ADCOCK v CO-OPERATIVE INSURANCE SOCIETY LTD

In a reinstatement claim under a fire insurance policy, the insured must prove that the claimed demolition and rebuilding work was necessitated by the insured event. A general case that extensive damage made total demolition necessary is insufficient where the evidence does not establish damage to the particular structure claimed for. The same approach applies to claimed foundation works.

Interest under section 35A of the Supreme Court Act 1981 is discretionary as to entitlement, rate and period. The discretion should compensate the claimant for money improperly withheld, but the court may reduce the award where delay, the manner in which the claim was advanced, or the date when payment ought reasonably to have been made justify doing so. Appellate intervention requires a plainly wrong decision or a conclusion outside the generous ambit of reasonable disagreement.

The claimant appealed from a judgment of His Honour Judge Langan QC in Norwich County Court concerning the amount recoverable under a fire insurance policy. The property had been seriously damaged by fire, after which the claimant demolished and rebuilt parts of the house in altered positions.

The judge awarded further reinstatement costs and interest, but rejected claims that the fourth external wall had to be demolished and that new foundations were required. He also limited interest to eight per cent from 1 February 1993, taking account of delay and the way the claim had been pursued.

The appeal challenged those findings and the exercise of the interest discretion. The central issues were whether the additional works were proved to be necessary consequences of the fire and whether the interest award fell outside the permissible range.

1. Appeal dismissed. The Court of Appeal, comprising Lord Justice Waller and Sir Christopher Slade, upheld the lower court’s findings and order. The appellant was ordered to pay the respondent’s appeal costs, subject to detailed assessment, with those costs set off against sums awarded below.
2. The judge was entitled to reject the evidence that the building control officer had instructed, or was understood to have instructed, total demolition. The officer’s contemporaneous note indicated that the fourth wall was reasonably solid, and the claimant did not tell the loss adjuster that total demolition had been required.
3. The claimant also failed to prove that demolition of the fourth wall was necessary because of the fire. The evidence concerning general collapse, damaged brickwork and movement of the building did not establish that the fourth wall had been damaged. The photographs, the building control note and the fact that the party wall was not demolished supported the judge’s conclusion.
4. The foundation claim was properly rejected. Once total demolition had not been established, the claimant had to prove the necessity of foundations for the south and east walls which did require rebuilding. The global figure claimed included foundations for works unrelated to the fire, including the fourth wall in a different position, and did not establish the necessary loss.
5. Section 35A of the Supreme Court Act 1981 gives a broad discretion over the rate and period of interest. Interest generally compensates for money improperly withheld, but delay and the date by which payment ought to have been made may justify reducing the period or rate. Guidance from earlier authorities and practice notes may assist, including where relevant prevailing base rates.
6. The interest award was not outside the generous ambit within which reasonable disagreement was possible. Even if the judge had focused insufficiently on the date when payment ought to have been made, the Court of Appeal would have reached the same result on the evidence. Sir Christopher Slade agreed with Lord Justice Waller.

• Court of Appeal (Civil Division): appeal from Norwich County Court dismissed. The court upheld the judgment of His Honour Judge Langan QC given on 6 May 1999.
• Norwich County Court: further reinstatement costs and interest awarded, but claims concerning demolition of the fourth wall, new foundations and a longer or higher-rate interest period were rejected or limited.