Crawford Adjusters v. Sagicor General - Hampson and Company change centuries-old law

On 13 June 2013 the Commonwealth’s highest court, the Privy Council in London, awarded Caymanian surveyor, Alastair Paterson, substantial damages at the end of a legal saga, which began seven years previously in the aftermath of Hurricane Ivan. The Privy Council judgment not only completely vindicated Mr Paterson, who saw his reputation gravely damaged by the legal action brought against him originally by Cayman General Insurance Company Ltd, (now Sagicor General Insurance (Cayman) Limited), but also, in a ground-breaking departure from law that has stood for over 300 years, the Privy Council decided that Mr. Paterson could be awarded damages for loss caused by malicious and unjustified civil proceedings.

In this radical departure from a centuries-old restriction, the Privy Council agreed with the arguments of Mr Paterson’s legal team (Isaac E. Jacob of 9 Stone Buildings, Lincoln’s Inn, London and Cayman Islands attorneys, Graham Hampson and Paul Keeble, of Hampson and Company) that he should receive substantial damages for the injury caused to his business, reputation and health by reason of Sagicor’s unjustified and malicious civil proceedings. The Grand Court and the Cayman Islands Court of Appeal had previously ruled that no damages could be awarded for a maliciously brought civil suit. Persuaded by the arguments of Mr Jacob, instructed by Hampson and Company, and despite hundreds of years of contrary precedent, the Privy Council overturned the decisions of the Court of Appeal and the Grand Court.

In 2006, Sagicor sued Mr Paterson and Hurlstone Construction who were both employed to assist in the rebuilding of Windsor Village after Hurricane Ivan. Sagicor alleged that Mr Paterson and Hurlstone had conspired to defraud it. The allegations of fraud and conspiracy were widely disseminated in Cayman and, as the Privy Council pointed out, were reported in the Caymanian Compass. The Court found that the wrongful allegations caused “massive damage to Mr Paterson’s reputation and to the willingness of third parties to employ him”, even though both he and Hurlstone had filed defences in which all the allegations were denied. In 2008, only days before the trial of its claim in the Grand Court, Sagicor abandoned it. As Judge Henderson of the Grand Court said at the time in his ruling of 9 December 2008, “From the failure of these plaintiffs to prosecute their case, I infer that they have never been in possession of a body of evidence capable of establishing fraud or conspiracy.”

By then however, severe damage to Mr Paterson’s reputation, business and family life had been done. Mr Paterson had sought justice in the form of compensation ever since. The Grand Court and the Court of Appeal dismissed his subsequent claims for damages for abuse of the court’s processes and for civil malicious prosecution. Both courts held that the law traditionally did not award damages to people who had suffered as a result of maliciously brought civil proceedings – for fear of a flood of actions by successful but aggrieved litigants.

The Privy Council ruling meant that Mr Paterson’s legal team not only comprehensively cleared his name, but also obtained substantial compensation for him. His legal team also achieved a very significant change in the law of England, overturning a centuries-old restriction against seeking damages from those who bring a civil claim for malicious reasons. The Privy Council’s judgment ran to 69 pages as the five Law Lords grappled with the need to do justice in the face of pronouncements to the contrary from judges in England, the United States and throughout the Commonwealth all stressing the importance of finality in litigation. The Privy Council, refusing to follow a judgment of the House of Lords given as recently as the year 2000, said in ringing tones and echoing the words of Lord Atkin in 1933, “finality is a good thing, but justice is better”.

Significance of the decision

Crawford Adjusters v. Sagicor General, reported at [2013] UKPC 17 and 2013 (2) CILR 135 is, as Cayman’s esteemed jurist and grand old man of the Cayman bar, Ramon Alberga QC, observed, the most important legal decision to emanate from the Cayman Islands, in that it effected a substantive change in the English common law of tort (dating to Savile v. Roberts in 1698). Previously it was thought that the tort of malicious prosecution was not available in civil proceedings, subject to some very limited exceptions. This decision changed that law and found to the contrary that a claim for malicious prosecution may lie where a party can establish that he has suffered damage as the result of civil proceedings brought maliciously and without reasonable grounds. The decision also opened the doors to the tort of malicious defence.

While decisions of the Privy Council are not binding on the English courts, the Supreme Court of England and Wales several years later in 2016 was called upon to consider a similar claim of civil malicious prosecution in Willers v Joyce, and in particular whether the Supreme Court was bound by the 2013 decision of the Privy Council in Crawford v. Sagicor. At paragraph 16 of his judgment for the Supreme Court, Lord Neuberger in Willers v. Joyce (2) [2016] UKSC 44 delivered on 20 July 2016 stated that:

“16. There is no doubt that, unless there is a decision of a superior court to the contrary effect, a court in England and Wales can normally be expected to follow a decision of the JCPC [the Judicial Committee of the Privy Council], but there is no question of it being bound to do so as a matter of precedent.”

The Supreme Court in a separate judgment in Willers v. Joyce (1) [2016] UKSC 43 went on to consider whether the tort of malicious prosecution was available in civil proceedings in England and Wales. Lord Toulson speaking for the majority, in reasons which followed the majority judgment of the Privy Council in Crawford v. Sagicor, concluded that such relief was available, stating:

“43. . . . . It seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it.”

Summary

In establishing that the tort of malicious prosecution was available in civil proceedings Hampson and Company and their London counsel, Isaac E. Jacob, effected a substantial change in the English common law of tort, which had stood unchanged since 1698.