Sagicor Ins v Crawford

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: (Henderson, J.)
• Judgment Date: 14 February 2011
• Date: 14 February 2011

SAGICOR GENERAL INSURANCE (CAYMAN) LIMITED and PROPRIETORS OF STRATA PLAN No. 151

and

CRAWFORD ADJUSTERS (CAYMAN) LIMITED and SIX OTHERS

(Henderson, J.)

Grand Court, Civil Division

Tort-abuse of civil process-elements of tort-no general tort of abuse of civil process-applies only to limited categories of proceedings-preferable to protect defendants through other related torts and remedies, e.g. undertaking as to damage caused by injunction

Civil Procedure-undertakings in damages-type and calculation of damages-damages to be calculated on contractual basis, i.e. party to be put in position would have been in if injunction never granted-burden of proof on party seeking damages to show that loss caused by injunction-if loss results from not doing enjoined activity, inferred that caused by injunction-‘but for’ test used to exclude irrelevant causes-if both injunction and proceedings themselves contributed to loss, court to ask which was ‘operating cause’

Civil Procedure-undertakings in damages-type and calculation of damages-aggravated damages awarded pursuant to undertaking for failure to disclose material facts on application for Mareva injunction-

awarded as additional compensation for injured feelings if justifiably heightened by wrongdoer”s motive or behaviour-exemplary damages not awarded since unavailable for behaviour in obtaining Mareva injunction

Civil Procedure-undertakings in damages-type and calculation of damages-no reduction in damages awarded pursuant to undertaking for failure to apply to set aside injunction if advised by attorneys that would be long and costly-party claiming damages pursuant to undertaking under duty to act reasonably to mitigate loss-burden of proving failure to mitigate rests with party alleging it-party not required to do anything outside ordinary course of business

Held, awarding damages to the Hurlstone parties:

Agency of Mr. Delessio

(1) The state of mind of Mr. Delessio would be attributed to Sagicor for the purposes of assessing its intention, since he represented the company”s ‘directing mind and will,’ or was the person whose functions within the company led to the conclusion that his state of mind must be regarded as that of the company. Given Mr. Delessio”s influence over the decision to commence the action, and the fact that he provided virtually all of the instructions to the attorneys preceding its commencement and the application for the Mareva injunction, the court was satisfied that he was the directing mind and will of Sagicor with respect to the action at all relevant times (paras. 8–9; paras. 14–15).

(2) Furthermore, the court would hold Sagicor vicariously liable for torts committed by Mr. Delessio. A company would be liable for torts committed by its employee if it had authorized them, or if the employee had wrongfully carried out an authorized activity. An employer”s liability extended to all torts committed by its employee when purporting to act in the course of its business, including fraud. Further, an employer could be vicariously liable for an employee”s tort if it was so closely connected to his employment that vicarious liability would be fair and just. However, each case would be considered on its particular circumstances, and an employer would not necessarily be held liable for acts of personal vengeance or spite. Here, Mr. Delessio”s motivation in initiating the

lawsuit was not entirely personal-rather, he believed that his employer had been defrauded. Coming to such a conclusion was well within the course of his employment, as were his dealings with the attorneys and other individuals. Although it was true that he disliked Mr. Paterson, this dislike came from their business relationship, which arose from his employment. His actions and state of mind were so closely connected with his employment that it would be fair and just to hold Sagicor liable vicariously, if liability on the part of Mr. Delessio were otherwise established (paras. 10–13).

Abuse of civil process and malicious prosecution

(3) Sagicor would not be liable to the Crawford or Hurlstone parties for the closely-related torts of abuse of civil process or malicious prosecution arising from the proceedings generally. In civil actions, these torts had only previously been applied in limited categories of proceedings, and the original proceedings did not belong to any of those categories. Moreover, House of Lords authority had held that no extension to civil proceedings generally was necessary or desirable. In the absence of compelling reasons to the contrary, the court would follow this authority, and the Crawford parties would be unable to recover beyond an award of indemnity costs (paras. 52–53).

(4) Moreover, even if recovery under the tort of abuse of civil process were in principle available to the Crawford and Hurlstone parties, the requirements of that tort had not been satisfied. A party would only be liable for abuse of civil process if it had abused the legal process to effect an object not within its scope, its predominant purpose was one other than that for which the process was designed, and it had thereby caused its opponents damage. A party would not be liable simply on the basis of an improper motive: the party needed to have pursued an object outside the legitimately-available remedies. The suggestion that Sagicor had the improper object of exerting pressure on its opponents to settle the case was misguided, since it was usual and legitimate for a party to commence litigation intending to cause a settlement. Likewise, even if it were correct that the aim of the proceedings was to ‘destroy’ Mr. Paterson, it would not have been an abuse of civil process. The ‘destruction’ of another party, whilst a disagreeable motive, did not fall outside the range of legitimate remedies, since judgments and awards of damages often had such an effect. Nor was the planted newspaper article confirmation of an object outside the scope of the process. The claim of abuse of civil process against Sagicor could therefore not have succeeded, even if available (para. 17; paras. 42–48).

(5) However, had relief under the tort of malicious prosecution been available, the Crawford parties would have met its requirements, which were (a) that the proceedings had been determined in favour of the party alleging malicious prosecution; (b) that the proceedings had been instituted without reasonable and probable cause; (c) malice on the part of the prosecuting party; and (d) damage. It was clear that the proceedings had

been determined in favour of the Crawford parties and had no reasonable and probable cause. It was also the case that the proceedings had caused them damage. Moreover, Mr. Delessio”s dislike of Mr. Paterson and intent to harm him, when viewed in the light of his failure to warn the attorneys of the deficiencies in the report, amounted to proof of malice. Had recovery on the basis of malicious prosecution-or abuse of civil process-been available to the Crawford parties, the court would have awarded them special damages in the sum of CI$1.3m., as agreed by the parties. The court would further have awarded Mr. Paterson CI$35,000 in general damages for loss of reputation (paras. 54–55; para. 68; paras. 90–91).

(6) Nor would Sagicor be liable to the Hurlstone parties for the torts of abuse of civil process or malicious prosecution arising from the Mareva injunction. The traditional justification for limiting the categories of proceeding in which recovery under these torts was available was that there was no damage to the party sued: the court”s public refutation of the unfounded claim and a costs award were usually sufficient remedies. This, however, was not necessarily true of cases such as this, in which an ex parte injunction had caused immediate and unjustified harm, and several of the categories of case in which these torts had previously been applied involved an ex parte process (although the torts had not previously been applied to obtaining a Mareva injunction). Nonetheless, the House of Lords authority had held that it was generally more desirable to protect defendants through other related torts and remedies. In these circumstances, the Hurlstone parties had a satisfactory alternative remedy in Sagicor”s undertaking, which would cover a liberal assessment of all the damage to reputation caused by the allegations of fraud and conspiracy, since they were included in the injunction. The claims in abuse of civil process and malicious prosecution would be dismissed (paras. 18–22; paras. 36–38).

Defamation

(7) Sagicor would not be liable for defamation with respect to the filing and use of the statement of claim. The filing of the statement was protected by absolute privilege as a step taken in a judicial proceeding, which would not be defeated even if malice on the part of Sagicor were established (paras. 74–75).

Damages pursuant to the undertaking

(8) Sagicor would be liable to each of the Hurlstone parties pursuant to its undertaking to compensate for any loss caused by the injunction. Damages pursuant to such an undertaking were to be assessed on much the same basis as damages for breach of contract, i.e. the Hurlstone parties were entitled to be put as nearly as possible in the position they would have been in had the injunction never been granted. The burden of proof was with the Hurlstone parties to establish that the damage was caused by the injunction (as opposed to, e.g., the proceedings themselves). However, the court would take a relaxed, common-sense approach to causation. If it

appeared that loss was the result of the Hurlstone parties” not doing something which was prohibited by the injunction, the court would infer that the injunction caused the loss. A ‘but for’ test would be used to exclude irrelevant causes. If it appeared that both the injunction and the proceedings themselves had contributed to a loss, the court...