Markel in legal battle over money owed to sub-prime lender by surveyor in liquidation
Sub-prime lender UK Acorn Finance is seeking £14m plus interest from Markel, because the insurer indemnified Colin Lilley Surveyors (CLS), which is in liquidation.
A judge ordered CLS to pay up the funds to UK Acorn Finance, but the company has no money in the pot to do so.
Instead, UK Acorn Finance is seeking the money from Markel, court documents show.
However, the insurer argues that it does not have to pay out on the policy, which had a £2.5m limit until June 2011 and £3m thereafter, because the surveyor lied about its business dealings.
While UK Acorn Finance argues in the documents that CLS’ answers to Markel’s queries regarding businesses it worked with “had the ring of truth”, the insurer disagrees.
Markel says that it only gave terms of renewal to CLS with the “utmost reluctance”, though it had worked with the company for 11 years.
CLS “dishonest and intended to deceive”, says Markel
It says that CLS was “dishonest and intended to deceive” when it renewed its policy in 2013, hiding its business with sub-prime lenders such as Simply Bridging, Waterman Capital and the claimant.
According to the court documents, was also working with Northern Rock, which infamously collapsed and had to be nationalised in 2008 at the start of the financial crisis.
Markel argues that the claimant itself was sub-prime and lending on 3-12 month bridging terms, without offers of term funding and without exit plans for borrowers.
Indeed, UK Acorn Finance had previously been described by Markel as “the broker partner” of the now notorious Connaught No3 Fund, which it defaulted on in 2012.
The Serious Fraud Office (SFO) dropped an investigation into UK Acorn Finance’s practices and treatment of farmers, who it sold high-interest loans to, in Autumn 2016, reports show.
When Markel questioned CLS about its work with sub-prime lenders, it claims that CLS failed to provide a decent explanation.
Markel’s defence reads: “Such limited effort at an explanation as was tendered did not establish to the defendant’s reasonable satisfaction that the aforesaid misrepresentations were innocent and free from any fraudulent conduct or intent to deceive.”
It therefore refused to pay out over the policy in February 2016, court documents show.
But UK Acorn Finance argues that Markel has no “cogent evidence” of fraud and blasts the insurer’s decision not to provide cover as “wrongful and irrational”.
The case continues.