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

Tort – Abuse of process – Malicious prosecution – Respondent insurer seeking damages against appellant surveyors alleging fraud and conspiracy in respect of property repairs – Appellants counterclaiming for balance of fees and damages for abuse of process and/or malicious prosecution – Respondent withdrawing allegation and discontinuing original action – Whether appellants entitled to bring claim for malicious prosecution – Appeal allowedThe appellants were P, a chartered surveyor resident in the Cayman Islands, and two companies of which he was a director and which acted by him. In September 2004, a hurricane made landfall in Grand Cayman and extensively damaged a development of 35 residential units in six two-storey blocks along the shore. The development was insured with the respondent insurer against damage, including by hurricane. The respondent accepted that much of the damage caused to the development was covered by the policy and appointed P to act as its loss adjuster in relation to the claim. A dispute arose concerning the value of the repair works and the respondent brought proceedings for damages, alleging that the appellants had fraudulently raised the value of those works. A senior officer of the respondent stated that he intended to destroy P professionally. The press reported the respondent’s allegations that P had made misrepresentations which he knew were false or which he had made recklessly. The currency thereby given to the allegations caused massive damage to P’s reputation and to the willingness of third parties to employ him. The appellants denied the allegations and counterclaimed for balance of fees and damages for abuse of process and/or malicious prosecution. A few days before trial, the respondent discontinued its action and judgment was entered for the appellants. The respondent was ordered to pay their costs on the indemnity basis. The appellants’ counterclaim for damages was dismissed. The judge concluded that the respondent was not liable for abuse of process because it had not used the facility to sue P in order to secure an object for which legal action was not designed. Further, the fact that the respondent’s dominant motive in making the allegations against him was improper did not convert its use of the legal process into an abuse. In reliance on the judgment of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, it was also held that the crucial feature precluding the respondent being held liable for malicious prosecution was that the present state of the law did not allow extension of the tort to civil proceedings. The Court of Appeal upheld that decision. The appellants appealed to the Privy Council.Held: The appeal was allowed (per Lord Wilson, Lady Hale and Lord Kerr concurring, Lord Neuberger and Lord Sumption dissenting). (1) The common law originally recognised that the tort of malicious prosecution extended as much to civil as to criminal proceedings. But early availability of an order for costs in favour of a successful defendant of civil proceedings often disabled him from proving the damage required by the tort which for that reason became, in practice, mainly focussed on criminal proceedings. The limitation on the scope of the tort of malicious prosecution in civil proceedings had been justified by reasoning which was no longer valid. In the light of the right of the public in relation to most civil proceedings to inspect and take copies of the pleadings which had to be filed, and of the media, without fear either of contempt of court or of the law of libel, fairly and accurately to report their contents even if defamatory, substantial damage to the reputation of a defendant could be caused by false allegations made in civil proceedings long before it was restored, even if full restoration was then possible, by his vindication at trial. (2) Insofar as the rationale for the tort of malicious prosecution was the inability of a successful defendant to sue a claimant for defamation in respect of allegations made maliciously in legal proceedings, it applied as much to civil as to criminal proceedings, as did another distinctive feature of the tort, that the defendant had abused the coercive powers of the state. (3) There was no impediment to a claim for the tort of malicious prosecution if no other tort was available as a remedy for the wrong done to the appellants. A tort of malicious prosecution of civil proceedings should enable a claimant to recover damages for foreseeable economic loss beyond out-of pocket expenses. The policy arguments against restoration of the general tort were insufficiently strong to override the rule, as a cornerstone of any system of justice, that where there was a wrong there should be a remedy: Gregory v Portsmouth City Council [2000] 1 AC 419 considered; Jones v Kaney [2011] UKSC 13; [2011] PLSCS 92; [2011] 14 EG 95 (CS); [2011] 2 AC 398 applied.Isaac Ellis Jacob and Conn MacEvilly (instructed by Hampson & Co, of George Town, Grand Cayman) appeared for the appellants; Michael Roberts and Nicholas Dunne, of the Caymanian Bar (instructed by Edwin Coe LLP, agents for Walkers, of George Town, Grand Cayman) appeared for the respondent.Eileen O’Grady, barrister