Crawford Adjusters v Sagicor

JurisdictionCayman Islands
CourtCourt of Appeal (Cayman Islands)
Judge(Chadwick, P., Mottley and Campbell, JJ.A.)
Judgment Date05 April 2012
Date05 April 2012
Court of Appeal

(Chadwick, P., Mottley and Campbell, JJ.A.)


I. Jacob and G. Hampson for the appellants;

M. Roberts and N.P. Dunne for the respondents.

Cases cited:

(1) Broxton v. McClelland (No. 1), [1995] EMLR 485, considered.

(2) Gilding v. EyreENR(1861), 10 C.B.N.S. 592; 142 E.R. 584, considered.

(3) Goldsmith v. Sperrings Ltd., [1977] 1 W.L.R 478; [1977] 2 All E.R. 566, considered.

(4) Grainger v. HillENR(1838), 4 Bing. N.C. 212; 132 E.R. 769, considered.

(5) Gregory v. Portsmouth City Council, [2000] 1 A.C. 419; [2000] 2 W.L.R. 306; [2000] 1 All E.R. 560, referred to.

(6) JSC BTA Bank v. Ablyazov, [2011] 1 W.L.R. 2996; [2011] EWHC 1136 (Comm), considered.

(7) Land Secs. Plc v. Fladgate Fielder, [2010] Ch. 467; [2010] 2 W.L.R. 1265; [2010] 2 All E.R. 741; [2009] EWCA Civ 1402, considered.

(8) Metall & Rohstoff A.G. v. Donaldson Lufkin & Jenrette Inc., [1990] 1 Q.B. 391; [1989] 3 W.L.R. 563; [1989] 3 All E.R. 14, considered.

(9) Speed Seal Products Ltd. v. Paddington, [1985] 1 W.L.R. 1327; [1986] 1 All E.R. 91; [1986] F.S.R. 309, referred to.

Tort-abuse of civil process-improper purpose-may not be abuse of process to bring claim with improper motive if plaintiff also believes in its legitimacy-allegations of fraud not to be made lightly but risk of deterring genuine claims if purpose readily open to scrutiny-penal order for costs may be appropriate remedy

The respondents sought damages from the appellants in the Grand Court for fraud and conspiracy.

The second respondents” building development was damaged by Hurricane Ivan. The first respondent, Sagicor, was their insurer. The first appellant, Crawford Adjusters, was appointed by Sagicor to adjust the loss and the second appellant, Bould Paterson, was engaged for its reinstatement. The third appellant, Mr. Paterson, was at all material times a director of Crawford Adjusters and Bould Paterson. John and Robert Hurlstone and their companies (‘Hurlstones’) were contracted to carry out the reinstatement and Sagicor advanced CI$3m. to them for this purpose.

When Mr. Delessio-an experienced loss adjuster-took up a senior post at Sagicor, he became concerned that the appellants and Hurlstones had conspired to defraud Sagicor and approached attorneys on its behalf. He arranged for a surveyor to assess the value of the work that had been done and the surveyor”s report was consistent with his own perceptions of overcharging. Mr. Delessio was aware that the report was badly flawed and not a proper basis in itself for the commencement of a fraud and conspiracy action, but he did not inform his attorneys of this. He and Sagicor concluded that the value of the work done was roughly CI$1.3m., and Sagicor filed a statement of claim alleging fraud and conspiracy. The allegations made in the pleadings received wide publicity through a newspaper article which Mr. Delessio caused to be published. The appellants claimed that as a consequence of this publication their reputations were gravely damaged and their businesses effectively destroyed. Following the issue of proceedings, the action progressed slowly towards trial and, on the eve of the hearing, Sagicor sought leave to discontinue.

The judge, in granting leave, awarded the appellants their costs on an indemnity basis.

The appellants amended their counterclaim to the original proceedings to claim, inter alia, damages for the tort of abuse of civil process. The Grand Court (Henderson, J.) (in proceedings reported at 2011 (1) CILR 130) found that Mr. Delessio”s dislike of Mr. Paterson and desire to harm him was the dominant factor which led him to present what should have been an ordinary case of overcharging as one of fraud, but could not conclude on the evidence that a malicious attack on Mr. Paterson was the sole reason for the litigation; Mr. Delessio”s unreasonable but genuinely held belief that Sagicor had been defrauded was also a significant contributing factor. The court dismissed the appellants” counterclaim as (i) in civil actions, this tort had only previously been applied in limited categories of proceedings which did not apply here; moreover, high authority had held that no extension was necessary or desirable; and (ii) it had not been proved that Mr. Delessio had pursued an object outside the scope of the process of the court-even if the aim of the proceedings was to harm Mr. Paterson, this was a mere motive, and it was not tortious to use the legal process in the manner for which it was designed, albeit with an improper motive; nor was the planted newspaper article confirmation of an object outside the scope of the process.

The appellants submitted that (i) contrary to the judge”s findings, Mr. Delessio”s sole motive was to destroy Mr. Paterson”s reputation: the proceedings were not instituted or pursued with a view to obtaining any relief but based on a report that Mr. Delessio knew to be flawed, which fact he failed to disclose to his attorneys; the delay that followed demonstrated that he had no intention of bringing the action to trial; and his disclosure of the pleadings to the press demonstrated his objective of damaging Mr. Paterson; (ii) even if this were only his predominant purpose, this was sufficient to establish the tort; and (iii) no extraneous factor such as a threat by Sagicor to Mr. Paterson or an attempt to exert pressure upon him in connection with the original proceedings was required to establish the tort-though there was reliable evidence of such behaviour. The respondents submitted in reply that (i) there were no findings to support the submission that the delay had been deliberate so as to prevent the action reaching trial; and (ii) a predominant purpose was insufficient to establish the tort.

Held, dismissing the appeal:

Sagicor would not be liable for the tort of abuse of civil process. While an allegation of fraud was not to be made lightly in legal proceedings, the court recognized the risk of deterring those with legitimate claims from bringing them if they were readily open to having their purpose in doing so called into question. Therefore, even if it were accepted that Mr. Delessio”s motive was to damage Mr. Paterson, in the light of the judge”s finding that Mr. Delessio genuinely believed that Sagicor had been defrauded and that this was a contributing factor of some significance, the

issue of proceedings could not be said to have amounted to an abuse of process. The court would not infer from Mr. Delessio”s delay that he had no intention to bring the action to trial-the judge did not make any findings of fact on this issue and Mr. Delessio”s attorneys” evidence was that the delay was not deliberate. The appropriate remedy was a penal order for costs, as was made in the present case (para. 20; paras. 24–28).

1 CAMPBELL, J.A.: This is an appeal from a decision of Henderson, J. (in proceedings reported at 2011 (1) CILR 130), dismissing the re-amended counterclaim of the appellants that the pleading, prosecution and presentation of a case against them by the respondents constituted an abuse of the process of the court, both as to the manner in which this was done and the purpose for which it was done. The factual background and the findings reached by the learned trial judge...

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