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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ashfaq v International Insurance Company of Hannover Plc [2017] EWCA Civ 357 (12 May 2017) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2017/357.html Cite as: [2017] EWCA Civ 357

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
LEEDS DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
HIS HONOUR JUDGE BEHRENS
LOWER COURT NUMBER: B50LS710

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/05/2017

Lord Justice Flaux:

Introduction

1. The Appellant (to whom I will refer as "the insured") appeals with the permission of Jackson LJ from the judgment dated 30 November 2015 of His Honour Judge Behrens in the Technology and Construction Court in Leeds, whereby the judge entered summary judgment in favour of the Respondent (to which I will refer as "the insurer") dismissing the insured's claim for an indemnity under the Residential Let Property Insurance Policy issued by the insurer to the insured, following a fire at a property in Huddersfield owned by the insured. The judge also ordered the insured to repay interim payments made by the insurers under the policy in the sum of £41,303.

The factual background

2. The insured was the owner of a residential property at 9 Inglewood Avenue, Huddersfield. The property was let out to students. On 30 January 2012, the insured made an application through his insurance brokers, Total Insurance Solutions Ltd ("the brokers"), for a Residential Let Property Owners insurance policy with Gresham Underwriting Limited ("Gresham"), which held a binding authority to underwrite such insurance business on behalf of the insurers. The brokers completed an online proposal form on behalf of the insured which included a Statement of Facts. The online proposal form when completed stated that "The client has been made aware of the content of ALL of the Statement of Facts", and that "the client AGREES to the facts". The proposal form also stated that the "Occupancy Status" of the property was "Students".
3. The Statement of Facts, so far as relevant, provided as follows:

"The quotation and any subsequently offered insurance are subject to compliance with ALL the following statements (except where otherwise agreed in writing by Underwriters)

This Statement of Facts will form the basis of any contract entered into with Insurers

…

You or any joint or co-insured have never… been convicted, or have any prosecutions pending, in respect of any offence other than motoring offences".

4. On 1 February 2012, Gresham provided a quotation on the basis of that proposal form and Statement of Facts, which was accepted. Gresham then issued the Residential Let Property Insurance Policy on behalf of the insurers, providing cover from 1 February 2012 to 31 January 2013. In so far as relevant, the Policy provided as follows:

"The Insured carrying on the Business described herein and no other for the purpose of this insurance and having paid or agreed to pay the premium as consideration for such insurance during the period stated in the Schedule or any subsequent period stated in the Schedule for which the Insurers shall have accepted the premium required for this Policy.

The Insurers and the Insured agree that:

This Policy, the Schedule […] and any Endorsement shall be considered one document and any word or expression to which a specific meaning has been attached shall bear such meaning wherever it appears

The proposal or any information supplied by the Insured shall be incorporated in the contract

…

The Insurers will provide the insurance described in this Policy subject to the terms and conditions specified herein."

5. The "Business" was defined in the Policy as follows:

"That of a buildings owner where a minimum of 30% of each and every Premises covered by this policy is self-contained private residential accommodation, and where the Premises is wholly or partially let to others".

6. The Schedule to the Policy identified the "Business" as "Residential Let Property Owner", the "Reason for Issue" as "New Business", and the "Policy Type" as "Residential Let Property Scheme". The coverage provided included for damage to buildings in the sum of £280,000 and loss of rent for up to 12 months in the sum of £56,000.
7. On 6 July 2012, the property was extensively damaged by fire, and the insured made a claim under the policy. By April 2013, the insurers had made two interim payments totalling £38,232, but subsequently became concerned that the claim was fraudulent (although the nature of those concerns are not relevant to this appeal). In the course of investigating the suspected fraud, the insurer's loss adjusters discovered that the information given in the Statement of Facts as part of the proposal form, that the insured had not had a prosecution pending at the time that the application for insurance was made, was not correct.
8. In fact, the insured had been charged with common assault contrary to s.39 of the Criminal Justice Act 1988 and with criminal damage, all arising out of an altercation with a former work colleague on 29 July 2011. He pleaded not guilty at Kirklees Magistrates Court on 13 October 2011. He had been due to stand trial in December 2011, but the case was adjourned. On 14 January 2012 (so only a matter of weeks before the application for insurance was made and the Policy incepted), a new trial date was set for 7 March 2012. In the event, only the charge of common assault was pursued by the prosecution before the Magistrates and the insured was convicted and sentenced to a restraining order for 24 months and a fine of £100.
9. Having discovered that this prosecution had been pending at the time of the application for insurance, the insurers declined to make any further payments to the insured and reserved their position. The insured instructed Chambers Solicitors of Bradford who issued proceedings on his behalf in October 2014 against the insurers and settled both the original Particulars of Claim and Amended Particulars of Claim after the brokers had been joined as defendants. The insurers avoided the Policy for material non-disclosure and misrepresentation on 9 January 2015.
10. In their Amended Defence and Counterclaim served in May 2015, the insurers raised three defences which arose out of the failure of the insured to disclose the pending prosecution to the insurers and which were relevant to the subsequent summary judgment application:

(1) That the provision in the Statement of Facts: "The quotation and any subsequently offered insurance are subject to compliance with ALL the following statements" was a condition precedent to any insurance coming into existence, which had not been complied with;

(2) That, given the presence of the "basis of contract" provision in the Statement of Facts as incorporated in the Policy, there was a breach of warranty by the insured, since the negative answer to the question about pending prosecutions was not correct, which breach of warranty entitled the insurers to avoid liability for the claim;

(3) That that negative answer and the failure to disclose the pending prosecution constituted a material non-disclosure or misrepresentation entitling the insurers to avoid or rescind the Policy ab initio, which they had done.

11. The insurers counterclaimed for the return of the interim payments made to the insured. Chambers Solicitors had originally settled a Defence to Counterclaim on behalf of the insured, alleging that the insurers had been aware of the pending prosecution when the insurance was taken out. That allegation was abandoned when, in an Admission of Facts dated 26 August 2015, the insured admitted that he had had a pending prosecution for criminal damage and common assault (described as battery) at the time of the application for insurance and that he had not informed the brokers or the insurers about that pending prosecution. The claim against the brokers was settled at some point.
12. The insurers issued their application for summary judgment on 7 September 2015, supported by statements from Ms Melanie Eales of RPC, the insurers' solicitors and Ms Karen Hubbard, the underwriter at Gresham who had underwritten the Policy. The insured's evidence in response was due by 2 October 2015, although an extension to 16 October 2015 was agreed, but no evidence was served by that deadline. The hearing originally listed for the last week of October 2015 was relisted for 30 November 2015, with the insured's evidence to be served no later than 23 November 2015. Chambers Solicitors had been instructed to prepare the insured's response to the summary judgment application, but in the event, no evidence in response to the application was filed by the insured. There was already a witness statement from him dated 30 April 2014, evidently prepared with the assistance of those solicitors, which was in response to a letter written by RPC on behalf of the insurers dated 6 March 2014 raising various queries arising out of the investigations by the loss adjusters. The only reference in that to the pending prosecution was a suggestion that he had informed the brokers about this when he instructed them on 27 January 2012, an allegation which, as I have said, has since been abandoned.
13. On 18 November 2015, the insured terminated the services of Chambers Solicitors, as he had learned that they were under investigation by the police and were not prepared for the summary judgment hearing. On 26 November 2015, RPC were notified that the insured would be acting in person at the summary judgment hearing, and forwarded the hearing bundle (comprising some 88 pages) to him.

The hearing and judgment

14. The insured attended the hearing on 30 November 2015 in person and made an application for an adjournment on the basis that he was not a lawyer and had not had an opportunity to carry out an analysis of the various documents he had received. The judge refused the application for an adjournment, essentially on three grounds:

(1) The insured had had solicitors acting for him until very recently, and he had not put in any evidence as to why he had terminated their services;

(2) The basic facts of the case were agreed as between the parties; and

(3) An adjournment would generate significant extra expense, which might not be recoverable.

15. The judge proceeded to hear the summary judgment application. The insurers pursued that application on the basis that the insured had no real prospect of success in defeating any of the three defences I identified at [10] above. The insured sought to resist these defences on the basis that, whatever the position at common law, that position had now been changed because of the enactment of the Consumer Insurance (Disclosure and Representations) Act 2012 (the 2012 Act) and the Insurance Act 2015 (the 2015 Act) . The judge noted in [23] of his judgment that those Acts had indeed changed the law in relation to breach of warranty and non-disclosure/misrepresentation, because the existing law in relation to those matters had been the subject of criticism by the Law Commission, some academic writers and some judges. However, he found that those Acts did not apply because they were not in force at the date of the inception of this Policy.
16. In particular, by section 12(4) of the 2012 Act, it only applied to consumer insurance contracts entered into after 6 April 2013 and the Act was not retrospective. As the judge also noted, the 2015 Act could not apply to policies entered into in 2012. At [25] he went on to observe, by reference to the 2012 Act:

"There may, in fact, be a debate as to whether this particular insurance policy was a consumer insurance policy within the meaning of the Act, but I do not need to investigate that because even if it is a consumer contract, it was not in force in February 2012 and the Act did not come into force for 14 months thereafter".

17. Accordingly, he held that the position was governed by the common law and Marine Insurance Act 1906 and went on to consider the insurers' arguments on that basis. In relation to the alleged condition precedent he set out the argument raised by Mr Sage on behalf of the insurers at [28] but does not appear to have made any ruling about it, no doubt because he was satisfied that the insured had no answer to the insurers' case on breach of warranty.
18. In relation to "basis of contract" clauses and breach of warranty, the judge held that the position at common law had recently been reaffirmed and upheld by the Court of Appeal (Lord Dyson MR, Jackson and Gloster LJJ) in Genesis Housing Association v Liberty Syndicate Management [2013] EWCA Civ 1173; [2014] Lloyd's Rep IR 318, where the leading judgment given by Jackson LJ analysed and approved the law as laid down in a series of cases over more than a hundred years. Given that the proposal form contained a basis of contract clause and the statement that the insured was not facing any pending prosecution was not correct, the judge held that the insured had no answer to the case of breach of warranty.
19. In relation to the defence of non-disclosure and misrepresentation, the evidence from the insurers was contained in Ms Hubbard's statement. She said:

"Gresham's view on criminal convictions and pending prosecutions is that we review each case on its merits. When reviewing referrals we use the underwriting guidelines contained in a document titled 'Proposers with financial problems and convictions – Acceptability and Rating Guide' … The guidelines highlight that as a business we are not keen to accept business that includes poor features. If a pending prosecution or criminal conviction has taken place in the previous 12 months, as was the case, it is likely to be a straight decline. Further, as Mr Ashfaq's pending prosecution involved assault I would have declined the risk on the basis that this type of incident goes to the character of the Insured and is ultimately not the type of Insured we wish to insure".

20. The Acceptability and Rating Guide to which she referred was exhibited. It stated that, where a proposer has been convicted of an offence involving violence to a person and ordered to pay a fine within the last 3 years, it would be appropriate to load the premium by 25-50%. However, where such a conviction has resulted in a prison sentence of less than 6 months, the proposal should be declined. The Guide contained no specific guidance on how to respond to pending prosecutions.
21. In dealing with this defence, the judge said at [32] of his judgment that he was prepared to assume that it was arguable that the insurer would have proceeded with the insurance even if the pending prosecution had been disclosed, on the basis that Ms Hubbard would have been cross-examined on what she had said in her statement. However the judge went on to say that even if the insurance had gone ahead, it was fanciful to suggest that the pending prosecution was not material in relation to the fixing of the premium. Although the matter might be said to be minor, "the insurer was entitled to have full particulars before it decided the level of premium to be added and it is right to say there was also a charge of criminal damage". The misrepresentation was therefore plainly material, and the insurers were entitled to repudiate the Policy.
22. Accordingly, the judge held that the insured had no realistic prospect of succeeding on his claim at trial. He also gave judgment for the insurers on the counterclaim, for the return of the interim payments, although he deducted the amount of the premium.

The Grounds of Appeal

23. The Appellant's Notice was filed on 21 December 2015. The Grounds of Appeal were drafted by Mr Jeffrey Terry of Counsel (who also appeared before us at the hearing of the appeal) who was instructed by the insured on a direct access basis. There were three grounds of appeal which were expanded upon in a Skeleton Argument also drafted by Mr Terry:

(1) The Judge erred in the exercise of his discretion in refusing to grant an adjournment;

(2) The Judge erred in failing to appreciate that the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR 1999") and the Insurance Conduct of Business Sourcebook ("ICOBS") rules were relevant in determining the Respondent's application for summary judgment. Had he done so, he would have found that the 'basis of contract' and 'subject to' clauses were unenforceable as against the Appellant;

(3) In determining whether the Respondent was entitled to rescind the Policy for non-disclosure/misrepresentation, the Judge erred in deciding that the failure to disclose the prosecution was material.

24. A witness statement dated 20 December 2015 from the insured was also produced in support of his application for permission to appeal. That gave some further detail about the incident with the former colleague which had led to the conviction, emphasising that it was extremely minor, as demonstrated by the sentence. It also explained how he had come to dispense with the services of Chambers Solicitors and represent himself and how he had tried to prepare for the hearing over the preceding weekend but the material was beyond his proper comprehension.
25. On 29 March 2016, Jackson LJ granted permission to appeal. On 14 April 2016, the insurers filed a Respondent's Notice. That raised the following contentions:

(1) The insured was not a consumer, so could not invoke the UTCCR 1999 and the ICOBS rules. Further, he had the burden of showing that he was a consumer, and he had produced no evidence to that effect;

(2) In any event, the insured could not now rely on the UTCCR 1999 and the ICOBS rules since they were not pleaded in his particulars of claim, amended particulars of claim, or defence to counterclaim;

(3) If the UTCCR 1999 did apply, the 'basis of contract' clause was irrelevant, since it was a 'core term' within the meaning of rule 6 and, in any event, the 'basis of contract' clause was fair;

(4) If the ICOBS rules did apply, the insurers were nevertheless entitled to rely on the condition precedent, because there was evidence that the claim was fraudulent, and the insured could reasonably have been expected to disclose his pending prosecution (rule 8.1.2);

(5) In any event, the UTCCR 1999 did not impinge on the rule of law entitling the Respondent to rescind for misrepresentation.

26. From this Respondent's Notice, it must have been clear to the insured and those advising him that a critical threshold question at the hearing of the appeal would be whether he was a "consumer" within the meaning of the UTCCR 1999 or ICOBS and that the insurers would be arguing that he had adduced no evidence to that effect. Notwithstanding that, the insured has not sought to put before the Court any further evidence beyond the witness statements of 30 April 2014 and 20 December 2015, neither of which deals directly in any way with this issue of whether he was a consumer.

Definitions of "consumer" in UTCCR 1999 and ICOBS

27. Regulation 3(1) of UTCCR 1999 in force at the relevant time provided that a consumer is:

"any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession."

28. That definition was considered by His Honour Judge Hegarty QC sitting as a High Court Judge in the Mercantile Court in Manchester in Overy v Paypal (Europe) Limited [2012] EWHC 2659 (QB). After an extensive review of the European and domestic case law, he summarised the applicable principles at [169] of his judgment:

"The principles to be derived from this survey of the relevant case law seem to me to be as follows:

1. The expression "consumer" for the purposes of Council Directive 93/13/EEC [to which the UTCCR 1999 gave effect] should be given an autonomous, Community-wide, interpretation, rather than one anchored to the particular jurisprudence of any individual Member State.

2. At least where the language adopted in Community instruments is substantially the same and they have as their objective, at least in part, the protection of consumers, a similar approach to the construction and application of the expression should be adopted unless the context and purpose of the relevant instrument requires a different approach.

3. It is a question of fact for the court seised of the dispute to decide the purpose or purposes for which a person was acting when entering into a contract of a kind which might be covered by the Directive; and it is similarly a question of fact as to whether he was so acting for purposes outside his trade, business or profession.

4. The court must resolve these factual issues on the basis of all of the objective evidence placed before it by the parties; but that evidence is not confined to facts and matters which were or ought reasonably to have been known to both parties.

5. Though the words of the Directive must ultimately prevail, a party will normally be regarded as acting for purposes outside his trade, business or profession if, and only if, the purpose is to satisfy the individual's own needs in terms of private consumption.

6. Furthermore, where the individual in question is acting for more than one purpose, it is immaterial which is the predominant or primary purpose; and he will be entitled to the protection of the Directive if and only if the business purposes are negligible or insignificant.

7. However, even where the objective purpose or purposes for which the individual was acting were, in fact, wholly outside his trade, business or profession, he may be disentitled from relying upon the protection afforded to him by the Directive if, by his own words or conduct, he has given the other party the impression that he was acting for business purposes so that the other party was and could reasonably have been unaware of the private purpose or purposes."

29. ICOBS at paragraph 2.1.1(3), in the section dealing with Client categorisation contains a similar definition of consumer: "A consumer is any natural person who is acting for purposes which are outside his trade or profession." Paragraph 2.1.3 then deals with cases of customers covered in both a private and a business capacity in these terms:

"(1) Except where paragraph (2) applies, if a customer is acting in the capacity of both a consumer and a commercial customer in relation to a particular contract of insurance, the customer is a commercial customer.

(2) For the purposes of ICOBS 5.1.4 G and ICOBS 8.1.2 R, if, in relation to a particular contract of insurance, the customer entered into it mainly for purposes unrelated to his trade or profession, the customer is a consumer."

30. Paragraph 2.1.4 then provides: "In practice, private individuals may act in a number of capacities. The following table sets out a number of examples of how an individual acting in certain capacities should, in the FCA's view, be categorised". One of the examples given in the "Capacity" section of the table is pertinent in the present context: "Person taking out a policy covering property bought under a buy-to-let mortgage". In the "Classification" section of the table against such a person is stated: "Commercial customer".

The parties' submissions

31. In his submissions before us on behalf of the insured, Mr Terry accepted that the principles by reference to which the Court should determine whether the insured was a consumer for the purposes of the UTCCR 1999 were correctly set out by the judge in the Paypal case. He recognised that he faced difficulties on the basis of that decision in demonstrating that, if the Policy was being taken out for both private and business purposes (i.e. the business of ownership of property to be let for profit) it could be said that the business purposes were "negligible or insignificant". Accordingly, he directed his submissions primarily to the position under ICOBS, which he submitted was different from the position under the UTCCR 1999.
32. He submitted, by reference to that section of the Defence where the insurers set out their allegations of fraud, that the trade or profession of the insured was that of a company director of three companies whose business was I.T. not property ownership or letting. The insured had entered the insurance mainly for the private purpose of protecting his house against risks such as fire, which was not a business purpose. That position was not altered by the fact that, at the time the insurance was taken out, the property was let temporarily. Mr Terry accepted that, at the time, the insured was not living at the property, but submitted that nonetheless it was his home. In the 30 April 2014 statement, the insured had denied the insurers' contention in correspondence that he owned another property in Accrington. In [2] of his witness statement of 20 December 2015, he described the Huddersfield property as: "my home".
33. Mr Terry submitted that the main purpose of taking out the insurance was to protect the insured's property asset against fire and other risks and the insurance against loss of rent was subsidiary. In those circumstances, the insured's main purpose was unrelated to his trade or profession and he fell within the definition of a "consumer" for the purposes of ICOBS.
34. Mr Terry was critical of the judge for refusing the adjournment which the insured had sought. The judge had evidently thought that none of the facts was in issue. Mr Terry sought to interpret the passage in [25] of the judgment which I set out at [16] above as recognition on the part of the judge that there was an issue as to whether the insured was a consumer or not, but the judge had erroneously thought that this issue was irrelevant, because he had not had cited to him the UTCCR 1999 or ICOBS. Mr Terry submitted that, if the Regulations and ICOBS had been drawn to the judge's attention, given what he had said at [25], he would have been bound to take a different view. The insured as a litigant in person should have been granted the adjournment or afforded the opportunity to establish at trial that he had taken out the insurance as a consumer.
35. In answer to the insurers' contention that there was no evidence that the insured was a consumer, Mr Terry relied upon a number of matters in the material before the Court, which he submitted cumulatively established a sufficiently arguable case that the insured was a consumer, bearing in mind he had been acting as a litigant in person, or at least sufficient of an issue to be investigated, which should have led to the granting of an adjournment: (i) the passage in the Defence to which I have already referred dealing with the IT companies of which he was a director, demonstrating that that and not property letting was his trade or profession; (ii) a mortgage application in relation to the Huddersfield property in the names of the insured and his wife on the basis that this was a residential and not a buy-to-let mortgage. However, the letter from Santander, the mortgagor, was dated 25 April 2016, five months after the judgment and more than four years after the insurance was taken out; (iii) on the Statement of Facts, the Risk Address and the Mail Address were both the same, 9 Inglewood Avenue, which would be unlikely if this were simply investment property. Likewise the provision "Trading As" was left blank, suggesting this insurance was not being taken out for business purposes; (iv) the Quotation from Gresham stated: "The rights of the bank or building society who provided your mortgage will not be affected by anything which your lodgers or tenants do to increase the risk of loss or damage to the home…" It was submitted that the reference to "home" was directed towards a private consumer; (v) Condition 1 of the General Conditions of the Policy referred to: "You and all members of your Family permanently residing with You must comply with the terms and conditions of this policy" which was only consistent with this being a consumer insurance taken out for private purposes; and (vi) the specific denial by the insured in his witness statement that he had another property in Accrington which was being insured.
36. Mr Terry accepted that, if there was no real prospect of successfully establishing that the insured was a consumer, the appeal would fall away, since in those circumstances, neither UTCCR 1999 nor ICOBS would affect the position at common law, which would prevail. In those circumstances, whilst he submitted that the insured had a sufficiently arguable case in relation to the condition precedent and whether there had been a material non-disclosure/misrepresentation, he accepted that the insured had no answer to the defence of breach of warranty.
37. Mr Sage began his submissions on behalf of the insurers by answering the criticism levelled at the insurers by Mr Terry in his Skeleton Argument for not drawing the judge's attention to UTCCR 1999 or ICOBS and the need to decide whether the insured was a "consumer" within the meaning of those provisions, by pointing out that the reason why the issue of whether the insured was a consumer within the meaning of those provisions was not raised by him with the judge at the summary judgment hearing was that those matters had not been pleaded or raised on behalf of the insured, who had been legally represented until immediately before the hearing. I accept that, in the circumstances, the criticism of the insurers and of Mr Sage is unjustified.
38. Mr Sage's primary submission was that, since this issue had never been pleaded, this Court should not allow a new point of law to be raised on appeal. He relied upon a passage at 24.2.3 of the White Book which refers to the problem of a new point of law being taken on an appeal from an award of summary judgment that determination of the point by the appeal court deprives the losing party of an opportunity to bring a first appeal on the point. With respect to Mr Sage, there does not seem to me to be any force in this point in a case such as the present, of an appeal from the High Court to the Court of Appeal. The point is directed to summary judgment appeals heard by the High Court where any appeal to this Court will be a second appeal.
39. In the alternative, Mr Sage submitted that, if this Court did permit the issue of whether the insured was a consumer to be raised, we should still conclude that the insured had no real prospect of succeeding in his claim, as the judge concluded, albeit for different reasons. He submitted that before the Court could contemplate allowing this issue to go to a trial, there had to be some evidence raising a sufficiently arguable issue that the insured was a consumer. There was no such evidence. Mr Terry had raised a whole series of hypothetical situations, such as insurance taken out by someone who took lodgers into his house, but none of these was supported by evidence before the judge or before the Court of Appeal.
40. In particular, in relation to the test of whether the insured was a consumer within the meaning of UTCCR 1999, Mr Sage submitted that there was a high threshold to be overcome by the insured, as set out in the judgment in the Paypal case. Even if the insured could establish that the insurance was taken out for both private and business purposes, it would only be if the business purposes were negligible or insignificant that the insured would be a consumer and the insured simply had no evidence to get him over that threshold.
41. Mr Sage submitted that, in fact, there was no evidence that the insurance was taken out for anything other than a business purpose. It was accepted by Mr Terry on behalf of the insured that, at the time that the insurance was taken out, the insured was not living in the property at 9 Inglewood Avenue, which was let out to students. Although it had been suggested that this was only temporary, there was no evidence to that effect. The Memorandum of Entry in the Register of the Kirklees Magistrates Court of the insured's conviction for common assault on 7 March 2012, just over a month after the insurance incepted, gave the insured's address as 44 Mountjoy Road, Edgerton, Huddersfield. The key point was for what purpose was the insurance taken out. Mr Terry had submitted that it was to protect the property asset, so was a private, consumer purpose, but Mr Sage submitted that this was not a private, consumer purpose: every business using premises would take out insurance against fire and other risks to protect the premises and, thereby, the business, as no business would want its premises to burn down. Thus where, as here, the premises were being let for profit, the insurance was taken out for a business purpose.
42. So far as the somewhat different definition of consumer under ICOBS is concerned, Mr Sage placed particular reliance on the fact that the table in paragraph 2.1.4 classified someone who took out a policy covering property bought under a buy to let mortgage as a commercial customer. He submitted that the critical point was not the existence of the mortgage, but the fact of the mortgage demonstrated that the purpose for which the insurance was taken out was the "trade or profession" of letting property for a profit. In the present case, although there was no buy to let mortgage, the insurance which was taken out was a Residential Let Property Insurance Policy where the insured was defined as carrying on the "business" of a buildings owner letting out his property wholly or partially to others, so that the insurance was, on the face of it, taken out for that business purpose and, by close analogy with the example given in paragraph 2.1.4 of ICOBS, this insured would be classified as a commercial customer.
43. Mr Sage submitted that to the extent that the insured was seeking to argue that, notwithstanding what the documentation showed, the insurance was taken out mainly for purposes outside that trade or profession, it was incumbent on the insured, even on a summary judgment application, to put forward some evidence that he had been taking out the insurance as a consumer. It was no answer for Mr Terry to point to the fact that the insured was a company director of IT companies. Paragraphs 2.1.3 and 2.1.4 of ICOBS are, as the table in 2.1.4 demonstrates, directed at whether the insurance was taken out mainly for the purpose of a trade or profession, here the trade or profession of letting out property for profit and it was neither here nor there that the insured also had another trade or profession.
44. Because the insured had simply not put forward any evidence either before the judge or before the Court of Appeal that he had taken out the insurance for private, consumer, purposes, Mr Sage submitted that we should not be speculating as to what evidence there might be and should not allow the case to go to trial on that speculative basis. If, as was the case, the insured had not put in any evidence that the insurance had not been taken out for the purpose of a property letting business, but for another purpose, then we should conclude that he had no real prospect of establishing that he was a consumer and dismiss the appeal.

Analysis and conclusions

45. Despite the cogent submissions of Mr Terry I am quite satisfied that, on the material before us, the insured has no real prospect of successfully establishing that he was a "consumer" within the meaning of either UTCCR 1999 or ICOBS. I have reached that conclusion for a number of reasons.
46. First, on the face of the documentation evidencing the application for insurance and the Policy itself, the purpose for which the insurance was taken out was to protect the property, which the insured was using for the business of letting to students for rent, against fire and other risks. Accordingly, the purpose of the insurance was related to the insured's trade, business or profession of property letting and he was not a consumer. In particular, the online proposal form completed by the broker was clearly an application for a policy under the Residential Let Property Owners Scheme in respect of a property which was let to students, where part of the cover sought was loss of rent for up to 12 months. This was thus not an application for ordinary domestic house insurance.
47. That the application was for a form of business insurance rather than consumer insurance is borne out by the fact that the Policy issued, the Residential Let Property Insurance Policy, was insuring an insured stated to be carrying on the "business" (of a "buildings owner where …the premises is wholly or partially let to others") "and no other for the purpose of this insurance". In other words, this was business insurance rather than consumer insurance.
48. Second, that conclusion as to the purpose for which the insurance was taken out is not even arguably displaced by any of the matters relied upon by Mr Terry as set out at [35] above. The passage in the Defence referring to the insured as a company director is in a section dealing with the allegation of fraud and the fact that he was carrying on the trade or profession of company director does not mean that he was not also carrying on the trade, business or profession of a buildings owner letting out property for profit, as the example in the table at paragraph 2.1.4 of ICOBS demonstrates. A person who takes out a policy covering property bought under a buy to let mortgage is a "commercial customer" for the purposes of classification under ICOBS, and it is neither here nor there that that person may also be a company director of a company whose business is unrelated to property letting or also carrying on any other profession.
49. In my judgment, the same commercial customer classification must apply to a person such as this insured who takes out a policy covering property which is let out to tenants for rent, irrespective of what type of mortgage that person has. That is because, in each case, the purpose of the insurance is to protect property which is let out. In fact, the insured has not produced any evidence as to what mortgage was in place on the property when the insurance was taken out in January 2012. The letter from Santander is dated 25 April 2016, more than four years later and the Details sheet, which may or may not have been enclosed with that letter, is undated.
50. The point about the addresses given on the online proposal form and the Quotation has little if any force. It is accepted by the insured that he was not living at the property at the time that the insurance was taken out and that it was let to students. He has adduced no evidence as to how long the property had been let out in the past or how long it was intended to let it out in the future, and there is nothing from which the Court could infer that this was a temporary arrangement, as Mr Terry suggested. The property was evidently still let at the time of the fire in July 2012 and it was intended to continue to let it for the remainder of the period of insurance (which expired on 31 January 2013), since one of the heads of claim in the "Special Damages Calculation" forming part of the Amended Particulars of Claim, is 8 months loss of rent. The insured has not in fact vouchsafed any evidence as to where he was living at the time that the insurance was taken out (and neither of his witness statements gives an address), although the entry on the register in the Magistrates Court suggests very strongly that he was living at the Mountjoy Road address.
51. The fact that the "Trading As" section on the proposal form was left blank is of no significance but simply demonstrates that the insured was not using a business name, not that he was not carrying out the relevant business of letting out property. Likewise, the reference to "home" in the Quotation does not mean that the insurance was taken out as a consumer. The property was not the insured's home, since it is accepted that he lived elsewhere, so it can only be the "home" of the tenants living at the property. The Definitions section of the Policy defines "Home" as "the private dwelling of standard construction and the garages and outbuildings used for domestic purposes at the premises shown in the schedule". That means no more than since the business as defined is one where the premises which are private residential accommodation are wholly or partially let to others, the tenants are using them for domestic purposes not some other purpose. Thus the reference to "home" does not convert what is business insurance into consumer insurance.
52. Likewise, the reference to "You and all members of your Family" in the General Conditions does not have that effect. The condition is probably of no relevance here, given that the insured and his family were not living in any part of the property when the insurance was taken out. The condition might be of relevance to a case (not this one) where the relevant premises were partially, not wholly, let to others, but in any event, this condition in what is otherwise clearly a business insurance rather than a consumer insurance, cannot change the nature of the insurance.
53. The point about the insured having denied owning another property in Accrington, on which Mr Terry placed some emphasis, is with respect a complete red herring, given that it is accepted that the insured was not living in the property at 9 Inglefield Avenue at the time the insurance was taken out and that such material as is available points strongly to his having been living at the Mountjoy Road address.
54. Third, although the insured has known, at least since the Respondent's Notice was filed on 14 April 2016 that the insurers were resisting the assertion in the Grounds of Appeal that he was a "consumer" within the meaning of UTCCR 1999 or ICOBS, on the basis that he had adduced no evidence to that effect, for whatever reason, the insured has not sought to adduce any further evidence to support the assertion in the intervening period of more than a year. He has been represented by Mr Terry since the Grounds of Appeal were filed and we have no doubt that, if such evidence were available, Mr Terry would have made an application to the Court of Appeal to adduce fresh evidence.
55. In circumstances where the evidence before the Court does not establish a sufficiently arguable case that the insurance was taken out for a purpose which was a private purpose or that the insured was a "consumer" within the meaning of UTCCR 1999 or ICOBS, and the insured has chosen not to adduce any further evidence to support his assertion, I agree with Mr Sage that it would be quite wrong for this Court to speculate as to what evidence there might have been or to allow the insured, who is now legally represented and has been for over a year, to go to trial on this issue in the hope that something might turn up. Micawberism did not entitle a defendant to leave to defend under Order 14 of the old Rules of the Supreme Court (see per Megarry J in Tennant v Associated Newspapers Group [1979] FSR 298). Such speculative Micawberism is all the more to be discouraged under the Civil Procedure Rules, where summary judgment under Part 24 is intended to avoid the use of limited court resources at trial on cases where a party has no real prospect of success and where the overriding objective at Part 1.4(2)(c) requires the Court to decide promptly which issues need full investigation and trial and dispose summarily of other issues.
56. The fact that there is no evidence, even now, to support the insured's assertion that he was a consumer is also a complete answer to Mr Terry's submission that, at the very least, the judge should have acceded to the application for an adjournment. The decision to refuse the adjournment was a classic exercise of case management and discretion with which this Court ought not to interfere. The judge had regard to all the factors in the insured's favour (including that he was now a litigant in person) but considered that they were outweighed by the costs of adjournment, the fact that he had been represented until very recently and the fact that the essential facts were not in dispute.
57. I do not consider that there is anything in Mr Terry's submission that the judge was in error in concluding that the facts were not in dispute in circumstances where, had the judge's attention been drawn to UTCCR 1999 and ICOBS he would have appreciated there was an issue as to whether the insured was a "consumer". It does not seem to me that [25] of the judgment bears the interpretation which Mr Terry seeks to put upon it, that the judge recognised that there was such an issue but it was not relevant. I consider that, on the contrary, when the judge said: "there may, in fact, be a debate as to whether this particular insurance policy was a consumer insurance policy…" what he was saying was that he was sceptical as to whether, given the nature of the insurance, a contention that it was consumer insurance would have been sustainable, even if the 2012 Act had been in force at the time the Policy incepted.
58. Accordingly, the insured has no real prospect of establishing that he was a "consumer" within the meaning of UTCCR 1999 or ICOBS and the position at common law applies. The applicable principle derived from the authorities was summarised by Jackson LJ at [57] of his judgment in Genesis Housing Association v Liberty Syndicate Management:

"The principle which emerges from these authorities is that where a proposal form contains a "basis of contract" clause, (i) the proposal form has contractual effect even if the policy contains no reference to the proposal form; (ii) all statements in the proposal form constitute warranties on which the insurance contract is based. They cannot therefore be treated as immaterial."

59. In the present case, the Policy expressly provided that: "The proposal or any information supplied by the Insured shall be incorporated in the contract" so that that principle applies a fortiori. It necessarily follows that the insured has no real prospect of succeeding at trial in defeating the defence of breach of warranty.
60. Given that conclusion, it is not necessary to consider whether the insured had any real prospect of successfully defeating the other defences of non-compliance with a condition precedent and avoidance/rescission for material non-disclosure/misrepresentation. We heard some argument from Mr Terry on those aspects of the appeal, but did not need to hear Mr Sage on those matters, so I propose to say no more about them. On the basis that the insurers have an unanswerable defence of breach of warranty, the judge was right to enter summary judgment for the insurers on the claim and counterclaim and the appeal is dismissed.

Lord Justice Briggs

61. I agree.

Lord Justice McFarlane

62. I also agree.