EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lady Paton Lord Clarke Lord McGhie	[2012] CSIH 90 A2759/02 OPINION OF THE COURT delivered by LORD CLARKE in Reclaiming Motion by MRS KATHLEEN MARY SELENA McLEAN or TORREMAR Pursuer and Reclaimer; against CGU BONUS LIMITED Defenders and Respondents: _______________

Pursuer and Reclaimer: Party

Defenders and Respondents: Armstrong, QC, Milligan; Reid Cooper, Solicitors, Glasgow

4 December 2012

[1] At the hearing of this reclaiming motion, the pursuer appeared on her own behalf, as she had done at the proof before answer, before the Lord Ordinary, against whose decision in respect thereof she now reclaims.

[2] The dispute involves a claim by the reclaimer that she is entitled to be paid certain sums by the respondents by way of indemnity under a contract of insurance entered into between the parties with effect from 16 August 1999 to 15 August 2000. That contract provided insurance cover in respect of a hotel and hotel business, owned and operated by the reclaimer, the hotel in question being the Bunrannoch Hotel, Kinloch Rannoch, Perthshire. The hotel was formerly jointly owned by the reclaimer and her husband Christen Arne Torremar. Mr Torremar died in 1996.

[3] As part of the contract of insurance it was provided that the respondents would indemnify the reclaimer against:

"(1) loss or destruction of or damage to the Hotel buildings in accordance with section 1A of the Policy Booklet up to the limit specified in the renewal Schedule:

(2) loss or destruction of or damage to Business Contents as described in section 1B(a) and (c) of the Policy Booklet within the limits specified in the Renewal Schedule; and

(3) loss of current money, the property of or for which the insured was responsible for in the course of the business in terms of Section 4 of the Policy Booklet up to the limit specified in the Policy Booklet as modified by the Renewal Schedule".

[4] In the early hours of the morning of Saturday 27 May 2000 a fire broke out in the hotel which was extensively damaged as a result. The upper floors were damaged throughout most of the main southwest wing and the adjacent area of the main bedroom wing. The finishings throughout the building were affected by fire, smoke and water. The reclaimer also claimed that there was water damage to all areas of the hotel and that the fire had also destroyed (a) stocks of cigarettes, cigars and tobacco; (b) business contents of the hotel; and (c) cash.

[5] Prior to the fire breaking out, the reclaimer had been seeking to sell the hotel and there were prospective purchasers but the reclaimer was not in a position to sell immediately because of a problem with the title. Late in the evening of 26 May 2000, the reclaimer left the hotel by car, together with four of her five children and her dog. The reclaimer's remaining child Thomas, who was 18 at the time of the fire, had been working as a barman at a neighbouring hotel and was accommodated in a cottage adjacent to the reclaimer's hotel. There was evidence that as at 26-27 May 2000 the reclaimer was experiencing some financial difficulties, being indebted to the Royal Bank of Scotland both in respect of a mortgage over property owned by her at Rothesay Terrace, Edinburgh, and in respect of an overdraft which was secured over the hotel. The hotel was not trading profitably and only the bar was operating. The reclaimer accepted that the bank had arranged to take any sums recovered by her on the sale of the hotel in settlement of her outstanding debts. The reclaimer had made a successful claim on the insurance policy in question in respect of a fire some months prior to the fire to which the present proceedings relate. Certain family possessions were removed from the hotel immediately prior to the fire.

[6] The reclaimer intimated a claim to the respondents in respect of the losses incurred as a result of the fire but they refused to indemnify her in respect of these. In their pleadings the respondents explain (in answer 5):

"...the fire and the consequent damage was the result of a deliberate act of setting fire to the premises. The fire was set either by or on behalf of or with the knowledge and concurrence of the pursuer which is the basis upon which the defenders refuse to indemnify the pursuer".

On the other hand the reclaimer in her pleadings avers in article 5 of condescendence:

"Explained and averred that the fire was accidental. It was probably started in the sauna room on the second floor, which was directly above room 9. An electrical switch for the sauna's heater may have been left on inadvertently, possibly by the pursuer's daughter Hannah. An electrical wiring fault is a slight possibility of a cause".

The issue, then, that the Lord Ordinary had to determine, after proof, was whether the respondents had satisfied him, on the appropriate standard of proof, that the fire had been started deliberately by the reclaimer or someone on her behalf or by someone with her knowledge and concurrence. The reclaimer sought to negative the respondents' case by showing that the seat of the fire was the sauna and that it was caused either by the sauna being left on and becoming overheated or by an electrical wiring fault.

[7] As has been noted, the reclaimer conducted the proof on her own behalf. That was no doubt a formidable experience for someone like herself who is not legally qualified. She, understandably, made this point several times before this court. We should stress, however, at this stage, that we cannot detect from anything in the Lord Ordinary's opinion, or what we were told took place at the proof, any suggestion that she was put to any particular disadvantage other than that which any party litigant would have, in that situation, found himself or herself in and, in particular, we sense that the Lord Ordinary sought to make appropriate and legitimate allowance for the reclaimer being a lay person, within the bounds that must exist, lest the judge be seen to be unduly favouring one party over another.

[8] It was not disputed before the Lord Ordinary that the onus fell upon the respondents to establish their right to avoid the policy and he proceeded on that basis - see para.6 of his opinion, though he did not ordain the respondents to lead at the proof, as he might have done. It was accepted by the Lord Ordinary, correctly, that the standard of proof which the respondents had to meet was the balance of probabilities: see Mullan v Anderson 1993 SLT 835 and Sodden v The Prudential Assurance Co Ltd (Inner House) 15 January 1999 unreported. It was accepted, on behalf of the respondents, having regard to what was said in the lastmentioned case, that, standing the seriousness of the allegation which the respondents sought to establish, that allegation required to be established by "evidence of good quality".

[9] The Lord Ordinary recognised that the dispute between the parties, as presented to him, raised sharply the question of the reclaimer's credibility and reliability. She was being accused of herself setting the hotel on fire deliberately, or having authorised someone else to do so, or having allowed it to be done with her knowledge and concurrence. It was peculiarly within the reclaimer's knowledge as to whether such allegations were true or not. The Lord Ordinary, it appears, had some difficulty in reaching a firm conclusion on the issue of the reclaimer's credibility and reliability by relying solely on the considerable advantage he had in hearing the reclaimer give her evidence and, in this case, conducting the proof. He, nevertheless, did not quarrel with counsel for the respondents' criticism of the reclaimer in certain respects and at paragraph 104 of his opinion said:

"Having regard to Mr Armstrong's criticisms I regard the pursuer's credibility as being questionable".

His Lordship did, however, go on to say:

"But I cannot claim to have detected anything in the pursuer's demeanour or way of answering questions that I could point to as definitely indicating that she was being untruthful when she denied setting the fire".

What is clear, however, is that his Lordship, whatever reservations, or anxieties, he may have had about judging of the reclaimer's reliability and credibility on the basis of her own evidence and demeanour, considered that any such doubts and anxieties were removed by consideration of other evidence in the case from which he drew the clear inference that the reclaimer was not telling the truth and that the fire was started deliberately by her. That evidence is set out at page 34 (para.104) of the opinion of the Lord Ordinary. The Lord Ordinary reached the conclusion, from that evidence, after having considered, in detail, the alternative explanation proffered by the reclaimer for the fire having taking place, namely, that it had arisen in the sauna room because of overheating or some electrical fault, which explanation was considered by expert witnesses in evidence before the Lord Ordinary. Those witnesses were in agreement that there were only two candidates for the area of the origin of the fire: the sauna room or what was described as bedroom 9. All other possibilities had been ruled out. The two possibilities were investigated, thoroughly, at the proof in evidence taken from experts led on behalf of both parties. The sauna heater had been inspected on behalf of both parties as had bedroom 9 and the sauna room itself. An expert witness, Mr Roger Smith, instructed on behalf of the reclaimer, through her loss assessors, Balcombes, gave evidence that he accepted fully that if the fire originated in bedroom 9, human agency must have been involved to introduce a source of ignition. The Lord Ordinary heard evidence from two electrical engineers who had examined the sauna heater, Mr Gordon Morris for the reclaimer and Mr John Logie for the respondents. Having considered their evidence, the Lord Ordinary, at paragraph 63 of his opinion, found that it was "highly improbable the sauna heater was the source of or origin of the fire". The respondents also led an expert witness Dr James Lygate who is a fire investigator. Dr Lygate was a witness who apparently impressed the Lord Ordinary. His opinion was that the area of origin of the fire was bedroom no.9 and that the point of origin was at the side of a bed situated close to the corner of the bedroom. He was driven to the view that the fire must have been started by some means involving human agency. He could not exclude the possibility that the fire was the result of a deliberate act of the pursuer.

[11] After having considered all the evidence the Lord Ordinary, at paragraph 104, concluded as follows:

"Looking to the totality of the evidence and the possibilities that it gives rise to, I have been satisfied that the defenders have discharged the onus that the fire was probably set by the pursuer. There was a lack of precision in the pursuer's evidence and a degree of internal contradiction that would lead me to have reservations about her reliability as a witness, particularly if one was concerned with matters of detail".

While, as previously noted, the Lord Ordinary seems to have found it difficult to reach a conclusion on the reclaimer's credibility, simply by reference to the actual evidence she personally gave, and the manner in which she gave it, he reached the conclusion he did on the basis of the evidence as a whole from which he held, by inference, that not only was the fire caused by human agency, as spoken to by the expert evidence, but that it was caused deliberately. That evidence is summed up by the Lord Ordinary at paragraph 104 of his opinion as follows:

"That evidence excludes the sauna heater as a possible source of ignition and implicates Bedroom 9, a location with plenty of combustible material, as the area of ignition. In the absence of any evidence pointing to an electrical or mechanical source of ignition the only remaining possibility is human agency either deliberate or inadvertent. The fire broke out in the main bedroom wing when the hotel was locked and no one was inside. There was no sign of a break-in or other interference by intruders. The pursuer had locked up the hotel. Hannah (the reclaimer's daughter) had left the hotel with her, but the pursuer had been the last person in the main bedroom wing prior to her locking up the hotel and therefore the last person in the main bedroom wing prior to the outbreak of fire. The pursuer had the opportunity to set the fire at or about 11.30pm on 26 May, either while in the bedroom wing before locking up or after re-entering for that purpose immediately after having locked up. The state of development of the fire when the fire brigade arrived was not inconsistent with it having started at or about 11.30pm. The pursuer had a motive to destroy the hotel and thereby secure indemnity under the insurance policy. The fire broke out when neither the burglar alarm nor CCTV were operational and was only discovered at an early hour of the morning after the pursuer had absented herself from the Hotel together with all of her children other than Thomas, and her pet dog in order to embark on a long journey, the precise purpose of which was variously explained by the pursuer".

[12] We are satisfied that the Lord Ordinary, in this case, was wholly aware of the appropriate test to be met in deciding whether or not the respondents had discharged the onus upon them to provide a basis for avoiding the policy and that he applied that test. Moreover we are satisfied that there was sufficient evidence, of the necessary quality, before the Lord Ordinary, to allow him to conclude, on the balance of probabilities, that the fire had been started deliberately by the reclaimer. This court requires to bear in mind also the weight that has to be given to the decision on the facts by a judge sitting at first instance, and that an appellate court should be slow to interfere with a decision based on the credibility and reliability of witnesses of whom the Lord Ordinary was able to make a personal assessment - see Thomson v Kvaerner Govan Ltd 2004 SC(HL) 1. In any event, we did not have presented to us any submission, argument or material by the reclaimer, which would have allowed us to disturb the Lord Ordinary's material findings in fact in this case and the conclusion he drew from these. The thrust of the reclaimer's submissions was, to a very large extent, focused on the considerable disadvantage that she found herself in in conducting the proof on her own behalf which factor had, she claimed, been taken advantage of by the respondents. We repeat that we can well understand that the reclaimer would not have found the exercise of conducting the proof, on her own behalf, at all easy but that is a situation which litigants in person unfortunately do tend to find themselves in. While the court will seek to assist such a person insofar as that is not incompatible with the court's over-riding duty to be even-handed as between the parties, a party litigant cannot expect his, or her, case to be judged, ultimately, on any other basis than in accordance with established law and procedure. In the present case, moreover, we are satisfied that there was no indication, having regard to the conduct of the proof as a whole, that the reclaimer was given anything other than a fair hearing in the proceedings before the Lord Ordinary.

[13] For the foregoing reasons the reclaiming motion falls to be refused.