, purporting to show how Mr Ireland had come to some of the figures in the Budget Cost. The backup calculations were not always consistent with the headline figures in Mr Ireland’s report: indeed the total of the Elemental Summary is different, and has been arrived at in a different way. Moreover, I noted with regret that the back-up information appeared to have been printed off on the 6 January 2006, but was not provided to the Defendant (or the court) for a further three weeks. In view of the orders of the court as to the exchange of expert evidence in December, I was also rather surprised that Mr Ireland said that these back-up figures were deliberately produced some weeks after the exchange of his report when he could do the exercise “in a more leisurely fashion”.

[294]In my judgment, Mr Ireland’s recent labours actually support the proposition that the Delavals scheme is wholly inadequate. I have already made the point that, in order to arrive at certain figures, he was obliged to produce his own specification for particular items of work, because the Delavals scheme for those items was not clearly defined.

[295]However, there is a more fundamental problem with Mr Ireland’s Budget Cost figure. I regret to say that I have concluded that its whole purpose was to inflate the Claimants’ claim so as to get it as close as possible to the (unreliable) Cheesmur quotation, almost regardless of the consequences.

[296]It will be recalled that the Cheesmur quotation (as adjusted) was in the sum of £458,297.18. Mr Ireland appears to be prepared to go as high as £441,000. However, how he gets there is, in my judgment, nothing short of extraordinary. The actual cost of the building works, according to his one page budget figure, was just £273,500. To that he adds preliminaries of £75,000, overheads and profit at £44,000, a contingency of £25,000, and an additional 5% to reflect a margin that the tenderers might add, which gets him to £441,000.

[297]I consider that every element of this Budget Cost calculation is fundamentally flawed.

(a) Comparison between cost of work and “soft cost”

[298]As I have noted, Mr Ireland’s estimate for the cost of the physical works is just £273,500 (excluding the timber frame and the ground slab which has already gone in). His total figure is £441,000. Thus, £167,500 is represented by “soft costs” such as preliminaries, overheads and profit, contingency, and the additional 5%. In my judgment, such a large proportion of percentage ‘add-ons’ simply cannot be justified in this case.

(b) Preliminaries

[299]Mr Ireland’s evidence was that a reasonable preliminaries percentage was 27½%. No justification of any sort, by reference to any other projects, or any national pricing information, was provided by Mr Ireland in order to support this extraordinarily high figure. It is to be compared with the much lower percentage set out in the BCIS tables which identify an average percentage of 15% for 2003. Indeed, Mr Stillman thought an appropriate percentage was 5%, and Mr Ward was talking about figures which would represent an allowance of 10% for preliminaries. Thus I consider the 27½% to be wholly exaggerated and unrealistic. I note that it produces a figure that is more than 20% higher than the figure apparently tendered by Cheesmur for preliminaries.

(c) Profit

[300]Mr Ireland estimated a figure of 12½% for overheads and profit. Mr Athey, the Defendant’s quantity surveyor, thought that in general 10% was sufficient. Perhaps more significantly, Mr Ward also suggested 10%, and that was also the figure in the Cornford tender. Mr Ireland’s figure was plainly too high when taken together with a percentage for preliminaries of 27½%.

(d) Site establishment

[301]Mr Ireland attempted to justify his preliminaries percentage by reference to a huge site establishment including a full-time site agent, part-time contracts manager and quantity surveyor, together with attendant labour, a large site set-up and other items. All of this was completely at odds with the evidence of Mr Stillman and Mr Beale who both said that no such elaborate establishment would be necessary or required. I accept their evidence and therefore reject the views of Mr Ireland on this point.

(e) Contract period

[302]Mr Ireland’s preliminaries percentage was calculated by reference to an estimated contract period of 35 weeks, despite the fact that this was not his own calculation, but simply the longest period that could be gleaned from the (unsuccessful) tenders in October 2003. It is unclear why this particular tender period was taken and relied on without any further analysis of how it was arrived at, particularly as Mr Stillman, who had considered the point on behalf of the Claimants, estimated a contract period of 26 weeks. I also note that the 26 week period advanced by Mr Stillman was precisely the same as the period identified by Mr Hulejczuk in his programme of October 2002. For these reasons, I consider that the 26 week period is the correct figure for me to take. Again, therefore, I find that Mr Ireland’s preliminaries figure was too high because it relied on an inflated (and unjustified) contract period.

(f) Contingency

[303]It is not understood how Mr Ireland’s contingency figure of £25,000 can be included in what is, after all, a damages claim. The whole point of a damages claim is to compensate the claimants for the sum they have lost. This is done by producing a detailed schedule of work with accurate prices. If that is done, then there is no need for a contingency at all. Accordingly, the fact that there is a contingency sum here is a further sign that the Delavals scheme is too vague to form the basis of a proper costing. I consider that the contingency cannot be recovered as damages in any event.

(g) Plus/Minus 5%

[304]Mr Ireland rounded his figure up to £420,000 without explanation (the actual figure was £417,500) and then said that he would expect tenders within a range of plus or minus 5%. In a naked attempt to increase the sum that could be recovered by the Claimants still further, he then added 5% to the £420,000 to get to £441,000. It was not explained why he did not equally make the 5% deduction so as to reduce the figure to £399,000. Mr Ireland was therefore claiming 5% on top of (amongst other things) a £25,000 contingency. The only explanation for this is that, as I have already indicated, Mr Ireland’s task was simply to get his own Budget Cost figure as high as possible.

(h) Miscellaneous

[305]There are many other elements of Mr Ireland’s Budget Cost calculation which I consider to be untenable. In particular, I note that he has ignored the Delavals PC sums by endeavouring to work out his own specification, although that has not been detailed in any of his documents. He has calculated different PC sums to those identified by Delavals and he has incorrectly allowed profit on them. He has included items which are not even in the Delavals specification, such as the wardrobes in the bedroom.

[306]It is not unfair to conclude that Mr Ireland looked at the general descriptions in the Delavals specification and then tried to identify what detailed work might be required in order to comply with those general descriptions, whether that work was actually set out in the specification or not. Indeed, he accepted this in his cross-examination. The effect is that there is precious little link between the Delavals specification and Mr Ireland’s Budget Cost figure.

[307]For all the reasons set out above, I reject Mr Ireland’s belated Budget Cost figure as a disreputable attempt to increase the Claimants’ claim to as high a figure as possible on the basis of the inadequate Delavals scheme. It is not – and cannot be - a reliable breakdown of the costs which are recoverable by the Claimants pursuant to the terms of the Policy. It does, however, illustrate neatly the inadequacies in the Delavals scheme, and at least some of the reasons why that scheme is a wholly unreliable basis for the court’s assessment of the sums due to the Claimants. G5. Summary

[308]For all the reasons set out above, I consider that the Delavals scheme is not a reinstatement scheme. It includes major and significant changes and improvements which make it impossible for me to use the scheme as the basis for an accurate assessment of the Claimants’ money claim.

[309]Further and in any event, I find that the scheme was so inadequately documented that, even if it contained a proper reinstatement scheme, it would not form a safe or reliable basis for any assessment of damages in any event. I regard the proof of that particular pudding as being in the eating: on the evidence, the Delavals scheme palpably failed to generate any reliable figures. It appears that, very late in the day, the Claimants recognised these difficulties and endeavoured to put forward what amounted to a wholly new case as to quantum but, for the reasons which I have indicated, I regard that belated case as thoroughly defective.

[310]The Claimants and their advisers have had 2½ years to prepare a detailed bill of quantities and/or detailed drawings to allow a fully broken-down estimate to be prepared. They have not done so. The Defendant, on the other hand, through Mr Beale, their expert engineer, and Mr Athey, their quantity surveyor, have contrived to produce detailed drawings and bills to allow a broken-down cost figure to be prepared. It is therefore appropriate to turn to that set of documentation to see whether, in contrast to the Delavals scheme, it provides the basis for an accurate assessment of the likely cost of an appropriate reinstatement scheme. H. THE DEFENDANT’S PROPOSED SCHEME H1. What Scheme Does The Defendant Rely On?

[311]The purpose of the scheme put forward on behalf of the Defendant is to introduce an alternative set of costings based on what it contends is a proper reinstatement scheme. The alternative scheme is contained in Mr Beale’s drawings, accompanied by a fully measured and priced set of bills of quantities prepared by Mr Athey. It produces a cost figure for the works at October 2003 of £296,131.37. H2. Is It A Reinstatement Scheme? H2.1 Overview

[312]Ms Jackson commenced her oral closing submissions by comparing Mr Beale’s detailed drawings with the drawings produced by Mr Tonkin in September 2003 which, it will be remembered, he had agreed to provide to show what was there before the fire. In about five minutes flat, Ms Jackson demonstrated that the layout of the reinstated property proposed by Mr Beale was precisely the same as the layout indicated on Mr Tonkin’s drawings. Having done that exercise, Ms Jackson submitted that it was plain beyond doubt that Mr Beale’s scheme did what it set out to do, which was to propose the detailed reinstatement of the property to its condition before the fire.

[313]There was next to nothing which could be or was said to gainsay that demonstration. Mr Beale’s plans do indeed replicate almost precisely the building shown on Mr Tonkin’s two drawings. Therefore, it is right to note at the outset that – unlike the Delavals scheme - Mr Beale’s scheme certainly looked like a scheme to reinstate the property to the layout that was there before. Of course, I accept that the same layout may be indicative of reinstatement but it cannot prove it conclusively. Accordingly it is necessary to look at some of the detailed features of Mr Beale’s scheme to examine in greater detail whether or not it is, in truth, the reinstatement scheme it appears to be.

[314]Just before doing that, however, it is appropriate to comment on a point that arose in a number of different places in Mr Terry’s closing submissions, namely his complaint that the Defendant should not be allowed to rely (or should at the very least be criticised for relying) on Mr Beale’s alternative scheme, because it was not produced until after the proceedings started. I reject that submission. The point was only available to the Claimants if they had had a valid estoppel argument, and I have found that they had no such thing (see in particular Section F3 above). Moreover, I consider that, again, the argument springs from a misunderstanding of the burden of proof, which remained throughout on the Claimants. Indeed, as I pointed out to Mr Terry during argument, it was not incumbent upon the Defendant to produce an alternative scheme at all. Without it, however, the Claimants would have been in even greater difficulties than they presently are; on one view, due to my rejection of the Delavals scheme and the figures it generated, without Mr Beale’s scheme the Claimants would have been entitled to nothing at all. H2.2 Detailed Elements Of Mr Beale’s Scheme

[315]The first point to note on the detailed analysis of Mr Beale’s scheme is that it showed the Small Barn at the same width as it was before the fire, namely 4.95 metres, with the same roof pitch of 45o. Therefore, contrary to the Delavals scheme, it is endeavouring to replace what was there before. There was a dispute about whether the need for enhanced insulation might justify a nominal increase in width. This seemed unlikely, given the comparatively thin layers of modern insulating material usually required for a domestic dwelling. Moreover any such increase was off-set by the fact that the proposed east wall would be slightly narrower than the wall that was there previously.

[316]As I have indicated, the internal layout of the Small Barn shown on Mr Beale’s drawings is precisely the same as the pre-fire lay-out. Again that is to be contrasted with the Delavals scheme. Although Mr Beale includes for a staircase, he has not shown the staircase on the drawings, because he cannot put it anywhere where it would comply with the building regulations. However, it is important to note that the staircase is allowed for in the estimated cost so that if, as appears likely, the Small Barn will actually be rebuilt to a wider dimension than previously, the staircase will still be reinstated at the Defendant’s cost.

[317]The final point in relation to the Small Barn is that Mr Beale has preserved the void on the first floor that existed before the fire. Again, that is reinstating what was there before.

[318]As to the Main Barn, Mr Beale has provided a timber frame in the eastern end, to replace the timber frame that was there before the fire. As to the western end, which had originally been built off the flint walls, it is agreed that, due to the structural deficiencies within the walls, something else is required to support the roof. Mr Beale has allowed for an internal steel frame to carry the load of the first floor and to support the south wall of the Main Barn at ground to first floor level. The internal steel frame would not be visible because it would be within the stud work. This is, of course, to be contrasted with the Delavals scheme which has a full and visible timber frame in the western end of the barn, which was not there prior to the fire.

[319]The suggestion in the Claimant’s closing submissions was that in some way the internal steel frame could not amount to reinstatement (because it was not there before) and was somehow inherently inferior. I do not agree with either criticism. The steel frame is only necessary because of the concerns as to the structural stability of the flint walls, which the Local Authority has insisted must be retained. Thus something new is required. The Claimants want a timber frame but that will be visible and an aesthetic improvement on what was at the eastern end of the Main Barn before the fire. By contrast, the steel frame will not be visible. It would fulfil the structural task which the flint walls can no longer manage. Indeed it might be said that there is an element of betterment in installing a new steel frame to replace ageing flint walls, but it seems to me that, since the frame is required to reinstate the building as closely as possible to what was there before, it is something for which the Defendant must pay. However I can see no reason why that reinstatement cost should not be calculated by reference to the steel frame designed by Mr Beale.

[320]There was some debate as to the structural benefits brought by the timber frame on the one hand and the steel frame on the other. However, Mr Orrell generally accepted that Mr Beale’s steel frame would be equally effective in carrying the load of the first floor of the Main Barn; that the roof could be supported by the internal stud partition; and that the south wall of the Main Barn could be tied in with a wall plate.

[321]On this last point, there was some argument to the effect that the south flint wall was continuing to move and that, therefore, it might not be adequate to have the roof supported in this way. However, Mr Beale’s evidence was that the wall was not moving and that therefore any further support was unnecessary. In any event, he said that, if (contrary to his view) further support for the wall was necessary then a buttress could be provided at an additional cost of £1,700.

[322]It is not clear to me that the wall is continuing to move. If it is, that could be said to be the Claimants’ responsibility, both because of the delays to the works (Section I below) and the failure to carry out proper protection works (Section O below). But, giving the Claimants the benefit of both these doubts, I have concluded that a proper assessment of the cost of the reinstatement should include the buttress at £1,700. It does not seem to me that such a buttress invalidates the steel frame; indeed, in my judgment, Mr Beale’s proposals are, in all the circumstances, considerably closer to what was there before than the drawings provided by Delavals.

[323]At the first and second floor levels in the Main Barn, Mr Beale has provided for soft wood joists and soft wood boards. On the second floor he has provided for plywood, appropriate for a loft. Again it seems to me that that is reinstating the property to the condition it was in before the fire.

[324]As to other points concerning the condition to which the property must be reinstated, Mr Beale’s scheme has, at least in general terms, accepted what Mr Tonkin has said was there before. One important difference is the doors and windows. Mr Beale has not allowed for purpose-made doors and windows because he maintains that there is no reason for the window openings and door openings to be designed for anything other than standard dimensions. No reason has been given by the Claimants as to why that is an inappropriate course: since the openings are no longer there, they can plainly be designed to standard dimensions. Thus, Mr Beale’s scheme is based on the cost of purpose-made doors and windows. In all the circumstances, it seems to me that that is entirely appropriate.

[325]In order to try and avoid the uncertainty caused by the numerous PC sums in the Delavals scheme, Mr Beale has endeavoured to identify the actual costs of the items in question. Thus, by way of example, the actual cost of a Rayburn has been identified and included by Mr Beale/Mr Athey; they have not made use of general PC sums.

[326]Mr Beale has included an insulated concrete floor in the Main Barn, as being the closest approximation to the uninsulated brick floor that was there before. It seems to me that that it is closer to the pre-fire condition than the oak floor specified by Delavals.

[327]Perhaps in acknowledgment of the difficulties that he had in seriously contending that Mr Beale’s scheme was not a reinstatement scheme, Mr Terry cross-examined him on a very limited number of matters. Even then, on many occasions, Mr Beale’s response was to demonstrate that he had simply included what was set out in the Delavals specification. This included the internal frame, using timber studs in the Small Barn, and the plywood flooring in parts of the Small Barn, which were taken from a passage in Mr Tonkin’s second witness statement. Similarly, in answer to the criticism that his joists ran in a different direction to the way in which the joists in the Main Barn had run before the fire, Mr Beale explained that he had simply replicated the Delavals specification. Even on the smaller points, Mr Beale had an answer to the purported criticisms of his scheme that were put to him in cross-examination. He accepted that an oak staircase was required in the Main Barn and he had identified a cost for that work. He said that a specialist company had been located to make “old world” solid oak doors to match the description of the pre-fire joinery that Mr Tonkin had given in evidence.

[328]In my judgment, the only point of any substance that was put to Mr Beale during his cross-examination concerned the steel frame and the possible problem with the southern flint wall. For the reasons which I have given above, it seems to me that the steel frame was justified as being as close as possible to what was there before, given the structural difficulties with the flint walls. I have allowed for the additional cost of the buttress.

[329]I should add a final word about square meterage. From the way in which this topic was covered in such detail in the Claimants’ written opening, I had anticipated that Mr Beale would be extensively cross-examined to the effect that his scheme produced a much smaller building than that which had existed pre-fire. In fact, his cross-examination on that point was very limited. The only point of substance that was canvassed in the evidence concerned whether the eastern end of the Main Barn was 6.8 metres wide (Mr Ward) or 6.385 metres wide (Mr Beale), a confusion which could be traced back to the drawings produced by Delavals and Mr Ward and the uncertainties surrounding the dimensions added automatically by the computer system. It seemed to me that, given that the equivalent western dimension was 6.42 metres, the lower figure of 6.385 metres was more likely than not to be right. That finding means that it is Mr Beale’s scheme that is a more accurate attempt to reinstate the Main Barn to its pre-fire dimensions.

[330]It may also be that the reason for Mr Terry’s lack of emphasis on the topic of square metreage during the trial was that, as the last page of the table that went with the Claimants’ written opening made clear, Mr Francis, Mr Ireland and Mr Beale were all operating on a figure of about 350m 2 as the rough size of the property pre-fire. The odd ones out were Delavals, whose September 2003 scheme produced a total of over 400m 2. I reject the very limited closing submissions on this topic put forward by Mr Terry at paragraph 135 1); for the avoidance of doubt, I find that Mr Beale’s proposed scheme produces a building which will be broadly the same size as the property before the fire.

[331]For all these reasons, therefore, it seems to me that the evidence demonstrated unequivocally that Mr Beale’s scheme was a proper reinstatement scheme. In the light of this finding, it is appropriate to express my surprise that the first part of Mr Terry’s closing submissions included over 4 pages of personal criticisms of Mr Beale and his evidence. Not only do I find that these criticisms were quite unfounded (some of them were not even put to him in cross-examination), but I also consider that such an attack reveals the absence of any cogent arguments available to the Claimants as to why, on a detailed analysis of the competing schemes, Mr Beale’s scheme was not a proper reinstatement scheme H2.3 Is It Adequately Documented?

[332]Mr Beale’s scheme is the subject of detailed, dimensioned drawings. It is also the subject of a detailed Bill of Quantities. Both these features were wholly lacking in the Delavals scheme. It is difficult to imagine what documents might be required to improve or supplement Mr Beale’s scheme. Indeed, it is right to say that at no time was it suggested, either in submission or in the cross-examination of Mr Beale, that his scheme was anything other than adequately documented. The purported criticisms at paragraph 136 of the Claimants’ closing submissions were either not put in cross-examination or were put to, and comprehensively rejected by, Mr Beale and Mr Athey. H3. Has It Generated Accurate Figures?

[333]The Bill of Quantities was prepared and costed by Mr Athey, in the sum of £298,449.47. Mr Ireland accepted that, generally, he made no criticisms of the rates etc used by Mr Athey. The big difference between them is in respect of the preliminaries figures. For the reasons which I have explained, I consider that Mr Ireland’s preliminaries figures are excessive. Mr Athey has included in his total the figure of £46,062.40. I consider that that figure is reasonable.

[334]Again, the points put during the cross-examination of Mr Athey were extremely limited. Points were taken about particular rates in the bills (despite Mr Ireland’s general agreement that the rates used by Mr Athey were reasonable) but, on analysis, it turned out that the rates that were being used for comparison purposes were actually for different materials. I find, therefore, that this exercise went nowhere and was of no assistance to me.

[335]For these reasons, I find that Mr Beale’s scheme has produced reliable figures, namely those produced in his evidence by Mr Athey. The vast majority of those figures were not challenged; on the few points that were raised, Mr Athey had a complete answer to the purported criticisms. H4. Summary

[336]For the reasons set out above, I find that Mr Beale’s scheme is a reinstatement scheme and that Mr Athey’s figures are reasonable and appropriate. Accordingly, I shall assess the reinstatement claim on the basis of Mr Athey’s figures; in my view, they are the only figures on which it is safe and appropriate for me to rely. I. RESPONSIBILITY FOR DELAY I1. Introduction

[337]Before coming on to deal with the various heads of claim, it is necessary for me to make some general findings as to the lengthy delays that have occurred in this story, and the reasons for those delays. This is because a number of the Claimants’ claims turn – either wholly or in part – on the assumption that the Defendant was responsible for the delays that have occurred since 2002.

[338]I do not propose to deal here in detail with the sequence of events between 2002 and the present because I have already analysed the factual background in Section C above. This Sectionof my Judgment is designed simply to summarise my findings on delay. I2. What Should Have Happened

[339]As set out in paragraph 71 above, I am of the view that the timetable prepared by Mr Hulejczuk in September/October 2002 was entirely reasonable and eminently achievable. Compliance with this programme would have ensured that the contractor’s prices would have been obtained in early 2003, with the work being completed no later than September 2003. I3. Why That Timetable Was Not Achieved

[340]In the first instance, the timetable was not achieved because Delavals did not seek planning permission until March 2003. However, the critical delay in 2003 arose because their original scheme of January 2003 was wholly inadequate and was not on any view a proper reinstatement scheme: see paragraphs 85-88 above. The Defendant therefore correctly refused to accept it. Thus, most of 2003 was lost because of that failure. Even when, in September/October 2003, a new scheme was produced, the continued deficiencies (see Section G above) meant that no contract for the reinstatement work could be let. Again, therefore, the delays are referable to the inadequacies of the Delavals scheme.

[341]At exactly the wrong time, in September/October 2003, the Claimants chose to re-activate the FOS complaints procedure. Of course, the Claimants did not know that the FOS procedure was going to take a whole year to resolve itself but they did know that, by pursuing the complaint, they would freeze any progress on their claim. That was made clear to them by Mr Rudelis and by the FOS, and Mr Tonkin accepted in evidence that he had been warned that this would happen. Accordingly, the Claimants’ decision to push on with the formal complaints procedure, in the full knowledge that it would cause delay, was the cause of the delay until November 2004.

[342]Shortly after the FOS result was published, the Claimants chose to commence proceedings. That has accounted for another 15 months’ delay. The Claimants chose litigation over the sensible proposal indicated by the FOS Adjudicator (paragraph 140 above) and the similar proposal made by the Defendant (paragraph 142 above). Although Mr Terry criticised the Adjudicator’s proposal because it referred to a review of the documents produced up to that date (and those, he said, were almost all documents produced by the Defendant), I regard that as a bad point for two quite separate reasons. First, it was always open to the Claimants, if they had truly wanted to follow this sensible recommendation, to suggest modifications to the procedure which allowed them, if they had wanted to, to put in any further documents. Secondly, the documents in existence at the time were largely in the Defendant’s favour because the Delavals scheme was so obviously, on its face, not a proper reinstatement scheme. In my judgment, the period between the end of the FOS procedure and the end of the trial can only be a period of delay ascribable to the Defendant if the Claimants’ basic claims in the litigation have been proved to be correct. That in turn would involve the finding that the cornerstone of their case, namely the Delavals September 2003 scheme (and the figures that it generated) comprised a proper and reliable basis for assessing their reinstatement claim. For the reasons set out in Sections G and H above, I have found that that is not the case.

[343]Accordingly, it seems to me that the critical delays that have arisen in this case can all be directly traced back to Delavals’ inadequate scheme and the decisions made by the Claimants themselves. Therefore, whilst I am sure that they did so inadvertently, and whilst I am entirely confident that they now, with hindsight, very much regret how they have approached this claim, I am bound to conclude that it has been the Claimants (and their advisers) who have been responsible for all the critical delays since the fire. I4. The Defendant’s Default

[344]Some criticisms can properly be made of the Defendant. I consider that the Defendant should have made it plain earlier than they did that, on the basis of the advice of Mr Beale, they did not accept the footprint on which the Delavals September scheme was based, and also had numerous other criticisms of the proposals. This would have helped to crystallise one of the vital disputes between the parties. But I do not consider that this failure caused any critical delay because, on the evidence, it was quite plain that the Claimants (and Delavals) would have proceeded on the basis of the Delavals September 2003 scheme in any event, whatever the Defendant had said. That, after all, remained their position throughout the trial, despite their knowledge of the array of points taken against the scheme by the Defendant and Mr Beale. Moreover, I reiterate the point that, throughout, it has remained the Claimants’ task to demonstrate that the Delavals scheme of September 2003 was a valid reinstatement scheme, and not the Defendant’s obligation to prove each and every way in which it failed to fulfil that function.

[345]I also consider that the Defendant was in default in repudiating liability on 1 May 2004. Mr Rudelis honestly accepted that this was an emotional reaction caused by the failure of the parties to come to terms, notwithstanding the offer that he said he had made. He accepted that it was wrong. It plainly was wrong. However, it is again impossible to conclude that any critical delay was caused by this event. The real dispute always was, and always remained, whether the Claimants were entitled to make a claim based on Delavals’ September 2003 scheme. I do agree with Mr Terry that the wrongful decision to repudiate the contract would have caused additional stress and strain to the Claimants but I cannot conclude that any critical delay resulted.

[346]I also consider that, once proceedings commenced, the Defendant had the opportunity to accept liability rather than to maintain their allegation of repudiation. The Defendant failed to take that opportunity and I am bound to note that it only corrected the position pursuant to my order of May 2005. I think that this conduct again exacerbated the situation and caused further stress and strain to the Claimants. But, as before, it is just not possible to say that any delay or identifiable loss was caused as a result of this late acceptance of error on the part of the Defendant, given that, in the proceedings, the vast majority of time and effort was expended by both sides on the arguments about the merits, or otherwise, of the respective reinstatement schemes. I5. Summary

[347]Accordingly, it seems to me that the critical delays in this story are referable to the Claimants and their advisers. Whilst the Defendant’s conduct is not free from criticism, for the reasons which I have stated, it is impossible to conclude that any critical delay or other identifiable loss was caused by those defaults. J. CLAIM A: CONSTRUCTION COSTS J1. Which Scheme?

[348]For the reasons set out in Sections G and H above, I find that Mr Beale’s scheme, translated into detailed bills of quantity by Mr Athey, constituted a proper reinstatement scheme. On the evidence, it is the only appropriate and reliable basis for calculating the sums due to the Claimants under the policy. J2. Assessment Of Costs J2.1 Basic Reinstatement Costs

[349]On Mr Beale’s scheme, as valued by Mr Athey, the basic reinstatement costs are valued at £298,449.47. To this must be added the agreed figure for emergency works at £12,278.75 and the agreed figure for scaffolding, namely £1,715.50, making a total of £312,443.72. It needs to be remembered that these are all at 2003 prices and that therefore, to reflect my finding at Section B2 above, there needs to be a deduction to reflect the losses at the date of the fire. I find that this deduction should be assessed by way of a percentage reduction from the 2003 figures of 4.1%, as per the Defendant’s evidence. This produces a deduction in the sum of £12,810.19. In addition, there is a need to add the buttress figure of £1,700 (see paragraphs 321-322 above). This makes a total figure for the basic reinstatement cost of £301,333.53. J2.2 Local Authority Requirements

[350]The Claimants have a claim for extra costs referable to Local Authority requirements. I have already expressed my grave doubts as to their approach in principle to this claim: see paragraphs 16-18 above. However this claim is only triggered at all if the £504,000 limit in the Policy is exceeded. In other words, if the Claimants’ reinstatement claim is below the cap, there is no need for any separate claim in respect of the Local Authority requirements. Those Local Authority requirements which form part of Mr Beale’s scheme have already been costed by Mr Athey and are included in the figures set out above.

[351]Because I have found in favour of the Defendant in respect of Mr Beale’s scheme, and thus Mr Athey’s figures, there is no danger of the cap in the Policy being exceeded: see below. I therefore do not need to deal with the individual Local Authority requirements because they do not give rise to any separate claim. J2.3 Incomplete Works

[352]The parties are agreed that there should be a deduction to reflect the fact that works to various parts of the property had not been completed at the time of the fire. This is plainly right because, if there was no deduction, the Claimants would be having work carried out at the Defendant’s expense which, but for the fire, they would otherwise have carried out and paid for themselves. The Claimants give a credit of £1,500 in respect of incomplete works but this figure is unexplained. The Defendant, on its primary case, which is to say the case based on Mr Beale’s scheme and Mr Athey’s costing of that scheme, put the deduction at £34,595. This is made up of eight separate figures. I deal in turn briefly with each of these below. i) Small Barn/Dry Lining And Insulation

[353]It seems that at least part of the west wall of the Small Barn may not have been insulated or dry-lined. The consequence of rebuilding in accordance with Mr Beale’s scheme would be that the wall would be insulated and dry-lined. Thus, the Defendant seeks a deduction in relation to this item in the sum of £1,800. In my view it is unclear, pre-fire, precisely what part of this wall was not dry-lined and/or insulated. More importantly, it does not appear that, prior to the fire, the Claimants believed that any further work to this wall was required. Accordingly, I would be reluctant to make a deduction for such work, particularly as that was the part of the property in which the Claimants, and their children, lived without apparent problems as a result of any absence of insulation. Put another way, I believe that the Claimants are entitled to the benefit of the doubt on this item, and to have their claim assessed without a deduction of this kind. I therefore dismiss the Defendant’s case on this item. ii) Small Barn/Roof

[354]Mr Tonkin admits that some minor roof work to the Small Barn was required. He assesses the figure at £500 on the basis that he would do the work himself. However, the assessment I must do has to be on a commercial basis, assuming that a contractor will do the work. Therefore Mr Beale’s estimated figure of £1,500 must be more appropriate in the circumstances. iii) Small Barn/Loft Replacement

[355]This only gives rise to a deduction if I accept the Delavals September 2003 specification with the much greater headroom in the Small Barn. Since I have not accepted the Delavals specification and have instead decided in favour of the Defendant and Mr Beale’s specification then it is accepted by the Defendant that no further deduction is appropriate. iv) Main Barn/Dry-Lining and Insulation

[356]There can be no doubt that the Main Barn was not fully dry-lined and insulated. The difference between this and item i) (paragraph 353 above) is that, there, the Claimants had been living in the Small Barn without any apparent difficulties as a result of the alleged absence of dry-lining and insulation for part of the west wall. However, in respect of this item iv), I am bound to note that the Main Barn was not being used for residential accommodation and was plainly the subject of ongoing renovation works. Mr Beale’s specification allows for dry-lining and insulation in the Main Barn, which will help towards the Claimants’ ultimate goal of making the Main Barn habitable in a way that it was not before the fire. It is work of the kind that Mr Francis noted as outstanding in 2000, the completion of which (he believed) would greatly enhance the value of the property. Thus, I consider that this work in the Main Barn is betterment and a deduction falls to be made as a result. The only reliable calculation of the figure to be deducted is Mr Beale’s estimate in the sum of £4,000. Although Mr Tonkin has put forward the figure at £600 or thereabouts, it is not at all clear how that has been calculated. I am bound to prefer Mr Beale’s calculation to Mr Tonkin’s guesstimate. v) Main Barn/Roof Insulation

[357]There is a dispute between the parties as to whether the roof of the Main Barn was insulated or not. Mr Tonkin said half the Main Barn roof was insulated; the Defendant maintained that there was no such insulation. Mr Beale’s notes of Mr Tonkin’s conversation with him in September 2003 appeared to record that there was no such insulation, because roofing felt was visible from the ground. On that basis, it seems to me that, on the balance of probabilities, there was no insulation in the main roof. Mr Tonkin sought to argue that he was telling Mr Beale what the condition of the Main Barn was when he first bought the property, rather than its condition just before the fire. I reject that explanation as inherently implausible: Mr Beale had no interest in the condition of the property in the 1980’s. I also reject the suggestion that Mr Tonkin insulated the roof of a large building (the Main Barn) which was only sporadically used.

[358]Thus, the insulation of the roof is clear betterment. The only detailed calculation of that betterment is the figure of £3,800 set out in Mr Beale’s addendum report. There is no evidence from the Claimants contradicting that sum. Therefore that is the amount that I allow. vi) Main Barn/Repairs To Frame and Doors

[359]It is suggested that, because of Mr Francis’ notes that work might be necessary to the pre-fire timber frame, there should be an allowance of £3,000 to reflect the fact that a new frame and new doors would amount to betterment. I have decided that, on the balance of probabilities I should reject the Defendant’s case on this item. The timber frame as set out in Mr Beale’s specification and the new doors amount, in my judgment, to reinstatement. I do not think that it would be appropriate to make a further deduction for alleged betterment. This work is the natural consequence of the fire. I therefore reject this item of the Defendant’s case. vii) Main Barn/Roof

[360]Mr Francis’ evidence on the Main Barn roof was very clear. He said that it needed to be re-roofed. This work was outstanding when he inspected in 2000 and there was absolutely nothing to suggest that any such work had been done after his inspection and before the fire. In those circumstances, it seems to me that an allowance has to be made for the betterment that would otherwise result from a completely new roof. To put it another way, because Mr Tonkin had told Mr Francis (as he obviously did) in the summer of 2000 that he intended to put a new roof on the Main Barn, it would be wrong for the insurers to pay for that new roof without a contribution from Mr Tonkin. The calculated figure put forward for the betterment represented by this item is £16,700 as set out at paragraph 19.5.2 of Mr Beale’s report. At first sight, that figure seems rather high. The difficulty is that the Claimants have advanced no evidence which contradicts that sum. Moreover, Mr Beale gave a full and persuasive explanation as to the basis for the figure in his report and in his evidence. In those circumstances, on all the evidence available to me, I make an allowance of £16,700 in respect of this item of betterment. viii) Windows

[361]It appears that, under the scheme proposed by both Delavals and Mr Beale, all the windows will be double glazed. The windows were not originally double glazed. That is therefore betterment. The allowance is calculated by the Defendant at £650. There is no other figure. I therefore make the allowance in that sum. Summary

[362]The total claimed allowance for incomplete works/betterment was £31,450 (excluding item iii). I have rejected £4,800 of that amount (items i) and vi) above). Therefore the correct amount of the deduction is £26,650, although that should itself be reduced by £1,092.65 (to reflect the 4.1% referred to above) to get the net reduction to £25,557.35. J2.4 Summary

[363]The basic costs calculated by Mr Athey on the basis of Mr Beale’s scheme, and adjusted by reference to 2002 prices, are £301,333.53. From that falls to be deducted the figures of £25,557.35 to reflect incomplete works and betterment. That produces a total in respect of the reinstatement claim of £275,776.18. K. CLAIM B: FEES K1 Delavals’ Fees

[364]Delavals’ basic fee entitlement is 10% of the construction costs. I regard that as reasonable. More importantly, it was what was agreed in the letters of 22 and 29 October 2002 (see paragraph 72 above). Accordingly, for the purposes of this exercise, I consider that Delavals’ basic entitlement is 10% of £275,776.18, namely £27,577.62.

[365]There are a number of points to make about the calculation of £27,577.62. First, what is the appropriate figure on which the 10% calculation should be made? I consider that the Claimants are entitled to recover 10% of the net value of the reinstatement claim. I have assessed that at Section J2.4 above in the sum of £275,776.18. Therefore, I consider that the Claimants are entitled to recover 10% of that amount, namely £27,577.62, in respect of Delavals’ fees.

[366]I reject the Defendant’s case that the 10% should be reduced to 2.5% in respect of those areas of the design, such as the timber frame, which Delavals are not doing themselves. It seems to me that the 10% was an overall percentage by reference to the cost of the reinstatement works. I do not think that it would be fair or appropriate to make reductions from that 10% in respect of individual items of the proposed reinstatement works. Accordingly I consider that the 10% should be applied to the entirety of the reinstatement costs.

[367]An additional sum of £1,664 plus VAT is claimed by way of printing disbursements. The Defendant maintains that this is high and points to the fact that the claim has never been broken down (despite requests) and was entirely omitted from all three of Mr Stillman’s witness statements. Accordingly, the Defendant maintains that these claims are unproven. The Claimants, on the other hand, at paragraph 173 of Mr Terry’s closing submissions, maintain that, since Mr Stillman was not cross-examined on these matters, they should be allowed in full.

[368]I consider that there is considerable force in the Defendant’s criticisms of this item of claim. I do not consider that, in the absence of any real justification for these claims, the Claimants were entitled to regard the claim as proved unless Mr Stillman was cross-examined on the point. That smacks of the wider attitude adopted by the Claimants to the effect that, in some way, the burden was on the Defendant to disprove the claims made. I also note that the Claimants’ final damages schedule, which seeks £1,664 plus VAT in respect of this item, suggests that support for the claim can be found in tab B20. However, tab B20 simply identifies an invoice from Delavals to Capita McLarens of 4 December 2003 in this amount, without any breakdown or back-up whatsoever.

[369]In the circumstances, it seems to me that I have to assess an amount under this head of claim because I am not satisfied that the Claimants have made out the claim for £1,664 plus VAT. I have therefore decided that no more than £500 plus VAT, namely £587.50 should be awarded in respect of printing disbursements.

[370]There is a claim for the planning fee in the sum of £220 including VAT. That sum is not disputed. Similarly, the building regulations fee, at £2,115 including VAT, is also not disputed. Accordingly these two undisputed sums come to £2,335 in total. They have already been paid.

[371]There is a claim for travelling expenses, put at £867.15. This claim is disputed, and on precisely the same grounds as the claim in respect of the printing disbursements. Again, I consider that the Defendant’s criticisms of this item of claim, and its lack of supporting documentation, are justified. Put shortly, I simply cannot see how Delavals could justify what amounts to almost 100 round trips from their offices to the property. Again I consider that I should award something under this head of claim, but it ought to be considerably less than the amount claimed.

[372]I assess this head of claim in the sum of £150 plus VAT, making a total of £176.25.

[373]The next item of claim in respect of Delavals’ fees concerns a claim for £681.50 including VAT, relating to drawings requested by the Defendant, and Mr Beale in particular, at the meeting on 14 August 2003. Here the dispute is one of liability. The Defendant contends simply that the cost of preparing such drawings formed part of the Claimants’ cost of preparing claims under the Policy and the terms of the Policy made plain that such costs could not be recovered: see Clause 4 cited in paragraph 13 above. I am bound to say that I cannot see any answer to this point: if, as Mr Terry set out in his written opening at paragraph 118, these drawings were “part and parcel” of establishing an appropriate reinstatement programme, then they were part of the claim and therefore not separately recoverable.

[374]Further, and for completeness, I should also say that, in my judgment, it is impossible to say what these drawings are. The only drawings of which I am aware that were produced after the meeting in August (other than the Delavals September 2003 scheme drawings which would be plainly covered by the 10% entitlement referred to above) were the drawings produced by Mr Tonkin following the request for such information at the meeting. I do not see how Delavals can recover the cost of those drawings, since they were produced by Mr Tonkin himself. Moreover, those drawings were a vital part of Mr Tonkin’s claim and are therefore not separately recoverable in any event. For these two reasons, therefore, I am satisfied that this item of the claim must fail.

[375]The last two items of the Delavals fee claim are not disputed. They are the fee in respect of the planning application for The Gallery (£1,480.58) and the planning fee in respect of The Gallery (£220) making a total of £1,700.50.

[376]Accordingly, I find that the following sums are due to the Claimant in respect of Delavals’ fees: Paragraph of judgment Amount 364-365 £27,577.62 367-369 £587.50 370 £2,335 371-372 £176.25 375 £1,700.50 Total £32,376.87 K2 Fees Already Paid

[377]The Defendant has correctly noted that the Claimants have failed to account for the sum of £1,128 in respect of fees paid to Focus and £391.37 paid to Gyoury Self, the structural engineers. This produces a total of £1,519.37. These sums need to be included in the claim because this Judgment (at paragraphs 424 and 425 below) will award the Claimants a net amount, once allowance has been made for the sums previously paid. In those circumstances, it is necessary for the Claimants to ensure that their claim is fully accounted for: otherwise, they will lose out.

[378]Somewhat oddly, it was apparently the Claimants’ position, as set out at paragraph 120 of Mr Terry’s written opening, that this sum of £1,519.37 was not admitted either as to liability or quantum. The items are not addressed at all in his closing submissions. I am bound to say that I consider such an approach to be extremely unhelpful in circumstances where the court is endeavouring to ensure that the Claimants’ claims are fully accounted for. Moreover, given that the two sums making up the £1,519.37 are documented, I do not understand why these sums remain disputed.

[379]For the avoidance of doubt, therefore, I consider that the Claimants should be entitled to these amounts, which have already been paid and which therefore fall to be deducted in any calculation of the net sum due to the Claimants in this action.

[380]For completeness I should also note that it is agreed that the sums of £11,338.75 (being £9,650 plus VAT) and £2335 (paragraph 370 above) have also been paid to Delavals by way of an interim payment for their fees. These sums too will fall to be deducted below in order to arrive at the net sum due to the Claimants. Together with the sum of £1,519.37 referred to above, they make a total deduction for professional fees already paid of £15,193.12. K3 Summary

[381]Accordingly, the position as to the claim for professional fees is as follows. The basic sum due in respect of professional fees is £32,376.87 (paragraph 376 above). Any deduction to reflect the incomplete items/betterment has already been allowed for because the calculation of this sum is based on the net value of the reinstatement works. In addition there is an excess of £50 which can be conveniently deducted here and which is not disputed. That reduces the fees to £32,326.87. However, it is also agreed that there is an additional entitlement on the part of the Claimants to fees of £1,519.37 referred to at paragraphs 377-378 above. Accordingly, adding this figure back, the total assessment in respect of professional fees is £33,846.24. A deduction is made at paragraph 425 below to reflect the sums already paid by way of professional fees. L. CLAIM C: ALTERNATIVE ACCOMMODATION, RENT, STORAGE L1. Container Storage Charges

[382]The Claim is for £687.38. This sum is admitted by the Defendant. This claim figure covers the period up to 28 February 2005.

[383]Although it is not pleaded, some further documents were provided during the trial which seemed to suggest that there was a claim for further storage charges at an increased rate. No explanation was given as to why these documents were not provided before. No claim for charges beyond the 28 February 2005 has been pleaded.

[384]Further and in any event, it seems to me that, in view of my findings on delay, it is not appropriate to allow any further claim beyond that admitted by the Defendant up to 28 February 2005. The reason that such charges were being incurred after that date, as explained in Section I above, was the Claimants’ responsibility. They are therefore not entitled to make a claim for any sum beyond that admitted by the Defendant. L2. Contents, Fittings And Furnishings To Render The Gallery Habitable As Temporary Accommodation

[385]There are a number of troubling elements about this head of claim. The first is that this claim can only be in respect of items which were necessary to make The Gallery habitable but which cannot be re-used once the Claimants move back into the property. This head of claim cannot legitimately be used as a way of getting round or increasing the Claimants’ original contents claim; the Claimants’ contents claim has been paid out in full in the sum of £43,000. All claims in respect of contents beyond that figure are not to the Defendant’s account.

[386]Despite this, I have concluded that many of the items within the Claimants’ claim were covered by the contents element of the policy, because they are items which can plainly be re-used when the property is rebuilt. I simply do not understand how claims for items such as duvets, wine glasses, bed frames and the like, can be recoverable under this head of loss. They are not temporary items, to be discarded when the Claimants move from The Gallery back to the property. These are contents items which have already been recovered by the Claimants pursuant to the £43,000 paid out by the Defendant.

[387]Secondly, I am concerned that a number of these items are not supported by documents and that, where there are documents, they appear to show that the Claimants have claimed more than the amount these items actually cost them. An example of this tendency can be found in the cross-examination of Mr Tonkin on the Mackay’s receipt of October 2002. Some of the items included there were obviously on special offer and a deduction from the normal prices was made by the retailer. The receipt identifies the net amount that was then paid by Mr Tonkin. For reasons which he was unable to explain, he has claimed against the Defendant the gross amount, not the sum he actually paid.

[388]I do not intend to go through in detail the 37 items that make up the claim of £9,217.69. I note that the Defendant has admitted £1,855.24. I consider that – in general terms - the reasons for the denial of the remaining claims, set out in detail in paragraph 277 of Ms Jackson’s closing submissions, are entirely justified on the evidence. Therefore I allow this claim in the admitted sum of £1,855.24, but not otherwise.

[389]Particular points should be made about specific items within this claim: a) Item 4, in respect of the kitchen sink, was formally abandoned on day 4 of the trial. b) The claim for £1,155.02 for an electric oven and hob (item 5) cannot be recoverable in these proceedings since the Defendant has already paid for a kitchen and this item was included in the scope of works prepared by DJA, approved by the Defendant and included within the DJA invoice. c) Item 6, the fridge, is in respect of an item which can be used in the property when it is rebuilt. It cannot possibly be said to be a temporary item for which the Claimants will derive no benefit. No claim can therefore be made in respect of this item. The same is also true of item 7, the freezer. d) Item 8 is a claim for the pottery shed in the sum of £1,450. I reject this item of claim. Again, there is no reason why this pottery shed cannot be utilised after the property has been rebuilt. It is a top-of-the-range mock Swiss chalet log cabin. There is no evidence that the shed would be sold or somehow destroyed after the property has been rebuilt. I therefore reject this item of claim. e) Item 9 is in respect of duvets, item 11 is in respect of sofa and chairs, and item 13 is in respect of dining table chairs. Again it has simply not been established that these items are in some way temporary and could not be reused by the Claimants when they moved back into the property. f) Item 12 is in respect of small filing cabinets and item 14 is in respect of the oak office desk. These are plainly items which can be reused when the property is rebuilt. g) Item 15 is in respect of the small tv. It is extraordinary that this item is maintained given that Mr Tonkin accepted in cross-examination that the item was not properly recoverable and would be used by the family when they moved back into the property. h) Items 16, 17 and 18 are all in respect of bedding, which can again be reused when the Claimants move back into the property. Again these items cannot be allowed. i) There are a number of items, such as items 20 and 21 where no proof of quantification has been provided. It does not seem to me to be appropriate to allow anything in respect of these items where it is unclear what has been purchased or how and why the material purchased could not be re-utilised in the property. The same comment also applies to items 27, 28, 30 and 32. L3. Cost Of Complying With Planning Permission

[390]It is agreed that, under the policy and the agreement reached between the parties, the Defendant is liable for the costs of reconverting The Gallery back into a building which cannot be used for human habitation. The Claimants’ claim is for £8,048.75. It is based on a quotation from Cornford. There is no other information available in respect of that amount.

[391]The Defendant puts forward the figure of £5,000. Mr Ireland, the Claimants’ expert QS, accepted that that was a reasonable cost if the work was done by the contractor who carried out the main reinstatement works. There is of course no reason why the contractor should not do both sets of works together. The work is straightforward, largely involved with the removal of the kitchen and bathroom fittings. Accordingly, it seems to me that the Defendant’s figure of £5,000 is realistic in all the circumstances. L4. Alternative Accommodation

[392]The Claimants are claiming alternative accommodation at £3,000 for 12 months. It appears that this claim is advanced in addition to the claims in respect of the works to The Gallery.

[393]I reject this claim in its entirety for two reasons. First, it seems to me that it was established as long ago as September 2002 that, at their suggestion, the Claimants would reside in The Gallery during the rebuilding of the property. Indeed all of the documents assume that to be the case. No cogent reason was given as to why, so late in the day, the Claimants now wanted to move out of The Gallery.

[394]Secondly, it seems to me that this claim is only appropriate if I found that it was the Defendant’s fault that the reinstatement works had not long since been carried out and completed. For the reasons which I have set out in Section I above, I have concluded that the reasons for the delay are solely the responsibility of the Claimants and their advisers. In my judgment, therefore, the Claimants are not now entitled to make a new claim for alternative accommodation for 12 months some time in the future, because it is their fault that the reinstatement works have not already been completed.

[395]There was a suggestion that the Claimants were entitled to make this claim for alternative accommodation because the Defendant had somehow ‘got off lightly’ under the original agreement that the Claimants would live in The Gallery rather than move to rented accommodation. It seems to me that that is an unfair criticism. Even taking the figure for alternative accommodation at £3,000 a month (and I am bound to point out that this figure comes from a single reference in an earlier Capita McLarens’ report and there has been no independent evidence to support it) that would have produced an alternative accommodation claim of about £36,000 if the reinstatement works had been completed in accordance with Mr Hulejczuk’s timetable, as they should have been. That is roughly comparable with the sums that the Defendant has paid for the conversion of The Gallery, the items purchased for living there, and the costs that will be incurred to reconvert The Gallery once the property has been completed. The reason why a claim for alternative accommodation covering the whole of the period since the fire would have been so much greater than the actual sums spent on converting and reconverting The Gallery is due entirely to the delay in carrying out the reinstatement works, a delay which, for the reasons I have given, was the Claimants’ responsibility. The comparison is therefore illegitimate.

[396]I also note from the evidence that, even though the Claimants are seeking the costs of alternative accommodation, they also want to continue to remain at The Gallery during the reinstatement works, because Mr Tonkin wishes to continue to carry out commercially sensitive experiments there that he was not prepared to detail to the court. It is difficult to understand how the Claimants could justify claims which allow them both the cost of alternative accommodation and the continued occupation of The Gallery.

[397]For all these reasons, therefore, I dismiss the claim for alternative accommodation. L5. Summary

[398]Accordingly, in relation to Claim C, for the reasons set out above, I allow the Claimants the following sums: C1 Container storage charges £687.38 C2 Contents, fittings, etc £1,855.24 C3 Complying with Planning Permission £5,000 £7,542.62 M. CLAIM D: PERSONAL POSSESSIONS

[399]For the reasons which I have set out at paragraphs Section B4 above, I dismiss this claim as invalid in principle. At the time of the fire, there were no policy provisions in place which allowed the Claimants to claim for personal possessions in addition to their contents claim, which was paid out in full. The necessary insurance had simply not been taken out before the fire.

[400]Further and in any event, I note that there was no supporting information in relation to this claim for £7,898. This was most surprising given that, on Mr Tonkin’s evidence, some of these items had been purchased by the Claimants after the fire to replace those which had been lost in the blaze. In those circumstances one would have expected to see receipts for, say, the saxophones that had been allegedly bought to replace those destroyed in the fire. However, as Mr Tonkin accepted in cross-examination, there were no such documents. There were not even pages from catalogues or price lists from manufacturers. Again, that therefore means that, even if I had been prepared to allow this item as a matter of principle, I could not find any actual entitlement because of the absence of any supporting information. N. CLAIM E: INCREASED CONSTRUCTION COSTS

[401]The Claimants claim the sum of £84,738.22 by way of increased construction costs. They say that the Defendant was in breach of contract and failed to pay out on their claim, as a consequence of which the reinstatement works have been delayed and there has been an increase in the cost of those works. For the reasons set out above at Section B5(b) above, I have concluded that this claim is wrong in principle. It is a claim for damages as a result of the late payment of damages, and the authorities make plain that such a claim cannot be allowed.

[402]At one stage, it appeared that Mr Terry was seeking to argue that, as a result of the Defendant’s admission of liability, it was accepted that the Defendant was in breach of the terms of the Policy, and that all that mattered was the quantification of the damages that resulted. It was not clear to me that this argument was maintained in the Claimants’ closing submissions but, to the extent that it was, I reject it. The admission was as to the Defendant’s liability under the Policy. The Defendant has never admitted dealing with the claim in a way that was outside the terms of the Policy and, for the reasons summarised below, I consider that the Defendant was quite correct to adopt such a stance.

[403]Before turning back to the facts, I should identify a further reason why I consider that, on the authorities, this particular head of claim is hopeless. I consider that the factual situation here is indistinguishable from the situation in Sprung. There Evans LJ said:

“In my judgment it is impossible to say that any such breach, even if and to the extent that it was a breach of contract, would carry with it a right to substantial damages representing the claim which is now put forward. What has to be said, however hard it may seem to say it, is that in such circumstances the cause of any delay which the plaintiff suffered must be regarded as the consequence of his own decision not to proceed with repair or reinstatement, whether that decision was voluntary or not. In other words, if, unfortunately, through his own financial circumstances he is unable to do so without assistance from the defendants, he cannot allege that the defendants were in breach of contract by failing to accept liability at that stage.”

Similarly here, the Claimants have not proceeded with the reinstatement scheme (“whether the decision was voluntary or not”) and cannot therefore allege breach of contract.

[404]However, let us now assume that I am wrong about these two points of principle and that, prima facie, the Claimants were entitled to make this claim. The damages claim would then depend on my finding that the Defendant was in breach of contract and that this breach of contract had delayed the payment of the sums otherwise due to the Claimants and/or the commencement of the works on site.

[405]For the reasons set out in Section I above, I can make no such finding. Indeed, in my judgment, for the reasons there set out, I consider that it is the Claimants (and their advisers) who are responsible for the delay in the payment out on this Policy. The Claimants’ whole approach has been to expect the Defendant to pay out, in respect of a scheme that was not a reinstatement scheme, a sum of money calculated by reference, first, to a tender which even the tenderer said was in error, and which, much more recently, was calculated by reference to a one page Budget cost riddled with flaws.

[406]The Claimants, and their advisers, are therefore responsible for the delays in this case. They are therefore responsible for the fact that the construction costs have increased beyond 2003 prices. This claim therefore fails on the facts as well as in principle. O. CLAIM F: DEGRADATION REINSTATEMENT COSTS

[407]The Claimants claim £20,998.75 as being the costs of further works on site since the summer of 2003. Some of these works have been carried out; some have not. The Claimants say that these costs have been caused by the on-going degradation on site. It seems to me, however, that there are three reasons in principle why these claims must fail.

[408]First, this work would never have been necessary if the reinstatement of the property had gone ahead in 2003. It did not go ahead because of the Claimants’ default: see Section I above. Therefore, the Claimants can have no entitlement to additional sums by reference to a claim which only arose because of their own delay.

[409]Secondly, it is clear that, to the extent that there has been degradation on site, this was as a result of the failure on the part of the Claimants’ advisers to recommend proper protection works. Mr Orrell agreed that, although the flint walls should have been protected, they had not been. Accordingly, these remedial works were necessitated by this separate default on the part of the Claimants’ advisers, and again cannot therefore be laid at the Defendant’s door.

[410]Thirdly, it appears to be accepted that at least some elements of these works are already included in the overall reinstatement scheme prepared by Delavals and, to this extent at least, accepted by Mr Beale. They have therefore already been priced and form part of the Claimants’ entitlement under Claim A. Precisely which of the remedial works was already covered by the reinstatement scheme and what may be additional was not clear. On that ground as well, it seems to me that it would be wrong to allow any further claim in respect of this head of claim.

[411]Accordingly, for these three reasons, I reject Claim F in its entirety. P. CLAIM FOR DAMAGES FOR INCONVENIENCE

[412]The Claimants seek to make a claim for damages for inconvenience. It seems to me that, as a matter of principle, a claim for damages might lie if the Defendant was in breach of contract and if the breach was not simply the failure by the Defendant to pay damages otherwise due. Any such damages would be modest: see the cases summarised in Bella Casa Ltd v Vinestone Ltd

[2006] BLR 72

[413]The difficulty, of course, for the Claimants is that, on my analysis, the delays were due to the Claimants’ default, and not any default on the part of the Defendant. Whilst I consider that criticisms can be made of the Defendant’s conduct (see paragraphs 344-346 above), I find that such criticisms did not amount to a breach of contract.

[414]Even if I was wrong about that, and the limited criticisms that I have made at paragraph 344-346 above amounted to breaches of contract on the part of the Defendant, they plainly gave rise to no special damages. They did not cause delay or any other identifiable loss. Likewise, I do not consider that such breaches (if that is what they were) can trigger an entitlement to general damages either in principle or on the facts: any inconvenience here was caused by the delays for which the Claimants (and their advisers) were responsible, and it would therefore be wrong to award them general, or even nominal, damages. Q. CLAIM FOR INTEREST

[415]Precisely the same considerations apply in relation to the claim for interest as have been set out at Section P above in relation to the claim for the increased cost of rebuilding. Again, because I have found that the delays were due to the Claimants (or the Claimants’ advisers) no claim for interest can lie against the Defendant. R. CONCLUSIONS

[416]For the reasons set out in Section E above, I reject the Defendant’s case on fraud. Whilst I accept that the Claimants have not been completely open with the Defendant in the pursuit of their claims, I reject the allegations of fraud.

[417]For the reasons set out in Section F above, I reject the Claimant’s belated case in respect of estoppel. As to the point about the width of the Small Barn, I consider that the Defendant only agreed and paid for the ground works in the summer of 2003 because the Defendant had been led to believe by the Claimants and their advisers that the new foundations were designed for a building that was the same size as the property before the fire. As the Claimants and their advisers knew, but the Defendant did not, the new foundations were deliberately located in order to increase significantly the size of the property. I reject the wider case on estoppel because it was not pleaded and not pursued in the evidence, and because there was no relevant representation/statement, reliance or detriment.

[418]For the reasons set out in Section G above, I reject the Claimant’s case that the Delavals September 2003 scheme was, or was ever capable of being classified as, a reinstatement scheme. It was deliberately designed to give the Claimants a bigger and better building than the property that was destroyed in the fire, but without making any concessions whatsoever to that effect. Moreover, I find, for the reasons set out in Section G3, that, even if the scheme had been a reinstatement scheme, it was inadequately documented and detailed and, as set out in Section G4 above, wholly failed to generate any reliable figures. I therefore dismiss the Delavals September 2003 scheme as a proper or reliable basis for the assessment of the value of the Claimants’ claim for the reinstatement costs.

[419]For the reasons set out in Section H above, I find that Mr Beale’s scheme is the only scheme that seeks to reinstate the property to the condition and lay-out that existed before the fire. I find that the costing of that scheme by Mr Athey, by reference to the detailed bills of quantity that he prepared with Mr Beale, is the best and most reliable means of calculating the reinstatement costs. On that basis, for the reasons set out in Section J above, the correct figure for the reinstatement costs (Claim A) is £275,776.18 (see paragraph 363 above).

[420]As to Claim B, for professional fees, for the reasons set out in Section K above, I allow a sum of £33,846.24 (see paragraph 381 above).

[421]As to Claim C, for alternative accommodation and the like, for the reasons set out in Section L above, I allow the sum of £7,542.62 (paragraph 398 above).

[422]As to Claim D, for personal possessions, for the reasons set out in Sections B and M above, I reject this claim in its entirety. I find that the Claimants did not have the relevant cover at the time of the fire.

[423]I reject in their entirety the Claimant’s claim for increased construction costs (Claim E); their claim for degradation reinstatement costs (Claim F); their claim for damages for inconvenience; and their claim for interest. The particular reasons for my rejection of these claims can be found in Sections N-O inclusive above. However, I reiterate that, whatever the position in principle, I reject all these claims on the facts in any event. These claims are all predicated on the assumption that it was the Defendant who was responsible for the delays in the reinstatement of the property. For the detailed reasons set out in Section C and SectionI above, I reject that assumption in its entirety. On the contrary, I have concluded that, beyond any doubt, the delays that have meant that this property has yet to be rebuilt were solely the responsibility of the Claimants and their advisers. Such a conclusion gives me no pleasure whatsoever; it is, however, inescapable on the facts.

[424]Accordingly, I find that the Claimant’s gross entitlement is as follows: Claim A (reinstatement costs) £275,776.18 Claim B (professional fees) £33,846.24 Claim C (alternative accommodation, etc) £7,542.62 Total £317,165.04 Claim A (reinstatement costs) £275,776.18 Claim B (professional fees) £33,846.24 Total £317,165.04

Claim B (professional fees) £33,846.24

[425]From that gross sum falls to be deducted the sum of £57,102.37 previously paid to the Claimants (see paragraph 4 above, with the calculation of the fees paid in Section K2 above) and the sum of £60,800 paid by way of the interim payment ordered by me on 29 July 2005. That produces a total of £117,902.37. Accordingly, there will be judgment for the Claimants in the sum of £199,262.67, being £317,165.04 less the £117,902.37 previously paid.

[426]I will deal separately with any arguments on costs.