Case No: 2009 Folio 316
Neutral Citation Number: [2010] EWHC 215 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

12 February 2010 

Before :
Jonathan Hirst QC sitting as a Deputy Judge of the High Court

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Between :

	SHAUL YECHIEL
	
Claimant	
			
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KERRY LONDON LIMITED	Defendant	

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James Couser (instructed by Brightstone Law LLP) for the Claimant
Paul Parker (instructed by Williams Holden Cooklin Gibbons LLP) for the Defendant

Hearing date: 28 January 2010
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JUDGMENT
Mr Hirst QC: 
1.	On 18 August 2004, a case belonging to the Claimant (“Mr Yechiel”) was stolen from a luggage trolley at Nice Airport under the control of his family, who were waiting for him to collect and return with a hire car.  The family were on the way to the wedding of Mr and Mrs Yechiel’s son in Monte Carlo.  The case contained a large amount of valuable jewellery which has never been recovered.
2.	Mr Yechiel was insured by Norwich Union Insurance Limited (“Norwich Union”) under a “Tapestry” policy no. 0132173289 (“the Policy”).  The then current policy ran from 24 June 2004 until 23 June 2005.  Listed in the personal belongings section of the Policy Schedule were 23 items of jewellery.  The cover was for all risks loss or damage (with a few specified exceptions) at the address shown in the schedule and while temporarily removed elsewhere in the world.  As part of the description of items 12-23 were the words “kept in Bank” – so that, for example, item 12 was described:
“Emerald and diamond necklace kept in Bank 		£40,901”
	The following condition applied to the Personal Belongings Section:
		Restriction to Bank
	Cover under the Personal Belongings section in respect of this item operates only whilst it is deposited in a bank or safe deposit agreed by Us and for a period of up to 14 days in any Period of Insurance while in Your personal custody

	Items in the Bank
	It is hereby noted and agreed that items 12 to 23 are contained within the Safety Deposit box at Selfridges of London
Items 12-23 were amongst the items of jewellery stolen at Nice Airport.  They were insured for a total of £133,600.
3.	Mr Yechiel had removed items 12-23 from the safety deposit box at Selfridges on 26 July 2004 so that Mrs Yechiel and their daughter could take them to Israel on 27 July, where they were to be fitted with clothes for the wedding.  On their return on 5 August, Mr Yechiel placed the jewellery in the safe at his home in Hampstead.  At the time of the theft on 18 August 2004, the jewellery had been out of the Selfridges safe deposit box for about 23 days, well in excess of the 14 days permitted under the Policy.  Norwich Union was never asked to agree to extend the 14 day limit.
4.	After considerable negotiation, Norwich Union agreed to pay Mr Yechiel’s claim in part but it declined to pay the claim in relation to items 12-23 on the ground that the 14 day limit of cover during the Period of Insurance had expired.  Mr Yechiel did not challenge that refusal – and it is difficult to see how he could have done.  The result was that that Mr Yechiel has been unable to make a recovery in respect of the theft of family jewellery insured for £133,600. 
5.	In these proceedings, Mr Yechiel claims damages against the Defendant, Kerry London Limited (“Kerry”), his insurance brokers, for failing to notify Norwich Union that the jewellery would be out of the Selfridges safe deposit box for more than 14 days.  Although not pleaded, it is presumably his case that, had Norwich Union been notified, it would have agreed to extend the cover for an additional period.
6.	His case is dependent on proving that he informed Kerry that the jewellery would be out of the Selfridges safe custody box beyond the 14 day limit and that, implicitly at least, he asked Kerry to approach Norwich Union to extend the period of cover.  
7.	Mr Yechiel’s case is that on 6 August 2004 he sent the following handwritten letter to Kerry by fax and post:
“06.08.04
Mr Paul Russel
Clare House
Worton Court
Worton Road
Isleworth
Middlesex TW7 6ER
Policy No – 013217329

Dear Paul,
I would like to inform you that my son is going to get married in South of France on 05.09.04.
Therefore we will be travelling to Nice on 18.08.04 with jewellery from the safes of both Selfridges and home.  We will be returning to London on 08.09.04.
Yours sincerely,
[signed]
S. Yechiel”
Kerry deny having received this letter by fax or post.
8.	On 9 October 2009 Flaux J. ordered a trial of the following preliminary issues:
(1)	Whether the letter of 6 August 2004 was sent to the Defendant by the Claimant prior to 18 August 2004, and if so by what means was it sent?
(2)	Whether the letter of 6 August was received by the Defendant prior to 18 August 2004, and, if so, when and by whom was it received?
9.	The trial of this issue took place on 28 January 2010 and I heard oral evidence from:
Mr Yechiel and Anthony Wagner of Wagner & Associates, who was appointed as Mr Yechiel’s loss assessor in May 2005 in place of Fisher & Co.
Mark Cotton, a director of Kerry, and David Hine, a former employee of Kerry.
Mr Yechiel’s case in more detail
10.	Mr Yechiel told me that he was well aware of the policy limit as regards items 12-23 and what items had to be retained in a bank or safe deposit box.  If the specified items were removed from Selfridges for more than 14 days, he had to inform Norwich Union.  He accompanied his wife and daughter to Israel, returning on 5 August.  On his return the jewellery was placed in the apartment safe which had been approved by Norwich Union.  He knew that he would be travelling with his family to Nice on 18 August.  On 6 August, he was at home as he and his family had a lot to do preparing for the wedding.  “Because I was aware I had to notify Norwich Union I was travelling abroad to Nice with the jewellery in 12 days I wanted to notify them immediately so that is why I faxed and posted the letter to Kerry”.  He did not have a fax machine at home, although he had one in his office (which did not have a secretarial staff).  “Because I wanted to get the letter to Kerry immediately and I didn’t know when I would next be going to the office I decided to fax the letter from our local grocery store, Bina in Golders Green High Road, where I know they had a fax machine. ... I decided to use Bina’s fax machine to fax the letter and then post the letter in the letter box close to Bina’s store.  ... I actually posted the letter in the letter box that afternoon ... I went into the store and asked to use the fax machine.  A young man took the letter from me, faxed the letter to the number I gave him and he then handed back the letter to me together with the fax transmission sheet.  I then put the letter in the envelope and walked to the post box where I posted the letter”. 
11.	Mr Yechiel exhibited to his witness statement a copy of a “TX Report” purporting to show that a 1 page document was sent to 85697331 starting at 06/08 16:14 and lasting 21 seconds.  Mr Yechiel said that the original had been on shiny fax roll paper.  He was asked by Mr Parker in cross examination how he was able to produce a copy of the letter, given that he had posted it.  He said that he had asked the shop assistant to copy the letter for him as well and a copy was provided, also on shiny paper.  All the copies of these documents produced to the Court are on ordinary copying paper.  I asked to see the originals, but they could not be produced.
Events after the theft
12.	Mr Yechiel reported the theft to Fisher & Co, loss assessors, who in turn reported it to Kerry on 19 August 2004.  Norwich Union were notified.  On 10 September 2004, Mr Baily of Fisher & Co wrote to Norwich Union (Paul Russel) (sic) at Kerry enclosing a copy of their written mandate.   The letter referred to the letter of 6 August, which was also enclosed, and asked for a copy of Kerry’s reply.  The letter continued:
“Our client was extremely busy at this time with the preparations for his son’s wedding in Monte Carlo and he cannot remember if he received a reply or not.”
	It made no mention of how the letter of 6 August had been sent to Kerry.
13.	 On receipt of this letter, Kerry conducted an investigation. Mr Robson was the claims account handler.  On 17 September David Hine sent him a memo stating that, further to a conversation the day before, “I can confirm that both Paul Russell and myself have not received a copy on Mr Yechiel’s correspondence dated the 6th August 2004”.  Later that day, Mr Robson informed Norwich Union that the letter of 6 August was never received by Kerry.
14.	Norwich Union appointed Cunningham Lindsey as loss adjusters.  Mr Hurry of that firm met Mr and Mrs Yechiel on 28 September and took a statement.  The draft was approved by Mr and Mrs Yechiel who signed it on 18 November.  The statement stated that the letter of 6 August was sent to Kerry but it did not say how.  Mr Hurry has subsequently confirmed however that he did recall Mr Yechiel indicating that the letter “had indeed been sent by fax”.  He did not ask if the letter was also posted and no fax receipt was produced.
15.	Cunningham Lindsey also made enquiries of Kerry in November 2004 about the letter and received a detailed response explaining the company’s systems and denying receipt.  Unfortunately Kerry was not told that Mr Yechiel was claiming that the letter had been faxed and the assumption was that Mr Yechiel was asserting that the letter had been sent in the post.
16.	On 14 December Cunningham Lindsey indicated that Norwich Union were prepared to settle the insurance claim, but rejected liability for items normally kept in the bank on the basis that the 14 days cover had been exceeded without approval from Norwich Union.  	
17.	In response to a chasing letter from Fisher & Co dated 16 December 2004, on 23 December Kerry replied to the letter dated 10 September stating that they had been assisting the loss adjuster and that “our enquiries revealed that no such correspondence was received”.  Mr Yechiel wrote again in rather formal terms on 8 February 2005.  He stated:
“For the avoidance of doubt I can confirm that on 6th August 2004 I posted a letter to you at Kerry London Limited advising you of my son’s wedding and the fact that I had withdrawn jewellery from the safety deposit boxes (Selfridges and home).  I have no reason to doubt that the letter was received by you as I have not since received any notification of non-delivery by the Post Office.  I am surprised, therefore, to hear that neither you nor Kerry London Limited have confirmed receipt of my letter.”
	No mention was made of a fax.
18.	Kerry responded on 17 February 2005 denying receipt of any communication from Mr Yechiel.
19.	Mr Wagner was appointed as Mr Yechiel’s loss assessor in place of Fisher & Co in May 2005.  On 16 November 2005 he telephoned Mr Cotton at Kerry.  Mr Cotton made a handwritten note during the call and I have been shown the original.  The note records:
“Client phoned to say jewellery out of safe and advised spoke to broker – put in writing – faxed it over got fax proof”
What Mr Wagner was saying was that Mr Yechiel had first telephoned Kerry to tell them that the jewellery had been out of the safe and the 14 day limit would be exceeded.  He had been told to put it in writing and had sent the letter by fax.  Fax proof existed.  Towards the end of the discussion, Mr Wagner offered to fax the TX report to Mr Cotton.  Mr Wagner got a secretary to do so and Mr Cotton took the message, as it arrived, off the fax machine in Kerry’s office.
20.	Mr Cotton produced a copy of the TX report he had received from Mr Wagner.  The document purported to show that a one page document was sent to 85697331 starting at 06/08 15:17 and lasting 21 seconds.  The copy produced contains at the bottom of the page an upside down print out recording that it was sent at 1220 on 16 November 2005.  The fax number is Mr Wagner’s office number.  Mr Cotton’s handwritten note records that the BT telecom proof that the fax went through to 85697331 was dated 06/08 st[art] time 15:17 21 secs.  The receipt of this fax from Mr Wagner is confirmed in Kerry’s machine generated fax records.
21.	I mention this detail because Mr Wagner denies that he ever had a TX report timed at 1517 on 6 August in his possession.  His evidence was that the only TX report he ever had was the one timed at 1614 and this was the report that he forwarded to Mr Cotton.
22.	On 8 April 2008, Sherringtons, solicitors then acting for Mr Yechiel sent a copy of the 1614 TX Report to WHCG, Kerry’s solicitors.  They also explained that Mr Yechiel did not have the original and was unable to recall what happened to it.  According to Mr Cotton, Kerry spotted the apparent inconsistency immediately.
Kerry’s case in more detail
23.	Mr Cotton gave evidence as to Kerry’s systems at the time.  The fax machine for 0208 569 7331 was situated next to the receptionist.  On receipt of a fax, the person to whom the fax was sent would be called by reception to collect it.  If the person was out or not specified, the receptionist would have called the relevant section head to collect it.  If there was uncertainty as to the correct recipient, the receptionist would look up client details on the computer and contact the appropriate person or department to which/whom it should be sent.  Post was opened by the post department, date stamped and then forwarded to the relevant section head and distributed as appropriate.  
24.	Mr Cotton confirmed that there was no record of receipt of a fax or posted letter.  Mr Hine and Mr Russell both denied receipt (as Mr Hine confirmed in his evidence). Mr Cotton did not accept that the letter of 6 August, if received, could have gone astray.  By the time Kerry were told for the first time in November 2005 (over 15 months later) that the letter had allegedly been faxed, the fax record for the machine, which may well have been replaced in the interim, was no longer available.
25.	I should record one other important matter that emerged from Mr Cotton’s evidence.  He was asked whether there was any reason why Mr Russell was not giving evidence.  He replied that Mr Russell was no longer working for the company.  He had left two or three years ago and not on good terms.  Asked to expand he said that Mr Russell had been dismissed for falsifying documents at the request of an insurance company.  He believed that Mr Russell’s behaviour was thoroughly underhand.   Up to the time of discovery, there was no reason to believe anything other than that he was a man of integrity.  In re-examination he confirmed that the accusation against Mr Russell was very different from the suggestion that he might deliberately have destroyed or concealed a fax or letter received from Mr Yechiel.

My conclusion
26.	I am faced with the factual question as to whether I believe Mr Yechiel’s evidence that he sent the letter of 6 August by fax and post and whether I accept Kerry’s denials of receipt, especially in the light of what has emerged about Mr Russell.  In reaching my conclusion I have paid particular attention to the contemporary documents and the overall probabilities, following the approach of Robert Goff LJ in Armagas Ltd. v. Mundogas S.A. (“The Ocean Frost”) [1985] 1 Lloyd’s Rep 1 at 57, as approved by the Privy Council in Grace Shipping v Sharp & Co. [1987] 1 Lloyd’s Rep 207 at 215:
“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”

Of course, this is not a fraud case, but Robert Goff LJ’s approach is of much wider application.
27.	I have reached the clear conclusion that the letter of 6 August 2004 was not sent to Kerry on that date.  It was fabricated by Mr Yechiel, as were both TX reports.  I have formed that stark judgment for the following reasons:
(1)	  The files produced by Kerry for itself and its predecessor in business, Mailfox General Insurance Services Ltd (“Mailfox”), show that Mr Yechiel was inefficient at dealing with requests from Norwich Union.  It took a very long time and many reminders to get him to have valuable jewellery valued professionally.
(2)	It was not his practice to deal with Mailfox or Kerry by letter.  He would telephone them.  There is only one piece of correspondence from him on file, and that was a compliments slip enclosing other documents.  It would have been more natural for him to telephone Mr Russell at Kerry, at least in the first instance, rather than drive to the Bina store (since closed) to send a fax and post a letter.
(3)	I do not see why, if Mr Yechiel faxed the letter to Kerry, he would also have posted it.
(4)	The letter is far from open and frank about how long the jewellery had been out of safe custody.
(5)	Mr Yechiel has been unable to produce the original shiny copy of the letter or the TX report.  It must have been obvious very early on that these were critical pieces of evidence in relation to a large loss.  Mr Yechiel claims to be unable to remember what happened to these original documents.  I find that quite incredible.
(6)	Mr Yechiel received no response from Kerry to his letter of 6 August.  The letter concerned valuable jewellery.  As at 6 August, 11 days had elapsed since the jewellery was removed from the Selfridges safe deposit box.  The expiry of the 14 day limit was imminent, as Mr Yechiel must have appreciated.  Having received no immediate response, I think he would have been bound to have called Kerry for confirmation of receipt and that they were dealing with it.  All the more so, when, as I am sure he must have realised, he did not just need to notify Norwich Union that the 14 day limit would be exceeded: he needed their agreement to extend the 14 day limit, and it was inevitable that (at least) an additional premium would be due.  Insurers would be bound also to ask about security precautions whilst jewellery was in France.  Mr Yechiel’s answer is that he was very busy preparing for the wedding – maybe, but not so busy as to overlook the need for a response from Kerry and Norwich Union on an important matter.
(7)	The letter from Fisher & Co, sent on Mr Yechiel’s instructions, is strange.  Mr Yechiel would surely remember if he had received a reply from Kerry. 
(8)	Mr Yechiel’s explanations as to how the letter reached Kerry have been various and unconvincing.  If he had faxed the letter, I would have expected him to have said so to Kerry promptly and to have produced the TX report as proof.  I accept that he told Mr Hurry of Cunningham Lindsey that he had faxed the letter, but he never produced any evidence of it and he made no reference to it in the approved statement, which he must have realised was an important document.  He did not tell Mr Hurry that he had also posted the letter.
(9)	Mr Yechiel’s letter to Kerry dated 8 February was a carefully prepared and rather formal document.  It stated that the letter had been posted.  It said nothing about it having been faxed – this was after Kerry had denied receipt and it would seem obvious that this was necessary to assert and prove that it had been sent by fax.
(10)	The first time that Kerry were told that Mr Yechiel claimed to have faxed the letter was on 16 November 2005, over 15 months after the letter had supposedly been sent.  There is a dispute about what TX report was sent by Mr Wagner to Mr Cotton.  I think that it is overwhelmingly clear that the TX report faxed to Mr Cotton was the one purporting to have been sent at 1517.  Mr Wagner vigorously disputed this.  I am sure that he is an admirable and tough negotiator for his clients against insurance companies.  He struck me however as far from independent and as an advocate for Mr Yechiel.  His evidence became absurd when he claimed that his secretary could not have fed the TX report into the fax machine back to front, even when in a hurry.  In my judgment it is perfectly obvious that the TX report sent to Mr Cotton was that timed at 1517. 
(11)	Mr Yechiel is quite unable to explain why he (or his representative) has produced two different TX reports.  He has never suggested and does not contend that the letter was faxed twice.   It would be inconsistent with his evidence to find that he did so.  Mr Couser said that this was a mystery and argued that, if Mr Yechiel had manufactured a TX report, he would not make the mistake of creating two.  I disagree.  Fraudsters are not that clever and make mistakes.  I am satisfied that it would not be difficult to create a forged TX report on a modern word processor.  It would be more difficult to produce one printed on shiny fax roll paper.
(12)	I am sure that Mr Wagner would not have told Mr Cotton that Mr Yechiel had telephoned Kerry before sending the letter, unless Mr Yechiel had so instructed him.  In his evidence, Mr Yechiel did not contend that he had made this call.  I think that this was a thoroughly unconvincing attempt to gild the lily.
(13)	I am very conscious that Mr Russell’s act of dishonesty would mean that, if he had been called to give evidence, there would have been real questions as to his credibility in denying receipt of the letter of 6 August.   However, before his denial became significant, I would need to accept Mr Yechiel’s evidence provisionally.  That I cannot do.  Moreover, I have reviewed Mailfox’s/Kerry’s files.  They appear to have been efficient brokers and to have maintained good records of oral conversations with Mr Yechiel.  There was no reason for Mr Russell to fail to deal with a letter from Mr Yechiel which was bound to lead to a demand for substantial additional premium and extra brokerage.  If the letter was faxed and posted to Kerry, the high probability is that both would have reached Kerry.  I think it very improbable that both would have been overlooked. 
(14)	I should add that I bear in mind Mr Couser’s legitimate complaint that Kerry have been slow in disclosing relevant documents.  I am satisfied however that they have now disclosed all relevant documents, including original files and that there is nothing sinister in the delay.  By contrast, the failure of Mr Yechiel to produce important original documents is telling.
28.	Individually most of these points may not be conclusive.  Cumulatively, they are compelling.  I conclude that Mr Yechiel failed to get Norwich Union’s agreement to extend the 14 day limit.  He may have overlooked the requirement (contrary to his whole evidence) or he may have thought that he would get away with it without the hassle and cost of getting an extension.  Of course, it never occurred to him that the disastrous theft would occur.  After the theft of property insured at £133,600, realising that the 14 day limit had been exceeded and that Norwich Union would be able to prove this via Selfridges’ records, he decided to falsify a letter to Kerry. He may have thought that this would persuade Norwich Union to pay up.
29.	I therefore hold that the letter dated 6 August 2004 was not sent to Kerry by Mr Yechiel by fax or post and that it was not received.  The letter (and two TX reports) were later fabricated by him and the first occasion on which Kerry received the letter was under cover of Fisher & Co’s letter dated 10 September 2004.
30.	It is essential to Mr Yechiel’s case against Kerry that the letter of 6 August was sent and received on that date or shortly afterwards.  I find that it was not.  It follows that this action must be dismissed.