Crawford Adjusters & Ors v Sagicor General Insurance (Cayman) Ltd & Anor (Cayman Islands )

Factual and Procedural Background

The Appellant, a chartered surveyor and director of two companies, was retained by Company A (the Respondent insurer) as loss-adjuster following severe storm damage to a coastal residential development (“the Development”). Acting on the Appellant’s recommendations, Company A advanced substantial interim payments to Company B (the building contractor). After a change in Company A’s management, its new Senior Vice-President accused the Appellant and Company B of fraudulently inflating costs. Relying on expert reports later found to be seriously flawed, Company A and the Development’s proprietors issued civil proceedings alleging deceit and conspiracy, and obtained ex parte freezing relief against Company B (but not against the Appellant).

The action, and related press coverage encouraged by Company A’s executive, gravely damaged the Appellant’s reputation and business. Shortly before trial, Company A discontinued the fraud claim; indemnity costs were awarded to the Appellant and Company B. The Appellant then counter-claimed in tort for abuse of process (and, alternatively, malicious prosecution). Judge Henderson dismissed the counter-claim, holding that abuse of process was not made out and that, although all factual elements of malicious prosecution were proven, the tort did not extend to civil proceedings.

The Court of Appeal upheld that decision. The Appellant obtained leave to appeal to the Privy Council. A majority of the Board (Judge Wilson, Judge Hale and Judge Kerr) allowed the appeal; Judges Sumption and Neuberger dissented.

Legal Issues Presented

1. Does the common-law tort of malicious prosecution apply to the institution of civil (as distinct from criminal) proceedings?
2. If so, is the Respondent liable in malicious prosecution for commencing and publicising the discontinued fraud action against the Appellant?
3. Was the alternative tort of abuse of process established on the facts?
4. If liability is established, what damages are recoverable, in particular for reputational and economic loss?

Arguments of the Parties

Appellant’s Arguments

• The Respondent’s fraud action was commenced without reasonable cause, was discontinued in the Appellant’s favour, and was motivated predominantly by malice; the classic elements of malicious prosecution were therefore satisfied.
• Historical authorities show that the tort originally covered civil as well as criminal proceedings; later limitations (e.g., Quartz Hill) are outdated now that civil pleadings are widely accessible and damaging publicity precedes trial.
• Abuse of process is also made out because the Respondent misused the court’s procedures to destroy the Appellant’s reputation rather than to obtain legitimate relief.
• The Appellant suffered proved special damages of CI$1.3 m and significant non-pecuniary loss; such economic loss is recoverable in tort.

Respondent’s Arguments

• The tort of malicious prosecution is, as confirmed in Gregory v Portsmouth City Council, confined to criminal proceedings (save for limited, anomaly-based exceptions); extension to ordinary civil actions would chill legitimate litigation and spawn satellite claims.
• The Appellant never pleaded malicious prosecution; in any event, the Respondent had reasonable grounds to be suspicious and therefore lacked malice.
• Abuse of process fails: the Respondent sought exactly the relief for which legal process is designed (recovery of alleged over-payments); no collateral purpose was proven.
• Even were liability established, recoverable loss is limited to costs and out-of-pocket expenses, not wider economic loss.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Abuse of Process: The Board agreed with Judge Henderson that the Respondent’s dominant motive was personal animus, but held that the proceedings were nonetheless brought to obtain judgment for alleged over-payments. Because the legal process was used for its proper purpose (albeit maliciously), the essential “collateral purpose” element was absent.

2. Malicious Prosecution: The majority (3–2) revisited the limitation identified in Gregory. Historical analysis demonstrated that civil malicious-prosecution actions had been recognised, and the traditional justifications for restricting the tort (privacy of pleadings, cost awards) were obsolete. Modern publicity of allegations can ruin reputations long before trial; denying a remedy would leave serious wrongs unredressed.

3. Policy Balancing: While recognising concerns about “satellite litigation” and chilling legitimate claims, the majority considered the existing hurdles—need for favourable termination, lack of reasonable cause, and malice—sufficient safeguards. They declined to require an overt act or “special injury,” favouring a principled extension to all civil proceedings.

4. Damages: Expert evidence fixed economic loss at CI$1.3 m, and the majority allowed a further CI$35,000 for distress. They confirmed that consequential economic loss is recoverable in malicious-prosecution claims.

5. Dissent: Judges Sumption and Neuberger emphasised the public-function rationale of the tort, the authority of Gregory, risks of indeterminate expansion, and availability of procedural protections (costs, strike-outs). They would have dismissed the appeal.

Holding and Implications

APPEAL ALLOWED. The Board entered judgment for the Appellant for CI$1.335 million (economic and non-pecuniary loss).

Implications: The decision removes the historic barrier confining malicious-prosecution liability to criminal (or narrow “special injury”) cases, allowing claims arising from ordinary civil proceedings where they are commenced without reasonable cause and with malice. This materially enlarges potential liability for litigants who make baseless, damaging allegations, and is likely to influence future development of the common law in other jurisdictions, although it sparked strong dissent highlighting risks of increased satellite litigation.