Steven Antony Elliott v The Members of Lloyds Syndicate 4444 as Constituted for the 2017 Underwriting Year of Account Acting Through their Managing Agent Canopius Management Agents Limited

An insurer is liable only for insured damage occurring during the policy period and caused by the insured peril as defined by the policy. Earlier movement or damage is not brought within cover by later notification. A statement that there are no underwriting issues does not admit the occurrence, cause, timing or extent of damage. Where an insured advances one claim and fraudulently exaggerates it, the claim is treated as a whole and its honest component is unrecoverable. That rule operates alongside the fraud provisions of the Insurance Act 2015 and the policy. On the evidence, the alleged subsidence was unproved and the claim was also fraudulently exaggerated.

The claimant sought indemnity under a household policy for alleged subsidence at a listed house and its extensions during the policy period from 9 August 2017 to 8 August 2018. The property had a history of movement, earlier insurance claims and remedial works. A subsidence claim was notified in July 2018, followed by further investigations and correspondence.

The court considered whether insured subsidence damage occurred during the policy period, what damage had been notified, whether a June 2019 email was a pre-action admission, whether the claim was fraudulent under the policy and the Insurance Act 2015, and the effect of other insurance and the claimed losses. The claim was determined at first instance.

The claim was dismissed. The judge’s material conclusions were:

1. Coverage and damage. The policy responded to loss or damage occurring during the policy period and insured subsidence or ground heave as defined. Subsidence meant downward ground movement; heave was a distinct form of upward or sideways movement. The experts agreed that there was no evidence of subsidence damage to the main building during the policy period. Movement recorded at the garage was minimal before the policy period, and later measurements were inconclusive. Earlier allegations and documents showed, at most, damage which had begun before cover. Issue 2 was answered no, issue 3 did not arise, and no qualifying damage had been notified for issue 4.
2. Evidence. Applying the approach in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), the judge placed substantial weight on contemporaneous documents. The claimant’s oral evidence was found entirely unreliable unless supported unequivocally by documents.
3. Fraud. The judge applied Versloot Dredging BV and another v HDI Gerling Industrie Versicherung AG [2017] A.C. 1. A genuine claim dishonestly exaggerated is one fraudulent claim, and the honest part cannot be severed. The claimant had made one claim in 2018 and later relied on a false quotation portraying conversion works as underpinning. This engaged Condition 7 and section 12 of the Insurance Act 2015. The insurer was therefore not liable for the claim.
4. Pre-action admission. The June 2019 statement that there were no underwriting issues meant only that the insurers were not avoiding the policy. It did not admit insured damage, causation, timing or extent. The claimant still had to prove those matters, and no withdrawal application was required under CPR 14.1.
5. Subsidiary issues. If liability had been established, only nominal damages could have been awarded because the evidence did not identify the relevant damage and reasonable remedial scope. The rebuild cost was assessed at £1,615,000. The court also found relevant double insurance under the other policy. The issue of earlier third-party compensation did not require determination.
6. Procedural matters. No further order was made on the authenticity and sanctions application. A later informal application to adduce evidence was refused in substance because the trial had ended, applying the principle in Fage UK Ltd v Chobani UK Ltd [2014] F.S.R. 29. Consequential matters were left for agreement or a short hearing.