Yaqoob & Anor v Royal Insurance (UK) Ltd

Where an insurance policy covers only accidental loss and the insured bears the burden of proving that a deliberate fire was not caused by him or with his connivance, the claim fails if the evidence, properly assessed, does not discharge that burden.

An appellate court will ordinarily give substantial weight to a trial judge’s assessment of a witness. That restraint does not preserve a finding reached without resolving critical conflicts of evidence, addressing material credibility issues, or analysing necessary inferences from unchallenged forensic evidence. If a properly directed judge could reach only one conclusion, the appellate court may dismiss the claim rather than order a retrial.

The claim concerned fire damage to a restaurant and take-away insured by Royal Insurance. The fire was deliberately started at two locations using an accelerant. The evidence indicated that the perpetrator had keys, knowledge of the alarm arrangements and had contrived a break-in.

HHJ Mitchell in the Telford County Court held that the insured had established, on the balance of probabilities, that the fire had not been caused by him or with his connivance. The insurer appealed. The central issues were whether the judge had properly assessed the forensic and stock evidence, and whether the Court of Appeal should remit the matter or determine the claim itself.

1. Appeal allowed; claim dismissed. The court unanimously held that the county court judgment could not stand. The insured bore the burden of proving that the deliberate fire was not caused by him or with his connivance. A failure to discharge that burden did not amount to an affirmative finding that he had caused or connived at the fire.

2. The judge’s favourable assessment of the insured’s credibility did not cure the absence of findings on decisive evidence. The judge had not resolved the conflict between the insured’s account of normal stock levels and the evidence of the police and fire officers that there was virtually no food or drink on the premises. The latter evidence, including contemporaneous notes, should have been accepted. It supported the inference that stock had been reduced or removed in preparation for the fire.

3. The judge had also failed to analyse the necessary implications of the unchallenged forensic evidence. The perpetrator had access to keys, knew the premises and alarm arrangements, and had damaged a door to simulate forced entry. That profile substantially confined the possible perpetrators to the insured or a person acting with his connivance. There was no evidence identifying an equally likely alternative perpetrator.

4. The court accepted that appellate restraint is especially important where fraud and witness credibility are in issue. But the principle stated in Akerhielm v De Mare [1959] AC 789 depends on the trial judge having properly used the advantage of seeing and hearing the witnesses. Here the omissions vitiated the balancing exercise.

5. A retrial would serve no purpose. On the material evidence, a properly directed judge could only conclude that the insured had not proved that the fire was unconnected with him or his connivance. The claim was therefore dismissed.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 885, the insurer’s appeal was allowed and the claim was dismissed.
• Telford County Court (HHJ Mitchell): On 30 September 2005, judgment was entered for the claimant on the basis that he had proved that the fire was not caused by him or with his connivance.