This sounds and looks like a real 'p*** take'. What took them so long to get mad?

This is obviously a civil case, which means the case is decided on the balance of probability rather than purely on legal definitions. Several years ago, the company I worked for had a similar writ about work we had done years previously. The list of complaints was a mile long plus the 'stress' etc etc. You get the picture. Even though we had been paid and had a satisfaction note signed. Our solicitor ran rings around them, questioned everything, muddied the waters so much the case was unpresentable to a court. It is annoying and it cost us about £800 plus the work digging through our records etc, but you are stuck with it. If you do the same they will probably go away. There is no real way to get back at them unless you can prove a vexatious claim charge, which we did. We employed a detective who made some enquiries and revealed that they were in deep financial trouble amongst other nefarious activities. When this was leveled at their solicitor it went very quiet. Then it went away. After 6 years it is out of time anyway. Unfortunately they did not have a pot to p**s in so we did not pursue a counter claim.

Do some digging on the internet, you may be amazed what you find to help you. Keep us informed and keep your chin up, this goes on for some time. Good luck. Concrete.

Bazomis, what rotten luck. I have no experience of this, but from what you say, you have done the right thing, put it in the hands of the insurer who have appointed a solicitor who presumably specialises in fraudulent claims.

Clutching at straws slightly, would the "victim" not have had a letter 3 years ago stating the the £851 was in "full and final settlement"?

Easy to say, but other than what Brit in Germany suggests (digging out any old letters, diagrams, etc), the best thing to do is try and forget it and get on with life. The chances are you will hear nothing further for months and nothing bad will come of it.