Thames Water v Imber: High Court finds settlement fraud after defendant failed to disclose completed property sale

The High Court has granted summary judgement to Thames Water Utilities Limited in a fraudulent misrepresentation claim, ruling that a defendant had no realistic prospect of defending allegations arising from her failure to disclose a completed property sale during settlement negotiations.

In Thames Water Utilities Limited v Imber [2026] EWHC 2720 (KB), Deputy Master Marzec rescinded a settlement agreement and ordered the defendant to repay £225,000 received in settlement of a claim relating to repeated sewage flooding. Any further damages sought by Thames Water will be assessed separately.

The dispute originated in flooding at the defendant’s home in 2006 and 2007. Proceedings were settled in 2013, with Thames Water paying £500,000. Following a further flood in 2014, the defendant brought a second claim for uninsured losses, including an alleged diminution in the property’s market value.

An expert report obtained for the defendant valued the property at £817,000 on the hypothetical basis that it had never suffered flooding. The defendant maintained that the property was effectively unsaleable and claimed its full value as diminution in market value, alongside approximately £144,000 for other losses, including increased insurance premiums, relocation expenses and distress.

At mediation in July 2023, Thames Water disputed that the property had suffered any diminution in value. Negotiations continued after the mediation, culminating in a settlement agreement dated 6 September 2023, under which Thames Water agreed to pay £225,000 in full and final settlement.

However, the property had already been sold. The defendant had accepted an offer of £780,000 before the mediation, exchanged contracts on 2 August 2023 and completed the sale the following day. Thames Water said it had not been informed of the completed transaction before agreeing to settle.

The defendant denied dishonesty. Her case was that she had disclosed the accepted offer to the mediator, had not expected the sale to complete and believed her solicitor understood the position. She also maintained that she disclosed the completed sale to her solicitor on 6 September 2023 and was advised that it did not prevent settlement. The judge assessed the application on the assumption that her account was accurate, without making findings of misconduct against the solicitor.

Applying the principles in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) and King v Stiefel [2021] EWHC 1045 (Comm), the court acknowledged the need for caution when determining allegations of fraud summarily. However, it concluded that the evidence left no realistic prospect of the defendant successfully defending the claim.

The judge found that describing the property as unsaleable implied that it had not been sold and that no sale was expected. Those representations became false when the transaction completed. Given that diminution in value formed the principal component of the defendant’s claim, the completed sale fundamentally altered its factual basis.

The court also rejected the argument that Thames Water could not have been induced to settle because it had consistently maintained that the property remained saleable. Relying on Hayward v Zurich Insurance Co plc [2016] UKSC 48, the judge held that inducement did not require Thames Water to believe the original representation. The material question was whether it had influenced the settlement decision. Knowledge of the completed sale would plainly have affected negotiations.

On dishonesty, the court applied the two-stage test in Ivey v Genting Casinos UK Ltd [2017] UKSC 67, considering the defendant’s actual knowledge and beliefs before assessing her conduct against the standards of ordinary decent people.

The judge concluded that the defendant knew the property had been sold and that the central premise of her claim had changed. Disclosure of an accepted offer was insufficient because an anticipated transaction was materially different from a completed sale. The alleged subsequent disclosure to her solicitor did not correct the continuing representation before settlement.

The court held that ordinary decent people would regard it as dishonest to pursue and settle a claim founded on a property being unsaleable without disclosing that it had been sold. Summary judgement was entered, the settlement agreement rescinded and repayment of the £225,000 ordered. Further directions will govern the assessment of any damages claimed by Thames Water.