Neutral Citation Number: [2005] EWHC 3093 (TCC)
Case number 4 BM 50104
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY

TECHNOLOGY AND CONSTRUCTION COURT

BIRMINGHAM CIVIL JUSTICE CENTRE
33 BULL STREET
BIRMINGHAM B4 6DS

Date: 3 November 2005

Before Her Honour Judge Frances Kirkham
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Between :

(1)	MICRO DESIGN GROUP LIMITED
(2) MICRO DESIGN CONSULTANCY LIMITED
Claimants

and

NORWICH UNION INSURANCE LIMITED
Defendant
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Mr John Brennan of Counsel (instructed by Wragge & Co) for the Claimant

Mr Oliver Ticciati of Counsel (instructed by Beachcroft Wansbroughs) for the Defendant

Dates of trial: 22, 23, 24, 25, 26 and 30 August 2005
Date of draft judgment: 20 October 2005

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 JUDGMENT
1.	At material times, the first claimant was a holding company for various subsidiaries.  The second claimant carried on business in software and hardware consultancy, research, design, manufacture and supply.  The defendant (NU) is an insurance company.

2.	By a contract of insurance dated 31 March 2003, NU agreed to indemnify the Insured (as defined) against, amongst other matters, loss and damage resulting from the theft of the Insured’s computer equipment (as defined).  This is referred to as the Engineering Policy. By a separate contract of insurance, also dated 31 March 2003, NU agreed to indemnify the Insured against, amongst other matters, loss and damage resulting from the theft of contents (as defined) in the buildings (again, as defined) and resulting from damage to premises at 60 Kenilworth Road, Leamington Spa.  This is referred to as the Office Policy. 

3.	A burglary took place at 60 Kenilworth Road on 8 November 2003.  It appears that there was extensive damage to the buildings and theft of equipment.  The claimants notified their brokers who in turn notified NU of the burglary.  They have made a claim under the Engineering Policy.  A claim notified under the Office Policy has not been pursued.  The claimants say their losses are well in excess of £400,000.  On 11 August 2004, NU made an interim payment under the Engineering Policy of £50,000 but have refused to make any further payment.   Both claimants claim to be entitled to the benefit of the indemnity under both policies.  NU deny such entitlement.  NU counterclaim to recover the interim payment.  

4.	This trial has concerned liability only.  I am obliged to Mr Brennan and Mr Ticciati, (counsel for the claimants and NU, respectively) and their respective legal teams for their help with this case.  

5.	There are three broad issues as follows:

the identity of the insured under each policy 
whether NU is entitled to avoid the policies on the basis of material non-disclosure; and

whether NU is entitled to avoid the policies on the basis of fraud  

6.	Mr Brennan submits that the burden of proof in relation to relevant matters is as follows.  On his analysis, the claimants must prove the following:
that the first claimant and/or the second claimant entered into the Engineering Policy and/or the Office Policy; alternatively, if not, that NU is now estopped from contending otherwise;
that the first claimant and/or the second claimant are entitled to the benefit of an indemnity under the Engineering Policy and/or the Office Policy;
that NU has refused to indemnify the first claimant and/or the second claimant and is thereby in breach of contract; and 
as a result, that the first claimant and/or the second claimant have suffered loss and damage, and, in particular, that they incurred a liability to pay ACS Wade for the work of reconfiguring drawings of the buildings at 60 Kenilworth Road.
If the claimants prove their case, Mr Brennan submits that NU must prove the following to avoid liability:
that the claimants entered into a policy of insurance with St. Paul Insurance in respect of the period from 4 October 2002 onwards (“the St Paul's policy”);
that the St Paul’s policy was cancelled for non-payment of premium;
that the claimants were advised that the St Paul’s policy had been cancelled;
that NU was not advised that the claimants had had a policy of insurance cancelled before the Engineering Policy came into being and/or was advised that the claimants had never had a policy of insurance cancelled before the Office Policy came into being;
that the claimants were obliged to disclose that they had had a policy of insurance cancelled for non-payment of premium before the Engineering Policy came into being and/or that the claimants failed to disclose, misrepresented or misdescribed the fact that the claimants had had a policy of insurance cancelled for non-payment of premium when they entered into the Office Policy;
that the cancellation of the St Paul’s policy was material, in the sense that it would have had an influence on NU’s decision to enter into or set the terms of the Engineering Policy and/or the Office Policy; and 
that NU would not have agreed to enter into the Engineering Policy and/or the Office Policy either at all or on the same terms if the claimants had disclosed that it had had a policy of insurance cancelled for non-payment of premium;
alternatively, that neither the first claimant nor the second claimant incurred a liability to ACS Wade Ltd for recovering and rescanning A1 architectural drawings.

There is an apparent inconsistency between the last point in each category, but in practice I have not encountered any difficulty with the burden of proof. 

Background

7.	It is necessary to explain the various people and entities who have featured significantly in this case. 

8.	The claimant holding company is Micro Design Group Ltd (the first claimant).  The subsidiary companies are (i) Micro Design Consultancy Ltd (the second claimant), (ii) Micro Design Consultants Ltd, a trading company especially for computer and systems installation; and (iii) Micro Design Systems Ltd, an M & E company.  Ince House Ltd is a company ear-marked for use as a vehicle for property development and construction projects.   The companies are based in offices at 60 Kenilworth Road, Leamington Spa.  The front of the office is known as Ince House.  The back is known as Kenilworth House.  The properties are interconnected.  When the NU insurance was obtained, Kenilworth House was little more than a shell.  After the burglary, the companies relocated from Ince House to Kenilworth House. 

9.	Mr Martin Rooke is the Managing Director and Technical Director of the companies in the Micro Design Group and Ince House Ltd.  He is the moving spirit behind them.  Ms Catherine Brown is Martin Rooke’s partner in the modern meaning of the term.  She is the company secretary of Micro Design Consultants Ltd.  In practice, she acts as Mr Rooke’s personal assistant.   Mr Rooke and Mr Brown have played a central role in this trial.

10.	Mr Ian Turner is a chartered accountant and trades as such under the style of Leonard Wilson & Co.  He acts as a confidante and advisor to Mr Rooke. 

11.	Between about September 2001 and February 2003, Mr Rooke and the Micro Design Group obtained insurance through a broker, Heartland (Midlands) Ltd which traded as Heartland.  The director and founder of that company was Mr Brian Weetman.  He was assisted by Mr Stuart Turner.  Heartland arranged cover for Mr Rooke and his companies with St Paul Insurance Company.  There are issues as to the status of a St Paul’s policy of insurance dated October 2002 and whether that policy was cancelled by reason of non-payment of premium.  From December 2002 onwards, Mr Rooke obtained advice from Brooksure Insurance whose principal is Mr Brookes.  In February 2003, Brooksure Insurance took over from Heartland as brokers to Mr Rooke and the Micro Design Group. 

12.	The NU staff who dealt with the Engineering Policy are based in Birmingham.  Mr Andrew Tennant was the principal point of contact.  He referred the matter to his superior, Mr Ian Harris, a regional account underwriter, when an impasse arose between Mr Rooke and Mr Paul Knight (Norwich Union’s surveyor) as to the adequacy of the security at the Kenilworth Road site.  The staff who dealt with the Office Policy were based in Leicester where Mr Ajay Dalal was the principal point of contact.  Once the claimants’ claim for indemnity had been made, Mr Harris referred the matter to Mr Mark Greenlees, a senior reinsurance consultant.  NU appointed RM Risk Adjusting Ltd as loss adjustors.  It acted at all times through Mr Neil Robbie. 

13.	At material times Hossack Broome Ltd carried on an architectural practice under the style of HB Architects (HBA).  It had an office in Rugby.  In addition, it shared office premises in Sutton Coldfield with Oculus Properties Ltd which carried on business as a property developer.  HBA and Oculus Properties have common directors, including Mr Paul Leonard and Mr Dennis Swain. They are architects.  Mr Leonard is the senior director.  

14.	Mr John Edge is the owner and managing director of ACS Wade Ltd.  After the burglary, Mr Rooke asked for his help and, in particular, to provide a sub-contractor, Mr Colin McKeith, to help him sort things out.  It is the claimants’ case that ACS Wade reconfigured computerised drawings of the Micro Design Group’s offices in Kenilworth Road. 

15.	At material times, Bridgewater& Coulton were a firm of quantity surveyors.  Mr Nigel Robinson, a partner, worked closely with Mr Rooke.  Martyn Bramich Associates were planning consultants.  Their managing director, Nicholas Hood, also worked closely with Mr Rooke. 

16.	I have heard evidence from Mr Rooke, Ms Brown, Mr Ian Turner, Mr Edge, Mr Brookes, Mr Robinson, Mr Burke, Mr Hood, Mr Weetman, Mr Stuart Turner, Mr John Moffat, Mr Knight, Mr Tennant, Mr Dalal, Mr Harris, Mr Swain and Mr Leonard. It was agreed that I read the statements prepared by Mr Andrew Jacques, Mr Robbie and Mr Greenlees.

17.	Disclosure has been given by the claimants (both voluntarily and pursuant to requests by NU) and by NU.  The files of some third parties (eg Heartland, Brooksure and HBA) have also been obtained.  Scrutiny of third party files has revealed some curious differences between documents which the claimants say are authentic but which have not been located on the files of supposed recipients.

18.	The background to the case is complex but needs some explanation.  Mr Rooke obtained planning permission to redevelop the premises in Kenilworth Road into an office development.  On 31 December 2003 part of the façade was demolished, in breach of the planning consent which had been granted.  Mr Hood assisted Mr Rooke and his companies by persuading the local authority that the latter should not require the façade to be rebuilt.  Mr Hood and Mr Rooke attended a meeting with Warwick District Council on 5 January 2004.  The Planning Officer made it clear that demolition of the façade had effectively rendered the original planning application incapable of being implemented; a new planning application would be required.   Mr Hood wrote to the local authority planners on 23 January 2004 amongst other matters asking whether they would consider not requiring the submission of a fresh application for planning permission.  I accept Mr Hood’s evidence that it was no surprise when the local authority replied on 11 March 2004 confirming that the original grant of planning permission had been rendered incapable of implementation so that a new application would be required.  The local authority did not, however, require reconstruction of this façade.  The significance for Mr Rooke was that he had hoped to use the existing permission on which to piggy back an application for planning permission to build residential units.  Loss of the planning permission which had previously been granted set back those plans.  Accordingly, as at late December 2003 or early January 2004, Mr Rooke and his advisers appreciated that as a consequence of the demolition of the façade, it was likely that a fresh application for planning consent would have to be made.  

19.	The claimants’ case is that, because electronic records had been lost as a consequence of the burglary on 8 November 2003, they needed to recreate drawings, as a matter of urgency, in order to deal with that fresh application for planning permission.  Their case is that, after the burglary they engaged ACS Wade to recover and reconfigure drawings of the buildings in Kenilworth Road which had been lost as a result of the burglary.  That work was urgently needed.  Mr Moffat (an architect) scanned the claimants’ paper drawings.  Information was passed in electronic form to ACS Wade who carried out the reconfiguration work and the claimants incurred a liability to ACS Wade of £7,900 plus VAT.  NU’s case is that the claimants incurred no such liability and their claim for that sum is fraudulent.  The claimants’ case is that ACS Wade did the work and their claim is genuine. 

20.	Whilst proceeding with his various development projects, Mr Rooke was also arranging for work to be undertaken to his house, Meadow Cottage.  Various firms of architects, including HBA, were involved at different times and with different aspects of work at Meadow Cottage and in relation to the various proposals for development of the Kenilworth Road site.

21.	Mr Rooke’s involvement with HBA began in about March 2004.  HBA were engaged to undertake work on Meadow Cottage and on the residential units Mr Rooke wanted to build at the Kenilworth Road site.  Before the relationship between Mr Rooke and HBA came to an end in August 2004, Mr Rooke became very interested in the possibility of participation in or association with the businesses of HBA and Oculus, and indeed Mr Rooke gave Mr Leonard advice based on his perception of the viability of those businesses.  Mr Rooke and Ms Brown spent time working from HBA’s offices and had access amongst other matters to HBA’s computers.  Indeed, while Mr Leonard was on holiday from 10 until 26 July 2004, he gave Mr Rooke authority to act on behalf of Mr Leonard in relation to HBA and Oculus.  Mr Rooke involved himself in HBA’s business, including while Mr Leonard was away. 

22.	A significant part of the trial has been concerned with the honesty and integrity of a number of witnesses.  The credibility of witnesses is central to the issues in this case.  I therefore begin by setting out my conclusions as to the extent to which I feel able to rely on the evidence of those who have given evidence in this trial.  NU accuse Mr Rooke of being a compulsive liar and a serial forger of documents.  They contend that Ms Brown, Mr Edge, Mr Ian Turner and Mr Brookes were all dishonest witnesses.  The evidence has covered many different aspects of the case.  The claimants have attempted to call evidence to deal with each area challenged by NU.  The evidence of Mr Rooke covers all material issues and is thus of particular significance.  Serious allegations have been made by NU against a number of the claimants’ witnesses and by the claimants against Mr Swain and Mr Leonard of HBA.  In considering all this evidence, I have taken a cautious approach.  I bear in mind that it is most unusual for there to be forgery of documents on the scale alleged by NU.  I conclude that a person has been guilty of reprehensible conduct only if confident that that is so.  My firm conclusion, having heard all the evidence, is that I am unable to accept any evidence given by Mr Rooke or Ms Brown unless it is corroborated by a source in which I have confidence.  So far as the other witnesses are concerned, I explain during the course of this judgment where I am able or unable to accept evidence.  

23.	I begin with the bogus HBA documents because the fact and circumstances of their creation colour the evidence of many of the issues in this case. 

HBA, Oculus and the bogus HBA Invoice and Letter

24.	An unusual feature of this case is that it is common ground that there are two bogus documents in existence.  (There are other documents which the claimants say are genuine and which NU claim to be bogus.  I deal with these other documents later.)  The first document is a false invoice dated 31 March 2004 supposedly from HBA to the first claimant and the second is a letter, dated 18 June 2004, supposedly from Mr Leonard to Mr Rooke.  The claimants’ case is that these two bogus documents were created by Mr Swain of HBA.  NU’s case is that Ms Brown or Mr Rooke created these.  It is common ground that they were created on Mr Leonard’s computer, while Mr Leonard was on holiday.  The bogus invoice purports to be for work allegedly carried out by HBA for the claimant in November 2003.  It states “Recovery and rescanning of 170 A1 architectural drawings.  Work completed November 2003 - your reference Martin Rooke”.  The sum shown on that invoice is £7,900 plus VAT.  HBA did not carry out any of the work referred to on the false invoice.  The invoice is not logged in HBA’s accounting system.

25.	The second document is a purported letter from Mr Leonard to Mr Rooke dated 18 June 2004.  It states:
“Dear Martin
Re Outstanding Invoice HBA-154-1c
With reference to our numerous telephone conversations regarding your outstanding account, although I empathise with your frustration at the length of time that your insurance company are taking to honour your claim following the break-in to your business premises in November 2003, I cannot allow our invoice to remain unpaid indefinitely. 
Knowing the urgency with which your business required the recovery and re-scanning of the A1 drawings, our business made it our top priority to assist you fully.  We complied with your requests to credit our original invoice dated November 2003, and agreed to invoice in March 2004 - as we both presumed that your Insurance Company would have settled your insurance claim by this time.  As time progressed with no insurance offer forthcoming, we subsequently agreed to withhold from chasing payment of this invoice until such time as after your insurance settlement had been paid. 
However, now that you have issued Court proceedings against Norwich Union, being only too aware of the lengthy Court process, I am no longer prepared to wait for payment of our invoice and I must insist that our invoice be settled without any further delay. 
It is unfortunate that your Insurance Company have forced your company into this position, but I am sure you understand that our financial situation takes priority in this affair. 
I look forward to payment by the return of post. 
Yours sincerely
Paul Leonard,  Director”

26.	The claimants did not, in fact, use the bogus invoice or letter in connection with their claim against NU.  However, the fact of their creation is significant in the context of the claim for £7,900 plus VAT for work allegedly carried out by ACS Wade as well as in illustrating my lack of confidence in the credibility of Mr Rooke and Ms Brown.

27.	Mr Rooke was introduced to HBA and Oculus in March 2004.  HBA did some work for him and his companies.  Mr Rooke also explored with HBA and Oculus ideas for working together.  In that context, Mr Rooke looked at the HBA and Oculus businesses.  From March 2004 until his relationship with them ended in August 2004, Mr Rooke was involved in discussions with Mr Leonard, in particular, as to the future of HBA and Oculus.  Mr Rooke raised concerns he said he had and began to make allegations as to a number of matters, including the activities of those running Oculus and whether Mr Swain might have been involved in such activities.  It appears to have been a difficult period: Mr Leonard was under pressure and Mr Rooke was suggesting to him that all was not well.  On 9 July 2004 Mr Rooke interviewed Mr Swain in relation to some of the concerns which Mr Rooke had raised with Mr Leonard.  Mr Swain agreed to and did resign as a director of Oculus.  On 10 July 2004 Mr Leonard went away for a fortnight’s holiday, apparently leaving Mr Rooke with extensive authority to act on his behalf.  Mr Rooke had been left with substantial control.  Mr Rooke and Ms Brown attended HBA’s offices on a number of occasions while Mr Leonard was on holiday.   

28.	While Mr Leonard was on holiday Mr Rooke sent Mr Swain on gardening leave for seven days beginning 13 July.   Mr Swain returned to work on 21 July 2004.  Mr Rooke interviewed him at HBA’s offices in Rugby, during the early evening of 21 July.  Mr Robinson was present at that meeting and made a contemporaneous note of events that day.  Mr Rooke handed Mr Swain a Grievance Procedure document (not a document created by HBA or seen by Mr Swain before that day).  Mr Rooke required Mr Swain to remain on garden leave for a further week.  Accordingly, apart from 21 July 2004, Mr Swain was absent from HBA’s offices between 13 and 27 July 2004.  

29.	The bogus HBA invoice and letter were created on Mr Leonard’s computer at HBA while he was on holiday.  Mr Rooke and Ms Brown had access to the computers at HBA, as did Mr Swain.  After HBA and the claimants severed relations in August 2004, Mr Leonard discovered on his computer a file/folder in the name of MDG including the bogus invoice and letter.  He and Mr Swain looked at the data then, after taking solicitors’ advice, contacted NU who sent an investigator.  The claimants’ case is that Mr Swain created the bogus invoice and letter.  He did so from spite because of his treatment at Mr Rooke’s hands and in order to damage the claimants’ position vis a vis NU.  NU’s case is that Mr Rooke or Ms Brown created these two bogus documents. 

30.	During the course of these proceedings, Mr W Wilkinson of KPMG LLP was instructed jointly by the parties to investigate Mr Leonard’s computer and express an opinion with respect to the creation of the bogus invoice and bogus letter.  Mr Wilkinson has carried out detailed research into the available information.  He reported on 22 August 2005.   During the trial (after Mr Wilkinson’s report had been made available and after some of the claimants’ witnesses had given evidence) Mr Brennan prepared a summary of the additional basis on which the claimants were then putting their case with regard to the use made of Mr Leonard’s computer in producing the bogus HBA invoice and letter (“the claimants’ expanded case”).  In short, the claimants say that the person who created those documents - Mr Swain, they say - changed the computer’s internal date and time settings.  They further allege that, in late summer 2004, HBA deliberately disposed of servers so as to destroy the evidence that such changes to the date and time had been made. The claimants’ expanded case was provided, it seemed to me, both in response to Mr Wilkinson’s report of 22 August (which points very strongly to Ms Brown as the person who created the documents) and in the light of evidence which had been given up to the end of 25 August 2005.  The claimants’ expanded case was prepared before Mr Leonard and Mr Swain gave their evidence.  For the detailed reasons given at the time, the court refused the claimants’ application to call Mr Wilkinson to give evidence at trial.  However, the claimants’ expanded case was put to Mr Wilkinson with questions from the claimants.  Mr Wilkinson answered these on 30 August 2005.

31.	I found Mr Wilkinson’s report and subsequent explanations to be very clear and helpful, and I have no reason at all not to have confidence in the evidence he has given.  He and a colleague inspected computers from Oculus’ and HBA’s offices including those used by Mr Swain and Mr Leonard, and a floppy diskette containing copies of documents copied from Mr Leonard’s computer.  His investigation revealed that the computer records showed that the bogus letter was created on 21 July 2004 at 1856 hrs and modified on 23 July 2004 at 1814 hrs.  The bogus invoice was created at 1341 hrs on 21 July 2004 and modified at 1343 hrs that day.   Relevant work to these documents was carried out by someone using the user profile “cbrown”, ie the user profile used by Ms Brown. 

32.	The user profile “cbrown” was linked to other data found on Mr Leonard’s computer.  This included access to a Tesco website, which required a specific log in and password and which displayed the cached web-page display “Hello Miss Brown” and “Welcome Catherine”.  That web site was accessed at 1730 hrs on 21 July.  At 1750 hrs on 23 July “cbrown” logged into the email account “emailbrown@yahoo.co.uk” and a review was made of messages received.  Use of four e-mail accounts, accessed from the cbrown user profile, is shared by Ms Brown and Mr Rooke. On 23 July user profile “cbrown” accessed and modified a document concerning a telephone call with Mr D Leach on 22 July 2004.  The access took place at 1753 hrs and 1820 hrs (ie during the period when the bogus HBA letter was also being worked on). 

33.	The evidence from the investigation of the computer points very clearly to Ms Brown as the author of the two bogus HBA documents.  However, she denies she is the author.  She says she made no use of  Mr Leonard’s computer on either 21 July or 23 July 2004.  Indeed, she denies being at HBA’s offices at the times when the bogus documents were worked on.   She and Mr Rooke say that Mr Swain must have accessed the computer using her user profile, but cleverly changing the BIOS clock so as to implicate her.  The allegations are set out in detail the claimants’ expanded case. 

34.	Mr Wilkinson acknowledges (at paragraphs 9.1.6 - 9.1.8 of his report) that, hypothetically, the system time and date (BIOS clock) of Mr Leonard’s computer could have been re-set so as to create a false picture as to when documents were created or modified.  Mr Wilkinson points out that it would take “a very competent user” to make such alterations to dates and times.  Mr Wilkinson’s answers dated 30 August 2005 to the claimants’ questions offer the claimants very little support.  Indeed, he rejects the claimants’ theory that the bogus HBA letter had been loaded on to Mr Leonard’s computer from a floppy disk.  He does not support the claimants’ theory as to the ease with which the BIOS clock could have been changed.  He points out that such modification leads to inconsistencies in, for example, files which sequentially record updates and append date and time accordingly.  No problem of that nature has been reported.  Mr Wilkinson’s answers to the claimants’ questions do not change the tenor of the opinion expressed by Mr Wilkinson in his report of 22 August 2005. 

35.	It is clear from Mr Wilkinson’s report, and I accept his conclusions, that a user of the “cbrown” profile modified and completed the documents which became the bogus HBA invoice and letter.  The obvious and very strong indication (eg from the Tesco web site access) is that Ms Brown using the profile “cbrown” produced the bogus invoice and letter. 

36.	Mr Brennan realistically acknowledges in his closing submissions that the claimants’ expanded case is not supported by Mr Wilkinson.  He suggests that there are areas of confusion in Mr Wilkinson’s report and questions which the claimants would have wished to explore.  I do not accept that there are any material areas of confusion on matters which needed to be expanded or clarified in oral evidence.  The claimants’ expanded case was put clearly to Mr Wilkinson who gave careful and detailed answers.  He did not support the main planks of the claimants’ recent case.  Further, and in any event, the expert evidence must be considered in the light of the factual evidence. 

37.	At best (from the claimants’ point of view) Mr Wilkinson’s evidence indicates that the steps which the claimants allege Mr Swain took might possibly have occurred.  However, I need to consider what, in the light of all the evidence, is likely to have happened.  I have considered carefully the evidence of all those who had some knowledge or claimed to have had knowledge as to Ms Brown’s and Mr Rooke’s whereabouts on 21 and 23 July 2004.

38.	I accept that on 21 July 2004 Ms Brown was given a lift to HBA’s offices in Rugby arriving at about 1030 hrs or 1100 hrs.  I do not, however, believe Ms Brown’s story that she left those offices about 20-30 minutes later and drove Mr Rooke’s car to Listers garage in Coventry, and then did not return to HBA’s offices.  I believe that she was at HBA’s offices during that day.  There is clear evidence of Ms Brown’s use of Mr Leonard’s computer throughout 21 July 2004.  On that machine, Ms Brown created a document containing the claimants’ (not HBA’s) Grievance Procedure.  This was saved at 1145 hrs on 21 July.  It was used by Mr Rooke in his discussions that day with Mr Swain.  HBA did not have any such document of their own.  It is most unlikely that anyone working for HBA would have had any dealings with such a document.  A fax to a Mr E Ingram (a banker) was created on Mr Leonard’s computer.  It was saved at 1217 hrs and 1332 hrs on 21 July.  Mr Rooke and Ms Brown accepted that it was a genuine fax.  It asked Mr Ingram to telephone Ms Brown at HBA’s offices.  The clear inference is that Ms Brown would be at those offices to receive that telephone call.  In an internal memorandum (which appears to be genuine) which was prepared on Mr Leonard’s computer Ms Brown records that at 1200 hrs on 21 July she faxed completed mandate forms to Mr Ingram.   Ms Brown’s evidence was that the words “1200 [hrs] CB faxes completed mandate forms to [Mr Ingram]...” means that a secretary faxed the forms.  That is an absurd attempt to explain away the obvious.   

39.	Ms Brown accepts that she typed a spreadsheet listing Oculus properties. This document was last saved at 1634 hrs on 21 July.  At 1730 hrs there was access to the Tesco website, which must have been made by Ms Brown, not Mr Rooke as Ms Brown sought to suggest.

40.	I reject Ms Brown’s attempts to explain away her involvement at HBA’s offices from mid morning until the evening of 21 July.  I have no doubt at all that she was there and that she was involved in the creation and modification of all the documents prepared under the “cbrown” user profile, including the bogus HBA invoice and letter.  I have no doubt that she did so with the full knowledge of Mr Rooke. 

41.	Ms Brown says that she did not attend at HBA’s offices on 23 July 2004, but remained at Meadow Cottage all day.  She says that Mr Hood and Mr Burke attended a meeting at Meadow Cottage over lunchtime and into the early afternoon.  Thereafter, she and Mr Rooke remained at Meadow Cottage until early evening, when Mr Hood returned at about 1900 hrs to meet Mr Rooke to go out for a meal.   I do not believe Ms Brown’s evidence on this point nor am I persuaded by the alibi evidence the claimants have called to support Mr Rooke’s and Ms Brown’s stories as to their whereabouts on 23 July.  For example, Mr Burke gave evidence that he was with Ms Brown at Meadow Cottage on 23 July 2004.  I accept that he may have been at the house with them for part of the day but, even on his evidence, it is clear that there were periods of time when Ms Brown could easily have been - and in my judgment was - at HBA’s offices in Rugby at the relevant times.  

42.	Mr Rooke and Mr Robinson accepted that Ms Brown typed up manuscript notes which Mr Robinson had made of the meeting between Mr Rooke and Mr Swain on the evening of 21 July.  Those typed notes were last saved on Mr Leonard’s computer at 1810 hrs on 23 July.  Ms Brown typed notes of a telephone call with Mr Leach; these were last saved on that machine at 1820 hrs on 23 July.  It is clear from the text of those latter notes that at least part of the document was worked on during 23 July.  At 1750 hrs on 23 July there was a successful log-in to Ms Brown’s email account at Yahoo.  This required detailed knowledge of the account and password.  It is thus quite clear, before one begins to consider the claimants’ allegations against Mr Swain, that the person most likely to have created the bogus invoice and bogus letter was Ms Brown.  

43.	Mr Swain was absent from HBA’s offices on gardening leave for most of the period from 13 to 27 July 2004.  On 21 July Mr Swain returned to work from garden leave.  Meanwhile, on 20 July 2004 Mr Rooke had arranged for the HBA and Oculus computer systems to be locked down and for specific log-in identities to be allocated to members of staff.  Mr Swain needed to know his new ID to enable him to work on his computer.  Mr Rooke’s evidence is that he gave this to Mr Swain at about 11.20 hrs.  Mr Swain’s evidence is that Mr Rooke did not give him the ID until about 1500 hrs that day.  I do not believe Mr Rooke’s evidence on this.  I do believe Mr Swain’s evidence, which is supported by the contemporaneous notes made by Mr Robinson.  Because log in details and passwords had been changed (on Mr Rooke’s instruction) Mr Swain was unable to log in to a computer at Rugby during the morning of 21 July.  Mr Swain left at about 1130 hrs and went home.  It is clear from the evidence that he was not given access to a computer at HBA’s offices until he returned from home during the afternoon that day.  Mr Swain had no access to HBA’s computers from home.  He could not, therefore, have been involved with the bogus documents before the afternoon at the latest, unless the claimants’ theory as to the changing of the BIOS clock had any credibility.   

44.	I accept Mr Ticciati’s submission that as, during the period 13 to 27 July 2004, Mr Swain attended at HBA’s offices on only 21 July 2004, it would have been extraordinary for him to have changed the BIOS clock to 21 July, of all days.  The bogus invoice purports to seek payment for work completed in November 2003.  As HBA’s relationship with Mr Rooke did not begin until March 2004, it is unlikely that Mr Swain would have created a document which referred to work carried out before that relationship began.  

45.	It is fantasy to suggest that Mr Swain could have known sufficient about the claimants’ claims against NU and the sort of evidence that the claimants felt they needed to pursue those claims to have enabled him to prepare such documents.  

46.	I do not accept the claimants’ suggestion that HBA caused their computers, including the servers, to be wiped of data in the late summer of 2004 to obliterate the evidence the claimants say would exist (though this is not supported by Mr Wilkinson) to prove that BIOS clock had been changed. 

47.	The claimants’ efforts to explain away the overwhelming evidence of Ms Brown’s involvement in the creation of the bogus documents are ludicrous and incredible.  It is absurd for the claimants to suggest that Mr Swain created the bogus documents.  Mr Swain played no part in the production of the bogus HBA invoice and letter.  Of that I have no doubt.  The claimants’ serious slur on Mr Swain’s character is wholly unfounded.  I have no doubt at all that the bogus HBA letter and HBA invoice were created by Ms Brown on Mr Leonard’s computer and that Mr Rooke knew full well that she had done so.   

48.	I deal later with the question why Ms Brown created these bogus documents.  The creation of the bogus HBA invoice and letter illustrate the willingness of Mr Rooke and Ms Brown to create documents when they thought it might suit them to do so.  

49.	By August 2004, those responsible for HBA and Oculus had resolved their difficulties.  Mr Leonard says that they severed relations with the claimants.  Mr Rooke, however, says he terminated HBA’s services in relation to architectural work on Meadow Cottage and on the residential development at Kenilworth House.  This is a peripheral issue, but one which is telling so far as credibility of witnesses is concerned.  Two documents are available to assist.  One is a letter dated 16 August 2004 from Mr Robinson to Mr Rooke.  This records that, at a meeting on 11 August 2004, HBA “verbally withdrew their services on your scheme” and he referred to the need for the appointment of a new architect.  This is found on HBA’s file and appears to be genuine.  The other is a supposed letter dated 11 August 2004 from Mr Rooke to Mr Leonard.  It refers to a meeting on that day and states: 
“...It was agreed in today’s meeting that our company should withdraw its business consultancy services with immediate effect... 
We cannot afford to be associated with your companies any further. 
We therefore have no option but to place our business relationship back on a straight business footing ie purely as a supplier for architectural services, and as per our engagement documentation drawn up by Eversheds, we urge you to get on with the architectural drawings on our two projects and trust that there will be no further delays...”

50.	However, the content of that letter is inconsistent with what in fact was happening.  The claimants were not requiring HBA to work on any projects.  I do not believe Mr Rooke’s evidence that the claimants were holding HBA to their contract.  The relationship had come to an end.   

51.	That letter is not found on HBA’s files.  It is inconsistent with Mr Robinson’s letter of 16 August 2004.  I believe Mr Leonard’s evidence that he had not seen Mr Rooke’s supposed letter until these proceedings.  It is likely that a professional person such as Mr Leonard, on receipt of a letter such as the supposed letter of 11 August, would have prepared a careful response.  None was sent and, in fact, HBA did no further work for Mr Rooke or his companies

52.	It is, in my judgment, likely that the 11 August 2004 letter is bogus.

The Identity of the Insured

53.	The Insured was shown on both the Engineering Policy as Micro Design Group (Ince House Ltd.) and on the Office Policy as Micro Design Group (Ince) House Ltd.  Neither entity exists.  The claimants do not seek rectification of the policies.  Their case is first, that, upon a true construction, the first and/or second claimants were a party to both policies: correction of a mistake as to the name of a party to a contract is a matter of construction, not rectification.  In any event, Brooksure notified NU by telephone on 16 April 2003 as to the corporate identities to be insured under both policies.   Further, they say that NU knew clearly (because their surveyor, Mr Knight, had visited the claimants’ premises) which companies were to be insured.  NU dispute the claimants’ construction of the policies and they deny the allegations concerning the telephone notification and information given to Mr Knight.

54.	Mr Brennan relies on extracts from Lewison: The Interpretation of Contracts (3rd edition, 2004) at 9.01, in support of his submission that the court is entitled to correct a mistake in an agreement reduced to writing if (a) it is clear that a mistake has been made on the face of the instrument and (b) it is clear what correction ought to be made to cure that mistake.  That principle, Mr Brennan submits, applies to the identity of the party or parties to the contract with NU.  He submits that the court is entitled to have regard to extrinsic evidence, including parol evidence, to ascertain the identity of a party to a contract.  Mr Brennan also relies on Fung Ping Shun -v- Tong Shan [1918] AC 403 for guidance as to the determination of such questions.  The Privy council referred to the “indicia of identity” found in one of the relevant documents.   He also refers to F Goldsmith (Sicklesmere) Ltd -v- Baxter [1968] 1 Ch 85 in which Stamp J was concerned with a conveyance to a non-existent limited company. 

55.	Mr Brennan submits that the following matters are “indicia of identity” of the insured in this case.

56.	So far as the Engineering Policy is concerned, he says that the identity of the insured was evident from the policy itself: the insured named was “Micro Design Group (Ince House Ltd)”; the insured’s address was “Ince House, 60 Kenilworth Road, Leamington Spa, Warwickshire CV32 6JY”; the insured’s business was “Mechanical Electrical Consultants”; the insured’s broker was “Brooksure Insurance” and the insured obtained insurance for goods, namely, “Computer equipment owned by the insured” situated at “Ince House, 60 Kenilworth Road”.  Mr Brennan cites the same factors in relation to the Office Policy, and in addition refers to the information in the policy as to the brokers’; that the insured obtained insurance relating, in particular, to property damage and contents (save in so far as the same comprises computer equipment and business records) relating to certain premises namely Ince House; Micro Design Consultancy (Pension Scheme) was named as an interested party.  Further, the quotations for the Office Policy identified the proposer as “Micro Design Group”

57.	Mr Brennan relies on the following matters where NU do not challenge the evidence.  I see no reason to doubt it.  Neither Micro Design Group (Ince House Ltd) nor Micro Design Group (Ince) House Ltd exists.  The Micro Design Group comprised a holding company and three subsidiary companies.  The holding company was Micro Design Group Ltd (the first claimant).  The subsidiary companies were Micro Design Consultancy Ltd (the second claimant), Micro Design Consultants Ltd and Micro Design Systems Ltd.  Ince House Ltd was a shell company ear-marked by Mr Rooke for property development projects in which the Micro Design Group was or became concerned.  Micro Design Group Ltd and Micro Design Consultancy Ltd both traded from and occupied Ince House, 60 Kenilworth Road.  Brooksure Insurance acted for both Micro Design Group Ltd and Micro Design Consultancy Ltd.  The style ‘Micro Design Group’ was used by all the companies within the group including Micro Design Group Ltd and Micro Design Consultancy Ltd (eg correspondence with Mr Robbie). No companies occupied Ince House, 60 Kenilworth Road or indeed any other property within the post code for that address other than the companies within the Micro Design Group and Ince House Ltd.  No companies with a similar name (ie a derivative of Micro Design) had a registered address at 60 Kenilworth Road other than Micro Design Group Ltd or Micro Design Consultancy Ltd or another company within the Micro Design Group. The registered address of Micro Design Group Ltd and Micro Design Consultancy Ltd was Kenilworth House, a property joined to Ince House Ltd and comprised within the same site.  “Micro Design Group (Ince House Ltd)” and “Micro Design Group (Ince) House Ltd” both look to be an amalgam of Micro Design Group on one hand and Ince House Ltd on the other.

58.	Mr Brennan notes that, so far as Micro Design Group Ltd is concerned, it owned subsidiary companies which carried out work both as mechanical and electrical consultants and consultants.  It owned most of the assets held within the group and, in particular, the computer equipment insured under the Engineering Policy.  Mr Brennan relies on the fact that NU was content for judgment to be entered against it in relation to the action brought in the first instance by Micro Design Group Ltd. Further, in that context, Norwich Union’s senior solicitor expressed himself to be of the view that “the insured is Micro Design Group” on more than one occasion.  NU sought to effect payment of the interim sum by cheque made payable to Micro Design Group.  In the event, the payment was made by BACS transfer into the Micro Design Consultancy Ltd.  

59.	So far as Micro Design Consultancy Ltd is concerned, Mr Brennan submits that the nature of its business was accurately, if loosely, described as “consultants” in the Office Policy. Micro Design Consultancy (Pension Scheme) was named as an interested party under the Office Policy.  The quotation provided by the engineering department of Norwich Union was addressed to Micro Design Consultants Ltd. 

60.	The claimants’ case is that NU plainly intended to insure the companies within the Micro Design Group plus Ince House Limited, including the two claimants in particular.  Mr Brennan relies on the matters to which I have referred and (1) that this was the very interpretation placed on the Engineering Policy by NU’s own senior solicitor and (2) that NU abandoned an earlier case that it would not have agreed to insure more than one company. 

61.	I reject the claimants’ case on the construction of the policies.  I am simply unable to accept that, on a true construction, either “Micro Design Group (Ince House Limited)” or “Micro Design Group (Ince) House Ltd,” the names shown on the policies, can possibly be construed to have the meaning, so far as the Office Policy is concerned, “Micro Design Group Limited, Micro Design Consultancy Limited, Micro Design Consultants Limited, Micro Design Systems Limited, Ince House Limited and Micro Design Consultancy Limited Pension Scheme.” or, so far as the Engineering Policy is concerned, to have the same meaning, save that the name “Micro Design Consultancy Limited Pension Scheme” is not applicable to the Engineering Policy.  One is not dealing here with a small difference in a name.  The submission that these two names were understood by both sides to mean a reference to all the individual companies and that NU intended to insure all these companies is not supported by the evidence.  The detail cited by Mr Brennan does not lead to that conclusion.  

62.	Mr Brennan does not dispute Mr Ticciati’s submission that, following Wickman Machine Tool Sales Ltd -v- L Schuler AG [1974] AC 235, events subsequent to the issue of the policies cannot be relied on as an aid to construction.  It follows that reliance NU’s subsequent actions and interpretation are of no assistance.  

63.	As the claimants are unsuccessful as to the construction of the policies, I must consider their alternative claims.  I deal first with the allegation that, on 16 April 2003, Mr Brookes telephoned NU and told them that the name of the insured should be amended to include all the companies within the Micro Design Group (including in particular the two claimants) and Ince House Limited.  The parties are agreed that, if that call were made, an estoppel will arise. 

64.	Mr Rooke contacted Mr Brookes of Brooksure in December 2002.  They met on 3 March 2003.  At that meeting, Mr Rooke asked Mr Brookes to arrange some motor vehicle insurance.  He told Mr Brookes that he was experiencing difficulty in obtaining insurance cover for computer equipment at the Kenilworth Road buildings.  (It is significant, in the context of the material non-disclosure defence, which I deal with later, that Mr Rooke told Mr Brookes that the equipment was already insured under an office insurance policy but which was due to expire.)  He asked Mr Brookes for a quotation for renewal of that policy.  Mr Rooke provided Mr Brookes with details of the equipment to be insured and a copy of the St Paul’s policy. 

65.	On 3 March 2003 Mr Brookes telephoned NU to obtain a quotation for the claimants’ computer equipment.  He spoke to Mr Tennant in the Birmingham office.  He gave the post code for the Kenilworth address.  The following day he received by fax a quotation for insurance of the computer equipment.  The subject of the fax was shown as Micro Design Consultants Ltd and the company named on the quotation was Micro Design Consultants.  The quotation was subject to receipt of a completed proposal form not showing any adverse features, and a pre-inception survey.  On 31 March 2003 Mr Brookes faxed Mr Tennant asking that he hold cover, in the name of Micro Design Group (Ince House Limited).  That was the description used by NU in their correspondence with Brooksure, save as I have set out above. 

66.	There is an issue as to when Brooksure received the Engineering Policy and the Office Policy from NU.  Mr Brookes says he received these under cover of NU’s letter of 31 March 2003.  Mr Rooke says that he received them from Mr Brookes at the end of March 2003.  NU’s evidence is that the Engineering Policy was sent to Brooksure on 26 April and the Office Policy was not sent out until the beginning of May 2003.  

67.	The claimants’ case is that they received the Engineering and Office Policy documents at the end of March 2003.  Mr Rooke’s evidence is that having received the Engineering Policy, he telephoned Mr Brookes on 15 April to draw his attention to errors on the policy.  He told Mr Brookes that he wanted cover for Micro Design Group Limited and its subsidiaries namely Micro Design Consultancy Limited, Micro Design Consultants Limited, Micro Design Systems Limited and he also wanted cover for Ince House Limited and Micro Design Consultancy Limited Pension Scheme (but as to the latter, as to part only of the buildings).  He says that Mr Brookes told him that he would immediately contact NU; he subsequently told Mr Rooke that he had done so and that the necessary changes had been effected.  Mr Rooke has produced an itemised telephone bill which shows that a call was made, lasting just over nine minutes, from Ince House to Brooksure at just gone midday on 15 April 2003.  

68.	Mr Brookes agrees that he and Mr Rooke had that conversation.  His evidence is that Mr Rooke telephoned him to explain that the names insured under the Engineering Policy needed to be changed.  He says that Mr Rooke gave him the full name and company number for each of the five companies for which Mr Rooke required cover.  He claims to have made notes at the time but these are not available.  Mr Brookes says he prepared a draft letter to NU, dated 16 April 2003, setting out the changes required, and has produced that draft letter.  However, in the event he did not fax that letter to NU.  Instead, he says, he telephoned NU to inform them that the name of the insured under the Engineering Policy needed to be changed, as Mr Rooke had explained to him in detail.  He says someone at NU (he does not recall who) told him the name could not be changed because what was proposed was too long to fit the name field of NU’s computer database, but that NU would make a handwritten note of the name change.  Mr Brookes has produced what he says is a contemporaneous handwritten note of that telephone conversation. 

69.	In fact, as I have explained, the policies were handled by two different offices.  Mr Tennant dealt with the Engineering Policy at NU’s Birmingham office.  Mr Dalal dealt with the Office Policy at NU’s Leicester office.  Neither Mr Tennant nor Mr Dalal had any recollection of the telephone conversation Mr Brookes describes.  Neither made any note on NU’s records of the change of name of the insured under either policy. 

70.	I found both Mr Tennant and Mr Dalal to be credible witnesses.  I accept Mr Tennant’s evidence that, had such information been given to him by telephone, he would have required written confirmation.  Change of name is not a formality.  He would have wanted to know that the named insured companies had an insurable interest in the property being insured.  He would have wanted an explanation as to why the change of name was requested.  If satisfied, he would then have had to arrange for the policy documentation to be reissued.  None of that happened.  I accept that had a broker informed Mr Tennant of a matter as important as the correct identity of an insured, he would have wanted to know more, to enable him to consider the risk.  Further, NU need to know the identity of an insured in order to ascertain whether there was any match with a previous or existing quotation or policy.  No-one at NU arranged for that step to be taken.  Had Mr Brookes notified Mr Tennant as Mr Brookes suggests, Mr Tennant would have asked for confirmation in writing from Mr Brookes.  None was received.   If Mr Dalal had received such a call from Mr Brookes, he would have made a note on the electronic “blackboard”.  No such note was made. I accept Mr Dalal’s evidence that, had he been telephoned and told of a desire to record various company names on a policy, he would have referred it to a senior broker.  In fact, he did not contact anyone.

71.	Mr Tennant fairly accepted that it is possible that noting of information and reissue of policy documents were overlooked, but I do not believe that is what happened. It is possible that either Mr Tennant or Mr Dalal forgot to make a note when Mr Brookes called, but in my judgment it is very unlikely that both would have omitted to do so.  

72.	Mr Brookes’ evidence does not have the ring of truth.  He was uncertain when giving his evidence as to whether he had made one telephone call or two to NU on 16 April 2003, and he could not remember to whom he spoke.  That is puzzling, because he had Mr Tennant’s direct dial number.  Curiously  no file note recording what Mr Rooke is alleged to have told Mr Brookes about the companies is available.  As can be seen, the detail of what is said to have been given is complex.  It is inconceivable that Mr Brookes would have remembered the detailed names of the various companies and company numbers and not needed to write them down.  His explanation for not having sent the letter he says he had drafted is unconvincing.  Given the complex and detailed information which he says he gave to NU, it is extraordinary that the information was not faxed.  Not only were there a number of companies with similar but slightly different names, the pension fund was said to want more limited cover.  It is very unlikely that Mr Brookes would not have taken care to reduce such complex and detailed information to writing.  NU in subsequent correspondence referred to Micro Design Group (Ince House) Limited, yet Mr Brookes did not query the continued use of a name which, on his evidence, he had specifically asked to be changed. 

73.	Mr Brookes claims to have made one manuscript note, then photocopied it and placed one on his Engineering Policy file and one on the Office Policy file.  If information had been given to both the Birmingham and Leicester offices of NU, such information must (on the claimants’ case) have been slightly different, given that one policy was to include limited cover for the pension fund and the other was not.  It follows that one file note, with precisely the same information, would not have sufficed for both files. There is not even a manuscript note to record the differences between the insureds and the scope of cover. 

74.	Mr Brookes demonstrated his willingness to act in a questionable way on behalf of Mr Rooke’s companies.  On 6 February 2004 NU declined to renew the Engineering Policy.  Mr Brookes contacted a different office in NU and tried to insure the claimants’ computers under the Office Policy without informing that department of NU of the other office’s refusal to renew cover under the Engineering Policy.  Behaviour of that sort inevitably leads the court to question the evidence given by a witness, and here I have little confidence in Mr Brookes’ evidence.  

75.	I do not believe that Mr Brookes contacted NU by telephone on 16 April 2003 to correct the names of the insured under the two policies, as he alleges. 

76.	An additional factor, however, which supports my inability to believe the evidence of Mr Rooke and Mr Brookes on this point, is the question when Mr Brookes is likely actually to have received the Engineering Policy and sent it to Mr Rooke - the event said to have triggered the alleged telephone calls concerning the identity of the insured.  I accept Mr Tennant’s evidence that although the NU covering letter is dated 31 March 2003, the letter and policy were not sent out to Mr Brookes until 26 April 2003.  It was only shortly before trial that NU appreciated that the Engineering Policy had probably been sent to Mr Brookes on 26 April 2003 and not 31 March.  I accept that there was a delay - as there generally was - between the date when agreement was reached with the broker and the date on which the policy was sent to the broker.  The delay is explained by the need for the various documents making up the policy to be assembled before despatch.  Mr Brookes’ records show that he forwarded the Office Policy to Mr Rooke on 1 May 2003.  One can understand why, from the face of the documents alone, Mr Rooke may have assumed that he probably received the Engineering Policy at the end of March 2003, but I accept that he did not receive this until late April.

77.	It follows that Mr Rooke’s story about having telephoned Mr Brookes on 15 April 2003 to correct mistakes as to the names of the insured simply cannot be true.

78.	The claimants also rely on a discussion which, they claim, Mr Rooke had with Mr Knight when the latter visited Kenilworth Road on 15 April 2003 to assess the security on site.  Mr Knight made that visit after the date on which the policies are said to have come into effect, so this is another area of evidence which is not admissible in relation to the construction of the policies.  In any event, I do not accept Mr Rooke’s evidence on this point.  Mr Rooke’s evidence (given in chief, and not referred to in any of his witness statements) is that when he and Mr Knight met, he illustrated to Mr Knight, on a white board, the structure of his companies.  I found Mr Knight to be a credible witness.  I accept Mr Knight’s evidence that Mr Rooke made no such explanation of his companies.  Mr Knight and Mr Rooke discussed the nature of Mr Rooke’s business in broad terms, the security of the premises and the equipment being used.  Mr Rooke then took Mr Knight on a guided tour of the building.  Mr Knight made his report, identifying some improvements he would require.  As Mr Knight he commented, he thought he would have recalled someone going into such detail.  It is ludicrous to suggest, as Mr Rooke now does, that Mr Knight was so interested in Mr Rooke’s business empire that Mr Rooke explained to him the various companies involved and the corporate structures. 

79.	I am not persuaded that NU were informed, whether directly by Mr Brookes or indirectly through Mr Knight of the identity of the companies which Mr Rooke wished to insure. 

80.	Mr Brennan raises the point that NU have proceeded on the premise that contracts of insurance were in existence.  As the named insured is, in each case, a non-existent entity, NU’s position is anomalous: the only consequence can be that NU did enter into policies with the various companies as the claimants contend.  In my judgment, the starting point is whether these claimants have demonstrated that they entered into the contracts with NU.  For the detailed reasons I have given, they have failed to do so.  The anomalous consequence to which Mr Brennan refers does not alter that conclusion.

81.	In all the circumstances, the claimants have failed to prove that they entered into either the Engineering Policy or the Office Policy, and have failed to prove that NU are estopped from contending otherwise.  Accordingly, the claimants are not entitled to an indemnity under either policy.  It follows that NU is not in breach of contract by refusing to indemnify the claimants, and the claimants’ claims therefore fail.

82.	I deal with the rest of the issues as these have been dealt with at length at trial and in case it assists. 

Would NU have been entitled to avoid the Engineering Policy on the basis of material non-disclosure?

83.	Prior to the involvement of Mr Brookes and NU, Mr Rooke had various policies of insurance with St Paul Insurance.  We are concerned here with an office policy for the period beginning 4 October 2002, which covered equipment including computers.

84.	NU’s case is that there was a valid policy in force between the claimants and St Paul and that St Paul cancelled that policy in March 2003 at Heartland’s request by reason of non-payment by the claimants of the premium.  The claimants’ case is that Heartland had no authority to renew the St Paul’s policy: the premium was too high, incorrect property and contents had been included in the scope of the policy and the policy was unsuitable for the claimants’ needs.  The claimants deny that the policy was cancelled. 

85.	It is common ground that no disclosure was made to NU to the effect that the St Paul’s policy had been cancelled.  I deal in the next section with NU’s case, namely that, if that had been disclosed, they would have declined cover.  

86.	The St Paul’s policy in question was due for renewal in October 2002.  On 10 September 2002, Mr Weetman of Heartland and Mr Rooke met to discuss various matters including renewal.  Mr Weetman’s note of that meeting indicates that Mr Rooke was keen to stay with St Paul’s.  They discussed the level of cover.  Over the next couple of weeks St Paul quoted various premiums.  Mr Weetman and Mr Rooke met on 1 October 2002.  Mr Weetman says that at that meeting Mr Rooke gave him clear instructions  to renew the policy.  Mr Rooke says that he was concerned that the premium was so high and asked for clarification and a breakdown of the premium.  Mr Rooke said he made it clear that he was not willing to renew with St Paul on the terms proposed.  He asked Mr Weetman to obtain alternative quotes.  There are no notes of that meeting to assist me.  Mr Rooke has made five witness statements in these proceedings.  His evidence as to his understanding of the St Paul’s policy has changed as the action has progressed.  In his first statement, he said that between about 1997 and March 2003 the building and contents insurance for the Micro Design Group had been with St Paul Insurance Company suggesting that he accepted the existence of a policy taking effect from October 2002.  Mr Brookes’ evidence was that, at his initial meeting with Mr Rooke on 3 March 2003, Mr Rooke said that his companies were already insured under a policy which was due to expire.  Mr Rooke now says that no such policy was put in place.  

87.	In terms of credibility, I prefer the evidence of Mr Weetman to that of Mr Rooke.  Further, Mr Weetman’s account is supported by the content of subsequent correspondence.  It is clear from the subsequent, genuine correspondence that Heartland had renewed the St Paul policy and that Mr Rooke was fully aware of that.  He knew (as his earlier witness statements acknowledge) that the St Paul’s policy had been renewed from 2 October 2002.   On 4 October 2002 Heartland sent Micro Design Group Limited an invoice for premium of £12,435.15 (including tax) for a commercial combined policy with a renewal date of 4 October 2002.  Meanwhile, and unusually, Heartland had themselves paid to St Paul the premium due on the policy.  They began to chase Mr Rooke for reimbursement.   Mr Rooke queried a number of aspects of the cover which Heartland hand arranged. By letter 13 January 2003 Mr Rooke wrote to Heartland to say that the schedule of items involved was “still incorrect with several items repeated” so that the premium Heartland was chasing was incorrect.  Mr Stuart Turner wrote to Mr Rooke on 5 February 2003, stating that if any items included in the cover required amendment, either in value or as to description, then he should let Mr  Turner know, and Mr Turner would amend the cover accordingly.  Mr Rooke did not notify Mr Stuart Turner of any corrections. 

88.	Mr Turner and Ms Greig of St Paul spoke by telephone on 6 February 2003 and discussed whether, if Heartland were unable to secure payment from Mr Rooke’s companies, St Paul would cancel the policy ab initio.  By e-mail dated 17 February Ms Greig indicated that they would prefer not to cancel, noting that a consequence would be that the insured company/companies would have been trading for four months without Employer’s Liability insurance. 

89.	By letter of 17 February 2003, Mr Weetman wrote to Mr Rooke requiring payment by 21 February and warning that, if payment were not made, insurers would be cancelling the policy ab initio.  He reminded Mr Rooke of the requirement for Employer’s Liability insurance.  There was no reply from Mr Rooke.  By letter dated 25 February 2003, Mr Weetman wrote to say that the policy had been cancelled with effect from 4 October 2002.  St Paul repaid Heartland in full in respect of the premiums they had been paid. 

90.	I found Mr Weetman to be a credible witness.  I accept that, at the meeting on 1 October 2002, Mr Rooke asked him to renew the St. Paul policy, and Mr Weetman did so.  I accept that Mr Rooke felt that the renewal premium was high and I also accept that there was some muddle as to the scope of the contents to be covered by the St Paul policy.  Mr Rooke appears to have used the muddle over the contents as an excuse not to pay Heartland.  Instead of resolving what may have been very minor difficulties, he chose instead to proceed with a different broker.   

91.	I am not persuaded that Heartland were not authorised to effect the policy with St Paul on behalf of Mr Rooke’s companies.  

92.	Mr Rooke relies on a letter purportedly from Mr Ian Turner of Leonard Wilson & Co, dated 10 February 2003, addressed to Mr Weetman.  It is an aggressive letter.  Towards the end Mr Ian Turner states:
“As already advised our client has not renewed, and will not be renewing, any insurance policies with your firm.  All enforceable policies are paid in full up to this date allowing a clean break.  For your information, upon our advice, our client has already been in negotiations with an alternative broker who is able to meet our clients’ insurance needs.”

93.	Mr Weetman and Mr Stuart Turner say that they never received that letter.  Certainly, there is no reply.  I accept Mr Weetman’s evidence that his company had never received such a scathing or sarcastic letter, and it would certainly have come to his attention if a letter of that sort had been received.  It is, in my judgment, unlikely that Heartland would not have replied to such a letter if they had received it. 

94.	Mr Rooke claims to have sent a fax to Mr Weetman, supposedly dated 26 February 2003, in which he says:
“You will surely recall our telephone conversation advising you that we will not be renewing our policy with Heartland (hence the return of your invoice) as we have not received any satisfactory re-quotes and have lost complete confidence in you as a broker.”

95.	Ms Brown claims to have typed this, then faxed it to Heartlands.  Heartlands say they never received it.  Ms Brown has, recently, produced what she says is the confirmation that the 26 February 2003 fax was sent to Heartland. 

96.	I do not believe that the letter purportedly from Mr Ian Turner of 10 February 2003 or Mr Rooke’s fax of 26 February 2003 or the fax history report are genuine documents. There was no reason why Heartland should have suppressed these documents if they had received them.  The natural response to the letter and the fax would have been to protest that, in fact, a policy was in place and the premium had been paid.   It is quite consistent with Mr Rooke’s and Ms Brown’s approach for either of them to have created documents which, on reflection and after the event, they considered might bolster their case.  It is not to Mr Turner’s credit that he maintains that the letter of 10 February is one he wrote at the time.  I do not believe that. 

97.	By February 2003 the policy was in place.  It is clear that St Paul chose to treat the policy as cancelled ab initio.  Mr Brennan submits that, given the wording of the policy, St Paul had no right to do so.  He relies on clause 15 of the St Paul’s policy which provides as follows:
“15.	Cancellation
This insurance or any cover included herein may be cancelled at any time by [St Paul] by giving at least thirty days notice by Recorded Delivery letter to the Named Insured at the last known address.  The Named Insured shall be entitled to the return of a proportionate part of the premium corresponding to the unexpired Period of Insurance.”

98.	St Paul did not give notice as required by the clause.

99.	Mr Brennan submits that, to succeed in its case, NU would have to prove that the St Paul policy was indeed cancelled, and not simply, for example, that Heartland had told the claimants that the policy was cancelled.  In circumstances where St Paul did not have the right to terminate, Mr Brennan submits there cannot have been termination.  This is not realistic.  The policy had been renewed by Heartland on behalf of Mr Rooke’s companies.  The claimants do not suggest that it continued to exist after February or March 2003.  It was, as a matter of fact, cancelled by St Paul. Whether St Paul were entitled to cancel is irrelevant.  The fact is they did cancel. 

100.	In summary, therefore, there was a cancellation of the St Paul policy and Mr Rooke had been warned that this would happen if he did not pay the premium. 

Inducement/Causation

101.	What would NU have done if the claimants had disclosed to NU that the St Paul’s policy had been cancelled?  The claimants do not accept that this was a material factor.  Their case is that NU would have entered into the same policies on the same terms if it had been known that there had been such cancellation. 

102.	Mr Harris gave evidence on the matter.  He confirmed that whether or not to provide insurance was ultimately a commercial judgment.  He acknowledged that the claimants could demonstrate a track record of paying premiums in lump sums and would have been able to demonstrate a bona fide dispute as to the St Paul’s policy, and that the impression given was that the claimants’ business was well run.  He accepted that the comment made as to the professionalism of Mr Rooke’s companies was key to his decision to agree cover.  They took security seriously.

103.	Understandably, Mr Brennan put to Mr Harris the positive features of the claimants’ case and Mr Ticciati put the negative features weighing against the claimants.  I asked Mr Harris to consider both positive and negative factors relevant to a decision, at that period, whether to offer cover to the claimants.  Mr Harris seemed to me to be a very fair witness.  I accept his evidence that, if all relevant information - both positive and negative factors (including the fact of cancellation of the St Paul’s policy) - had been available to him, NU would not have taken on the claimants.  He said that, at the time, business was growing phenomenally quickly and NU would have had no reason to take on the risk.  His evidence, namely  that NU would simply have declined or offered no quotation for any risk with unattractive points is understandable, and I accept it.

104.	In all the circumstances I accept that, if there had been disclosure of the fact that a previous policy had been cancelled by reason of non-payment of premium, NU would probably have declined to accept the risk.  

The claimants’ liability to ACS Wade Ltd

105.	The claimants’ case is that they engaged ACS Wade Ltd to reconfigure drawings of the Kenilworth Road buildings and are liable to pay them £7,900.  They require NU to indemnify them in respect of that sum.  NU’s case is that this is a fraudulent claim.  NU accept that Mr Moffat scanned drawings.  Their case is that ACS Wade did not carry out the work of reconfiguring the scanned drawings and the claimants have no liability to pay them £7,900.

106.	I have explained already the claimants’ wish to make a fresh application for planning permission.  They were aware by early 2004 that this was likely to be required even though formal confirmation was not received from the local authority until March 2004.  

107.	ACS Wade are heating ventilation and dust and fume extraction specialists.  They were undertaking work on the development of the Kenilworth Road site, including the design of ventilation and air conditioning and their electronic control systems.  Mr Edge immediately offered his assistance.  He and Mr Rooke agreed that Mr McKeith of ACS Wade would assist.  Mr McKeith attended the site on 10 and 11 November to help Mr Rooke secure the site.  Later in November 2003 Mr McKeith helped restore computer networks and back-up.  There are minor issues as to the scope and cost of Mr McKeith’s work but resolution of these inconsistencies will not assist me here.  

108.	Mr Rooke says that electronic copies of the drawings of the building were lost as a result of the burglary, as they were held on one of the servers which was stolen.  The original drawings had been received in electronic form from various members of the project design team.  However, these had been modified over time: layer upon layer of electronic 2D and 3D drawings had been added to the original electronic copies.  Mr Rooke had hard copies of the original architects drawings.  He decided to have these scanned so that he could reassemble an electronic 2D and 3D model of the building.  This became particularly urgent in early 2004 because of the need to submit a fresh planning application. 

109.	The claimants’ case is that, at a meeting on 20 January 2004, Mr Rooke asked Mr Edge urgently to reassemble the 2D drawing layers and recover the electronic blue prints.  He says that he had previously arranged for Mr Moffat to scan the hard copy drawings, which he did so at no cost to the claimant.  Mr Moffat sent the scanned drawings by email to Ms Brown on 4 February 2004.  That day Ms Brown sent a CD containing the scanned drawings to ACS Wade for cleaning.   Between 13 February and 8 March 2004, ACS reconfigured the cleaned drawings in Auto CAD format and then sent these to the claimants.  On 20 February 2004 ACS Wade are said to have raised an application for payment for work.  

110.	Meanwhile, Mr Rooke had notified NU on 24 February 2004 that ACS Wade’s charge for this would be £7,900.  Mr Robbie asked the claimants for documents to support this claim but the relevant documents were not supplied until after these proceedings had begun. 

111.	On 4 October 2004 ACS Wade are said to have raised an invoice.  This includes a claim for £7,900 plus VAT for “recovery and rescanning” of drawings.  On 30 October 2004 they are said to have raised a credit note in respect of that invoice.  On 26 November 2004 ACS Wade Ltd are said to have raised a further invoice, again including a claim for £7,900 plus VAT for “recovery and rescanning” of drawings.  Because of the good working relationship between Micro Design Group and ACS Wade, Mr Edge was said to have been content to wait until NU paid before his company was paid.  He then sent an invoice in October 2004, because NU were insisting on seeing one.  The claimants have not yet paid ACS Wade. 

112.	Mr Rooke’s evidence is that, while he was on site shortly after the burglary on 8 November 2003, Mr Edge had telephoned him.  Mr Edge had supposedly sent the second claimant a quotation for the recovery of AutoCAD drawings including the scanning of paper copy drawings, at £60 per drawing.  This predates demolition of the façade and thus the belief in early 2004 that a fresh planning application would be needed.  A further quotation is said to have been sent to the second claimant dated 9 January 2004, again for the provision of scanned drawings and modification to workable AutoCAD drawings.  The price offered was £50 per drawing.  

113.	I accept that one of the servers stolen in the burglary contained electronic versions of drawings of Ince House and Kenilworth House.  I believe that Mr Rooke considered, shortly after the burglary that he would have to recreate the models and would therefore need to scan and reconfigure drawings.  I accept that in early January 2004, there was a perceived need for reconfigured drawings to create the 2D and 3D models to enable Mr Rooke to make a fresh application for planning consent following the collapse of the façade of Ince House on 31 December 2003.  I accept that Mr Hood asked Mr Rooke for all the drawings used in the previous application for planning consent. 

114.	The defendant relies on an apparent inconsistency in the claimants’ story concerning discussions on 24 November 2003 when Mr Rooke told Mr Robbie that he did not believe there would be a problem with data restoration.  On 3 December 2003, Mr Robbie received an e-mail from Ms Brown to say that they had fully restored all their data.  Ms Brown’s evidence was that Mr McKeith worked from 24 November until 18 December 2003 on various tasks including restoring the claimants’ main computer server and reinstating lost data.  It seems to me, however, these matters preceded the demolition of the façade of Ince House on 31 December 2003 and it is likely that the consequences of that affected the claimants’ view as to what they needed to try to retrieve.  Because the planning application for residential use was to piggy back on the application for office development, it is understandable that, in early 2004, there was felt still to be a need to make a fresh application for office development, hence the need to retrieve the drawings prepared for such development

115.	Mr Ticciati submits that instead of scanning and reconfiguring the drawings, the claimants could have obtained the drawings from the architects who produced the original drawings and have given no satisfactory explanation for not having done so.  Mr Robinson explained that Mr Rooke had fallen out with both previous architects, so it is understandable that Mr Rooke would not have been able to obtain them from that source.  In any event, I accept that it is likely that those original drawings had been modified and added to by various professionals and contractors as Mr Rooke describes, and I accept that the drawings on the server probably could not have been recovered simply by reference to the original electronic versions from original architects.  It is likely therefore that there was, at one stage, a need for the hard copy drawings to be scanned and then reconfigured. 

116.	There is, therefore, a plausible basis for the claimants’ case.  However, no clear picture emerges of the claimants asking ACS Wade to do the electronic reconfiguring or of their actually doing that work and the claimants’ case is full of concerning inconsistencies.  NU doubt the authenticity of some of the documents on which the claimants rely and challenge the credibility of the oral evidence called on behalf of the claimants in relation to this matter.

117.	Mr Ticciati submits that it is puzzling that Mr Rooke should have engaged ACS Wade to do the work: they did not have an A1 scanner, and they are engineers.  I accept that a firm of engineers may well have expertise in reconfiguration of drawings and it appears that an employee at ACS Wade probably did have the necessary expertise.   

118.	The quotations offered to undertake work at £60 per drawing then at £50 per drawing.  In their statements, both Mr Rooke and Mr Edge said that the price they agreed was a fixed price of £7,900 plus VAT regardless of the number of drawings.  This is inconsistent with the quotations.  There is no documentary evidence to support the variation from the position suggested by the quotations to a fixed price of £7,900 plus VAT.  That is curious given the documents which were apparently produced. 

119.	It is said that a meeting was held on 20 January 2004 at which Mr Rooke asked Mr Edge to deal with five drawings as a matter of urgency.  This is inconsistent with Mr Hood’s evidence that a large number of drawings was urgently needed, and is inconsistent with the evidence of Mr Moffat that he had not been asked to deal with the scanning of the drawings as a matter of urgency, and had not been asked to deal with five with particular urgency.   There is no evidence that five drawings were dealt with urgently.  Indeed, the impression one gains is that matters were not tackled urgently.  Mr Moffat did the scanning on 4 February 2004.  The claimants’ case is that the CD on which Mr Moffat had stored the scanned drawings was forwarded to ACS Wade by post, under cover of a compliments slip.  The first drawing is said to have been produced by ACS Wade on 13 February 2004 and work is said to have continued until 8 March 2004.  ACS apparently submitted their application for payment of £7,900 on 20 February 2004.  It is curious that such an application was apparently made before work was, on the claimants’ case, complete.  

120.	The claimants case is that ACS Wade sent an invoice, dated 4 October 2004, for £7,900 plus VAT.  That document is said to be for “recovering and scanning of A-1 architectural drawings”, yet ACS Wade did not undertake the scanning. 

121.	There is a delay between the date of the purported 20 February 2004 application for payment and the date of the purported invoice of October 2004.  It is said that ACS Wade were initially content to wait for payment until after the claimants had been paid.  However, they then went on to submit their invoice for the work.  In my judgment none of this is inconsistent with what I consider to be Mr Rooke’s attitude to others: whether or not there were any formal arrangement with a company like ACS Wade, as to payment for services, it is likely that Mr Rooke would pay only when he considered it appropriate to do so.  If a client or supplier knows that, it is not surprising that it will not invoice for work until it is confident of being paid.  If it were not for other factors, I should not have been surprised at Mr Edge’s story that he initially prepared only an application for payment and not an invoice taking the view (whether correct or not) that he would thereby postpone liability to pay VAT until the invoice itself were prepared. 

122.	Mr Ticciati suggests that it might be said that NU had paid the claimants, thus triggering any liability on the claimants to pay ACS Wade.  That, however, in my judgment is unlikely to have had any impact at all on Mr Rooke’s view as to whether he would actually then pay a supplier. 

123.	The inconsistencies are concerning.  Further, I did not find Mr Edge to be a satisfactory witness.  He did not appear to be open and frank in his evidence to the court.  I am not persuaded by the efforts of the claimants and those called on their behalf to explain the inconsistencies in the evidence as to whether ACS Wade in fact reconfigured drawings for the claimants and as to any agreement they reached as to the cost of such work. 

124.	It was telling that Mr Robinson said that he had never been supplied with copies of the drawings which ACS Wade are said to have reconfigured.  He thought that might have been because Mr Rooke wanted to proceed with the residential development and not the office development of Kenilworth Road.  Mr Hood confirmed that the strategy shifted from office to residential development.  I accept Mr Hood’s evidence that he never saw the drawings said to have been reconfigured by ACS Wade. 

125.	The impression I have gained is that, while there was at one stage a perceived need to recreate these drawings urgently, that did not remain the case, and the likelihood is that a stage was reached when it was realised that the reconfiguration was no longer needed, after all.  However, Mr Rooke had told Mr Robbie in February 2004 that they would be making a claim for this work, and is thus likely to have decided to continue with it even though the work was not done, after all.  

126.	Mr Brennan submits that it is inconceivable that the claimants would have sought to defraud NU by reference to the bogus HBA letter and invoice when they had “the genuine articles” from ACS Wade, but that submission has no force given my conclusion that Ms Brown, with the full knowledge of Mr Rooke, created the bogus HBA invoice and letter.  It raises the question why the claimants felt the need to allege that Mr Swain had created documents which it might be thought were needed to bolster the claimants’ case.  If ACS Wade had genuinely undertaken the work the claimants say they did, there would have been no need at all for any documents from a source other than ACS Wade to support that claim.  The creation of the bogus HBA documents only reinforces the doubts I have as to whether ACS Wade did the work.  

127.	I am not persuaded on the balance of probabilities that ACS Wade actually did the reconfiguration work.  I am not persuaded that the claimants incurred a liability to ACS Wade for the work of reconfiguring A1 architectural drawings.  

Conclusion

128.	In all the circumstances, the claimants’ claims fail.   I invite submissions on the wording of an order and as to costs.