Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd

JurisdictionUK Non-devolved
CourtPrivy Council
JudgeLord Wilson,Lady Hale,Lord Kerr,Lord Sumption,Lord Neuberger
Judgment Date13 June 2013
Neutral Citation[2013] UKPC 17
Docket NumberAppeal No 0054 of 2012

[2013] UKPC 17

Privy Council


Lord Neuberger

Lady Hale

Lord Kerr

Lord Wilson

Lord Sumption

Appeal No 0054 of 2012

Crawford Adjusters and others
Sagicor General Insurance (Cayman) Limited and another


Isaac Ellis Jacob

Conn MacEvilly

(Instructed by Hampson & Co.Attorneys-at-Law, George Town)


Michael Roberts

Nicholas Dunne

(Instructed by Edwin Coe LLP, as agents for Walkers, George Town)

Heard on 22–23 January 2013

Lord Wilson

This appeal requires the Board to consider the scope of the closely related torts of abuse of process and malicious prosecution.


The appellants are Mr Alastair Paterson and two companies of which he is a director and which at all material times acted by him. For the purposes of this appeal I will personify all the appellants as Mr Paterson.


The respondent is Sagicor General Insurance (Cayman) Ltd ("Sagicor").


Mr Paterson appeals against an order of the Cayman Islands Court of Appeal, Cayman Islands, dated 5 April 2012. By a judgment delivered by Sir Anthony Campbell JA, with which Sir John Chadwick P and Elliott Mottley JA agreed, the court dismissed Mr Paterson's appeal against an order of the Grand Court of the Cayman Islands dated 14 February 2011. By a judgment delivered on that date Henderson J had dismissed Mr Paterson's counterclaim against Sagicor for damages.


Mr Paterson is a chartered surveyor resident in the Cayman Islands.


On 11 and 12 September 2004 Hurricane Ivan made landfall in Grand Cayman and caused substantial damage. It extensively damaged Windsor Village ("the Village"), a development of 35 residential units in six two-storey blocks along the shore. The proprietors of the Village had insured it with Sagicor against damage, including by hurricane.


Sagicor at once accepted that much of the damage caused to the Village was covered by the policy. On 24 September 2004 it appointed Mr Paterson to act as its loss adjuster in relation to the claim. Mr Scott, the chief executive officer of Sagicor, resided in the Village and was keen that the works of restoration should begin quickly. It was he who suggested that the works might be undertaken by one or other of two building companies of which Messrs John and Robert Hurlstone were directors. I will describe both companies and both men compendiously as Hurlstone.


Sagicor and the proprietors of the Village were both content that Hurlstone should undertake the works. It began the initial clean-up work on about 21 October 2004. But in the aftermath of the hurricane there was considerable chaos on the island. Building materials were in short supply and their cost had increased sharply. Little heavy equipment remained in working order. There was a severe shortage of motor vehicles. Construction workers were hard to find; Hurlstone had to employ hotel and bar workers, who demanded higher than normal hourly rates of pay. Water had devastated Hurlstone's offices and its computers had been destroyed.


It was partly for these reasons that paperwork apt to a project of such size was lacking. Engineers had produced a structural report and drawings for the reconstruction but a detailed scope of works was never produced and its absence caused considerable difficulty. A total contract price was never agreed between Hurlstone and the proprietors of the Village. The absence of specifications and bills of quantities disabled Hurlstone from offering a firm price. But in November 2004 it gave the proprietors a preliminary estimate in the sum of just over $5.5m; and the estimate came to Sagicor's attention. In this judgment all references to dollars are references to Cayman Islands dollars.


Hurlstone made clear to Mr Paterson and through him to Sagicor that it expected payments in advance to cover its likely expenditure. Between October 2004 and May 2005, on the recommendation of Mr Paterson, Sagicor made seven advance payments to Hurlstone which totalled $2.9m. The final three of the payments were also approved by another loss adjuster instructed by Sagicor although he expressed concern about the lack of detail in Mr Paterson's reports. Before recommending advances to Hurlstone, Mr Paterson visited its offices, inspected its invoices and sought carefully to review its work. By June 2005 Mr Paterson was close to finalising his adjustment of Sagicor's liability under the policy. For discussion he put forward figures, which Sagicor appeared to accept, that the total cost of the works of reconstruction at the Village would be in the sum of $6.5m, of which Sagicor would be liable for $5.5m. Hurlstone was pressing for a further advance on the basis that the total of the previous advances fell significantly short of the value of the works which it had so far done; but Mr Paterson agreed with Sagicor that no further advance would be made until a contract price had been agreed.


In June 2005 Mr Frank Delessio joined Sagicor as Senior Vice President. He was an experienced and able loss adjuster with an aggressive personality. He and Mr Paterson had known each other for several years. They were not fond of each other. Like many others, Mr Paterson considered Mr Delessio to be confrontational. In about 2001 Mr Paterson had inquired of the Cayman Immigration Department whether Mr Delessio held an appropriate work permit; and his inquiry had come to Mr Delessio's knowledge.


On arrival at Sagicor Mr Delessio began a detailed study of its liability for losses caused by the hurricane and in particular for the cost of works at the Village. He became concerned that there was a serious deficiency in the documentation to support the advance payments which had been made to Hurlstone on the recommendation of Mr Paterson. On behalf of Sagicor Mr Delessio instructed Mr Paterson to deal only with himself. He acquired scope sheets apparently prepared on behalf of Mr Paterson, which appeared to calculate Sagicor's total liability at $4.8m rather than $5.5m. He demanded that Mr Paterson should at once provide a full report outlining all costings. By that stage it would have been almost impossible for Mr Paterson to meet that demand; and, insofar as he could have met it in part, he could not have done so quickly.


In July 2005, apparently with the agreement of the proprietors, Mr Delessio told Hurlstone that it had been fired. It had completed about half the work and had expected to finish it in December 2005.


In July 2005 Mr Delessio stated that he intended to drive Mr Paterson out of business and to destroy him professionally. The judge found that Mr Delessio meant what he said. To one witness Mr Delessio seemed obsessed by a desire to damage Mr Paterson. He arranged for private investigators to place Mr Paterson under surveillance. He caused Sagicor to instruct Quin and Hampson, attorneys-at-law, to advise it; and, in its dealings with the attorneys, Sagicor acted through him. At its invitation the head of the Financial Crimes Unit of the Islands Police Service attended a meeting between him and the attorneys in case it should be concluded that Mr Paterson had committed a criminal offence.


In August 2005 Mr Delessio instructed Mr Purbrick, a chartered surveyor and loss adjuster in practice in England, to come to Grand Cayman and to assess the value of Hurlstone's work at the Village. Mr Purbrick spent five days on site. But, on the instruction of Mr Delessio, he did not speak to Mr Paterson or Hurlstone. Nor did he inquire of Hurlstone's subcontractors or suppliers about costs. Nor did he even consult the engineers who had produced the structural report and the drawings.


In September 2005 Mr Purbrick produced a preliminary report. In it he valued the work done by Hurlstone at $0.9m, of which $0.8m was said to be the responsibility of Sagicor. On Mr Delessio's instruction Mr Purbrick had made no allowance for the cost of any clean-up work. Mr Delessio thereupon caused the attorneys to instruct London counsel to advise whether Mr Paterson and Hurlstone had perpetrated a fraud on Sagicor. On the basis of Mr Purbrick's report counsel advised that Hurlstone's overcharging, approved by Mr Paterson, had been so gross as to be incapable of honest explanation. In about February 2006 Mr Purbrick wrote a second report in which he identified allegedly defective work by Hurlstone which caused him to reduce his estimate of the value of the work which it had done to $0.8m, of which $0.7m was said to be the responsibility of Sagicor. Both Sagicor and the proprietors of the Village instructed the attorneys to issue proceedings on their behalf.


On 28 February 2006, in the Grand Court, Sagicor and the proprietors issued a writ against Mr Paterson and Hurlstone. The statement of claim was squarely founded on Mr Purbrick's reports. The plaintiffs alleged that Sagicor had paid Hurlstone $2.9m for works for which it was liable to pay only $0.7m; that the payments had been made as a result of fraudulent misrepresentations about the value of the works on the part of Mr Paterson and Hurlstone; and that they had conspired together to make the misrepresentations. Sagicor claimed damages against them for deceit and conspiracy. The proprietors, however, soon amended their claim so that it was brought only against Hurlstone and only for breach of contract or by way of restitution; so they thereby dissociated themselves from the allegations of fraud and conspiracy.


On the date when the writ was issued Sagicor, not joined by the proprietors, applied ex parte to the Chief Justice for Mareva injunctions against Mr Paterson and Hurlstone. On the usual undertaking he granted the injunction against Hurlstone; but he held that the evidence of Mr Paterson's likely dissipation of assets was insufficient to...

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