Sagicor General Insurance et al v Crawford Adjusters (Cayman) Ltd and 6 Others - Judgment

¶ Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 1 of 226 IN THE GRAND COURT OF THE CAYMAN ISLANDS 1 HOLDEN AT GEORGE TOWN, GRAND CAYMAN 2 3 CAUSE NO: 78 OF 2006 4 5 BETWEEN: 6 (1) SAGICOR GENERAL INSURANCE (CAYMAN) 7 LIMITED 8 (2) THE PROPRIETORS OF STRATA PLAN NO. 9 151 10 (KNOWN AS WINDSOR VILLAGE) 11 Plaintiffs 12 13 14 -AND- 15 16 17 18 (1) CRAWFORD ADJUSTERS (CAYMAN) LIMITED 19 (2) BOULD PATERSON LIMITED 20 (3) ALASTAIR PATERSON 21 (4) HURLSTONE LIMITED 22 (5) HURLSTONE GENERAL CONTRACTORS 23 LIMITED 24 (6) JOHN HURLSTONE 25 (7) ROBERT HURLSTONE 26 27 Defendants 28 29 30 31 -AND- 32 33 34 35 36 37 38 39 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 2 of 226 1 IN THE GRAND COURT OF THE CAYMAN ISLANDS 2 3 CAUSE NO. 573 of 2008 4 5 BETWEEN: 6 (1) HURLSTONE LIMITED 7 (2) HURLSTONE GENERAL CONTRACTORS 8 LIMITED 9 (3) JOHN HURLSTONE 10 (4) ROBERT HURLSTONE 11 12 Plaintiffs 13 -AND- 14 15 (1) SAGICOR GENERAL INSURANCE (CAYMAN) 16 LIMITED 17 (2) THE PROPRIETORS OF STRATA PLAN NO. 151 18 (KNOWN AS WINDSOR VILLAGE) 19 20 Defendants 21 22 Coram: The Hon. Mr. Justice Henderson 23 24 25 Appearances: Mr. Michael Roberts instructed by 26 Mr. Nick Dunne of Walkers for the 1st and 27 2nd Plaintiffs 28 29 Mr. Thomas Lowe, Q.C. instructed by 30 Mr. Christopher J. McDuff of Thorp Alberga 31 for the 4th to 7th Defendants 32 33 Mr. Anthony Bueno Q.C. instructed by 34 Mr. Graham Hampson, Attorney-at-Law 35 for the 1st and 3rd Defendants 36 37 38 Heard December 18, 2009 39 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 3 of 226 1 2 3 4 5 6 7 8 9 TABLE OF CONTENTS

¶ [1] Windsor Village & Hurricane Ivan

¶ [2] Work Starts

¶ [3] Mr. Paterson’s Role

¶ [4] Expert Evidence on Loss Adjusting

¶ [5] Events of January, 2005

¶ [6] February to May, 2005

¶ [7] Events of June, 2005

¶ [8] Frank Delessio

¶ [9] Disagreement

¶ [10] Attorneys Are Consulted

¶ [11] Alan Purbrick

¶ [12] Expert Opinion on the Purbrick Report

¶ [13] Events to February, 2006

¶ [14] The Original Proceeding Page 9 Page 17 Page 22 Page 28 Page 31 Page 38 Page 40 Page 43 Page 52 Page 56 Page 59 Page 64 Page 73 Page 76 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 4 of 226

¶ [15] The Mareva Injunction

¶ [16] The Newspaper Article

¶ [17] The Case Collapses

¶ [18] LIABILITY - Agency of Frank Delessio

¶ [19] Abuse of Process and Malicious Prosecution of a Civil Action Page 80 Page 82 Page 83 Page 89 Page 96

¶ [20] Findings of Fact On Malice

¶ [21] Other Findings of Fact Requested by Crawford parties

¶ [22] Defamation

¶ [23] DAMAGES – Crawford Parties

¶ [24] Damages Pursuant to the Undertaking

¶ [25] Causation

¶ [26] Failure to Mitigate

¶ [27] Aggravated or Exemplary Damages

¶ [28] Damages: HL & John Hurlstone

¶ [29] Expert Evidence on HL’s Loss of Profit

¶ [30] Agreement on Some Issues

¶ [31] Evidence of Mr. Sybersma

¶ [32] Evidence of Mr. Bullmore Page 124 Page 136 Page 139 Page 140 Page 149 Page 150 Page 156 Page 158 Page 159 Page 174 Page 175 Page 178 Page 186 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 5 of 226

¶ [33] Award to HL

¶ [34] Damages for Loss of Opportunity

¶ [35] Failure to Mitigate by applying for Discharge

¶ [36] Aggravated Damages

¶ [37] Damages: HGCL & Robert Hurlstone

¶ [38] Equipment Rental

¶ [39] General Damages: John & Robert Hurlstone and HGCL

¶ [40] Interest

¶ [41] Costs

¶ [42] Draft & Final Versions of This Judgment

¶ [43] Summary Page 193 Page 198 Page 199 Page 201 Page 209 Page 221 Page 222 Page 223 Page 223 Page 224 Page 225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 6 of 226 1 2 3 4 5 6 7 JUDGMENT 8 9 10

¶ [1] In September, 2004 the island of Grand Cayman was devastated by 11 Hurricane Ivan. The second plaintiff, the Proprietors of Strata Plan 12 No. 151 (known as WV), is a residential development located on 13 the shore of the island. It suffered very extensive damage. The 14 insurer of WV was the first plaintiff, Sagicor General Insurance 15 (Cayman) Limited. It was known at the time as Cayman General 16 Insurance but I will refer to it for convenience by its current name, 17 “Sagicor”. Mr. Danny Scott, the Chief Executive Officer of 18 Sagicor, resided in one of the units at WV. 19 20

¶ [2] Sagicor hired Crawford Adjusters (Cayman) Limited (“Crawford”) 21 and Mr. Alastair Paterson, one of its principals, to adjust the loss. 22 The second defendant, Bould Paterson Limited (“BPL”), was 23 retained on behalf of WV as project manager for the reinstatement. 24 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 7 of 226 The fifth defendant, Hurlstone General Contractors Limited 1 (“HGCL”) and its principal, Robert Hurlstone (the seventh 2 defendant), were hired to perform the construction work. The 3 general contractor was Hurlstone Limited (“HL”), the fourth 4 defendant, and its principal, John Hurlstone, the sixth defendant. 5 6

¶ [3] By the end of June, 2005 around CI $3,000,000 had been advanced 7 to the Hurlstone parties (i.e., the fourth to seventh defendants) but 8 Sagicor formed the opinion that the value of the work was roughly 9 CI $1,300,000. It concluded that it had been defrauded by both the 10 Crawford parties (i.e., the first to third defendants) and by the 11 Hurlstone parties. After obtaining a report from an independent 12 expert, Mr. Alan Purbrick, Sagicor commenced an action (“the 13 original proceeding”) in this court under cause no. 78 of 2006. 14 After obtaining a Mareva injunction freezing the assets of the 15 Hurlstone parties, it did little to advance its case towards trial and 16 abandoned its claims at the last moment. 17 18

¶ [4] After dismissing the claims by Sagicor and WV, I gave judgment 19 on December 8, 2008 on a counter-claim by the Hurlstone parties. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 8 of 226 I awarded to HL the sum of CI $791,716.28 as the lost profit on the 1 reinstatement and interest. I made a finding that: 2 “From the failure of these plaintiffs to prosecute their case, 3 I infer that they have never been in possession of a 4 body of evidence capable of establishing fraud or conspiracy.” 5 6 7

¶ [5] Because of the serious nature of the allegations which had been 8 pleaded but not proved, I awarded indemnity costs to each 9 defendant. 10 11

¶ [6] The proceedings did not end there. I directed an enquiry to assess 12 the damages suffered by the Hurlstone parties as result of the 13 Mareva injunction. The injunction contains the usual undertaking 14 by Sagicor to compensate the respondents for any loss the court 15 determines they have suffered. WV did not associate itself with 16 the injunction application. I granted leave to the Crawford parties 17 to amend their counter-claim for unpaid fees owing to them; the 18 amount claimed was amended to CI $399,309.02 plus interest 19 owed to Crawford and CI $71,450 plus interest owed to BPL. 20 Since the closing arguments of the parties make no mention of 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 9 of 226 these amounts my understanding is that they are no longer an issue. 1 If that understanding is wrong, the parties are at liberty to apply. 2 3

¶ [7] The Hurlstone parties started a new action, cause no. 573 of 2008, 4 against Sagicor and WV claiming damages for the torts of abuse of 5 process and malicious prosecution of a civil action. The two torts 6 are closely related and may best be viewed as two variations on a 7 single theme. The Crawford parties amended their counter-claim 8 in the original proceeding to claim damages for abuse of process 9 and defamation. The two actions were consolidated. 10 11 12 Windsor Village & Hurricane Ivan 13 14

¶ [8] WV is a relatively upscale strata development consisting of six 15 two-storey blocks accommodating some thirty-five condominium 16 units of one, two or three bedrooms. The majority of the Strata 17 Executive Committee members were not living on the island. Mr. 18 Scott was very active in the affairs of WV as he was one of the few 19 who lived there. 20 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 10 of 226

¶ [9] After the passage of Hurricane Ivan in September, 2004, the two 1 blocks of WV immediately adjacent to the ocean (blocks one and 2 six) had been essentially destroyed. One had major roof damage, 3 the other roof was totally destroyed. The foundations of both 4 blocks had been undermined. The seawall had almost disappeared. 5 Every unit was full of hard-packed sand, rock and stones. Pipes 6 and conduits were broken. The other four blocks which were not 7 adjacent to the sea also sustained significant damage. All roofs 8 had some wind damage and there was flood damage to all interiors. 9 Rain water had also penetrated through broken windows and roof 10 leaks. 11 12

¶ [10] On September 24, 2004 Alastair Paterson, Mr. Martyn Bould and 13 Mr. Jonathan Nicholson met with Mr. Scott at Sagicor. The result 14 was an engagement from Sagicor for loss adjusting services on a 15 number of claims including WV. After the meeting, Mr. Paterson 16 told Patrick Harrigan, a member of the executive committee of the 17 WV Strata, that he had been engaged as loss adjuster. BPL was 18 established October 6, 2004. Shortly after that it began providing 19 project management and quantity surveying services to WV. A 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 11 of 226 written contract between the Strata and BPL was signed on 1 October 24, 2004. Mr. Paterson took on the dual roles of loss 2 adjuster and project manager. Mr. Paterson is a surveyor and a 3 long time resident of the Cayman Islands. 4 5

¶ [11] Mr. Scott had a chance meeting with Robert Hurlstone, whom he 6 regarded as a “good builder”, in late September, 2004. Mr. Scott 7 was particularly keen to see the restoration move quickly. Mr. 8 Hurlstone said he might wish to undertake the reconstruction and 9 Mr. Scott said he would be interested in retaining him. Mr. Scott 10 suggested that Mr. Hurlstone speak to Mr. Paterson, who had done 11 some professional work for the Hurlstones in the early 80s, again 12 in the early 90s, and some limited work in 2003. Mr. Hurlstone 13 referred Mr. Scott to his brother, John Hurlstone. After John 14 accepted the proposal, Robert agreed to involve himself in the 15 project. 16 17

¶ [12] Although no agreement was ever signed, HGCL and Robert 18 Hurlstone began the task of reinstating the units to their former 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 12 of 226 condition. No fixed rates were agreed by the parties for labour or 1 materials. No fixed sum was agreed for the cost of the clean-up. 2 3

¶ [13] Around this time, Florida and the U.S. east coast suffered 4 extensive damage from other hurricanes. This resulted in an 5 unusually high demand for building materials. Some suppliers 6 found themselves out of inventory. Robert Hurlstone says the cost 7 of construction material increased by about 50% shortly after 8 Hurricane Ivan. Local suppliers of building materials lost much of 9 their inventory in the Hurricane. In addition, there was very little 10 heavy equipment in working condition on Grand Cayman and a 11 severe shortage of motor vehicles. Mr. Hurlstone managed to rent 12 a few pieces of equipment and brought his own equipment, which 13 was on Little Cayman, back to Grand Cayman. 14 15

¶ [14] It was very difficult to find workmen. Mr. Hurlstone says that 16 everyone on Grand Cayman who was willing and able to work in 17 the construction industry, including bartenders, waiters and chefs, 18 were being offered “huge” sums of money to do construction 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 13 of 226 work. The workers were not willing to accept the same hourly 1 rates which prevailed prior to the hurricane. 2 3

¶ [15] Mr. Hurlstone eventually found some workers and they “brought in 4 other people”. There was little accommodation on the island and 5 food was scarce. In order to find workers, Mr. Hurlstone found it 6 necessary to assist them with housing, food, water and 7 transportation. The workers were usually paid in cash. Often, 8 Robert Hurlstone gave them additional payments to assist with the 9 difficult conditions then prevailing. Although the various skilled 10 and unskilled workers were being paid varying hourly rates, Robert 11 and John Hurlstone decided for convenience that all workers 12 would be “charged out” at the same average rate on the basis of 13 working ten hours a day. Site works were conducted for ten or 14 more hours per day at least six days a week. The flat rate decided 15 upon for labour for the clean-up of the site was CI $35 per hour. 16 Mr. Hurlstone’s first estimate of the total cost of the re-building 17 was in the range of CI $5,000,000 to CI $7,000,000. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 14 of 226

¶ [16] HL acted as the general contractor. John Hurlstone is a fifty-five 1 year old Caymanian who worked initially in the banking industry. 2 In 1982 he formed a general contracting construction company 3 with his brother Robert. In 1994 he became the managing director 4 of HL, the shares of which are held by a trust for Mr. Hurlstone 5 and his children. HL has operated as a general contractor in the 6 Cayman Islands since its incorporation. It has about fifty 7 employees, including an in-house quantity surveyor, an office 8 manager, and five other accounting and administrative positions. 9 It has completed a number of construction contracts over the years 10 having values in the approximate range of CI $2,000,000 to CI 11 $12,000,000. 12 13

¶ [17] Although Robert Hurlstone and his own company, HGCL, have an 14 office within HL’s premises the two corporations are not otherwise 15 related. During Hurricane Ivan approximately six feet of flood 16 water devastated the HL offices. The computers and paper work 17 stored there were destroyed. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 15 of 226

¶ [18] Having being told by his brother that Danny Scott wanted the 1 Hurlstones to do the reinstatement work at WV, John Hurlstone 2 contacted Mr. Scott. The latter said that he wished to have Robert 3 Hurlstone undertake the reinstatement works and to be on site 4 personally to direct the re-building and the clean-up which would 5 have to precede it. Mr. Scott emphasized that he wanted Robert to 6 commence the clean-up immediately and that the work should be 7 completed as soon as possible. When asked about payment, he 8 said that funds “would not be a problem”. (Mr. Scott said he gave 9 that assurance much later on, but I prefer the evidence of Mr. 10 Hurlstone on this point.) Since the two men were friends, John 11 Hurlstone accepted this implicitly. Mr. Scott also confirmed that 12 he was speaking to Mr. Hurlstone with the authority of the Strata 13 Committee and advised him that Alastair Paterson would be in 14 charge of the project. 15 16

¶ [19] Upon speaking to his brother, John Hurlstone was told that HGCL 17 would need a substantial advance payment in order to mobilize 18 further projects and would also need regular payments as the works 19 proceeded. Robert Hurlstone was clear that he did not intend to 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 16 of 226 finance any aspect of the re-construction. In a further discussion 1 with Mr. Scott, John Hurlstone reiterated that advanced payments 2 on account would have to be made. He said he would make the 3 actual arrangements for payment through Mr. Paterson, with whom 4 he had an amicable relationship. Mr. Scott took no objection to 5 this. 6 7

¶ [20] At an early stage, Mr. Harrigan on behalf of WV requested that a 8 new seawall be constructed to replace the one which had been 9 destroyed. Mr. Scott advised Mssrs. Harrigan and Paterson said 10 that a new seawall would not be covered under the policy of 11 insurance. However, Mr. Scott agreed that the cost of repairing the 12 foundations for blocks one and six (the two buildings closest to the 13 sea) would be covered. The proposed seawall was sufficiently 14 close to the foundations that the two could be viewed as a single 15 project. For that reason, Mr. Paterson proposed that the cost of the 16 combined seawall and foundation restoration be split between the 17 insurer and the insured. Plans were prepared. The agreement to 18 split the cost was a preliminary one, to be reassessed later. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 17 of 226 Work Starts 1 2

¶ [21] When work started, no specifications, bills of quantities, or 3 structural surveys had been prepared. The Hurlstones found this 4 understandable in the circumstances but also a handicap. In the 5 absence of such documents neither HL nor HGCL could give a 6 firm price for the cost of the work. 7 8

¶ [22] The Hurlstones agreed with Mr. Paterson that HL should bill for the 9 demolition, debris and clean-up work on a fixed rated “day work” 10 basis. Mr. Paterson requested a broad and preliminary scope of 11 works which Mr. Hurlstone provided by his letter of November 4, 12

¶ [2004] This letter asserts that the clean-up and the re-construction 13 works were to be addressed separately. He estimated the cost of the 14 reinstatement work at CI $5,565,000. The letter confirms that this 15 was a preliminary estimate and would need to be reviewed and 16 adjusted subsequently when professional reports had been prepared. 17 Mr. Scott said that neither he nor anyone else at Sagicor had seen 18 the letter of November 4, 2004: “this document was never 19 presented to us.” Again, I accept the evidence of Mr. Hurlstone in 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 18 of 226 preference to that of Mr. Scott on this point. Much of Mr. Scott’s 1 evidence was inconsistent and self-contradictory. 2 3

¶ [23] Robert Hurlstone requested an advance payment of CI $1,250,000 4 to buy necessary building materials, pay deposits to sub- 5 contractors, and to mobilize his workforce. He also requested 6 architectural, electrical and mechanical drawings and says these 7 were needed as soon as possible. It was expected that a formal 8 written contract at a fixed price would be negotiated and agreed 9 upon in due course. 10 11

¶ [24] On the following day Mr. Paterson wrote to John Hurlstone 12 promising that a contract would be signed and requesting him to 13 commence work immediately. He said that CI $250,000 was being 14 paid in advance for “initial expenses”. 15 16

¶ [25] John Hurlstone wrote again to Mr. Paterson on November 9, 2004 17 reminding him that the Hurlstones would not finance the cost of re- 18 construction and requesting again that the advance be in the amount 19 of CI $1,250,000. He also said that advance payments needed to be 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 19 of 226 made twice monthly as the project progressed. He described his 1 understanding of the contract which would be signed: 2 “We are proceeding with the work as per your instructions in 3 the understanding that the contract is the CASE standard form 4 of contract 1994 (without quantities) and is a fixed price sum 5 based on our budget previously presented with a contract term 6 of twelve months from the date of our company being given 7 possession of the site. The term price and scope of the contract 8 is to be extended to include any works necessary to complete 9 the re-instatement of the project and any additional works 10 instructed by yourselves or directed by the project engineers.” 11 12

¶ [26] There was no direct response to this letter. Neither Mr. Paterson, 13 Mr. Scott nor anyone on behalf of Sagicor or the Strata appears to 14 have questioned the intent set out in the letter. Mr. Hurlstone 15 considered that his letter of November 9th embodied the agreement 16 until a more formal contract could be executed. 17 18

¶ [27] In a letter dated December 1, 2004 John Hurlstone warned that the 19 clean-up was taking longer than anticipated. He confirmed that the 20 billing would be on a separate invoice based on a fixed rate per 21 hour for manpower and equipment. He again requested an advance 22 payment of CI $1,250,000. 23 24 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 20 of 226

¶ [28] APEC Consultants, a firm of engineers, prepared the necessary 1 structural report and drawings for the reconstruction of the 2 buildings and the seawall. Robert Hurlstone was responsible for 3 ordering and purchasing materials, engaging sub-contractors, and 4 ensuring that all the work was carried out in an efficient and 5 workman like manner. John Hurlstone and HL were responsible 6 for administration of the project, including making payments and 7 contractual arrangements. 8 9

¶ [29] The site could not be cleaned up until damaged furniture belonging 10 to the owners was removed from the buildings. There was no space 11 on the island to store them, so Robert Hurlstone obtained nine 12 storage containers and used these. He charged rent for the 13 containers. They were eventually sold, apparently without 14 authority, by Mr. Frank Delessio in 2006. 15 16

¶ [30] The absence of a detailed scope of works was troublesome 17 throughout. Robert Hurlstone agreed with his brother that an 18 initial payment on account of CI $1,250,000 and regular fortnightly 19 payments thereafter would be reasonable. It was a concern to him 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 21 of 226 that the initial payment was never made. Given his view about the 1 initial payment, Robert Hurlstone was always of the opinion that 2 Sagicor was “behind” in their payments and needed to “regularize” 3 their account. He says he proceeded with the works because of his 4 long term relationship with Danny Scott and Mr. Scott’s assurances 5 that they would be paid. 6 7

¶ [31] The Hurlstones began working on the site around October 21, 2004. 8 Robert Hurlstone had regular site conferences with Alastair 9 Paterson. He provided Mr. Paterson with information upon request. 10 Mr. Hurlstone says it was “impossible” to keep any proper record 11 of the workers’ hours and to calculate overtime. An initial effort 12 was made but abandoned. He was “constantly” on site and knew 13 that the workmen were there at least ten hours per day and 14 sometimes more for six days a week. Some work was also done on 15 Sundays. He considered it reasonable to assume that the workers 16 would be paid for ten hours per day six days per week. 17 18

¶ [32] Mr. Jonathan Nicholson designed a loss adjusting report form and 19 issued a blank template of it to Mr. Paterson. By the end of 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 22 of 226 November, 2004 Ken Osborne of Sagicor had seen the reporting 1 format and said it was not detailed enough. Mr. Nicholson 2 explained it was intended for interim reports; the final report would 3 take a more detailed form. 4 5

¶ [33] Around December 3, 2004 Crawford Adjusters received an 6 instruction from Sagicor to stop working on all of the files. After a 7 meeting, the instruction was revoked but further concerns were 8 expressed by Ken Osborne about the lack of detail in the reporting 9 template. 10 11 Mr. Paterson’s Role 12 13

¶ [34] Mr. Scott said that Alastair Paterson told him in 2003 that Crawford 14 would be providing loss adjusting services on Grand Cayman “on 15 behalf of Crawford and Company”, a large international firm. An 16 email from Mr. Paterson states that “all claims which [Sagicor] may 17 require can now be provided by local Crawford representation”. 18 Mr. Scott saw this as significant because he felt the local Crawford 19 directors were not sufficiently qualified and experienced to 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 23 of 226 undertake complex loss adjusting work. By virtue of their 1 relationship with the well know firm of Crawford and Company, 2 they would be in a position to offer the necessary expertise. When 3 Sagicor retained Crawford to provide loss adjustment services on 4 about four hundred claims, Mr. Scott says no one advised him that 5 there was no actual affiliation between Crawford and Company and 6 Crawford. I am satisfied from the evidence of Mr. Paterson and 7 Mr. Jonathan Nicholson that there was an informal arrangement 8 (only) for consultation and advice and Mr. Scott was told of that 9 during a meeting in January, 2005. 10 11

¶ [35] All the advances were made on Mr. Paterson’s recommendation. 12 Sagicor expected its loss adjuster, Mr. Paterson, to establish the 13 amount at which the claim should be settled and prepare 14 appropriate reports, to make recommendations regarding the 15 amount of advances, and to review the work at the site in order to 16 ascertain that the advances had been applied properly before 17 recommending further advances. Because of the large number of 18 claims which followed Hurricane Ivan, Sagicor staff could not 19 review every claim with the degree of detail they would normally 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 24 of 226 undertake. As a consequence, a greater degree of trust was reposed 1 in the skill and integrity of the loss adjusters. 2 3

¶ [36] In a letter to WV, BPL as described the duties it would undertake as 4 project manager. It agreed to: 5 i. Advise on all financial implications of the project; 6 ii. Prepare an outline of the construction program; 7 iii. Prepare an outline cash flow of the financial 8 requirements; 9 iv. Prepare outline budgets for all aspects of the work to be 10 carried out; 11 v. Monitor and control cost throughout the program; 12 vi. Assist in financial control and liaising with owners and 13 bankers; 14 vii. Monitor progress of the project; 15 viii. Monitor the performance of the various parties; 16 ix. Maintain financial control of the project. 17 18

¶ [37] Mr. Patrick Harrigan was Chairman of the WV Strata Executive 19 Committee. He retained BPL as project manager. He says he was 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 25 of 226 not monitoring the payments to the Hurlstones and relied “heavily” 1 on Danny Scott and Alastair Paterson. He was usually advised of 2 the payment later on. He never saw invoices. 3 4

¶ [38] As a loss adjuster, Mr. Paterson is appointed by and paid by the 5 insurance company. He regarded his mandate as one that required 6 him to ensure that a fair settlement within the terms of the 7 applicable policy was reached. He functioned, he says, as a 8 “completely independent professional.” 9 10

¶ [39] Mr. Paterson would not describe the fact that he was both loss 11 adjuster and project manager as a conflict of interest. He denied 12 that a loss adjuster is the agent of the insurer and said his obligation 13 was to settle the claim fairly on behalf of both parties. He 14 conceded that as property manager he represents the insured “to a 15 certain extent”. He agrees that he was not keeping a record of costs 16 or taking copies of invoices. He says he felt “very comfortable” 17 with the advances he was recommending and could have produced 18 a detailed accounting if asked. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 26 of 226

¶ [40] Based upon Mr. Scott’s instructions, Mr. Paterson understood that 1 he was to establish the amount of the loss at WV, recommend 2 reasonable advance payments to the contractor on a regular basis to 3 ensure sufficient cash flow and to allow good progress to be made, 4 and to ensure that the advances did not exceed Sagicor’s liability 5 under the policy. It was clear to him that Crawford was not 6 responsible for checking the quality of the work. Its duty was to 7 ensure that progress was being made and that it bore a “not 8 unreasonable” relationship to the advanced payments to the 9 Hurlstones. 10 11

¶ [41] Mr. Paterson says the job of a project manager is to “assist the loss 12 adjuster” by obtaining quotes, prices and scopes of work. The 13 advances were just that; they were not intended to be accurate 14 certifications. Mr. Paterson says it was never intended that he 15 would certify the works in the ordinary way and Sagicor was 16 always well aware of his methodology. He did not perform the 17 detailed investigation which would be expected and required if he 18 was presenting a formal certification. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 27 of 226

¶ [42] It was made clear to everyone that the Hurlstones were not prepared 1 to finance the ongoing cost of the reinstatement; they needed to 2 have regular cash advances for the purchase of materials in the 3 United States and to pay their ongoing costs. Many building 4 materials were not available locally, especially after the destruction 5 caused by the hurricane. All materials and equipment of any 6 consequence had to be brought in from overseas and had to be paid 7 for in full prior to shipping. Advance payments were necessary for 8 this purpose. Mr. Paterson says it was clear from the beginning that 9 advances were “not tied to the actual work done.” 10 11

¶ [43] Robert Hurlstone made it clear to John Hurlstone and to Danny 12 Scott that he was only prepared to undertake the project if he was 13 paid a substantial mobilization fee. He did not intend to finance 14 any part of the construction himself. He anticipated that it would 15 be difficult to secure the needed building materials and that 16 substantial deposits would have to be paid to suppliers when the 17 orders were placed. 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 28 of 226 Expert Evidence on Loss Adjusting 1 2

¶ [44] Mr. Michael Thomas, a chartered quantity surveyor and qualified 3 loss adjuster and the managing director of JEC Property 4 Consultants Ltd. in the Cayman Islands (a leading firm of chartered 5 surveyors), gave expert evidence on loss adjusting. He noted that 6 Mr. Paterson (through BPL) was also the project manager. He said 7 this was a “major” conflict of interest. The loss adjuster represents 8 the insurer: a project manager is appointed by the insured to 9 represent their interests. A project manager is expected to verify 10 the quality and value of work undertaken by the contractor and of 11 materials delivered, certify these, and then present the certified 12 payment request to the loss adjuster. It was Mr. Thomas’ opinion 13 that the conflict of interest arose at the very start of the project and 14 remained in existence until the defendants were discharged. 15 16

¶ [45] Mr. Thomas said that in his experience a loss adjuster will 17 recommend advances based upon estimates which are not 18 necessarily “finalized” but which fall within the reserve set by the 19 loss adjuster. Mr. Paterson made a settlement recommendation to 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 29 of 226 Sagicor on June 15, 2005. The recommendation includes a 1 schedule listing “elements” of the work, a recommended settlement 2 amount for the element, and a column headed “To Date”. When 3 Mr. Thomas saw the column headed “To Date” in the report he 4 understood it to represent Mr. Paterson’s opinion of the value of the 5 work executed to that date. Mr. Paterson says that this column was 6 not a representation concerning the value of the work done but was 7 only a statement of the amount the Hurlstones were claiming for it. 8 BPL never certified any work or payments. Mr. Paterson says he 9 made that clear to Mr. Delessio. 10 11

¶ [46] Mr. Richard Purdom is a civil engineer with training as a quantity 12 surveyor who gave evidence on behalf of the Hurlstone defendants. 13 He has had experience in the construction industry in the Cayman 14 Islands and was working here in the period following Hurricane 15 Ivan. He says that in the case of a fixed price contract an interim 16 claim for payment would be certified on a “percentage complete” 17 basis. The percentage is based upon an estimate and not a precise 18 figure. Invoices would be examined but the primary basis of the 19 estimate would be a measurement of the work done. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 30 of 226 1

¶ [47] On a fixed price contract, Mr. Purdom would not expect the 2 contractor to keep records in sufficient detail to account to the 3 employer for the manner in which costs had been incurred. 4 Historic cost accounting is not a concept used on a fixed price 5 contract although it becomes important on a “cost plus” contract. 6 The latter are rare. They are expensive to administer because the 7 contractor is required from the very start of the project to make a 8 detailed allocation of all costs incurred on the particular project. 9 Details of costs would need to be provided for labour, materials, 10 equipment and plant hire, and incidentals. A representative of the 11 employer would conduct a continuous review of the cost 12 allocations. 13 14

¶ [48] Given that the Hurlstones and Mr. Paterson expected to enter into a 15 fixed price contract, Mr. Purdom would not have expected them to 16 keep the sorts of records necessary to a cost plus contract. 17 Moreover, it would have been “very likely” that no accurate 18 historic cost accounting could have been produced by June, 2005. 19 Mr. Purdom felt it would be natural for the necessary records to be 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 31 of 226 unavailable, given the expectation at the outset. Hence, the request 1 for such an accounting would have been unreasonable. That would 2 have been apparent to any experienced surveyor or loss adjuster 3 who was familiar with the project. 4 5

¶ [49] Mr. Purdom interpreted the “To Date” column in the settlement 6 recommendation as being an assessment of the percentage of work 7 carried out to that date. He also said the column might include 8 anything which had been ordered even if not installed. The custom 9 of the trade is to include the cost of the materials ordered in a 10 column of that sort. 11 12 Events of January, 2005 13 14

¶ [50] A total of CI $2,900,000 was advanced by Sagicor to the 15 Hurlstones. Mr. Scott sets out the following table of advance 16 payments made: 17 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 32 of 226 Date Amount (CI$) Balance (CI$) 22nd October 2004 250,000 250,000 26 November 2004 250,000 500,000 31 January 2005 500,000 1,000,000 2 March 2005 400,000 1,400,000 23 March 2005 500,000 1,900,000 25 April 2005 500,000 2,400,000 27 May 2005 500,000 2,900,000 1 In January, 2005 Mr. Stuart Dack, the CEO and President of 2 Cayman National Corporation (which is the parent company of 3 Sagicor), met with Alastair Paterson, Jonathan Nicholson, Danny 4 Scott and others. He said that the insurance claims arising from 5 the Hurricane threatened the long term viability of both Sagicor 6 and its parent company. He emphasized that outstanding claims 7 needed to be adjusted expeditiously and fairly so that a realistic 8 understanding of the exposure could be arrived at. He did not say 9 that claims had to be reduced by any arbitrary methods but 10 emphasized the need to arrive at realistic estimates. In his 11 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 33 of 226 experience, reserves tend to be set at a higher level than the actual 1 settlement amount and he wished that the settlements be reached 2 quickly or an accurate reserve set. A reduction of 15% was 3 mentioned. He requested that the adjustment work by Crawford be 4 reviewed by Sagicor before a settlement offer was made to WV. 5 Mr. Paterson was instructed to economize on settlements at every 6 possible opportunity. The meeting left in Mr. Paterson’s mind 7 some doubt about the solvency of Sagicor. 8 9

¶ [51] At this meeting the participants were also told that all of the 10 Sagicor policies were indemnity policies and not based upon 11 reinstatement. As a consequence, settlements would have to take 12 depreciation into account. Owners would receive the actual value 13 of the lost property not the cost of reinstating it to its former 14 condition. This came as a surprise because Sagicor in the past had 15 treated their policies as reinstatement policies. In addition, some 16 losses from Hurricane Ivan had already been settled on a 17 reinstatement basis. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 34 of 226

¶ [52] Mr. Nicholson (a Crawford principal) was surprised that Sagicor’s 1 policies were actually indemnity policies not reinstatement policies. 2 He says that Crawford had been approaching claims on the basis 3 that these were reinstatement policies. At the same time, he heard 4 Mr. Scott speak of Sagicor’s precarious financial position. Mr. 5 Dack said that there was a likelihood Sagicor would be considered 6 insolvent if the reserves remained at the current levels; they had to 7 be reduced. Someone asked if a 15% reduction would be enough 8 and he confirmed that it would be. 9 10

¶ [53] The initial advance payment of CI $250,000 was considered by 11 John Hurlstone to be a payment on account in respect of the clean- 12 up work. No estimate on the clean-up had been provided; the 13 preliminary document prepared by him simply said that it was to be 14 assessed later. The reason for that was an instruction from Mr. 15 Paterson that heavy machinery could not be used during the clean- 16 up because it was necessary to avoid damaging underground 17 electrical and plumbing fixtures. In his report of January 15, 2005 18 Mr. Paterson said that he had reviewed the clean-up expense and 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 35 of 226 costs to date and was satisfied that the funds were being applied 1 properly. 2 3

¶ [54] John Hurlstone repeatedly made his concern over the lack of timely 4 advance payments known to the insurer and to Mr. Paterson. This 5 is evident in his letters of December 20, 2004, January 17, 2005 and 6 March 1, 2005. 7 8

¶ [55] Mr. David Hambly is a director of Charles Taylor Consulting Plc, 9 who are loss adjusters and risk consultants. Shortly after the 10 hurricane he came to Grand Cayman to adjust certain claims 11 including approximately two hundred for Sagicor. He had been 12 brought in from Europe to assist Sagicor in settling the many 13 hurricane claims it was facing. 14 15

¶ [56] Mr. Scott instructed Mr. Paterson to review all details of the claim 16 with Mr. Hambly in January, 2005. Mr. Hambly met with 17 Crawford to assist them with understanding how to make an 18 allowance for depreciation for claims under Sagicor’s indemnity 19 policies. Then, Mr. Hambly attended at Crawford, reviewed the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 36 of 226 files, and expressed himself satisfied that the reserves were 1 reasonable. 2 3

¶ [57] From January on, Mr. Paterson discussed the various Sagicor 4 claims with Mr. Hambly on a regular basis. When advances were 5 made to the Hurlstones in February, March, April and May 2005, 6 Mr. Hambly gave his prior approval to each. Mr. Paterson 7 describes Mr. Hambly as “very professional”. 8 9

¶ [58] In January, 2005 Sagicor became concerned that Mr. Paterson may 10 have a conflict of interest in acting as loss adjuster and as project 11 manager. Sagicor advised him that he must step down as project 12 manager. At the beginning of February, Mr. Scott was advised that 13 Mr. Paterson had stepped down. Mr. Scott referred to an email of 14 February 15, 2005 from Mr. Paterson to Mr. Harrigan saying “I am 15 not your project manager, I am the loss adjuster.” In an email of 16 March 8, 2005 Mr. Paterson asserted that Malcolm Stephenson was 17 the project manager. On January 25, 2005 Mr. Paterson wrote to 18 John Hurlstone telling him that the Strata was reluctant to sign a 19 formal contract until their financial exposure could be established 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 37 of 226 with certainty. He also told them that Malcolm Stephenson had 1 been appointed as “project overseer” for a period of some sixty 2 days. Finally he assured him that: 3 “You will be continued to be advanced funds on a monthly 4 basis by Sagicor Insurance until such times as the claim is 5 finalized. Sagicor will approve and certify the payments.” 6 7 Nevertheless, in other correspondence Mr. Paterson described 8 taking steps which would ordinarily be taken only by the project 9 manager. By April 19, 2005 BPL was again acting in a formal 10 capacity as project manager. Mr. Paterson (in a progress report of 11 April 19, 2005) said there “had” been a conflict of interest but that 12 the insurance claim had been substantially calculated with the 13 result that the conflict had disappeared. 14 15

¶ [59] Mr. Paterson says BPL served as project manager until about 16 January 18, 2005 at which time Malcolm Stephenson was 17 appointed in its stead. Around the beginning of April, 2005 BPL 18 was asked to take on the administrative role again. Mr. 19 Stephenson’s involvement was brought to an end. Mr. Paterson 20 says that Mr. Stephenson was appointed to assist him. 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 38 of 226 1 2 February to May, 2005 3 4

¶ [60] Mr. Hambly was not at Sagicor when the request for payment of 5 CI $400,000 was made on February 14, 2005. The request also 6 contained a promise to establish a definitive value of the loss by 7 the end of March. 8 9

¶ [61] Prior to the March 2, 2005 payment, Mr. Paterson said that the 10 project was progressing satisfactorily. A letter dated March 19, 11 2005 from Mr. Paterson requested a further payment. The letter 12 promises to conclude the claims settlement by the end of March. 13 Mr. Paterson made the same assertion prior to the March 23, 2005 14 advance. The claim was not settled. 15 16

¶ [62] Mr. Hambly authorized a further payment in response to a letter 17 dated April 20, 2005 from Mr. Paterson which represented that the 18 work was still progressing satisfactorily and that money was needed 19 for kitchens, roofing materials, windows and doors. The letter 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 39 of 226 promised a final report from Mr. Paterson by the end of May. Mr. 1 Hambly expressed concern to Mr. Scott about the lack of detail, 2 which Mr. Scott shared. Mr. Paterson assured him that he was 3 “working on” a more detailed report and was “very close” to 4 finalizing the claim. 5 6

¶ [63] Mr. Scott trusted Mr. Paterson and continued to make the advances. 7 There was a meeting in April, 2005 between John Hurlstone, Mr. 8 Paterson and Mr. Scott to discuss payments. Mr. Scott said enough 9 to give Mr. Hurlstone the impression that the insurer’s financial 10 position was deteriorating. It was now “obvious” to John Hurlstone 11 that the failure to make timely advance payments was caused by 12 Sagicor’s poor financial situation. 13 14

¶ [64] In May, 2005 Mr. Paterson told John Hurlstone that he could finish 15 adjusting the claim within a few weeks. He said he would require 16 some additional information from the Hurlstones. John Hurlstone 17 agreed to provide it. Robert Hurlstone says he provided cost 18 information to Mr. Paterson whenever it was requested. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 40 of 226

¶ [65] On May 26, 2005 Mr. Paterson requested another payment. The 1 letter did not say what work had been completed since the previous 2 advance and what the new advance was required for. Mr. Hambly 3 discussed this request with Mr. Scott and authorized the payment. 4 5 Events of June, 2005 6 7

¶ [66] Robert Hurlstone asked for a further advance of CI $750,000 in 8 early June. Mr. Paterson explained that he was reviewing the entire 9 loss with a view to obtaining an overall settlement. 10 11

¶ [67] Mr. Harrigan thought they were close to a settlement by this time. 12 As at June 9, he would have settled for the suggested amount of CI 13 $5,500,000. 14 15

¶ [68] Mr. Scott asked Mr. Paterson on numerous occasions to reach a 16 final settlement on the claim. On 9th June, 2005 Mr. Paterson sent 17 Sagicor an email suggesting a settlement. Mr. Paterson says that he 18 reached agreement with Danny Scott and David Hambly on June 9, 19 2005 on the amount of the settlement. The figures he advanced 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 41 of 226 were discussed in detail and then agreed upon and approved by 1 both Mr. Hambly and Mr. Scott in a meeting. Mr. Hambly signed 2 the document as “agreed with Alastair Paterson” and Mr. Scott 3 initialed it. Not unreasonably, Mr. Paterson took this to mean that 4 the figures were approved by Sagicor, whose maximum exposure 5 would be CI $5,500,000. The total loss was calculated at 6 approximately CI $6,500,000. The difference comprised the 7 deductible portion of the policy, uninsured items and additional 8 work and upgrades requested by owners. The cost of the seawall, 9 the clean-up and demolition was not yet the subject of an 10 agreement. It was also agreed on June 9th that no more advances 11 would be made to the Hurlstones until a total contract price had 12 been agreed upon. 13 14

¶ [69] Mr. Scott says he felt that the final settlement would be in the 15 region of CI $4,500,000 so he asked Mr. Paterson to look at the 16 claim again. On June 15, 2005 Mr. Paterson sent a further report 17 recommending a reserve of CI $5,494,851. This report also said 18 that the sum of CI $3,735,518 had been spent “To Date”. In his 19 first witness statement, Mr. Scott refers to the column headed “To 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 42 of 226 Date” in the report. He interprets the figures for air conditioning, 1 electrical work and plumbing under that column as representing 2 work which had been completed at that point. 3 4

¶ [70] Between June 9 and June 18 Mr. Paterson continued to work on 5 some remaining pricing issues. By June 15, 2005 advances in the 6 total amount of CI $2,975,000 had been made. Mr. Paterson says, 7 however, that “all of these figures were subject to final discussions 8 and negotiations with all parties ...”. The Hurlstones at this point 9 were claiming approximately CI $3,700,000. Mr. Paterson had 10 refused to authorize any further advances until a definitive 11 settlement was arrived at. There was still no agreement on a 12 number of individual items. Since final agreement on the 13 seawall/foundation question had not been reached by June 9, 2005, 14 Mr. Paterson included the cost of that work in his loss estimate but 15 split the amount in dispute equally between the insurer and the 16 owners. He explained this to Mr. Hambly and to Mr. Scott and 17 they each accepted his reasoning when they approved his draft 18 report. It was understood, however, that there were to be further 19 negotiations on this issue. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 43 of 226 1

¶ [71] Around this time, Mr. Frank Delessio arrived at Sagicor and soon 2 thereafter expressed concern about the lack of progress and the lack 3 of documentation to justify the advances. Sagicor refused to make 4 any further advances “until there was a full accounting of the 5 advances up to May 27, 2005”. Mr. Scott was expecting an audit 6 by his re-insurers in the near future and, for that reason, it was 7 critical that claims files were documented properly. 8 9 Frank Delessio 10 11

¶ [72] Mr. Frank Delessio, who figures prominently in this narrative, 12 passed away before the second trial. Although the trial bundles 13 contain a witness statement by Mr. Delessio I am advised by 14 counsel that it was not submitted as evidence of the truth of its 15 contents. 16 17

¶ [73] Mr. Scott first met Frank Delessio in 2001. He knew him as an 18 experienced loss adjuster with a good knowledge of the Cayman 19 Islands and the Caribbean area. In 2005, Mr. Scott offered Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 44 of 226 Delessio the job of Senior Vice President and consultant at Sagicor. 1 Around June 15, 2005 he joined Sagicor. Mr. Scott said Mr. 2 Delessio was given a great deal of autonomy at Sagicor. He 3 occupied the boardroom. He was a very competent loss adjuster. 4 5

¶ [74] Mr. Paterson first met Frank Delessio in the 1990’s when Mr. 6 Delessio came to Cayman as a director of a loss adjusting 7 organisation. Mr. Paterson was the local agent for that 8 organization. Mr. Paterson says he found Mr. Delessio to be 9 aggressive and confrontational. Clearly, the two men were not fond 10 of each other. 11 12

¶ [75] By 2001, Mr. Paterson had left the firm for which Mr. Delessio was 13 working and become managing director of Deloitte & Touche 14 Property Management. He says that that Mr. Delessio was “touting 15 for work” on Grand Cayman. Mr. Paterson wrote to the 16 Immigration Department to ask if Mr. Delessio had the proper work 17 permit. He says that Mr. Delessio had been doing work for the 18 private sector although his reason for being permitted to work here 19 was a mandate from the Cayman Islands Government. After Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 45 of 226 Paterson’s inquiry of the Immigration Department, he believes Mr. 1 Delessio formed the view that Mr. Paterson was solely responsible 2 for these problems. The relationship deteriorated further. 3 4

¶ [76] Mr. Nicholson attended a meeting with Alastair Paterson, Danny 5 Scott, and Frank Delessio. He said that Mr. Paterson was treated by 6 Mr. Delessio with “total disdain” during the meeting. At one point 7 Mr. Delessio said to Mr. Paterson that Paterson “was not a loss 8 adjuster and never had been.” 9 10

¶ [77] Mr. Harrigan dealt primarily with Mr. Delessio after June, 2005. 11 He says that Mr. Delessio appeared to familiarize himself closely 12 with all of the work being done at WV and was an experienced loss 13 adjuster. He made it “patently clear” to him on various occasions 14 that he did not like Mr. Paterson. This dislike was displayed prior 15 to and subsequent to the commencement of the original 16 proceedings. On several occasions, Mr. Harrigan heard Mr. 17 Delessio state that he intended to destroy Mr. Paterson and BPL. 18 Mr. Harrigan cannot recall the exact words used, but says it 19 conveyed the impression to him that Mr. Delessio intended to drive 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 46 of 226 Mr. Paterson out of business and destroy him professionally. Mr. 1 Harrigan found Mr. Delessio to be aggressive, agitated, and 2 extremely unpleasant on occasions. He characterized him as 3 “obsessed by a desire to damage Mr. Paterson.” 4 5

¶ [78] BPL sent an invoice to WV in the amount of approximately CI 6 $79,000 for professional fees. It was the insurer’s obligation, 7 according to Mr. Harrigan, to pay them. When the invoice was first 8 presented to the Strata Committee Mr. Delessio said that BPL 9 would not be paid because “professional fees were required to be 10 paid to a professional” and, in his view, Mr. Paterson was not a 11 professional. He threw the invoice into a waste paper basket. 12 13

¶ [79] Mr. Purdom worked closely with Mr. Delessio. He said Mr. 14 Delessio asked his opinion of the value of the work done and 15 “pressed me hard” for an answer. Mr. Purdom was unable to 16 comment. He found Mr. Delessio to be experienced and 17 competent. He had a “vast” amount of experience covering disaster 18 situations. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 47 of 226

¶ [80] One of Mr. Delessio’s first tasks was to perform a detailed review 1 of all claims files which remained open. He focused much of his 2 attention upon the WV project. He would have found an 3 instruction on file from the President of the WV Strata to Sagicor to 4 make cheques payable directly to the Hurlstones as instructed by 5 Crawford. He appears to heve become concerned that the 6 documentation was insufficiently particular. 7 8

¶ [81] Shortly after the site visit Mr. Delessio discussed his concerns with 9 Mr. Scott and, with his agreement, asked Mr. Harrigan to revoke 10 the authorization for payments to the contractors. Mr. Scott then 11 met with Robert and John Hurlstone and said there would be no 12 more advances until there had been a full accounting of the monies 13 advanced. 14 15

¶ [82] Mr. Paterson was instructed immediately to deal only with Mr. 16 Delessio instead of Mr. Scott and Mr. Hambly. A letter from Mr. 17 Delessio to Mr. Paterson dated June 20, 2005 asserted that Mr. 18 Delessio had commenced “a full review of the file and settlement 19 options which you outline in your email of 9th June 2005”. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 48 of 226 1

¶ [83] Mr. Harrigan gave some scope sheets to Mr. Delessio; he had 2 obtained them from Mr. Ulrich, their author, who worked for 3 Crawford and BPL for a short time. They were date stamped June 4 13, 2005. These scope sheets showed a total estimate for the cost 5 of repairs of CI $4,777,742.20. This amount was well below the 6 settlement recommended by Mr. Paterson in the amount of CI 7 $5,494,851. 8 9

¶ [84] Mr. Delessio wrote to Mr. Paterson requesting a unit by unit, line 10 by line breakdown of the damages. He advised Mr. Paterson that 11 the June 9 summary was not sufficiently detailed. He asked for a 12 full report outlining all “costings” by June 30, 2005. Mr. Delessio 13 wrote again to Mr. Paterson two days later saying he could not 14 reconcile the figures in the June 9 email. He questioned how the 15 cost of the roof had been calculated. He asked for a meeting. 16 17

¶ [85] The response from Mr. Paterson was that the claim was essentially 18 agreed; the implication was that there was no need to discuss the 19 issues raised by Mr. Delessio at this juncture. Moreover, Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 49 of 226 Paterson said that the contractor “should not have to further 1 validate any of his contractual costs either current or future as he 2 has a lump sum fixed price contract and his contract is with the 3 Strata”. There was no lump sum fixed priced contract in existence 4 yet. The contractor had been paid a substantial amount of money. 5 The Scott Schedules filed in this proceeding by the defendants 6 assert that CI $3,056,436 worth of work had been completed by this 7 date. 8 9

¶ [86] From June 18 to June 29, 2005 Mr. Paterson was away on vacation. 10 Upon his return, he met with Mr. Delessio. Mr. Paterson had been 11 asked to bring a copy of the scope sheets to the meeting. Although 12 Mr. Ulrich had been asked to prepare the draft scope of works on a 13 computer he produced a handwritten document. Mr. Paterson 14 determined that some major elements had been omitted from the 15 estimate including clean-up, demolition, the re-building of the 16 seawall, storage containers, fees and items such as hurricane 17 shutters and landscaping. There were, said Mr. Paterson, 18 “numerous errors.” As a result, Mr. Ulrich’s estimate for the total 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 50 of 226 loss was inaccurate. Mr. Paterson estimates that the total value of 1 the omissions in Mr. Ulrich’s assessment was CI $1,781,376. 2 3

¶ [87] Given the errors, Mr. Paterson did not wish to submit the scope 4 sheets to his client. When Mr. Delessio asked him to bring the 5 scope sheets to the meeting on June 29th, he found himself with a 6 hand written document which would be difficult to photocopy and 7 which showed erroneous pricing for many items. He instructed a 8 secretary to redact the prices and notes using white out to paint over 9 them. It was this redacted document which he presented to Mr. 10 Delessio and which Mr. Paterson intended to treat as a “working 11 document” to which he would add his own assessment of values. 12 13

¶ [88] Mr. Scott says he recalls two meetings with John Hurlstone, one of 14 which was on June 18th. He asked for an accounting or a release 15 from liability. Sagicor was willing to proceed on either basis. Mr. 16 Scott said that the re-insurers were not willing to put up their share 17 of the loss because they would not accept Mr. Paterson’s 18 documentation. They needed a proper accounting. It was because 19 the re-insurers wanted the documentation that Mr. Scott asked for 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 51 of 226 them. That was his only motivation. Mr. Harrigan had already said 1 he would sign a release but did not do so. 2 3

¶ [89] Mr. Scott claims that he was assured on June 18, 2005 by John and 4 Robert Hurlstone that “a full set of accounts had been given to Mr. 5 Paterson and would be delivered to Sagicor”. He never received 6 them. Robert Hurlstone denies telling Mr. Scott at anytime that he 7 would deliver “a full set of accounts” to Sagicor. He is unaware of 8 which accounts Mr. Scott may have had in mind. John Hurlstone 9 denies having had any meeting at all with Danny Scott on June 18, 10

¶ [2005] He has produced clear documentary evidence to show he 11 was in Europe at the time of this meeting. When confronted by Mr. 12 Hurlstone’s passport entries, Mr. Scott said he must be wrong about 13 the date. 14 15

¶ [90] Mr. Scott contradicted his own evidence in a number of important 16 ways. At one point he said his witness statement was “entirely 17 incorrect”. He said he was not worried about how much money had 18 been paid to the Hurlstones. The only reason he needed an 19 accounting was for the benefit of the re-insurers. He denied that he 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 52 of 226 had decided to fire Mr. Paterson. He said the witness statement 1 was written years afterwards by the attorneys. He agreed with the 2 suggestion that portions of his witness statement amounted to 3 “fiction”. Essentially, he says he never read documents, affidavits 4 or expert reports until the time of the first trial. 5 6

¶ [91] While I accept some portions of Mr. Scott’s evidence on other 7 matters, I am not satisfied that he had either of the two meetings 8 with John Hurlstone. I am satisfied that, as John and Robert 9 Hurlstone have said, no request was made to them for 10 documentation of the work already completed. 11 12 Disagreement 13 14

¶ [92] Mr. Paterson recalls sitting down with Mr. Delessio “to explain the 15 figures” before the end of June. He envisioned a fixed price 16 contract and therefore felt that it did not matter how much the 17 Hurlstones had actually spent to date. He concedes that he was 18 aware the insurers wanted to know how much that was. He 19 considered that he had finished his task as loss adjuster. Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 53 of 226 Hambly had approved his figures. What the Hurlstones had spent 1 the money on was not a “major concern” of Mr. Paterson. He 2 agrees that he never did provide cost accounting documentation. 3 He did not provide Mr. Delessio with what he asked for in writing 4 but he did so verbally. He says he gave him as much clarity as he 5 could. He tried very hard to satisfy Mr. Delessio but it was 6 impossible. He also says that he could only provide “very 7 approximate” figures of what had been spent. Mr. Delessio actually 8 wanted an accounting on a cost plus basis which would have been a 9 long and costly exercise. 10 11

¶ [93] Mr. Paterson was rather contradictory about whether he could or 12 could not have provided Sagicor with what they wanted. At one 13 point he says he could have done what Mr. Delessio wanted but it 14 would have taken about two weeks. He also agrees that he would 15 have had time to do what Mr. Delessio wanted by mid-August. In 16 re-examination he said he was very doubtful he could have 17 estimated the value of the work on a cost plus basis. It was not a 18 realistic exercise. The distinction is between a full historic cost 19 accounting (which was likely impossible at this stage) and 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 54 of 226 providing a reasonably detailed summary of what had been spent 1 on the various components of the project (which could have been 2 accomplished with some difficulty). 3 4

¶ [94] Mr. Scott has said that Sagicor never received the clean-up invoice 5 and that he and Mr. Delessio were unaware the clean-up 6 represented a major part of the cost. Mr. Paterson says he did pass 7 it on to Sagicor. Mr. Delessio’s file has never been disclosed by 8 Sagicor, who say it no longer exists. It is clear that he kept one and 9 that the cleanup invoice would be in it if it was provided to Sagicor. 10 In light of this (and other) failures by Sagicor to make proper 11 disclosure, I draw the inference against them that Mr. Paterson is 12 correct. He did provide the cleanup invoice to Sagicor and Mr. 13 Delessio was aware of it by July 5, 2005 at the latest. 14 15

¶ [95] Mr. Hurlstone was away from Grand Cayman on June 28 and 29, 16 2005 for medical reasons. He then went to Little Cayman to secure 17 his apartment there in the face of another advancing hurricane. 18 Upon his return to Grand Cayman he found that he and his workers 19 had been shut out of the construction site. He met Frank Delessio 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 55 of 226 for the first time when Mr. Delessio arrived at the site and told 1 Robert Hurlstone that he had been fired and was not allowed to 2 remove his construction equipment and tools. Later, he was 3 permitted to remove them. Mr. Delessio had no authority to bar 4 HGCL from the job site. 5 6

¶ [96] At the time of being barred from the site, Robert Hurlstone says he 7 had completed about 50% of the work and expected to finish in 8 December, 2005. He expected the final cost to be around CI 9 $6,500,000. 10 11

¶ [97] A document entitled “Hurlstone anticipated contract” was 12 submitted by Mr. Paterson to the Hurlstones on July 25, 2005. It 13 contains Mr. Paterson’s own assessment of what would constitute a 14 reasonable contract sum although, even at this point, some of the 15 figures were still open to negotiation and debate. The contribution 16 by Sagicor on this analysis was to have been CI $5,358,173. 17 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 56 of 226 Attorneys Are Consulted 1 2

¶ [98] Mr. Scott said that because of his growing concerns he and Mr. 3 Delessio approached the law firm of Quin and Hampson “with a 4 view to clarifying the legal position”. (Quin & Hampson became 5 the firm of Mourant during the progress of the litigation but I will 6 refer to it consistently as “Q&H”.) By early July he had been told 7 by Mr. Delessio that the value of the work done was around CI 8 $1,300,000. Without the knowledge of Mr. Scott, Mr. Delessio 9 arranged for Mr. Paterson to be placed under surveillance by 10 private investigators in early July. 11 12

¶ [99] The first meeting with Q&H was on July 5, 2005. Mr. Scott says 13 that the possibility of a criminal offence having been committed 14 was “determined” and a meeting was arranged with the head of the 15 Financial Crimes Unit of the Royal Cayman Islands Police Service. 16 That meeting took place on July 7, 2005. 17 18

¶ [100] Mr. Charles Quin, Q.C., a partner in the firm of Q&H, and Mr. 19 Delessio attended the meeting. Mr. Scott also says he advised the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 57 of 226 head of the Cayman Islands Monetary Authority of the situation 1 because they regulate the insurance industry. 2 3

¶ [101] Mr. Scott says he left the entirety of the file with Mr. Delessio as he 4 did not want to deal with it due to a conflict of interest. Once Q&H 5 had been instructed, “Frank Delessio was responsible for dealing 6 day-to-day with Sagicor’s attorneys”. When asked if Mr. Delessio 7 had told him about the fraud allegation, Mr. Scott replied that he 8 was making an accusation and “I had to let it run its course”. Mr. 9 Dack agreed that considerable trust had been reposed in Mr. 10 Delessio. In particular, he was trusted to deal with the lawyers and 11 to provide them with accurate information. 12 13

¶ [102] Robert Hurlstone says that his company did all of the purchasing of 14 materials. He kept copies of the invoices. There are no pay slips 15 issued to workmen although he did record their times. A lot of the 16 workmen were paid in cash. These employees were not necessarily 17 construction workers; a majority were not. He charged weekly for 18 the rental of his equipment. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 58 of 226

¶ [103] Before each payment, Mr. Paterson would come to the office and 1 look at the invoices. If someone had requested an accounting of 2 him, he would have given them all the information he had. No one 3 did. Mr. Hurlstone says he never understood that Sagicor wanted to 4 know what the money advanced to him had been spent on. He had 5 the invoices in a filing cabinet. His brother never asked to see these 6 documents. Mr. Paterson never told him that Sagicor wanted some 7 sort of accounting. Mr. Paterson had free access to the office. He 8 reviewed the work carefully and thoroughly. However, if Mr. 9 Hurlstone had been asked for a detailed cost accounting, he thinks 10 that would not have been possible. In any event, it would have 11 taken about two to three months and could have not been 100% 12 accurate. 13 14

¶ [104] Robert Hurlstone was asked why he did not produce the invoices 15 when the lawsuit first started. He says simply “I wasn’t asked.” He 16 believes he gave the documents to his lawyers three or four months 17 later. They were eventually produced to Sagicor in September, 18

¶ [2008] Mr. Hurlstone says that he was not aware at any material 19 time of any dispute about the value of the work done or any interest 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 59 of 226 on the part of Sagicor or WV in determining its value. Even after 1 the August 4th meeting, he was not told that Sagicor wanted an 2 accounting. I found Mr. Hurlstone to be a reliable witness and I 3 accept this evidence. 4 5 Alan Purbrick 6 7

¶ [105] Mr. Purbrick is a Chartered Surveyor practicing in England, a 8 member of the Royal Institution of Chartered Surveyors, and a 9 member of the Association of Building Engineers. He qualified as 10 a Quantity Surveyor in 1989. He worked on another reinstatement 11 project (Ocean Club) on Grand Cayman as loss adjuster. Mr. 12 Delessio asked him to come to Grand Cayman to assess the work 13 done at WV. 14 15

¶ [106] Mr. Purbrick describes Frank Delessio as a business acquaintance. 16 He had encountered Frank Delessio in the course of his work before 17 coming to the Cayman Islands. He found him loud and brash. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 60 of 226

¶ [107] Upon arrival Mr. Purbrick met Mr. Delessio for breakfast and then 1 the two men went to the job site. Mr. Delesssio made it clear that 2 he wanted to challenge the Hurlstones and that he was 3 contemplating a court case. Mr. Delessio did not tell him at this 4 point that he was putting together a case of fraud. He was not told 5 that the matter had been reported to the police. 6 7

¶ [108] Mr. Delessio did say to Mr. Purbrick that there was a big disparity 8 between the amount paid and the value of the work. He told Mr. 9 Purbrick not to speak to Mr. Paterson or to the Hurlstones. Mr. 10 Purbrick got the impression that Mr. Delessio was not on the best of 11 terms with Mr. Paterson. When Mr. Purbrick was asked why he did 12 not contact Mr. Paterson, he said it was because he was asked to 13 write a totally independent report. When Mr. Delessio told him not 14 to make inquiries of the Mr. Paterson and the Hurlstones, he said “it 15 will not get you anywhere”. 16 17

¶ [109] After receiving his instructions, Mr. Purbrick walked around the 18 site with Mr. Delessio. Mr. Purbrick claims he spent five days 19 conducting a “detailed measurement and assessment” of the project. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 61 of 226 Mr. Delessio was not involved. The report, he says, reflects Mr. 1 Purbrick’s own independent conclusions. He denies categorically 2 that Mr. Delessio told him his own opinion of the value of the work 3 done. 4 5

¶ [110] He did ask Mssrs. Delessio and Ulrich for drawings, which were 6 not provided to him. When asked why he did not contact the 7 engineers to obtain drawings, he said “I just didn’t”. Mr. Purbrick 8 only became aware of the existence of drawings at the meeting of 9 experts in this case. Mr. Purbrick repeatedly asked for documents 10 like sub contracts, invoices, day work sheets, and cancelled cheques 11 to subsidiaries. He never received any. 12 13

¶ [111] Patrick Ulrich provided his scope sheets to Mr. Purbrick. The two 14 men compared the Purbrick valuation of the work against the 15 estimates in the scope of works. Mr. Ulrich also gave him the 16 costing of the seawall. Mr. Ulrich told him that the strip out was 17 carried out by another contractor. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 62 of 226

¶ [112] Mr. Purbrick excluded the clean-up costs from his evaluation 1 because Mr. Delessio told him to do so. Mr. Scott’s understanding, 2 which he believes Mr. Delessio shared, was that the clean-up had 3 been largely undertaken by WV itself and not by the Hurlstones. 4 Mr. Scott believed that the only clean-up obligation which was the 5 responsibility of the Hurlstones was for the communal areas. 6 Invoices produced by the Hurlstones just prior to trial show that 7 they had in fact done clean-up work in the units themselves. 8 9

¶ [113] Mr. Purbrick obtained his rate for concrete from Mr. Ulrich. 10 However, he also said that Mr. Ulrich provided him with a rate of 11 CI $170 and he reduced that to CI $150 because he “felt” Ulrich’s 12 figure was too high. 13 14

¶ [114] When Mr. Purbrick was asked if he had enough information to 15 value everything, he said he did. When pressed about the labour 16 rates, he said that he does not have documentary evidence to back 17 up most of them. He was never given any labour rates to use by 18 Frank Delessio. He also said that he did not think it was necessary 19 to check with a local quantity surveyor concerning costs or rates. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 63 of 226 He added that he had costs which had been used by other loss 1 adjusters. 2 3

¶ [115] Significantly, he said that had he known that there was a system of 4 “on account” payments it would have explained some of the 5 discrepancy. No one told him at any time that advance payments 6 had been made. When asked why he did not contact the sub 7 contractors and suppliers he said he did not have enough time. 8 9

¶ [116] Mr. Purbrick described his first report as a preliminary one which 10 was intended to be a guide to inform a further investigation by 11 Sagicor. He would have taken the position that further 12 investigation should be done before a fraud allegation was made in 13 a lawsuit. 14 15

¶ [117] Mr. Scott says that Mr. Purbrick’s conclusions were “consistent 16 with both my own perception with the extent of works completed at 17 the site and that of Frank Delessio.” When he received Mr. 18 Purbrick’s report Mr. Scott was very angry at its findings. He 19 concluded that Sagicor had been defrauded. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 64 of 226 1

¶ [118] Andrew Moran, a London barrister, was asked for an opinion. It 2 reinforced Mr. Scott’s view and a decision was taken by Sagicor’s 3 board of directors to initiate formal legal proceedings. He says this 4 step would not have been taken but for the advice of Mr. Purbrick 5 and the attorneys. 6 7 Expert Opinion on the Purbrick Report 8 9 10

¶ [119] Mr. Purdom was retained by Sagicor to assist in assessing insurance 11 claims on Government properties here. He has studied the report of 12 Mr. Purbrick and provided expert opinion evidence on it on behalf 13 of the defendants. He also attended the experts’ meeting in 14 London. 15 16

¶ [120] Mr. Purdom commented on the major flaws in Mr. Purbrick’s 17 valuation. 18 19

¶ [121] When asked how he would have gone about evaluating the work, 20 Mr. Purdom said he would have asked for drawings and the scope 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 65 of 226 of work and then interviewed the contractor. He believes the 1 drawings would have made a “huge difference” to Mr. Purbrick if 2 he had obtained them. He said one should discuss with 3 subcontractors what materials they have ordered. Mr. Purbrick 4 failed to refer to the APEC drawings or any relevant rate schedule 5 and did not consult anyone locally to ascertain costs. Mr. Purdom 6 says “it would have been very easy” to obtain an accurate rate for 7 labour locally. 8 9

¶ [122] Mr. Purbrick’s labour rate of CI $14 per hour was far below the rate 10 considered by Mr. Purdom to be reasonable, i.e., CI $34.80 per 11 hour. Mr. Purbrick failed to account for the fact that there was 12 double boarding in the ceilings in order to comply with fire 13 regulations; he assumed it was single boarding. He used the rate of 14 CI $150 per cubic yard for concrete for the seawall but a rate of CI 15 $250 per cubic yard is necessary to include the cost of placing it. 16 Mr. Purdom estimates that the stripping out of the units would take 17 a total of 3,917 man hours; Mr. Purbrick estimated 1,462 man 18 hours. The cost of the initial clean-up is estimated by Mr. Purdom 19 at CI $526,792, far higher than Mr. Purbrick’s estimate but 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 66 of 226 significantly less than what was charged. With respect to the 1 seawall, Mr. Purbrick used an incorrect measurement for the 2 amount of concrete required, failed to incorporate the cost of rebar 3 in his estimate, and failed to take account of the full cost of 4 shuttering. His estimate was far lower than Mr. Purdom’s estimate 5 of CI $325,052. 6 7

¶ [123] Other significant differences in the two estimates included the cost 8 of installing timber floors, windows and doors, ceilings, and roofs. 9 With respect to mechanical, electrical and plumbing costs, Mr. 10 Purbrick estimated the value of the work at CI $90,339 while Mr. 11 Purdom found it to have a value of CI $315,700. There were also 12 significant difference in the costs of “preliminaries”, overhead and 13 profit, and materials left on the site. Mr. Purbrick’s figure for 14 overhead and profit was 10%, which Mr. Purdom said was “was 15 extremely low” and unreasonable. In the local market, 20% would 16 be appropriate. 17 18

¶ [124] Mr. Purdom, unlike Mr. Purbrick, examined the invoices and 19 payments made to the relevant subcontractors. He said that Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 67 of 226 Delessio should have required an explanation for the discrepancy 1 between the valuation and the amounts advanced. 2 3

¶ [125] Mr. Purdom attended a meeting of the expert witnesses in this case 4 in London on September 17, 2008. He says he was “genuinely 5 astounded” to learn that Mr. Purbrick, who also attended the 6 meeting, had failed to obtain “critical information” from the 7 consultants employed in the reconstruction works at WV. In 8 particular, Apex Engineering should have been consulted. He said 9 that Mr. Purbrick failed to ascertain the strength of the concrete 10 used in the reconstruction and, although he made an estimate of the 11 amount of steel reinforcement used, based his rates for that estimate 12 on U.K. construction rates as opposed to those in Cayman. The 13 weight of the evidence in this case establishes that Cayman rates 14 are likely to be significantly higher than those prevailing in the 15 United Kingdom and are bound to be so in the aftermath of a 16 hurricane. 17 18

¶ [126] Mr. Purdom described three major deficiencies in the report of Mr. 19 Purbrick. First, it made no allowance for the cost of cleaning up the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 68 of 226 site. At the experts’ meeting, Mr. Purbrick told Mr. Purdom that he 1 had been instructed by Mr. Delessio to refrain from taking the 2 clean-up cost into account. 3 4

¶ [127] Second, Mr. Purdom found it difficult to understand why Mr. 5 Purbrick had not consulted the drawings of the seawall or made 6 arrangements to discuss the construction of the seawall with its 7 architect, Mr. Sabti. Mr. Sabti is an engineer with offices on 8 Grand Cayman. At the experts’ meeting, Mr. Purbrick confirmed 9 that he had not seen the drawings but had simply relied on his own 10 experience and measurements. 11 12

¶ [128] Third, Mr. Purdom took issue with Mr. Purbrick’s labour rates. He 13 said that Mr. Purbrick relied upon his experience of labour rates in 14 the United Kingdom as well as the rates for the Ocean Club 15 restoration. Mr. Purdom relied upon local labour rates and invoices 16 from local suppliers. 17 18

¶ [129] He concluded that the Purbrick report was “fundamentally flawed.” 19 Since Mr. Delessio was a very experienced and competent loss 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 69 of 226 adjuster, Mr. Purdom said that Mr. Delessio “should have realized 1 immediately on reading the report” that it was deficient in these 2 respects. 3 4

¶ [130] Mr. Thomas, who estimates that he spent around 600 hours 5 analyzing the evidence in this case, gave expert evidence on Mr. 6 Purbrick’s opinion. Mr. Thomas formed his own opinion of the 7 value of the overall loss and estimated it at CI $6,935,551. That 8 figure is quite close to Mr. Paterson’s assessment. 9 10

¶ [131] Mr. Thomas made a number of points which serve to illustrate why 11 Mr. Purbrick’s estimate was so low. He says the rate for labour 12 “almost doubled” for the first six months following the hurricane. 13 There was general agreement in the industry that the cost of 14 construction work increased by 20% to 25% after the storm; these 15 increased costs remained in place for about 18 months. There was 16 a huge demand for construction work by the reputable larger 17 contractors. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 70 of 226

¶ [132] Nevertheless, Mr. Thomas found the Hurlstone’s labour rate of CI 1 $35 per hour to be unreasonably high and said it was higher than 2 the established norm for unskilled labour after the storm. He 3 thought the proper range was CI $20 to CI $25. (Mr. Paterson used 4 a rate of CI $22.50 per hour.) 5 6

¶ [133] Mr. Thomas estimated the value of the work completed by August 7 2005 at CI $2,769,223. With respect to Mr. Ulrich’s detailed scope 8 of works, Mr. Thomas notes that when adjusted to include the cost 9 of site clearance, the seawall, and preliminaries is approximately CI 10 $6,611,250. Taking all this into account, Mr. Thomas considered 11 the recommended settlement figure of CI $5,500,000 to be within 12 the range of reasonableness. 13 14

¶ [134] Mr. Thomas said that the Purbrick report contained “glaring errors 15 which any professional in the field should have seen and 16 questioned”. He continued: 17 “4. …From examination of Mr. Purbrick’s reports and 18 photographs it was evident that there were errors in the 19 form of the items missing from his assessment of what 20 work had been completed. One such error was notably a 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 71 of 226 huge underestimate of the cost of the site clean-up and 1 demolition works. 2 3

¶ [5] It was also immediately obvious that the rates used by 4 Mr. Purbrick in his calculations were severely understated 5 and any professional in the field at that time should have 6 questioned these. 7 8

¶ [6] After reading the reports I consider that his methodology 9 was flawed and some of his opinions should have been 10 questioned at the outset and a second opinion sought. 11 12

¶ [7] My own expert’s report comments in detail on all of these 13 issues and my opinion is that the Plaintiff should have 14 employed a local professional Chartered Quantity 15 Surveyor to give a second opinion on Mr. Purbrick’s report 16 as he clearly did not have the local expertise to accurately 17 value the work. 18 19 20

¶ [8] It was also apparent that the Plaintiff’s Expert witness had 21 not conducted the necessary due diligence in gathering 22 information for his September 2005 report. His overall 23 assessment of the value of the sea wall for example was 24 wrong because he made incorrect assumptions about the 25 specifications when detailed information was available. 26 He then failed to carry of [out] the necessary inquiries to 27 obtain the required information to correct his errors in his 28 February 2006 report. 29 30 31

¶ [9] I find it incomprehensible that given the various glaring 32 errors that Mr. Delessio and/or Mr. Scott with years of 33 experience in insurance and loss adjusting did not question 34 the aforementioned issues and did not seek second 35 opinions before making the accusations of fraud.” 36 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 72 of 226 1

¶ [135] Mr. Damian Waters is a quantity surveyor and a member of the 2 Chartered Institute of Building and a fellow of the Chartered 3 Institute of Arbitrators. He gave expert evidence on behalf of the 4 Hurlstone defendants. Mr. Waters does not have the benefit of 5 previous experience in the Cayman Islands. 6 7

¶ [136] Mr. Waters formed his own estimate of the value of the work 8 completed and placed it at CI $3,056,436. He expressed a number 9 of fundamental disagreements with Mr. Purbrick’s report. 10 11

¶ [137] Mr. Waters said that Mr. Purbrick’s failure to examine the available 12 drawings was a serious one because at the time he made his visual 13 inspection he would not have been able to see all of the work 14 undertaken. Mr. Purbrick assigned to the Preliminaries a value of 15 CI $71,018. The result is that Mr. Purbrick is asserting that the 16 Hurlstones are entitled to be paid only CI $1,972.74 per week for 17 the cost of site management and supervision, site accommodation, 18 power, lighting, fuel, tools and scaffolding. Mr. Waters said that 19 was grossly unfair and unreasonable. His own estimate for the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 73 of 226 preliminaries was CI $254,468.88 which represents a payment of 1 CI $21,205 per week. 2 3 Events to February, 2006 4 5

¶ [138] A meeting was held on August 4, 2005 and attended by Mssrs. 6 Harrigan and Coles for WV, Mssrs. Scott and Delessio for Sagicor, 7 John Hurlstone and Alastair Paterson. The purpose of the meeting 8 was to attempt to resolve the difference which had emerged. 9 10

¶ [139] Mr. Scott says there was no agreement that Hurlstone would be 11 paid additional sums as a re-mobilization fee or that a 12 memorandum of agreement was a pre-condition to work 13 commencing again. He says John Hurlstone agreed unequivocally 14 that he would begin work again on the site on August 8, 2005. 15 16

¶ [140] Mr. Richard Coles is an attorney and a former Attorney General of 17 the Cayman Islands. He owned a unit at WV at the time of the 18 hurricane. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 74 of 226

¶ [141] Mr. Coles attended the meeting on August 4, 2005. He was the 1 only person present with legal training. He recalls that the focus of 2 discussion was on how the CI $2,900,000 that had already been 3 advanced was spent. He recalls John Hurlstone saying that he 4 would work with Mr. Paterson to account for the money spent and 5 would provide a final cost estimate for the reinstatement works. 6 Sagicor agreed that they would settle the claim within fourteen days 7 of the documentation being provided. John Hurlstone said he 8 would mobilize his workforce and return to work on the following 9 Monday as a gesture of good faith. 10 11

¶ [142] Mr. Coles took a contemporaneous note of the proceedings. He 12 says there was no agreement reached to pay Hurlstone a 13 mobilization payment. On the contrary, Mr. Scott said that no 14 further payments would be made until proper documentation for the 15 work already completed had been provided. 16 17

¶ [143] Mr. Coles disagrees with John Hurlstone’s interpretation of what 18 had been agreed at the meeting. He says there was no agreement 19 that he or anyone else would draft a memorandum and that John 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 75 of 226 Hurlstone had promised to return to work without attaching any 1 conditions to that. I accept Mr. Coles’ recollection as the most 2 accurate description of the meeting. 3 4

¶ [144] On August 8, Sagicor received a letter from John Hurlstone asking 5 for a mobilization fee and saying that work would commence again 6 seven days after a memorandum of agreement had been executed. 7 Mr. Paterson told Mr. Delessio on August 9, 2005 that he had 8 agreed upon the terms of a memorandum of agreement. He said 9 that work would begin again when the memorandum was signed. 10 Mr. Delessio protested in writing that this was not what had been 11 agreed at the meeting. 12 13

¶ [145] On August 19 a more satisfactory response was received by Mr. 14 Delessio but, by then, he had instructed Mr. Purbrick to examine 15 the job site and prepare his valuation of the work completed. On 16 September 9, 2005 Mr. Delessio instructed Crawford Adjusters to 17 stop working on the WV file. He asked for the entire file contents. 18 Crawford replied that Mr. Delessio already had all the relevant 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 76 of 226 documents and “there is nothing left to send you.” In September he 1 instructed Crawford to stop work on all Sagicor files. 2 3

¶ [146] Shortly after this meeting M & J Construction was hired to 4 complete the construction in the place of the Hurlstones. M & J’s 5 contract provided for payment to it of its cost plus a profit of 25%. 6 The total cost of the M & J project came to CI $5,052,814. 7 8 The Original Proceeding 9 10

¶ [147] Mr. Simon Dickson is an attorney working at Q&H. Mr. Quin was 11 the senior partner in charge of the litigation department until he left 12 in 2007. Mr. Morrison had day-to-day conduct of the file until he 13 left in April 2006. He was a senior associate specializing in 14 litigation. 15 16

¶ [148] Mr. Dickson was aware that Sagicor was an important client of the 17 firm and had the impression that Mr. Delessio was “extremely 18 senior”. Mr. Dickson visited the job site around the time the 19 Hurlstones were locked out. He described Mr. Delessio as the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 77 of 226 dominant personality at the scene. Mr. Delessio insisted that he 1 was in sole control of the site. Mr. Dickson described him as fairly 2 abrasive. He took instructions directly from Mr. Delessio, who said 3 he had a lot of experience with litigation in the United States. Mr. 4 Morrison also obtained his instructions from Mr. Delessio and 5 worked very closely with him. 6 7

¶ [149] Mr. Dickson said that right from the start Mr. Delessio alleged 8 dishonesty. He was adamant that Robert and John Hurlstone and 9 Alastair Paterson had perpetrated a fraud. It was likely Mr. 10 Delessio who suggested going to the police. He said he “had” 11 surveyed the site and evaluated the work at CI $1,300,000. He 12 seemed convinced of his opinions. 13 14

¶ [150] The redaction of the scope sheets was recounted to Mr. Dickson as 15 an act of deceit by Mr. Paterson. Mr. Delessio said the sheets 16 provided evidence of fraud. 17 18

¶ [151] The Purbrick report was presented to Mr. Dickson as a thorough 19 examination of the site which could be relied upon to prove value. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 78 of 226 Mr. Dickson says the attorneys were happy with the Purbrick report 1 and did not look behind it or consider getting a second opinion. 2 3

¶ [152] As for the reports of Alastair Paterson, Mr. Dickson said he 4 understood that the payments were being made for work already 5 done. He was never told that the payments included or represented 6 advances. At none of his meetings with Mr. Delessio was anything 7 said to suggest that the discrepancy could be explained by goods 8 bought but not yet used in the project. 9 10

¶ [153] When Mr. Moran’s opinion arrived on January 11, 2006, it said that 11 there was no explanation for the discrepancy in figures other than 12 dishonesty. Mr. Dickson consulted Mr. Delessio to obtain his 13 instructions. 14 15

¶ [154] Mr. Dickson learned only after the Writ had been issued that the 16 WV Strata did not wish to be a Plaintiff in the action. Mr. Coles 17 was not consulted at any stage. Mr. Coles first became aware the 18 proceedings had been started in the name of WV Strata after 19 everything had been filed. He was very angry as he knew the Strata 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 79 of 226 had not authorized the proceeding. Patrick Harrigan had no 1 authority to authorize it on his own initiative. At a minimum, the 2 Strata Executive Committee would have had to agree and, in all 3 probability, the matter would have been put to a vote of all the 4 owners. The WV Strata distanced itself from the proceeding as 5 much as possible. 6 7

¶ [155] Although president and Chief Executive Officer of Sagicor, Mr. 8 Scott asserts that the decision to initiate litigation is one that “must” 9 be taken by the board of directors rather than by himself or by an 10 employee. 11 12

¶ [156] Mr. Dack has reviewed the minutes of Sagicor’s board meetings. 13 There was no one on the board with legal training. He says that 14 Mr. Scott advised the board of concern that the work at WV did not 15 justify the amount of money which had been paid. The board was 16 told of Mr. Purbrick’s opinion on November 28, 2005 and told that 17 London counsel had been asked for an opinion. No decision was 18 taken then to initiate litigation. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 80 of 226

¶ [157] At the February 20, 2006 meeting of the board, Sagicor considered 1 the opinion of Mr. Moran dated January 11, 2006. The board 2 agreed that it had “no alternative” but to commence litigation. Mr. 3 Dack has no recollection of Mr. Delessio attending any of the board 4 meetings. Mr. Dack left the board after January, 2008. 5 6 The Mareva Injunction 7 8

¶ [158] The Mareva injunction was obtained on February 28, 2006 on an ex 9 parte basis, supported by the affidavits of Danny Scott and Patrick 10 Ulrich and two reports by Mr. Purbrick. It was served the next day. 11 Sagicor applied for the injunction on its own behalf, without any 12 consent by or participation of WV. 13 14

¶ [159] In his affidavit in support of the Mareva injunction, Mr. Scott 15 described the scope sheet incident involving Mr. Delessio and Mr. 16 Paterson and their conversation at the end of June. After describing 17 the Purbrick report Mr. Scott said there were two possibilities: Mr. 18 Paterson had failed to inspect the site properly or he was in 19 collusion with the Hurlstones to request money for work which had 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 81 of 226 not been done. He then referred to Mr. Purbrick’s conclusion that 1 the discrepancies were so large that they could not be attributed to 2 error or incompetence. Mr. Scott asserted that there was “strong 3 evidence” of fraud by all defendants. 4 5

¶ [160] The evidence of possible dissipation of assets was found in a 6 winding-up proceeding against Hurlstone Construction Ltd. 7 commenced by a third party in 1997. The Official Liquidator who 8 was appointed concluded, according to Mr. Scott’s affidavit, that 9 this entity had been insolvent from 1992 onwards. Nevertheless, in 10 February, 1993 it entered into a contract which obliged it to pay a 11 subcontractor some CI $257,000. The Liquidator determined that 12 large amounts of money had been withdrawn by John and Robert 13 Hurlstone from this company and commenced proceedings against 14 them. The claim was eventually settled by the payment of US 15 $750,000. This evidence convinced the Court of a risk of 16 dissipation by the Hurlstones. 17 18

¶ [161] Sagicor also requested a Mareva injunction against Alastair 19 Paterson, Crawford and BPL. Mr. Paterson was accused of 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 82 of 226 falsifying the scope sheets in an attempt to deceive Sagicor. Mr. 1 Scott presented no evidence of potential asset dissipation by Mr. 2 Paterson. As a result, the Mareva injunction was issued only 3 against the Hurlstone defendants and not against the Crawford 4 parties. 5 6

¶ [162] No attempt was made by the Hurlstones to have the injunction 7 discharged. Sagicor did consent to a number of amendments to the 8 injunction at the request of the Hurlstones. 9 10 The Newspaper Article 11 12

¶ [163] On two occasions Mr. Delessio told Mr. Harrigan that he was going 13 to “plant” an article in the press about the lawsuit. He said his 14 girlfriend was going to try to plant it. Mr. Harrigan asserts that 15 “prior to the article about this case that appeared in the Caymanian 16 Compass in March of 2006, Mr. Delessio told me that an article 17 would be appearing”. Mr. Harrigan does not know who planted the 18 article in the paper. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 83 of 226

¶ [164] Mr. Alan Markoff is a journalist working for the Caymanian 1 Compass. In March, 2006 he wrote an article about the lawsuit. 2 He would not name his source in evidence, but said that the source 3 was an owner of a unit at WV. Danny Scott was not the source. 4 Mr. Delessio was not the source either, and nobody asked Mr. 5 Markoff to refrain from mentioning Mr. Delessio in the article. Mr. 6 Markoff never discussed his story with Mr. Delessio. 7 8

¶ [165] Mr. Coles was outraged over the press article about the action. He 9 said it was very clear that Mr. Delessio and Mr. Paterson did not 10 like each other. Mr. Delessio, in his view, was a fairly aggressive 11 individual who was not conciliatory but abrasive. 12 13 The Case Collapses 14 15

¶ [166] The case was set for trial in December, 2008. Mr. Dickson says 16 that after a time the file “went quiet”. At the order of the Chief 17 Justice, a Scott Schedule was prepared. After the pleadings were 18 filed and the injunction obtained, there was only sporadic activity in 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 84 of 226 the action until September, 2008. It was in that month that Q&H 1 obtained its own client’s documents and witness statements. 2 3

¶ [167] At this point, Mr. Dickson had to struggle with Mr. Delessio to get 4 him to disclose the needed information. By this time Mr. Dickson 5 was finding it very hard to even get instructions from Mr. Delessio. 6 When asked why he did not send a letter at an early stage 7 demanding disclosure of invoices and other documentation from 8 the defendants, Mr. Dickson said he did not because Mr. Moran had 9 not suggested it. 10 11

¶ [168] Both parties served lists of documents on or about September 9, 12

¶ [2008] The Hurlstone defendants provided their documents on 13 September 17, 2008 and the Crawford defendants provided theirs 14 on October 7, 2008. The Hurlstones disclosed a series of invoices 15 purporting to show work and materials supplied to WV by sub- 16 contractors and material suppliers. Sagicor had not seen these 17 before. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 85 of 226

¶ [169] When he saw the disclosure, Mr. Dickson became concerned by the 1 invoices which he was reading for the first time. He was surprised 2 that the clean-up costs had not been taken into account and noticed 3 other signs that the Purbrick reports had not been put together 4 carefully. 5 6

¶ [170] Mr. Dickson then requested specific disclosure of certain classes of 7 documents. He asked the Hurlstone defendants for specific 8 discovery of additional records supporting the charge of CI 9 $392,000 for clean-up representing 11,200 man hours at $35 per 10 hour. He also requested further detail with respect to the hourly 11 rate. He asked for cancelled cheques or other documentary 12 evidence of payment to the workers, bank statements, 13 documentation relating to food, accommodation and transport 14 (which were components of the hourly rate) and documentation 15 showing whether each worker was entitled to a pension and 16 vacation pay. He asked for time sheets and the names and “other 17 relevant details” of the workers who worked at the WV site. He 18 demanded disclosure of records which have to be kept as a matter 19 of Cayman law, including work permits and pension policies. With 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 86 of 226 respect to construction materials, Mr. Dickson asked for cancelled 1 cheques paid to suppliers and related documentary evidence, 2 including bank statements. 3 4

¶ [171] On October 17, 2008 Mr. McDuff, on behalf of the Hurlstone 5 defendants, responded: 6 “We can confirm that our clients have disclosed all of 7 the documentation relating to these matters which is or 8 has been in their possession, custody or power. The 9 documentation that you seek (such as further payroll 10 records beyond those already disclosed, time sheets and 11 details of workers) simply do not exist. 12 13 In making your request, you appear to overlook the 14 conditions which existed on Grand Cayman in the 15 aftermath of Hurricane Ivan and the manner in which 16 business and banking was then conducted. Amongst 17 other things there was an extreme shortage of paper and 18 stationary, such that documentary records were not 19 routinely kept. This practice was particularly prevalent 20 in the building trade in which work was required to be 21 done on an urgent basis. Most transactions, in particular 22 the payment of workers took place on a purely cash basis 23 without written receipt or record in the absence of a 24 normal banking system. The same practice often applied 25 in respect of the payment of suppliers. We can confirm 26 that our clients’ own offices were destroyed by Ivan and 27 that thereafter they were unable to create or store written 28 records in an orderly manner thereafter. 29 30 Our clients, Mr. John Hurlstone and Mr. Robert 31 Hurlstone, have, however, made inquiries with their 32 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 87 of 226 banks to obtain statements showing withdrawals and 1 payments made during the period in which they were on 2 site at WV. In any event these will not show you how 3 the funds were dispersed and can only be of marginal 4 relevance to the exercise you have in mind.” 5 6 Mr. McDuff did provide to Mr. Dickson copies of the bank 7 statements for HL and HGCL but due to the absence of detail these 8 were of limited value. 9 10

¶ [172] A second demand was made for names and details of the workers, 11 documentation which had to be kept on file as a matter of Cayman 12 law, any documentation relating to the provision of food, 13 accommodation and transport for the workers; and documentation 14 demonstrating which workers were entitled to a pension and 15 vacation pay. No reply was made to this letter. 16 17

¶ [173] Robert Hurlstone says that he has produced a schedule containing a 18 list of payments made in respect of WV which has been created by 19 examining his cheque books. This schedule was misplaced but he 20 found it around November 10, 2008, after which it was disclosed. 21 However, the schedule does not show the specific work for which 22 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 88 of 226 the payment was made, the labour rate applied, or how the rate was 1 calculated. The schedule shows a total expenditure of CI 2 $2,637,717 between October 2004 and July 2005. 3 4

¶ [174] Mr. Dickson sent everything off to Mr. Moran, who advised that he 5 felt the case had been compromised. In particular, he no longer had 6 confidence in Mr. Purbrick’s opinion. 7 8

¶ [175] On November 7, 2008 Mr. Moran advised Q&H that “the plaintiffs 9 are unable any longer properly to advance a case based on 10 dishonesty and conspiracy to defraud…”. The primary reason was 11 the likelihood that Mr. Purbrick would be regarded as an unreliable 12 witness. On November 12, 2008 he said that as “a matter of 13 professional obligation no case based on fraud can now be 14 presented and that the existing case must be withdrawn.” He 15 advised the pursuit of a dignified exit from the proceeding. 16 17

¶ [176] Despite this advice, attorneys for the plaintiffs initiated a meeting 18 with their counterparts for the defendants on November 17, 2008 19 and offered to settle for a payment by the defendant’s of CI 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 89 of 226 $1,175,000. The offer was not accepted. Nothing was said at the 1 meeting to suggest that the claims would be abandoned 2 unconditionally, a position which was announced on the following 3 day. 4 5

¶ [177] Sagicor confirmed their intention to abandon their claims against all 6 defendants in correspondence on November 21, and 24, 2008. 7 However, on the first day of trial, December 1, 2008, Sagicor 8 recanted and obtained leave to withdraw its application to 9 discontinue. Two days later on December 3, 2008, Sagicor 10 abandoned the claim and consented to judgment against it in favour 11 of all defendants. 12 13 LIABILITY 14 Agency of Frank Delessio 15 16

¶ [178] The Crawford and Hurlstone defendants say that the evidence 17 establishes liability for one of two alternate (and closely related) 18 torts: abuse of process and malicious prosecution. The definition of 19 each focuses critical attention upon the state of mind of the alleged 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 90 of 226 wrongdoer so I must begin by determining whose state of mind is 1 material. 2 3

¶ [179] The grounds for attributing an individual’s intention or state of 4 mind to a corporation were set out by Lord Hoffmann in Meridian 5 Global Funds Management Asia Ltd v Securities Commission 6

¶ [1995] 2 AC 500. Where an individual represents the “directing 7 mind and will” of the company, his intention or state of mind 8 should be attributed to the company. The individual concerned 9 need not be the central directing mind and will but may instead be 10 the person whose functions within the company lead in all the 11 circumstances to the conclusion that his actions or state of mind 12 must be regarded as that of the company. This will usually depend 13 upon the particular task or duty under consideration. 14 15

¶ [180] In El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 695- 16 696, 17 18 Nourse LJ stated: 19 20 “This doctrine, sometimes known as the alter ego doctrine, has 21 been developed, with no divergence of approach, in both 22 criminal and civil jurisdictions, the authorities in each being 23 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 91 of 226 cited indifferently in the other. A company having no mind or 1 will of its own, the need for it arises because the criminal law 2 often requires mens rea as a constituent of the crime, and the 3 civil law intention or knowledge as an ingredient of the cause of 4 action or defence… 5 6 The doctrine attributes to the company the mind and will of the 7 natural person or persons who manage and control its actions. 8 At that point, in the words of Millett J ([1993] 3 All ER 717 at 9 740): 'Their minds are its mind; their intention its intention; 10 their knowledge its knowledge.' It is important to emphasise 11 that management and control is not something to be considered 12 generally or in the round. It is necessary to identify the natural 13 person or persons having management and control in relation 14 to the act or omission in point.” 15 16 A corporate entity may also be liable for the acts of its employee 17 on the basis of vicarious liability. 18 19

¶ [181] An employer is liable for the wrongful acts of an employee 20 authorised by it or for the wrongful carrying out of an authorised 21 act: Poland v John Parr & Sons [1927] 1 KB 236 at 240. The 22 liability of an employer extends to all torts committed by its 23 employee when purporting to act in the course of its business 24 because the employee was authorised or held out as authorised to 25 transact business for his employer. This may include fraud: Lloyd v 26 Grace, Smith & Co [1912] AC 716 at 725. An employer may also 27 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 92 of 226 be vicariously liable for an employee’s torts if the wrongful act is 1 “so closely connected with his employment that it would be fair and 2 just to hold the [employer] vicariously liable”: Lister v Hesley Hall 3 Ltd [2002] 1 AC 215. Malicious prosecution is a tort which may be 4 committed by a corporate entity: see Cornford v Carlton Bank 5

¶ [1899] 1 QB 392. The editors of Clerk & Lindsell on Torts (19th 6 Ed) say at para 16-16) that 7 “A defendant may be liable in this as in other torts for acts done with his 8 authority or subsequently ratified. If an agent institutes a prosecution 9 within the scope of his employment and in pursuance of a general 10 authority, any malice or unreasonableness which may actuate him in so 11 doing is imputed to his principal”. 12 13

¶ [182] Lord Nicholls has said in Dubai Aluminium v. Salaam [2002] 14 UKHL 48 that “the court makes an evaluative judgment in each 15 case, having regard to all the circumstances …”. An employer will 16 not necessarily be liable for acts of vengeance or spite which are 17 entirely personal. I must determine whether the Mr. Delessio’s acts 18 were so closely connected with his employment that it would be 19 fair and just to hold Sagicor vicariously liable. 20 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 93 of 226

¶ [183] Mr. Delessio was a senior executive (“Senior Vice-President”) and 1 given a considerable degree of responsibility and autonomy. Mr. 2 Scott placed him in charge of the WV claim. Instructing the 3 attorneys was left almost entirely to Mr. Delessio, at least until 4 shortly before the first trial. Mr. Scott attended the first meeting 5 with Quin & Hampson but believes he left early. His own 6 consciousness of a conflict of interest (because he lived in the 7 development) caused him to be less involved than might otherwise 8 have been the case. Mr. Scott said that once Q&H had been 9 instructed, “Frank Delessio was responsible for dealing day-to-day 10 with Sagicor’s attorneys”. When asked if Mr. Delessio had told 11 him about the fraud allegation, Mr. Scott replied that he was 12 making an accusation and “I had to let it run its course”. Mr. Dack 13 agreed that considerable trust had been reposed in Mr. Delessio. In 14 particular, he was trusted to deal with the lawyers and to provide 15 them with accurate information. 16 17

¶ [184] Mr. Dickson had the impression that Mr. Delessio was “extremely 18 senior”. He took instructions directly from Mr. Delessio, who told 19 Mr. Dickson he had a lot of experience with litigation in the United 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 94 of 226 States. Mr. Morrison also obtained his instructions from Mr. 1 Delessio and worked very closely with him. 2 3

¶ [185] Given the impression I have gained from the evidence which is set 4 out below, I am satisfied that Mr. Delessio’s motivation in initiating 5 the law suit and seeking an injunction was not entirely personal and 6 unrelated to his employment. He formed an impression that his 7 employer had been defrauded; coming to such a decision was well 8 within the scope of his employment. His dealings with Mr. 9 Paterson, Mr. Purbrick and the attorneys were in the course of 10 carrying out his loss adjuster function at Sagicor. His dislike of Mr. 11 Paterson manifested itself in the course of (and during) a business 12 relationship with him which arose from his employment. I am 13 satisfied that Mr. Delessio’s actions and state of mind were so 14 closely connected with his employment that it would be fair and 15 just to hold Sagicor liable vicariously if liability is otherwise 16 established. 17 18

¶ [186] It is true, as Mr. Scott said, that the consent of the Board of 19 Directors was required before the Writ could be issued. Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 95 of 226 Delessio provided virtually all of the instructions to the attorneys 1 which preceded the commencement of the action and the obtaining 2 of the Mareva injunction. The Board, which had no member with 3 legal training, acted solely upon the advice of Mr. Scott and, in 4 particular, of Q&H. It made no independent investigation or 5 inquiry of any kind. Its deliberations appear to have been cursory. 6 Few questions were asked. Mr. Scott relied almost entirely upon 7 what Mr. Delessio told him, as did Q&H and Mssrs. Dickson and 8 Morrison. The Purbrick report was, of course, influential in the 9 decision to start an action and seek an injunction. Mr. Moran based 10 his advice upon it. Mr. Delessio selected Mr. Purbrick, provided 11 him with his instructions, and supported his conclusions actively. 12 13

¶ [187] I am satisfied that Mr. Delessio was the directing mind and will of 14 Sagicor with respect to the law suit from the time he first spoke to 15 Q&H until well after the Mareva injunction had been obtained and 16 served. I have no hesitation in finding that his state of mind in the 17 latter half of 2005 and the first part of 2006 represented that of 18 Sagicor. When assessing purpose, intention and motive, it is his 19 state of mind which must be examined. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 96 of 226 1 Abuse of Process and Mailicious Prosecution of a Civil 2 Action 3 4

¶ [188] These two heads of claim are closely related and can be considered 5 together conveniently. 6 7

¶ [189] Abuse of civil process appears to have been first recognised as 8 tortious by the Court of Exchequer Chamber in Grainger v Hill 9 (1838) 4 Bing. N.C. 212. In that case, the plaintiff used the process 10 of capias ad respondendum (which permitted the arrest of the 11 defendant to bring him before the court to hear judgment 12 pronounced) for the entirely ulterior purpose of seizing from his 13 possession a ship’s register to which he was not entitled. The Court 14 held that, unlike an action for malicious prosecution, abuse of 15 process did not require proof of success in the original proceedings 16 and lack of reasonable and probable cause for initiating those 17 proceedings. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 97 of 226

¶ [190] The components of the tort are summarised by the Court of Appeal 1 in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc 2

¶ [1990] 1 QB 391. Slade LJ (at 469) stated: 3 “…certain features of the legal constituents of the tort as 4 appearing from the judgments in Grainger v Hill must be 5 noted, namely: 6 (1) It consists of an abuse of the process of the law “to 7 effect an object not within the scope of the 8 process”… 9 (2) Since this is the nature of the tort, the plaintiff does 10 not have to show that the suit in question has 11 terminated in his favour… 12 (3) Neither does he have to show want of reasonable 13 and probable cause for it… 14 (4) However, a person alleging such an abuse must 15 show that the predominant purpose of the other 16 party in using the legal process has been one other 17 than that for which it was designed and that as a 18 result he had caused him damage…”. (underlining 19 added) 20 21

¶ [191] There are three elements in the tort of malicious prosecution of a 22 criminal case. First, the prior proceedings must have been 23 determined in favour of the plaintiff. Second, the proceedings must 24 have been instituted without reasonable and probable cause. In 25 Herniman v Smith [1938] AC 305, the House of Lords approved the 26 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 98 of 226 definition of reasonable and probable given cause by Hawkins J in 1 Hicks v Faulkner (1878) 8 QBD 167, 171: 2 “An honest belief in the guilt of the accused based upon a full 3 conviction, founded upon reasonable grounds, of the existence 4 of a state of circumstances which, assuming them to be true, 5 would reasonably lead any ordinary prudent and cautious man, 6 placed in the position of the accuser, to the conclusion that the 7 person charged was probably guilty of the crime imputed.” 8 9 Third, the proceedings must also have been instituted with malice. 10 In Gibbs v Rea [1998] AC 786 at 797, the Privy Council said: 11 “Malice in this context has the special meaning common to 12 other torts and covers not only spite and ill-will but also 13 improper motive.” 14 15

¶ [192] The same view was expressed recently by the Supreme Court of 16 Canada in Kvello v Miazga [2009] SCC 51. 17 18

¶ [193] English law has never accepted that the mere commencement of an 19 unmeritorious and malicious civil action is actionable. What is 20 needed is an additional element: the use of the legal process itself in 21 an illegitimate manner outside its proper scope. This has been 22 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 99 of 226 accepted since the decision in The Quartz Hill Consolidatred Gold 1 Mining Co. v. Eyre (1883) 11 QBD 674 (CA) . 2 3

¶ [194] The rule has been reaffirmed clearly in Metall und Rostoff, supra, 4 in these words: 5 The substance of the complaint against the defendants is that 6 they abused the process of the court by adducing false evidence 7 and submitting a false case for the primary purpose of 8 defeating claims by M. & R. in the proceedings to the return of 9 their metal and other assets and to prevent the defendants from 10 dealing with such assets in the meantime. 11 12 No doubt the adduction of false evidence and the submission of 13 a false case for the purpose of sustaining or defeating a claim 14 in legal proceedings may subject the guilty plaintiff or 15 defendant (as the case may be) to sanctions by way of a penal 16 order for costs or even a prosecution for perjury. In our 17 judgment, however, it does not expose him to an action from 18 damages in tort under the principle of Grainger v. Hill, 4 Bing. 19 N.C. 212. 20 21 No authority has been cited to us which satisfies us that it does. 22 If the use of court process is to expose a party to liability under 23 this principle, the process must, in our judgment, have been 24 used for a predominant purpose “outside the ambit of the legal 25 claim upon which the court is asked to adjudicate …” compare 26 Varawa v. Howard Smith Co. Ltd. (1911) 13 C.L.R. 35, 91, per 27 Isaacs J. Relief in tort under the principle of Grainger v. Hill is 28 not, in our judgment, available against a party who, however 29 dishonestly, presents a false case for the purpose of advancing 30 or sustaining his claim or defence in civil proceedings. This 31 may well cause hardship to an injured party who cannot be 32 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 100 of 226 sufficiently compensated by an appropriate order for costs. 1 However, if there is a gap in the law it rests on sound 2 considerations of public policy, as does the rule of law which 3 gives immunity to witnesses against civil actions based on the 4 falsity of evidence given in judicial proceedings. If the position 5 were otherwise, honest litigants might be deterred from 6 pursuing honest claims or defences and honest witnesses might 7 be deterred from giving evidence: compare generally Business 8 Computers International Ltd. v. Registrar of Companies [1987] 9 Ch. 229, 234, per Scott J. and the cases there cited. 10 11 In short we agree with the judge, for much the same reasons as 12 his, that the facts relied upon do not raise an arguable case that 13 there was an abuse of process falling within the Grainger v. 14 Hill principle, 4 Bing. N.C. 212. (underlining added) 15 16

¶ [195] The traditional rationale for the unavailability of a general tort of 17 malicious prosecution of a civil (as opposed to criminal) action is 18 stated by Buckley LJ in Wiffen v Bailey & Romford Urban District 19 Council [1915] 1 KB 600 at 607 in this manner: 20 "So the exception of civil proceedings, so far as they are 21 excepted, depends, not upon any essential difference between 22 civil and criminal proceedings, but upon the fact that in civil 23 proceedings the poison and the antidote are presented 24 simultaneously. The publicity of the proceedings is 25 accompanied by the refutation of the unfounded charge, if it be 26 unfounded, which was made.” 27 28 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 101 of 226

¶ [196] This reasoning was repeated by the Privy Council in Mohamed 1 Amin v Bannerjee [1947] 1 AC 322: 2 “The reason why the action does not lie for falsely and 3 maliciously prosecuting an ordinary civil action is that such a 4 case does not necessarily and naturally involve damage to the 5 party sued. A civil action which is false will be dismissed at the 6 hearing. The defendant’s reputation will be cleared of any 7 imputations made against him, and he will be indemnified 8 against his expenses by the award of costs against his 9 opponent.” 10 11 Actions for abuse of process or malicious prosecution of civil proceedings 12 have been confined to a few special categories. These special categories 13 include: 14 (1) the malicious institution of bankruptcy or winding up 15 proceedings: see Johnson v. Emerson and Sparrow (1871) LR 16 6 Exch. 329; Quartz Hill Consolidated Gold Mining Co v. Eyre 17 (1883) 11 QBD 674 ; 18 (2) malicious arrest: see Roy v. Prior [1971] AC 470; 19 (3) the malicious procurement of a search warrant: see Gibbs v. 20 Rea [1998] AC 786; and 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 102 of 226 (4) the malicious arrest of a ship: see The Walter D Wallet [1893] 1 P. 202; 2 (5) malicious attachment: see Congentra AG v. Sixteen Thirteen 3 Marine SA (The Nicholas M) [2009] 1All ER (Comm) 479. 4 5

¶ [197] Recently, the House of Lords reconsidered the question and for 6 “essentially practical reasons” rejected the argument that the tort of 7 abuse of process or malicious prosecution can be extended to civil 8 proceedings in any general way. Under the heading “The extension 9 of the tort to civil proceedings”, Lord Steyn (with whom the other 10 Law Lords agreed) said in Gregory v Portsmouth City Council 11

¶ [2000] 1 AC 419: 12 My Lords, it is not necessary for the disposal of the present 13 appeal to express a view on the argument in favour of the 14 extension of the tort to civil proceedings generally. It would, 15 however, be unsatisfactory to leave this important issue in the 16 air. I will, therefore, briefly state my conclusions on this 17 aspect. There is a stronger case for an extension of the tort to 18 civil legal proceedings than to disciplinary proceedings. Both 19 criminal and civil legal proceedings are covered by the same 20 immunity. And as I have explained with reference to the 21 potential damage of publicity about a civil action alleging 22 fraud, the traditional explanatio,n namely that in the case of 23 civil proceedings the poison and the antidote are presented 24 simultaneously, is no longer plausible. Nevertheless, for 25 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 103 of 226 essentially practical reasons I am not persuaded that the 1 general extension of the tort to civil proceedings has been 2 shown to be necessary if one takes into account the protection 3 afforded by other related torts. I am tolerably confident that 4 any manifest injustices arising from groundless and damaging 5 civil proceedings are either already adequately protected under 6 other torts or are capable of being addressed by any necessary 7 and desirable extensions of other torts. Instead of embarking 8 on a radical extension of the tort of malicious prosecution I 9 would rely on the capacity of our tort law for pragmatic growth 10 in response to true necessities demonstrated by experience. 11 12

¶ [198] The traditional rationale was found wanting in a modern context. 13 On this subject Lord Steyn said: 14 “The traditional explanation for not extending the tort to civil 15 proceedings generally is that in a civil case there is no damage: 16 the fair name of the defendant is protected by the trial and 17 judgment of the court. The theory that even a wholly 18 unwarranted allegation of fraud in a civil case can be remedied 19 entirely at trial may have had some validity in Victorian times 20 when there was little publicity before the trial: see Little v. Law 21 Institute of Victoria (No. 3) [1990] V.R. 257. However realistic 22 this view may have been in its own time, it is no longer 23 plausible. In modern times wide dissemination in the media of 24 allegations in litigation deprive this particular reason for 25 restricting the tort to a closed category of special cases of the 26 support of logic or good sense.” 27 28

¶ [199] One recent incremental extension of the tort to an ex parte 29 attachment has been accepted in Congentra, supra [2009] 1 All ER 30 (Comm) 479,488 by Flaux J. In rejecting a submission that the 31 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 104 of 226 category of cases in which a claim for the malicious institution of 1 civil proceedings may be brought is closed, he stated: 2 “The effect of Mr Swaroop’s submission based on this passage 3 is that the law only recognises these closed and anomalous 4 categories of “civil malicious prosecution” and that since 5 wrongful arrest does not encompass wrongful attachment, there 6 was no cause of action recognised by English law in the present 7 case. In my judgment, this is an unduly restrictive approach. 8 Lord Steyn was giving instances of cases where the English 9 courts had recognised “malicious prosecution” as a tort in the 10 civil context. It was not intended to be an exhaustive list, nor 11 was he excluding the possibility that English law might develop 12 incrementally beyond these instances.” 13 14

¶ [200] The tort of abuse of process is recognised in a more general form in 15 other common law jurisdictions. The Restatement of the Law, Torts 16 (2nd ed.) section 682 provides: 17 “One who uses a legal process, whether criminal or 18 legal, against another primarily to accomplish a purpose 19 for which it is not designed, is subject to liability to the 20 other for harm caused by the abuse of process.” 21 22 In Varawa v Howard Smith Co Ltd [1911] HCA 46, Isaacs J sitting 23 in the High Court of Australia stated: 24 “The appellant urges that this may be regarded as an 25 action for abuse of process. Such an action is well 26 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 105 of 226 known. In the sense requisite to sustain an action, the 1 term “abuse of process” connotes that the process is 2 employed for some purpose other than the attainment of 3 the claim in the action. If the proceedings are merely a 4 stalking horse to coerce the defendant in some way 5 entirely outside the ambit of the legal claim upon which 6 the Court is asked to adjudicate, they are regarded as an 7 abuse of process for this purpose ...” 8 9 In QIW Retailers Ltd v Felview Pty Ltd [1989] 2 Qd 245 at 258, 10 Macrossan J stated: 11 “In the present case, if the real object of Boles in 12 commencing proceedings was to force the directors of 13 the plaintiff company to negotiate that was not an end 14 which the law would enforce. If to achieve the collateral 15 object Boles launches winding up proceedings, even if it 16 be assumed that the winding up order might have been 17 available in the circumstances, that order was 18 nevertheless not something which fundamentally he 19 sought. If his strategy was to bring pressure to bear 20 simply or predominantly to force the directors to 21 negotiate with him over his demands he would be 22 abusing the process of the court.” 23 24 In Canada the tort is also recognized. In Tsiopoulos v Commercial 25 Union Assurance Co (1986) 57 O.R. (2d) 117; 32 D.L.R. (4th) 614, 26 Henry J. said: 27 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 106 of 226 “It is well settled that there is at law a tort known as 1 abuse of process. This cause of action arises when the 2 processes of law are used for an ulterior or collateral 3 purpose. It is defined as the misusing of the process of 4 the courts to coerce someone in some way entirely 5 outside the ambit of the legal claim upon which the court 6 is asked to adjudicate. It occurs when the process of the 7 court is used for an improper purpose and where there is 8 a definite act or threat in furtherance of such purpose…” 9 10

¶ [201] The continuing usefulness of the traditional view that there is no 11 general right to damages for malicious prosecution of a civil action 12 has been questioned by Professor Fleming in the Law of Torts (9th 13 ed., 1998) at p. 675: 14 “Extending the action to wrongful civil proceedings has 15 encountered anything but enthusiastic response. Admittedly, 16 there is nothing in the history of the action nor any 17 pronouncement of binding authority to suggest that the action is 18 confined to criminal proceedings. Yet in practice this came 19 close to being the case in consequence of so interpreting the 20 conventional requirements of legally recognised damage. First 21 of all, it has been peremptorily denied that commencing civil 22 proceedings could possibly expose the person sued to scandal, 23 save bankruptcy and winding-up petitions which stand in 24 singular need for a deterrent against the abusive practice of 25 extorting the payment of debts by means of proceedings aimed 26 at wrecking credit. The distinction was justified on the specious 27 ground that, whereas in bankruptcy proceedings and criminal 28 prosecutions injury to credit is done before the accused has a 29 chance to dispel the false imputation, in an ordinary civil action 30 it is not the bringing of the suit that does the harm but the 31 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 107 of 226 publicity of the proceedings, and the fair fame of a person 1 improperly maligned is supposedly cleared in open court by a 2 determination in his favour. In the one, it is said, the poison 3 comes before the antidote and mischief may be wrought before 4 it can be undone; in the other poison and antidote are 5 presented simultaneously. Though this would not be true if the 6 charge is only refused on appeal, it may have been linked to 7 19th century procedure which minimised the chance of publicity 8 prior to the hearing. Hence the Victorian Supreme Court, on 9 appeal recently found itself free to hold that this assumption no 10 longer applied under modern conditions such as public access 11 to pleadings and wide dissemination of publicity by the media. 12 It accordingly held that a malicious injunction restraining a 13 solicitor from practising could qualify as scandalous as well as 14 causing pecuniary damage to his professional practice.” 15 16

¶ [202] In the case alluded to by Prof. Fleming, Little v Law Institute of 17 Victoria (No 3) [1990] VR 257, the Court of Appeal of Victoria 18 said: 19 “...However, in our view, it does not follow that at the present 20 time proceedings, tainted with malice and brought without 21 reasonable cause, might not affect adversely the reputation of a 22 defendant or respondent to the proceedings for the reasons 23 stated by their Lordships. In modern society the quick and wide 24 dissemination of publicity relating to litigation, both pending 25 and current, by radio, television and news print might injure 26 the fair fame of an accused person who subsequently was found 27 to be not guilty, or of a defendant who later has had judgment 28 entered against him set aside on appeal. At the present time it is 29 rare that the poison of and antidote to malicious proceedings 30 are simultaneous.” 31 32 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 108 of 226 Kaye and Beach JJ concluded that this was 1 “...no longer justification for confining to a bankruptcy petition 2 and an application to wind up a company the remedy for 3 malicious abuse of civil proceedings where the damages 4 claimed is to the plaintiff’s reputation.” 5 6

¶ [203] The Hurlstone parties submit that the categories of permissible 7 abuse of process cases should be extended to include the malicious 8 obtaining of a Mareva injunction. (Since an injunction was never 9 granted against the Paterson parties, this particular argument is not 10 available to them.) It is submitted that there is no good justification 11 for not extending the categories mentioned above to include the 12 malicious obtaining of a Mareva injunction especially where claims 13 of fraud are made. The very obtaining of such an injunction brings 14 with it immediate damage to the respondent. The Hurlstone parties 15 say that such damage is not remedied merely by the conclusion of 16 the proceedings in the respondent’s favour or by an award of costs. 17 18

¶ [204] A prominent characteristic of the categories in which a claim for 19 abuse of process has been permitted is that an ex parte legal process 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 109 of 226 was invoked which caused immediate and unjustified harm to the 1 plaintiff. The obtaining of a Mareva injunction without reasonable 2 and probable cause and maliciously is similar in form and effect. 3 The existence of the injunction implies necessarily that there is a 4 real risk of the respondent dissipating his assets and being unable to 5 satisfy any eventual judgment. Further stigma attaches where 6 allegations of fraud or theft are made. The arrest of a ship and the 7 attachment of goods, to take two examples, are invocations of a 8 process against the assets of a respondent which are 9 indistinguishable for all present purposes from the freezing of 10 assets by injunction. 11 12

¶ [205] However, it seems to me that the case of a Mareva injunction is a 13 paradigm example of what Lord Steyn had in mind when he said in 14 Gregrory, supra, that “the general extension of the tort to civil 15 proceedings has [not] been shown to be necessary if one takes into 16 account the protection afforded by other related [remedies]”. The 17 Hurlstone parties have always had the protection of Sagicor’s 18 undertaking as to damages. Below, I award damages to them for all 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 110 of 226 of the loss which can reasonably be said to have been occasioned 1 by the injunction. As in many cases, the allegations in the 2 injunction mirror those in the Statement of Claim. The damage to 3 reputation was caused by the allegations of fraud and conspiracy 4 without differentiation in the public mind between what was 5 pleaded and what was asserted on the ex parte application. Indeed, 6 the issuance of the injunction implies an additional factor - it 7 represents a judicial finding that the Hurlstones were likely to 8 dissipate their assets to avoid satisfaction of a judgment against 9 them. There is no real advantage to the Hurlstones in my 10 recognition of an additional category of the tort of malicious 11 prosecution of a civil action. 12 13

¶ [206] I have not overlooked the principle (pressed heavily by Sagicor) 14 that compensation under the undertaking can be awarded only for 15 damage which is proven to have been caused by the injunction and 16 not by the action itself. Here, there is little distinction to be made 17 between the two. The evidence satisfies me that the injunction 18 itself was a substantial contributor to the harm caused. 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 111 of 226 1

¶ [207] It is also the case that the evidence of causation should not be 2 subjected to a minute and rigorous scrutiny. I adopt the following 3 comments from the authorities as representing the proper approach: 4 1) The comments of Norris J in Les Laboratoires Servier v 5 Apotex Inc [2008] EWHC 2347 (Ch): 6 “Third, whilst it is for Apotex to establish its loss by 7 adducing the relevant evidence, I do not think I should be 8 over eager in my scrutiny of that evidence or too ready to 9 subject Apotex methodology to minute criticism. That is so 10 for two reasons, quite apart from an acceptance of the 11 proposition that the very nature of the exercise renders 12 precision impossible. (a) Whilst, in order to obtain 13 interlocutory relief, Servier will not have had to persuade 14 Mann J that it was easy to calculate Apotex loss in the event 15 of the injunction being wrongly granted, it will have had to 16 persuade him that that task was easier than the calculation 17 of its own loss in the event that the injunction was withheld. 18 The passages I have cited from its skeleton argument and 19 evidence show that it did so. Having obtained the injunction 20 on that footing it does not now lie in Servier's mouth to say 21 that the task is one of extreme complexity and that the court 22 should adopt a cautious approach. Having emphasised at 23 the interlocutory stage the relative ease of the process, it 24 should not at the final stage emphasise the difficulty. (b) In 25 the analogous context of the assessment of damages for 26 patent infringement, in General Tyre [1976] RPC 197 at 27 212 Lord Wilberforce said:- 28 "There are two essential principles in valuing the claim: 29 first, that the plaintiffs have the burden of proving their loss: 30 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 112 of 226 second, that the defendants being wrongdoers, damages 1 should be liberally assessed but that the object is to 2 compensate the plaintiffs and not to punish the defendants." 3 The principle of "liberal assessment" seems to me equally 4 applicable in the present context. Although a party who is 5 granted interim relief but fails to establish it at trial is not 6 strictly a "wrongdoer", but rather one who has obtained an 7 advantage upon consideration of a necessarily incomplete 8 picture, he is to be treated as if he had made a promise not 9 to prevent that which the injunction in fact prevents. There 10 should as a matter of principle be a degree of symmetry 11 between the process by which he obtained his relief (an 12 approximate answer involving a limited consideration of the 13 detailed merits) and that by which he compensates the 14 subject of the injunction for having done so without legal 15 right (especially where, as here, the paying party has 16 declined to provide the fullest details of the sales and profits 17 which it made during the period for which the injunction 18 was in force).” 19 2) The comments of Sir Richard Scott V-C in Berkeley 20 Administration Inc v McClelland [1996] I L Pr 772 at 787-788: 21 “In pursuing its remedy under the cross-undertaking Maccorp 22 is put in the position, brought about by the injunction, of having 23 to base its case on hypothetical speculation, i.e. what would 24 have happened if the injunction had not been granted. Clear 25 proof of what would have happened if an historical fact had not 26 taken place is obviously very difficult; sometimes it is 27 impossible. The court should, in my opinion, bear this difficulty 28 in mind and bear also in mind that it is the fault of the 29 respondent, of Chequepoint, that the claimant is in this 30 difficulty. A fairly relaxed approach to the balance of 31 probabilities, is, in my opinion, therefore justified.” 32 33 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 113 of 226 3) The comments of Mason, J in Air Express Ltd v Ansett 1 Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 2 331: 3 “Unless the circumstances indicate otherwise, when it appears 4 that damage flows from the non-performance of an act and the 5 performance of that act has been restrained by an interim 6 injunction, the inference will generally be drawn that the 7 damage has been occasioned by the injunction.“ 8 9

¶ [208] The claim of the Hurlstone parties will be assessed below within 10 the context of my enforcement of Sagicor’s undertaking as to 11 damages. 12

¶ [209] The Crawford parties have pleaded that Sagicor and WV initiated 13 the fraud and conspiracy action with these motives and for these 14 purposes: 15 1) “to destroy or injure the reputations of” the Paterson parties; 16 2) “to cause or threaten harm to them”; 17 3) “to exert pressure upon them to pay and/or settle [the fraud 18 and conspiracy] claim” Sagicor and WV were making. 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 114 of 226 In addition, they have adopted the particulars provided by the 1 Hurlstone parties, which are to this effect: 2 1) “to destroy personally or professionally” the Paterson 3 parties; 4 2) “as a means of avoiding payment” of the claim and 5 professional fees; 6 3) “as a means of avoiding [paying for] the true loss”; 7 4) “to cause or threaten harm to” the defendants and “to exert 8 pressure upon them to pay and/or settle [the fraud and 9 conspiracy] claims”. 10 There is no reliable evidence of any overt act such as a threat by 11 Sagicor to Mr. Paterson or an attempt to exert pressure upon him in 12 connection with the original proceeding. 13 14

¶ [210] Insofar as this pleading suggests that malice can be found in an 15 intention to use litigation or the threat of litigation simply to bring 16 about a settlement of that same litigation, it is misguided. It is an 17 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 115 of 226 everyday occurrence that plaintiffs commence litigation with the 1 hope and intention of causing a settlement. A meritorious claim 2 cannot be rendered less so by the desire to bring about a settlement 3 and one lacking any merit does not become any the more 4 objectionable because that is the goal. 5 6

¶ [211] There is no cogent evidence that Sagicor or its parent, Cayman 7 National Corporation, intended at any time to avoid its obligation 8 under the WV policy of insurance. It is not credible that Mr. 9 Delessio would start an action in fraud and conspiracy simply to 10 avoid payment of that amount. There is no evidence of any general 11 intent by Sagicor or by Mr. Delessio to avoid the company’s 12 obligations generally to its clients. The understandable desire, 13 expressed by Mr. Dack in January, 2005, for a close examination of 14 the reserve amounts cannot be equated with an intention to avoid 15 payment by commencing unmeritorious litigation. 16 17

¶ [212] Mr. Paterson’s true case is that the original proceedings were 18 brought for revenge, with the intention of destroying him 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 116 of 226 personally. In closing, Mr. Bueno made the following assertions 1 relevant to Mr. Delessio’s motive and purpose: 2 1) “the entire case [was] the dishonest creation of the late 3 Frank Delessio”; 4 2) the attorneys were “deliberately misled by Frank 5 Delessio”; 6 3) the proceedings were “founded upon deliberately false or 7 recklessly formulated allegations of fraud”; 8 4) “The original proceedings were brought with the real 9 intention of destroying Alastair Paterson’s personal and 10 professional reputation and the businesses of his two 11 companies”; 12 5) “The only possible explanation is that Frank Delessio, on his 13 arrival at Sagicor on 15 June 2005, determined to make life 14 as difficult and unpleasant as possible for Alistair Paterson. 15 He determined to discredit his work and to settle old 16 scores. He had a visceral dislike of Alistair Paterson …”; 17 6) “His actions can only be explained on the basis that his true 18 objectives were to destroy Alistair Paterson, personally and 19 professionally, and inevitably the Hurlstones, also. He 20 wanted his revenge for his earlier immigration problems.” 21 22 The Crawford parties say that the improper object or purpose was, 23 essentially, the destruction of Mr. Paterson. There is no allegation 24 that the legal process itself was used in some way for which it was 25 not designed. The gist of Mr. Paterson’s case is that the 26 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 117 of 226 commencement of the action and everything which followed was 1 an abuse because Sagicor never had and never believed that it had 2 a viable case of fraud or conspiracy. It is said that the object which 3 was “not within the scope of the process” was the destruction of 4 Mr. Paterson by the pursuit of the action itself. 5 6

¶ [213] The submission of the Crawford parties appears to confuse motive 7 and object. The object of Sagicor, in the sense I draw from the 8 authorities, was simply to invoke the legal process in accordance 9 with the Rules of Court. The object was not “one other than that 10 for which [the civil process] was designed”. If this object was 11 pursued in the hope that one result would be the destruction of Mr. 12 Paterson, that is a disagreeable and unworthy motive. However, it 13 is not an “object” of the sort contemplated by the authorities as it is 14 not a distortion of the legal process itself. To use legal process in 15 the manner for which it was designed but with an improper motive 16 is not tortious behaviour. 17 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 118 of 226 The distinction between object and motive is captured in this 1 passage by Brennan, J in Williams v. Spautz 107 ALR 635 (HCA) 2 which was cited with approval in Land Securities v. Fladgate 3 Fielder [2009] EWHC 577 (Ch): 4 There is no impropriety of purpose (whatever may be said 5 of motive) when a plaintiff commences or maintains a 6 proceeding desiring to obtain a result within the scope of 7 the remedy, even though the plaintiff has an ulterior 8 purpose or motive which will be fulfilled in consequence of 9 obtaining the legal remedy which the proceeding is 10 intended to produce. 11 12 In Westjet Airlines Ltd. v. Air Canada [2005] OJ 2310 (Ont. SCJ), 13 Nordheimer, J made these observations on the distinction: 14 “19. The improper purpose relied upon by WestJet as part of 15 the necessary foundation for its claim is that Air Canada 16 set out to damage and ultimately “destroy” it. It is not 17 clear to me that by simply employing a relatively 18 pejorative term such as “destroy” one can satisfy the 19 requirement of a collateral and improper purpose. It 20 must first be recognized that there is a difference between 21 purpose and motive. Many actions may result in the 22 extinguishment of a defendant because the defendant 23 does not have the resources available to answer any 24 judgment that may ultimately be rendered. It may also be 25 the case that actions are commenced by one competitor 26 against another with the view to not only obtaining the 27 relief sought in the claim but also the possible 28 elimination of that competitor, whether directly or 29 indirectly. While that may be an improper motive, that is 30 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 119 of 226 not necessarily the same thing as being an improper 1 purpose. If the action itself is trumped up or completely 2 spurious, the institution of the action for the goal of 3 driving a competitor out of business might well be found 4 to be instituted for an improper purpose since there 5 would be no associated valid basis for the claim. 6 However, if there is some basis for the claim, it seems to 7 me that it then becomes difficult to characterize the 8 action as having been instituted for an improper purpose 9 just because a by-product of its successful prosecution 10 may be the elimination of the defendant as a competitor. 11 Rather, such situations would appear to fall into the 12 category of claim where, as the quotation in Metrick v. 13 Deeb, supra, observed, there is no liability when the 14 defendant properly employs the legal process but with 15 bad intentions. 16 17 Some of the authorities speak of a requirement that there be proof 18 of an “overt act” which confirms the improper object or purpose. 19 Nordheimer, J continued: 20 21

¶ [20] Assuming, however, that the facts of this case would 22 satisfy the requirement of a collateral and improper 23 purpose, there is nothing in the pleaded facts that would 24 satisfy the second requirement of a definite act or threat 25 in furtherance of a purpose not legitimate in the use of 26 the process and outside of its scope. This requirement 27 has been variously referred to in the cases as a “threat”, 28 “coercion”, “a club” or other like expressions. 29 Whether, as Mr. Justice Sharpe says, it is necessary for 30 the act to rise to that level, it is nevertheless clear from 31 the cases that there must have been some overt act done 32 by the defendant to effect a purpose that is outside of the 33 scope of the action. In other words, there must be an 34 identifiable objective that the defendant wished to 35 achieve that it could not achieve through the action itself. 36 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 120 of 226 This requirement is described in Fleming on Torts (9th 1 ed., 1998) at p. 688, in the following terms: 2 3 “In addition to the improper purpose, there must be some 4 overt act or threat distinct from the proceedings 5 themselves, in furtherance of that purpose, such as in the 6 abovementioned case the extortion accompanying the 7 capias. Were it otherwise, any legal process could be 8 challenged on account of its ‘hidden agenda2’.” 9 10

¶ [21] I am unable to find in the statement of claim any such 11 overt conduct by the defendants that would satisfy this 12 second requirement. The acts complained of by WestJet 13 are all acts that the defendants were entitled to engage 14 in. The executives of Air Canada are entitled to speak to 15 the press about the Air Canada action. Indeed, they may 16 have an obligation to do so in certain circumstances. Air 17 Canada is entitled to claim whatever level of damages in 18 that action that it wishes to. Air Canada can add parties 19 to the litigation as long as it can plead a proper cause of 20 action against those parties.” 21 22

¶ [214] Sagicor says that reliance upon abuse of process in the present case 23 is misconceived because the tort is limited to the pursuit of objects 24 lying outside the remedies available legitimately in pursuit of the 25 claim. The English authorities quoted above confirm the accuracy 26 of that submission. The purpose or object of the defendant must be 27 shown to have been “not within the scope of the process” and “one 28 other than that for which [the civil process] was designed” (Metall 29 und Rohstoff, supra). Such a purpose is a necessary element. The 30 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 121 of 226 need for this element is made apparent particularly by the lack of 1 any requirement in an abuse of process action that the earlier action 2 was wholly without merit or that the defendant lacked reasonable 3 and probable cause to initiate it. If the need for an object outside 4 the scope of the process were to be removed, a plaintiff with a 5 meritorious claim who pursues it out of spite and not for an award 6 of damages could be liable in damages for abusing the process of 7 the court. A significant number of claims which are fairly arguable 8 are no doubt brought for personal reasons, in whole or in part. Any 9 relaxation of the requirement to show an object outside the scope of 10 the process would open the judicial system to a flood of 11 counterclaims requiring an examination of the subjective intentions 12 of the plaintiff. An action brought dishonestly and based upon false 13 evidence is not, without more, an abuse of the process of the court: 14 Metall und Rohstoff, supra. 15

¶ [215] There is one external or collateral act which merits consideration: 16 the tip given to Alan Markoff which resulted in the newspaper 17 article. Mr. Harrigan says that on two occasions Mr. Delessio told 18 him that he was going to plant an article in the press about the 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 122 of 226 lawsuit. He said his girlfriend was going to try to plant it. Mr. 1 Markoff wrote an article about the case in March, 2006 which was 2 based upon the content of the court file. He was told by someone, 3 whose name he would not reveal, of the existence of the action. He 4 did say that the source was an owner of a unit at WV. He said that 5 neither Danny Scott nor Frank Delessio was the source. Mr. 6 Markoff never discussed his story with Mr. Delessio. The tenor of 7 Mr. Markoff’s evidence was that the law suit was common 8 knowledge around WV and all owners would have known of it. 9 Given the evidence of Mr. Harrigan, which I accept on this point, I 10 find that Mr. Delessio was instrumental in some undisclosed 11 manner in causing the story to appear although he did not himself 12 communicate with Mr. Markoff. 13 14

¶ [216] Mr. Bueno does not say that the newspaper article was itself a 15 wrongful object or purpose outside the scope of the process. He 16 says the appearance of the newspaper story is evidence of malice. 17 In my view, he is correct on both counts. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 123 of 226

¶ [217] Insofar as the claim is framed as an abuse of process, it cannot 1 succeed because the need for proof of an object not within the 2 scope of the process cannot be satisfied. 3 4

¶ [218] If the claim is viewed as one for malicious prosecution of a civil 5 action, it cannot succeed without a wholesale extension of the law 6 which applies the tort to civil proceedings “generally”. The 7 Crawford parties do not have the benefit of an undertaking as to 8 damages. Any injury caused to them arises not from the Mareva 9 injunction application but from the initiation and prosecution of the 10 action itself. In effect, they ask this Court to bring about a general 11 extension of the tort of malicious prosecution of a civil action and 12 hold that it permits a recovery in any case where an unmeritorious 13 civil action is commenced maliciously. While this Court is not 14 bound strictly to follow a decision of the House of Lords its 15 decisions are, of course, of very high persuasive value. The 16 judgment of the House of Lords in Gregory contains a considered 17 pronouncement on a question of broad policy. It establishes that no 18 extension of the tort of malicious prosecution to civil actions 19 generally is necessary or desirable. I would not decline to follow 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 124 of 226 such a decision except in rare and compelling circumstances which 1 are not present in the case at bar. 2 3

¶ [219] The boundaries of these two closely related torts cannot be 4 extended to the degree necessary to accommodate Mr. Paterson’s 5 claim. I conclude that my award of indemnity costs to him and to 6 the other Crawford parties is the limit of what the present state of 7 the law will allow. For these reasons, the claims framed as abuse of 8 process and malicious prosecution of a civil action are dismissed. 9 10 Findings of Fact on Malice 11 12

¶ [220] Since further proceedings may arise from this action, I shall now 13 consider certain findings of fact requested by the Crawford parties. 14 15

¶ [221] In a claim of malicious prosecution, the prior proceedings must 16 have been determined in favour of the plaintiff. The Crawford 17 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 125 of 226 parties were wholly successful in the original proceeding so this 1 element is established. 2 3

¶ [222] The prior proceedings must have been instituted without reasonable 4 and probable cause. Viewed objectively, and without consideration 5 of Sagicor’s state of mind or intention, this element has been 6 established. Sagicor has never possessed a body of evidence 7 capable of proving it was defrauded or was the victim of a 8 conspiracy. Its law suit was wholly misguided. 9 10

¶ [223] I am satisfied that the Crawford parties have suffered damage. The 11 evidence of that is reviewed below. 12 13

¶ [224] The only remaining question, if an award of damages for malicious 14 prosecution of a civil action were possible at all, would be the 15 question of malice. 16 17 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 126 of 226

¶ [225] There is ample evidence that Frank Delessio harboured a marked 1 dislike of Mr. Paterson at all material times. I am satisfied that Mr. 2 Paterson’s evidence about reporting Delessio to the Immigration 3 Board is reliable and that it provides an explanation for the ill will. 4 A number of witnesses have testified to the animosity. Mr. 5 Nicholson observed Mr. Delessio treating Mr. Paterson with total 6 disdain during a meeting; at one point Mr. Delessio said that Mr. 7 Paterson “was not a loss adjuster and never had been.” Because of 8 Mr. Harrigan’s ongoing feud of a personal nature with Danny Scott, 9 his evidence must be approached with some caution. Nevertheless, 10 I am satisfied that he did observe resentment on the part of Mr. 11 Delessio toward Mr. Paterson and did hear the former say that he 12 would drive the latter out of business and destroy him 13 professionally or words to that effect. I accept that those words 14 were said and are an accurate reflection of Mr. Delessio’s state of 15 mind in June and July, 2005. 16 17

¶ [226] I am satisfied that Mr. Delessio was instrumental, as I said earlier, 18 in causing the adverse publicity which appeared in the article in the 19 Caymanian Compass. Mr. Delessio told Mr. Harrigan that such an 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 127 of 226 article would appear prior to its publication. Other witnesses also 1 testified to Mr. Delessio’s dislike of Mr. Paterson. I am therefore 2 satisfied that Mr. Delessio’s resentment of and dislike for Mr. 3 Paterson was a substantial motivating factor in his putting forward 4 the case of fraud and conspiracy. No other conclusion would be 5 reasonable on the evidence. 6 7

¶ [227] A more difficult question is whether personal dislike and a wish for 8 revenge was Mr. Delessio’s sole motivation. Mr. Delessio told Mr. 9 Scott and the attorneys at Q&H that, in his opinion, about CI 10 $1,300,000 worth of work had been done by the Hurlstones. It 11 appears he had been told something of the sort by Mr. Ulrich, an 12 employee of BPL for a period of time and entrusted by it with the 13 task of preparing scope sheets. Mr. Delessio conducted his own 14 inspection of the project. There is nothing in the extensive 15 evidence of Mr. Dickson from which I can infer that Mr. Delessio 16 did not believe that Sagicor had been overcharged. 17 18

¶ [228] It is clear and not open to debate in this proceeding that the actual 19 value of the work done was in the area of CI $3,000,000. The 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 128 of 226 question becomes one of whether Mr. Delessio held a genuine but 1 entirely mistaken view of the discrepancy between value and cost 2 or whether he was lying about his own opinion on the subject. Mr. 3 Delessio was a highly experienced loss adjuster, a fact which 4 suggests that he would have known that more than CI $1,300,000 5 worth of work had been done. He was also, I find, a somewhat 6 impetuous personality with a strong belief in the correctness of his 7 own position. That suggests that he might have simply jumped to a 8 conclusion which was unwarranted but nevertheless a conclusion in 9 which he had a genuine belief. 10 11

¶ [229] In addition to what he observed on the job site, Mr. Delessio would 12 have understood (correctly) that Mr. Paterson was in a position of 13 conflict of interest. I am satisfied from the evidence of Mr. Thomas 14 that the obligations of a loss adjuster are in conflict with those of a 15 project manager and cannot be reconciled. This conflict of interest 16 was entirely excusable in the immediate aftermath of the hurricane 17 when it would have been difficult to obtain a second professional, 18 as Mr. Coles observed. It became much less so by January, 2005 19 when Sagicor asked Mr. Paterson to rectify the situation. These 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 129 of 226 facts would have been known to Mr. Delessio and would have had 1 an influence on his opinion. 2 3

¶ [230] It is true, as Mr. Lowe has argued, that Sagicor never brought home 4 to Mr. Paterson their unhappiness at the lack of detail in his 5 reporting. Sagicor was essentially overwhelmed with claims in the 6 months following the hurricane and had little time or inclination to 7 go behind the opinions of its loss adjusters. As a consequence, it 8 may have been reasonable for Mr. Paterson to submit his reports in 9 the brief and conclusory format in which they were written. The 10 lack of detail, however, is not characteristic of the way in which 11 most loss adjusters presented their reports to Sagicor and may have 12 engendered some suspicion in the mind of Mr. Delessio when he 13 reviewed them. Had the reports contained more detail, they might 14 have conveyed to Mr. Delessio a reasonable explanation for a 15 substantial disparity between the value of the work and the amount 16 of money spent: that a substantial amount of Sagicor’s money had 17 been spent on the purchase of materials which had not yet been 18 incorporated into the buildings. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 130 of 226

¶ [231] Mr. Paterson, on behalf of BPL, was project manager throughout. 1 BPL agreed in writing with Sagicor to provide it with a number of 2 analyses to “monitor and control costs throughout the program”, 3 and to “maintain financial control of the project.” These 4 contractual terms make it hard to accept Mr. Paterson’s assertion in 5 terms that he had no obligation to monitor the cost in any detailed 6 manner. BPL billed its client a substantial sum for its services as 7 project manager. After all, no fixed price contract had been signed 8 and Mr. Paterson would or should have been aware that the value of 9 the work might have to be assessed essentially (as in fact it was) on 10 a quantum meruit basis. As project manager, if not as loss adjuster, 11 Mr. Paterson needed to have a reasonable understanding of the 12 value of the work which had been done. Since Sagicor was making 13 payments direct to the contractor and not to its customer (WV), it 14 had effectively stepped into the shoes of the insured and had a 15 genuine and reasonable interest in confirming that the value of the 16 work completed was in proportion to the money it had spent. All of 17 this would have been in Mr. Delessio’s mind as he reviewed the file 18 and would have had some impact upon his conclusion about the 19 value of the work. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 131 of 226 1

¶ [232] Commencing upon receipt of Mr. Delessio’s letter of June 20, 2 2005, Mr. Paterson must have realized that his client wished to 3 have more information than it had been given. That letter asks for 4 detail on “costings”. 5 6

¶ [233] I accept that the contract was never meant to be a cost plus contract 7 and could not be converted into one after the fact. I acknowledge 8 that to do a full historic cost accounting in June or July, 2005 would 9 have been next to impossible. However, I am satisfied that more 10 information could and should have been given to Sagicor than was 11 actually provided. For example, Mr. Delessio’s enquiry of June 12 22nd about the reason for the cost of the standing seam roof was 13 answered by Mr. Paterson in a detailed manner in his email of June 14 27, 2005. In the same email, Mr. Paterson says that “our 15 negotiations, costs, estimates, etc. are transparent and will be made 16 available to you”. It was not. If that information was available, it 17 should have been provided to Sagicor upon request. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 132 of 226

¶ [234] The same email asserts that “the contractor should not have to 1 further validate any of his contractual costs either current or future 2 as he has a lump sum fixed price contract and his contract is with 3 the Strata.” What had been conveyed to Sagicor up to that point 4 did not amount to a “validation” by the contractor of any of his 5 costs. No lump sum fixed price contract was in existence. Mssrs. 6 Scott and Hambly had expressed their approval of a settlement in 7 the amount of CI $5,500,000 but it was open to them to change 8 their mind at any time. As project manager if not as loss adjuster, 9 Mr. Paterson should have been somewhat more receptive to Mr. 10 Delessio’s demands than he was and should have tried to 11 accommodate them. He says he explained his calculations to Mr. 12 Delessio orally. The failure to commit them to writing likely 13 encouraged Mr. Delessio’s suspicions. 14 15

¶ [235] Much has been made of the fact that Mr. Paterson produced scope 16 sheets to Mr. Delessio with the prices concealed by whiteout. This 17 incident seems to have given rise to suspicion through a simple lack 18 of communication. Mr. Paterson could perfectly well have said to 19 Mr. Delessio that the scope sheets had been prepared by his 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 133 of 226 employee Mr. Ulrich, that they contained a number of omissions 1 which had to be rectified by Mr. Paterson, and they were not yet 2 ready for presentation to a client. Mr. Delessio viewed this incident 3 as further evidence of fraud. His opinion was unreasonable, but we 4 are not concerned here with the reasonableness of his view but with 5 what he actually thought. 6 7

¶ [236] Very soon after arrival at Sagicor Mr. Delessio revoked Mr. 8 Paterson’s authority to approve the payment of advances. No doubt 9 his dislike of Mr. Paterson contributed to this decision. However, 10 Mr. Scott had by this time formed the view that no further advances 11 should be made until the contractual position was clarified. Mr. 12 Paterson’s assertion in terms that the claim had already been settled 13 by June 15th is a definite overstatement. Mr. Harrigan may have 14 said that he would accept a CI $5,500,000 settlement but it does not 15 appear that he was entitled on this point to speak for the WV Strata 16 Executive Committee. No enforceable contract was in existence. I 17 do not consider the revocation of authority to have been motivated 18 solely by a desire to destroy Mr. Paterson; Mr. Delessio had a 19 genuine concern to protect the financial interests of his employer. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 134 of 226 1

¶ [237] Mr. Delessio arranged for private investigators to conduct 2 surveillance on Mr. Paterson commencing July 1, 2005. That can 3 be seen as evidence of the depth of his dislike of Mr. Paterson but 4 can also be seen as evidence of a conviction that his company had 5 been the victim of a fraud. 6 7

¶ [238] Sagicor has never produced Frank Delessio’s file in this 8 proceeding. They say it cannot be found. Mr. Delessio would not 9 have had authority to remove this file from Sagicor; it belonged to 10 the insurer. I have inferred that there was such a file, that it 11 contained the cleanup invoice, and that Mr. Delessio was aware of 12 this invoice. Thus, he must have known that the amount paid to the 13 Hurlstones included about $640,000 for cleanup yet he told Mr. 14 Purbrick to exclude that from the evaluation. Mr. Delessio was 15 aware that Mr. Purbrick’s labour rates were “low” but, as he said, 16 not unreasonable. If one were to include the cost of the cleanup in 17 Mr. Purbrick’s estimate and adjust his labour rates upward to, for 18 example, the $18 per hour figure paid by another large contractor at 19 the time (McAlpine) or to the $22 per hour figure adopted by Mr. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 135 of 226 Paterson, a discrepancy between value and payments would remain 1 but it would not be sizeable enough to support claims in fraud and 2 conspiracy. 3 4

¶ [239] In summary, Mr. Delessio experienced and observed a number of 5 events which might, to the reasonable and objective observer, have 6 seemed somewhat suspicious. Coloured by his strong dislike of 7 and pre-existing suspicion about Mr. Paterson, they were 8 interpreted by him as evidence of fraud. He knew the Purbrick 9 report was badly flawed and not a proper basis in itself for the 10 commencement of a fraud and conspiracy action. He concealed 11 that from the attorneys. He also had his own (inaccurate) opinion, 12 fortified by his aggressive personality and excessive self- 13 confidence in his own ability as a loss adjuster, that the work he 14 had observed at WV was not worth $3,000,000. His dislike of Mr. 15 Paterson and desire to harm him was the dominant factor which led 16 him to present what should have seemed like an ordinary case of 17 overcharging as one of fraud, but I cannot conclude on the evidence 18 that the destruction of Mr. Paterson personally was the sole reason 19 for the litigation. Mr. Delessio’s unreasonable but genuinely held 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 136 of 226 belief that Sagicor had been defrauded was also a contributing 1 factor of significance. 2 3

¶ [240] If the “tort” of malicious prosecution of a civil action were a part of 4 our law, I would hold that Mr. Delessio’s dislike of Mr. Paterson 5 and intent to harm him, when viewed in the light of his failure to 6 warn the attorneys of the deficiencies in Mr. Purbrick’s opinion, 7 amount to proof of malice. 8 9 Other Findings of Fact Requested by Crawford Parties 10 11

¶ [241] Mr. Bueno has asked that I make a finding of fact about the reason 12 for the expulsion of the Hurlstones from the job site and the 13 dismissal of Mr. Paterson by Sagicor. The former was a result of 14 Mr. Delessio’s dislike of Mr. Paterson in combination with his 15 impression that Sagicor had been overcharged and his (erroneous) 16 understanding that the Hurlstones had abondoned the site in any 17 event. The latter was a result of Mr. Delessio’s dislike of Mr. 18 Paterson in combination with his suspicion that Mr. Paterson had 19 allowed Sagicor to be overcharged by the Hurlstones. I agree that 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 137 of 226 the Hurlstones and Mr. Paterson were excluded from the site “very 1 aggressively” and that imputations of dishonesty were made. 2 3

¶ [242] I am asked to find that Mr. Delessio’s actions “can only be 4 explained” by a desire to destroy Mr. Paterson. In aid of this 5 submission, particular findings of fact are requested. 6 7

¶ [243] I accept that the revocation of Mr. Paterson’s authority over 8 payments to the Hurlstones was motivated largely by a dislike of 9 and distrust of Mr. Paterson. 10 11

¶ [244] I do not accept that Mr. Delessio “demanded the impossible” of Mr. 12 Paterson, i.e., a detailed historical cost accounting. He appears to 13 have wanted more detail about cost, including details which would 14 have been difficult to provide, but his demand was not as extreme 15 as has been suggested in argument. 16 17

¶ [245] I am asked to find that Mr. Delessio knew the $1,300,000 valuation 18 by Mr. Purbrick was “false”. I have found that Mr. Delessio knew 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 138 of 226 that Mr. Purbrick had not taken the cleanup cost into account so the 1 valuation was deficient and gave a false impression of value. 2 3

¶ [246] I accept that Mr. Delessio gave instructions to fraud investigators to 4 conduct surveillance on Mr. Paterson. 5 6

¶ [247] There is insufficient evidence to support a conclusion that Mr. 7 Delessio “sabotaged” the attempt to have the Hurlstones finish the 8 project. I am asked to find that Mr. Purbrick was a “tame” expert 9 and hired for just that reason. I am satisfied from all of the 10 evidence, including my observation of Mr. Purbrick under cross- 11 examination, that he acted as an independent expert who formed 12 his own opinion and did not simply say what Mr. Delessio no 13 doubt wanted to hear. On the other hand, Mr. Purbrick’s ability to 14 reach a proper opinion was fettered severely by the instruction 15 from Mr. Delessio that he should not contact the Hurlstones or Mr. 16 Paterson. 17 18 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 139 of 226

¶ [248] I am satisfied that a desire to avoid paying the WV claim, or the 1 balance of the claim, at a time when Sagicor was experiencing 2 financial difficulty played no part in Sagicor’s motivation. 3 4

¶ [249] Overall, I have found Mr. Delessio’s dislike of Mr. Paterson and 5 desire to harm him to be the dominant factor which led him to 6 present what should have seemed like an ordinary case of 7 overcharging as one of fraud, but I have not concluded that the 8 destruction of Mr. Paterson personally was the sole motivating 9 factor. 10 11 Defamation 12 13

¶ [250] The only other tort pleaded by the Crawford parties is defamation. 14 The Amended Counterclaim of the Crawford parties alleges in 15 para. 8 – 10 that the filing and “use” of the Statement of Claim 16 constituted a “publication” of the allegations in it. The tenor of the 17 pleading alleges that the allegations were false. Malice is alleged. 18 Paragraphs 22 and 104 assert that the “defamatory” allegations 19 caused damage to the reputations of these parties. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 140 of 226 1

¶ [251] The Defence says that the filing of the Statement of Claim was an 2 occasion of absolute privilege because it was a step taken in the 3 course of a judicial proceeding. Proof of malice does not defeat 4 the defence. Those propositions are supported by ample authority. 5 The cases are collected in Clerk & Lindsell on Torts, 19th ed., at 6 para. 23-91 et seq. The claim in defamation also must be 7 dismissed. 8 9 DAMAGES 10 Crawford Parties 11 12

¶ [252] Mr. Paterson is sixty-one years of age. When the action against 13 him was commenced he was fifty-eight and, he says, at the height 14 of his professional earning capacity and potential. He qualified as 15 a Chartered Surveyor in 1971 in Scotland. In 1983 he was elected 16 a fellow of the Royal Institute of Chartered Surveyors and in 2000 17 became a member of the Chartered Institute of arbitrators. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 141 of 226

¶ [253] When he first arrived in the Cayman Islands he worked for a large 1 local construction company as an in-house quantity surveyor until 2

¶ [1978] He then joined a firm of local architects again working as an 3 in-house quantity surveyor. In approximately 1980 he started his 4 own business as quantity surveyor and valuer. He employed one 5 other valuer for over twenty years and an office manager. All of 6 his historical financial records were destroyed in Hurricane Ivan. 7 Mr. Paterson says that from about 1995 on his earnings were 8 always in the range of CI $200,000 to CI $250,000 per year. 9 10

¶ [254] In 1998, Mr. Paterson became an employee of Deloitte Property 11 Consulting and merged his own practice with theirs. His 12 remuneration remained in the range of CI $200,000 to CI 13 $250,000. By 2004, Mr. Paterson decided he wished to return to 14 private practice. About one week before Hurricane Ivan, he left 15 Deloitte with a view to re-establishing his own business which 16 would include a close working relationship with Crawford 17 International. He formed Crawford Adjusters (Cayman) Limited 18 but the close relationship implied by the corporate name never 19 became a reality. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 142 of 226 1

¶ [255] After Hurricane Ivan there was an abundance of work for loss 2 adjusters. Mr. Paterson was drawing approximately CI$20,000 per 3 month (in total) from Crawford and from BPL. Around March, 4 2005 he received a dividend from the two businesses in the total 5 amount of US $200,000. 6 7

¶ [256] The article entitled “Windsor Village Lawsuit Accuses Many” was 8 published on the front page of the Caymanian Compass on March 9 22, 2006. It quoted the Statement of Claim as asserting that in 10 light of the gross disparity between the advances to the Hurlstones 11 and the value of work actually completed at WV, the 12 representations by Crawford, BPL and Mr. Paterson are “incapable 13 of an honest explanation and must have been made with 14 knowledge of or recklessness as to their falsity.” The article 15 added: “a similar statement is made with regard to Hurlstone 16 and/or Hurlstone Contractors.” Mr. Paterson says that the effect of 17 this unwanted publicity was “catastrophic” and says friends and 18 business associates shunned him because of the negative publicity. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 143 of 226

¶ [257] Recently, Mr. Paterson’s health has deteriorated. He attributes that 1 to the stress caused by the lawsuit and the newspaper article. He 2 suffered a heart attack and underwent some heart surgery. He was 3 treated by his doctor for anxiety and depression. He is also a 4 diabetic, and the strength of his medication for that condition was 5 doubled. Dr. John Addleson is Mr. Paterson’s family doctor. He 6 confirmed Mr. Paterson’s evidence about the effect of the litigation 7 upon his health, including the level of stress which caused 8 insomnia and required a prescription and anti-anxiety medication. 9 Dr. Addelson said he only learned of the lawsuit ten days before 10 testifying. 11 12

¶ [258] Mrs. Paterson corroborated her husband’s evidence concerning the 13 emotional and financial effects of the litigation. She said that the 14 stress imposed by the fraud allegations and the slow progress of 15 the litigation caused her husband to lose interest in his former 16 friends and avoid social engagements. Almost all of the money the 17 couple had saved was spent on legal expenses. When the 18 allegations were withdrawn in November, 2008 “it was though a 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 144 of 226 huge weight had been lifted from him and almost overnight the 1 pain and suspicion were gone from his face.” 2 3

¶ [259] Mr. Derek Haines confirmed the fact that knowledge of the fraud 4 allegations was widespread in the local community and the subject 5 of gossip. 6 7

¶ [260] Mr. Bould left BPL and Crawford as of June 30, 2006. Mr. 8 Paterson attributes the departure of Mr. Bould to the lawsuit. 9 10

¶ [261] By August, 2005 the flood of work caused by Hurricane Ivan was 11 diminishing and Mr. Patterson was taking steps to market his 12 claims adjustment and risk assessment work. The allegations of 13 fraud publicized in the Caymanian Compass put an end to these 14 efforts. He says that even after the lawsuit was withdrawn in 15 December, 2008 it proved impossible to resurrect his business. 16 17

¶ [262] By necessity, Mr. Paterson began to look for work in other 18 Caribbean jurisdictions. He did obtain some fee paying work, 19 particularly in St. Maarten. He was also able to obtain two 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 145 of 226 valuation jobs on Grand Cayman in 2008. Mr. Joel Tranchecoste 1 is the financial comptroller of a condominium development in St. 2 Maarten. He said Mr. Paterson has been working there about three 3 to six days per month for his enterprise since July, 2007. He has 4 been paid US $10,000 per month plus his out-of-pocket expenses. 5 I am satisfied that Mr. Paterson made a reasonable effort to 6 mitigate his loss by seeking and finding what work was available 7 to him, principally in St. Maarten. 8 9

¶ [263] Mr. Liam Day is a director of BCQS Ltd., a company engaged in 10 quantity surveying, valuations and property management in the 11 Cayman Islands. In his opinion, directors and partners of property 12 consultancies such as his would earn approximately US $300,000 13 dollars per year inclusive of bonuses, profit sharing, and other 14 standard benefits. 15 16

¶ [264] Mr. Thomas has known Mr. Paterson since the early 80s and says 17 that he is qualified as an expert in the field of quantity surveying, 18 project management and valuations. In Mr. Thomas’ opinion, a 19 small to medium sized firm providing those services would 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 146 of 226 produce approximately CI $250,000 in remuneration for its 1 directors. After Hurricane Ivan, the level of profit owned by such 2 firms increased substantially for a period of over three years. 3 4

¶ [265] Mr. Alvin Aaron is head of corporate banking at First Caribbean 5 International Bank (Cayman) in George Town. BPL was an 6 approved valuer on the Bank’s panel of valuers from January, 7

¶ [2006] After the fraud allegations were publicized, the Bank made 8 a “business decision” to stop accepting valuation reports prepared 9 by Mr. Paterson’s firm for its customers. Mr. Aaron’s best guess is 10 that if Mr. Paterson reapplied to be listed he would be successful. 11 12

¶ [266] Mr. John Calhoun is the owner and lead broker of Coldwell Banker 13 Cayman Islands Realty on Grand Cayman. Customers often ask 14 his business to provide referrals to licenced appraisers. For many 15 years, Mr. Paterson had been providing some of those services. 16 After the fraud allegations were publicized in the Caymanian 17 Compass, Mr. Calhoun decided to stop referring customers to Mr. 18 Paterson “in the interests of protecting our own good name”. Mr. 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 147 of 226 Calhoun confirmed that he would now refer customers to Mr. 1 Paterson. 2 3

¶ [267] Mr. Colin Luke has been active in the insurance business for a 4 considerable time on Grand Cayman. He has regularly used the 5 services of Mr. Paterson and says he has been impressed by Mr. 6 Paterson’s knowledge and diligence. He considers him to be 7 honest and beyond reproach. Mr. Luke confirmed that the fraud 8 allegations caused a “marked deterioration” in Mr. Paterson’s 9 demeanour and a significant rise in his level of anxiety. Mr. Luke 10 says that local banking and other professional firms avoiding using 11 Mr. Paterson’s services while the litigation was afoot. 12 13

¶ [268] The effects of the litigation and the injunction were felt equally by 14 Crawford Adjusters and by BPL. 15 16

¶ [269] After Hurricane Ivan, Crawford International lost interest in a 17 business relationship with Crawford Adjusters because, apparently, 18 they felt that the changing business climate made it unnecessary to 19 have a local office. Mr. Patterson then decided to proceed 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 148 of 226 independently using the company (Crawford Adjusters) which he 1 had already formed. 2 3

¶ [270] After publication of the newspaper article, “all local banks” were 4 reluctant to instruct either BPL or Mr. Paterson. It was Mr. 5 Nicholson’s job to maintain the accounts of Crawford and BPL. 6 After the law suit was commenced, the companies’ cash reserves 7 were used to pay legal fees and experts and much of the 8 professional time was spent preparing the defence. He confirmed 9 that “new work began to dry up” as a result of the allegations of 10 fraud and conspiracy. 11 12

¶ [271] Had I found that the Crawford parties had established a liability to 13 them for abuse of process or for malicious prosecution of a civil 14 action, I would have awarded to them the sum of $1,300,000 as 15 special damages. That amount has been agreed to by the parties 16 and their experts, without allocation between the three Crawford 17 parties. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 149 of 226

¶ [272] I accept the submission by Mr. Bueno that general damages would 1 fall to be assessed in the manner such damages are assessed in 2 successful defamation actions. Mr. Paterson is entitled to receive 3 compensation for damage to his reputation and for the distress, 4 hurt and humiliation he has suffered: John v. MGN Ltd. The lack 5 of any apology to him from Sagicor should be taken into account: 6 ibid. 7 8

¶ [273] The award of special damages would compensate Mr. Paterson in 9 large measure for the damage to reputation. Had liability been 10 established, I would have awarded to him the additional sum of 11 $35,000 by way of general damages. 12 13 Damages Pursuant to the Undertaking 14 15

¶ [274] To obtain the Mareva injunction, Sagicor gave its promise that it 16 would compensate the Hurlstone parties for any loss caused by the 17 order if it was discharged. Such damages are to assessed on much 18 the same basis as damages for breach of contract: F. Hoffmann 19 La-Roche& Co A.G. v. Secretary of State for Trade and Industry. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 150 of 226 That is common ground between the parties. The Hurlstone parties 1 are entitled to be put as nearly as possible “in the same position as 2 [they] would have been if [they] had not sustained the wrong for 3 which [they are] now getting compensation or reparation:” per 4 Lord Blackburn in Livingstone v Rawyards Coal Company (1880) 5 1 App. Cas 25, at 39. 6 7

¶ [275] Since WV was not a party to the injunction application the liability 8 is Sagicor’s alone. The injunction was not granted against the 9 Crawford parties so they have no entitlement under the 10 undertaking. 11 12

¶ [276] Sagicor raises two questions of law on this branch of the action: 13 causation and the duty to mitigate. 14 15 Causation 16 17

¶ [277] Sagicor argues that any loss suffered by the Hurlstone parties was 18 caused by the existence of the proceedings as much as by the 19 injunction itself. On this basis, it is alleged that, since the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 151 of 226 Hurlstone parties would still have suffered the same loss had the 1 proceedings been pursued without a Mareva injunction, they 2 cannot recover on the undertaking. 3 4

¶ [278] The burden of proof rests with the Hurlstone parties to establish 5 that any damage they say they have suffered was indeed caused by 6 the injunction and not by any other event or circumstance. Having 7 said that, I adopt as a useful guide the words of Mason, J in Air 8 Express Ltd v Ansett Transport Industries (Operations)Pty. Ltd 9 (1981) 146 CLR 249, 322: 10 “Unless the circumstances indicate otherwise, when it appears 11 that damage flows from the non-performance of an act and the 12 performance of that act has been restrained by an interim 13 injunction, the inference will generally be drawn that the 14 damage has been occasioned by the injunction.“ 15 16

¶ [279] Sagicor argues that the Hurlstones must show that the Mareva 17 injunction was the exclusive cause of the loss that they suffered. 18 This argument is based in part upon the Air Express decision. All 19 four judgments which dealt with the question of causation adopted 20 a “but for“ test. What had to be shown was that prima facie the 21 loss would not have happened without the injunction. The High 22 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 152 of 226 Court did not suggest that the injunction had to be the exclusive 1 cause. Gibbs J said at p. 313: 2 "The party seeking to enforce the undertaking must show 3 that the making of the order was a cause without which 4 the damage would not have been suffered.“ 5 6 Stephen J said at p. 320: 7 "From this it can be seen that it will only be if damage is 8 suffered because of the grant of the injunction, and would 9 not have been suffered but for it, that the court should 10 compensate a defendant who claims damages under the 11 undertaking. Its grant must be shown to be the causa sine 12 qua non of the damage complained of before the 13 defendant can be entitled to be compensated for what 14 turns out to be the erroneous grant by the court of the 15 injunction against it." 16 17 Mason J said at pp. 324-325: 18 "The object of the undertaking is to protect a party, 19 normally the defendant, in respect of such damage as he 20 may sustain by reason of the grant of the interim 21 injunction in the event that it emerges that the plaintiff is 22 not entitled to relief. It is no part of the purpose of the 23 undertaking to protect the defendant against loss or 24 damage which he would have sustained otherwise, as for 25 example, detriment which flows from the commencement 26 of the litigation itself. That is loss or damage which the 27 defendant must bear himself, as he does when no interim 28 injunction is sought or granted. Consequently, it is for 29 the party seeking to enforce the undertaking to show that 30 the damage he has sustained would not have been 31 sustained but for the injunction." 32 33 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 153 of 226 It can be seen therefore that the test in Ansett was a “but for” test. 1 In Tharros Shipping Co. Ltd v Bias Shipping Ltd (The Griparion) 2 (No. 1) the Court of Appeal essentially approved a passage by 3 Saville J which said: 4 "I find [the reasoning of Mason J in Air Express] 5 convincing. However, in my view this approach does not 6 mean that a party seeking to enforce an undertaking must 7 deal with every conceivable or theoretical cause of the 8 damage claimed, however unlikely this may be. Once a 9 party has established a prima facie case that the damage 10 was exclusively caused by the relevant Order, then in the 11 absence of other material to displace that prima facie 12 case, the Court can, and generally would, draw the 13 inference that the damage would not have been sustained 14 but for the order. In other words, the Court seeks to 15 approach and deal with this question of causation in a 16 commonsense way." (underlining added) 17 18

¶ [280] The Air Express test did not require a claimant in an inquiry to 19 demonstrate that the injunction was the exclusive cause of the 20 damage. The appearance of the word “exclusively” in Tharros is 21 advanced by Sagicor in support of its argument that the “but for” 22 test “may well” not be sufficient in law. I do not think it was 23 intended to have that effect. 24 25 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 154 of 226

¶ [281] In contract it is recognised that two equally effective causes might 1 both qualify as “but for” causes: see County Ltd v Girozentrale 2 Securities [1996] 3 All ER 834. Where there are two approximately 3 equal causes of loss, the contract-breaker is liable so long as his 4 breach was an effective cause of the loss. The Court need not 5 determine which cause was the more effective. At 846, Beldam LJ 6 stated: 7 “Causal expressions used in the law whether couched in 8 classical or modern language are redolent of difficulty, 9 but I take the judge to have used the expression 'causa 10 sine qua non' in the sense not just of a necessary step in 11 the sequence of events leading to the loss but of an event 12 which with others combined to cause the loss, otherwise 13 he could have no basis for comparing the potency of each 14 in causing the loss. But if he used the expression in this 15 sense, his approach of discarding one of the causes 16 because he regarded it as less effective in causing the 17 result than the others meant that he could have rejected 18 an effective cause merely because he considered another 19 cause had had a greater effect. Such an approach is in 20 my view incorrect.” 21 22 The purpose of “but for” causation is to eliminate irrelevant 23 causes. In BHP Billiton Petroleum Ltd v Dalmine SpA [2003] 24 EWCA Civ 170, Rix LJ said: 25 “…In this connection we think that the role of the "but 26 for" test should not be exaggerated. As the learned 27 authors of Clerk & Lindsell stated at the beginning of the 28 passage cited above, the purpose of that test is to 29 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 155 of 226 eliminate irrelevant causes. The point is emphasised 1 again later on in the same paragraph, where the text 2 continues – “It is worth bearing in mind that the "but 3 for" test functions as an exclusionary test, i. e. its 4 purpose is to exclude from consideration irrelevant 5 causes”.” 6 7 8

¶ [282] My approach towards causation cannot be an overly rigid 9 application and must rely upon a common sense assessment of the 10 evidence. If the Mareva and the proceedings were both 11 contributors to damage that was suffered, I will not exclude that 12 damage from consideration but ask whether the injunction was 13 a “significant determinant“ or operating cause of it. This is the test 14 adopted by the Court of Appeal of New Zealand in Bonz Group 15 (Pty) Limited v Bonz Group (NZ) Limited. It is consistent with the 16 approach in contract to concurrent causes which examines whether 17 a cause was an “effective“ or “operating“ cause. The Court 18 concluded: 19 "In part, the decision to close the business may have been 20 motivated by the need to devote time and money to the 21 litigation, which was complex and expensive. But we are 22 of the view that Hansen J was right to conclude that a 23 significant determinant of that decision was the 24 injunction …” 25 26 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 156 of 226 1

¶ [283] If a plaintiff obtains an injunction fraudulently or maliciously the 2 court should hold that person responsible for all loss caused 3 directly by the injunction. The measure of damages should be the 4 same as for the intentional torts and it is just that in such 5 circumstances the plaintiff should bear all the loss: see Smith New 6 Court Securities Ltd v Citibank NA [1997] AC 254. 7 8 Failure to Mitigate 9 10

¶ [284] Sagicor argues that the Hurlstones failed to mitigate their loss 11 because they should have applied to discharge the injunction or 12 sought a variation of its terms. There is no decided case in which a 13 claim to damages pursuant to an undertaking has been reduced 14 because of a failure to mitigate. Nonetheless, I accept that in 15 principle the claimant is under an obligation to do what is 16 reasonable in all of the circumstances to reduce the magnitude of 17 the loss to the same extent as in a breach of contract action. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 157 of 226

¶ [285] The burden of proving a failure to mitigate rests with the party 1 alleging it: see BHP Billiton Petroleum Ltd v Dalmine SpA, supra. 2 The party with the benefit of the undertaking is under no obligation 3 to do anything other than in the ordinary course of its business: 4 British Westinghouse Electric and Manufacturing Company 5 Limited v Underground Electric Railways Company of London 6 Limited. It is well established that a claimant is not to be judged 7 too rigourously on this question. Lord MacMillan in Banco de 8 Portugal v Waterlow and Sons Limited [1932] AC 452 at 506 said: 9 “Where the sufferer from a breach of contract finds 10 himself in consequence of that breach placed in a 11 position of embarrassment the measures which he may be 12 driven to adopt in order to extricate himself ought not to 13 be weighed in nice scales at the instance of the party 14 whose breach of contract has occasioned the difficulty. It 15 is often easy after an emergency has passed to criticize 16 the steps which have been taken to meet it, but such 17 criticism does not come well from those who have 18 themselves created the emergency. The law is satisfied if 19 the party placed in a difficult situation by reason of the 20 breach of a duty owed to him has acted reasonably in the 21 adoption of remedial measures, and he will not be held 22 disentitled to recover the cost of such measures merely 23 because the party in breach can suggest that other 24 measures less burdensome to him might have been 25 taken.” 26 27 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 158 of 226 Accordingly a claimant is under no duty to embark upon 1 complicated and difficult litigation. That principle emerges clearly 2 from the decision of Harman J in Pilkington v Wood [1953] Ch 3 770 at 777: 4 " … I am of opinion that the so-called duty to mitigate 5 does not go so far as to oblige the injured party, even 6 under an indemnity, to embark on a complicated and 7 difficult piece of litigation against a third party. The 8 damage to the plaintiff was done once and for all directly 9 the voidable conveyance to him was executed. This was 10 the direct result of the negligent advice tendered by his 11 solicitor, the defendant, that a good title had been shown; 12 and, in my judgment, it is no part of the plaintiff's duty to 13 embark on the proposed litigation in order to protect his 14 solicitor from the consequences of his own carelessness." 15 16 It is also true that if the injunction was obtained maliciously or 17 deceitfully a failure to mitigate has no place in an inquiry as to 18 whether the order caused the loss: see Smith New Court Securities 19 Ltd v Citibank NA [1997] AC 254, at p. 285. 20 21 Aggravated or Exemplary Damages 22 23

¶ [286] Aggravated damages are awarded as 24 “additional compensation for the injured feelings of the plaintiff 25 where his sense of injury resulting from the wrongful physical 26 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 159 of 226 act is justifiably heightened by the manner in which or motive 1 for which the defendant did it.” Cassell & Co Ltd v Broome 2

¶ [1972] AC 1027 per Lord Diplock. 3 4 Aggravated damages are compensatory and have been awarded for 5 malicious prosecution: see Thompson v Commissioner of Police of 6 the Metropolis [1998] QB 498. 7 8

¶ [287] It appears that exemplary damages may not be available to punish a 9 defendant for his anti-social behaviour towards a plaintiff in the 10 obtaining of a Mareva injunction: see Al-Rawas v. Pegasus Energy 11 Ltd. [2009] 1 All ER 346. I need not consider the question further 12 as I am satisfied that my award of damages under other heads 13 carries with it an adequate punitive effect. 14 15 Damages: HL & John Hurlstone 16 17

¶ [288] Before making any personal expenditures exceeding CI $250, John 18 Hurlstone was required by the injunction to notify the plaintiffs’ 19 attorneys of the amount to be spent, the purpose of the expenditure 20 and the source of the funds. He was restricted to spending CI 21 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 160 of 226 $1,000 per week. Both Mr. Hurlstone and his company were 1 obliged to disclose their assets. 2 3

¶ [289] On March 16, 2006 the parties agreed to vary the terms of the 4 Mareva injunction to allow John Hurlstone to spend up to CI 5 $35,000 per month and to allow HL to spend up to CI $5,000 in a 6 single transaction without approval. He did consider asking the 7 court for a variation of the terms of the injunction but was told that 8 Sagicor’s position was that they wanted him to post CI $7,000,000 9 worth of land as security. His own attorneys said this was not a 10 viable approach. 11 12

¶ [290] Some consideration was given to applying to have the Mareva 13 injunction discharged. That was never done. The injunction had 14 been obtained largely upon the basis of the opinion evidence of Mr. 15 Purbrick. To obtain a discharge, it would be necessary to tender 16 expert evidence challenging his views. Mr. Hurlstone was advised 17 that the resulting credibility dispute could be resolved only after 18 cross-examination of the experts, a process which would have been 19 expensive and difficult to attempt at an interlocutory hearing. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 161 of 226 1

¶ [291] As the rumours circulated, Mr. Hurlstone says he found that 2 longstanding acquaintances were avoiding him. 3 4

¶ [292] After the injunction was issued, the HL accounting department was 5 required to ask Q&H for approval before it could pay its sub- 6 contractors. Delay inherent in this process began to have negative 7 effects. The problem was particularly acute with respect to “labour 8 only” sub-contractors. Cheques to these employers should have 9 been issued on Fridays, taking into account the net value of the 10 work done during the week. Because of the approval process, the 11 cheques were issued the following Monday or Tuesday. This 12 caused discontent among the subcontractors. 13 14

¶ [293] On March 2, 2006 Mr. Hurlstone was advised by ScotiaBank that 15 the HL accounts had been frozen. A process was created whereby 16 the accounting department of HL would prepare a list of payments 17 which needed to be made. The list was sent to Q&H and, usually 18 within about two days, approval for the payments was obtained. In 19 correspondence, Q&H were advised of the administrative and 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 162 of 226 reputation difficulties the injunction was likely to cause and were 1 advised that the damages, if the injunction were to be discharged 2 eventually, “will be in the many millions of dollars”. 3 4

¶ [294] On March 3, 2006 a number HL employees went to the ScotiaBank 5 to cash their weekly payroll cheques. A Bank employee announced 6 publicly to everyone in the bank that persons holding HL’s cheques 7 could not cash them because of a court order so the cheques should 8 be returned to the company. This caused obvious embarrassment. 9 Rumors concerning HL’s ability to honour its obligations circulated 10 through the small Grand Cayman business community. Some 11 suppliers and subcontractors expressed reluctance to honour 12 purchase orders unless payment was made in advance. The Bank 13 of Butterfield, HL’s second bank, also refused to honour its 14 cheques. 15 16

¶ [295] On March 9, 2006 an official at ScotiaBank told John Hurlstone 17 that a “watch” had been placed upon Construction Equipment 18 Services Limited, an unrelated company in which the Hurlstone 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 163 of 226 brothers had an interest. The assets of this company were not 1 caught by the Mareva injunction. 2 3

¶ [296] Many payments HL intended to make in the ordinary course of its 4 business were approved (after some delay) by Q&H but some were 5 not. For example, a request to transfer CI $165,000 from HL’s 6 account from the Butterfield Bank to its account at the ScotiaBank 7 was refused initially (and permitted subsequently). Even cheques 8 under the CI $1,000 limit were not honoured by ScotiaBank unless 9 they appeared on a list approved by Q&H. 10 11

¶ [297] HL was in the habit of submitting bids for construction projects 12 within both the private and public sectors. An officer at 13 ScotiaBank advised John Hurlstone that the bank could not 14 consider extending any more credit to HL until the injunction had 15 been discharged. This request was made repeatedly and refused 16 repeatedly. An official of the Bank of Butterfield took the same 17 position: it, also, would not extend financing until the injunction 18 had been lifted. John Hurlstone says that when requests for 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 164 of 226 financing were refused, the injunction was always mentioned as the 1 reason for refusal. 2 3

¶ [298] During the period the injunction was in force, HL made a number 4 of unsuccessful bids on projects ranging in value from around CI 5 $50,000 to a contract for some CI $10,500,000. In general terms, 6 Mr. Hurlstone says HL was just as busy after the Mareva as before. 7 However, this was a boom time and they expected to have a higher 8 volume of work. They had more than fifty employees during the 9 WV project, but less than forty before the hurricane. 10 11

¶ [299] Mr. John May owns and operates Capital Realty Ltd. in George 12 Town. In early 2007 he was planning the construction of a four 13 storey building on Seven Mile Beach known as Park Place. HL 14 submitted the lowest bid. Mr. May was familiar with John 15 Hurlstone and considered him to be a builder of good quality 16 projects. However, HL advised that it would require a mobilization 17 payment of 10% of the tender offer (which was approximately CI 18 $8,690,000) before commencing work. That was of major concern 19 to Mr. May. Around that time, it came to his notice that allegations 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 165 of 226 of fraud and conspiracy had been made against John Hurlstone and 1 HL by Sagicor in relation to the WV reinstatement. For these 2 reasons, Mr. May’s company decided not to enter into a contract 3 with HL. 4 5

¶ [300] A bid upon a project known as Cayman Falls was successful 6 despite the existence of the injunction. This was a contract valued 7 at CI $10,813,245 for the building of a forty-eight unit development 8 of high end two and three bedroom apartments. 9 10

¶ [301] HL’s inability to obtain financing caused significant delay to its 11 Cayman Falls project which is expected to result in substantial 12 liquidated damages. Some sub-contractors reduced their labour 13 force because of late payments and eventually stopped work at the 14 site. The project was delayed. The contract provides for liquidated 15 damages caused by delay of CI $3,683 per day. As of July 31, 16 2009 those damages amounted to CI $1,016,508. 17 18

¶ [302] A claim to recover the liquidated damages owing on the Cayman 19 Falls project has not been pleaded and has been addressed only in 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 166 of 226 passing by counsel. The expert evidence does not throw any light 1 on the issue either. I make no award of damages to compensate for 2 the payment of these liquidated damages. 3 4

¶ [303] Mr. Gibb was the in-house accountant of HL from November, 2006 5 on. He says that the accounts were in a “slightly haphazard state” 6 when he first arrived. They were being prepared by a bookkeeper 7 without accounting experience. In particular, there were no 8 construction accounting principles being applied. Normally, a 9 construction company would record revenue and cost as either a 10 “percentage of completion” or as a “completed contract”. Mr. Gibb 11 employed a percentage of completion approach because the 12 completed contract basis is used ordinarily in smaller jobs. Mr. 13 Gibb checked each balance sheet account for the period 2002 to 14 2006 to ensure that they were accurate. 15 16

¶ [304] On many occasions Mr. Gibb requested ScotiaBank to provide a 17 reference letter addressed to the Central Tendering Committee of 18 the Government. He asked that the Bank assert that it would 19 continue to help HL in their financing requirements. ScotiaBank 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 167 of 226 was willing to provide just two types of letters, neither of which 1 fully met the requirements. He submitted these letters with the 2 tenders because he could not obtain anything more useful. 3 4

¶ [305] Mr. Joe Chiazza is the in-house quantity surveyor of HL. He 5 described the tendering process for government contracts. Bids are 6 assessed on a points system. A bidder will be awarded fewer 7 evaluation points if it wishes to receive a mobilization payment. 8 Prior to the Mareva injunction, HL was able to submit competitive 9 tenders which would seek to maximize the points available because 10 they could finance the cost of the initial stages of the project 11 through bank overdraft facilities and loans. 12 13

¶ [306] Some private sector projects are awarded with a mobilization 14 payment but other private sector clients will not accept that. Prior 15 to the injunction, HL was able to finance the initial stages of a 16 private sector project where the client was unwilling to make a 17 mobilization payment. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 168 of 226

¶ [307] In addition, most government tendering requires the contractor to 1 provide proof of financing. Typically, HL would obtain a separate 2 bank reference letter for each tender. Since the injunction, HL’s 3 bankers have only been willing to provide relatively vague letters 4 of reference. For example, one letter asserted only that HL 5 “operates current accounts with combined average credit balances 6 maintained in the low six figure range” without any reference to the 7 bank’s willingness to advance financing to HL. 8 9

¶ [308] Performance bonds are sometimes required by clients in both public 10 and private sectors. These would normally be obtained from a 11 financial institution or insurance company. However, John 12 Hurlstone testified that HL had obtained no performance bonds 13 from 2003 to 2006. 14 15

¶ [309] Mr. Chiazza provided a list of projects for which HL made a 16 successful bid in the last few years. Prior to service of the 17 injunction, HL bid successfully for a variety of construction 18 projects ranging from CI $39,000 to CI $7,900,000 in value. There 19 were twenty such projects from January, 1999 onwards. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 169 of 226 1

¶ [310] After service of the injunction, HL was able to obtain four private 2 contracts and one government contract. Four of the five contracts 3 are for relatively small amounts: CI $7,500, CI $52,000, CI 4 $69,000, and CI $786,000. The company was successful in 5 obtaining one large private contract, the Cayman Falls project. The 6 company also carried out some work after the injunction on 7 projects in which Mr. Chiazza was not involved. He listed these 8 but did not provide evidence of their values. 9 10

¶ [311] At the time of the injunction, the construction industry was still 11 “buoyant” because of the continuing reinstatement work available 12 related to hurricane damage. Mr. Chiazza says the company did not 13 receive the number of invitations or opportunities to tender for 14 private sector projects which it had received in previous years. It 15 appeared to him that HL may have been excluded from tendering 16 on a significant number of private sector projects. 17 18

¶ [312] Mr. Chiazza described the necessary changes to the company’s 19 payment procedure to subcontractors brought about by the need to 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 170 of 226 have Q&H approve the payments. Although the time needed for 1 approval was only two working days, some sub-contractors were 2 unhappy with this because they were accustomed to being paid 3 weekly or fortnightly. HL would not know the amount of the 4 required payment (in the typical case) until Friday. In the past, it 5 would have issued the cheque that day. Because of the approval 6 process the cheque would likely be issued on the following 7 Tuesday. This brief delay troubled the “labour only” 8 subcontractors in particular. The effect, particularly with respect to 9 the Cayman Falls project, was to cause delay and disruption 10 because subcontractors who were unhappy with the delay in 11 payment would reduce their labour force owing to their own 12 inability to pay wages in a timely manner. 13 14

¶ [313] Mr. Chiazza gave evidence of a number of projects for which HL 15 was unable to tender, although it would have done so prior to the 16 issuance of the injunction. These were government projects for 17 which HL could no longer provide the necessary proof of its ability 18 to finance the early stages. These projects included the East End 19 seawall, the Drug Task Force building, the airport expansion 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 171 of 226 project, the Mosquito Research Unit facility, the George Town 1 Primary School, the Government Administration Building, the 2 West Bay High School, the Frank Sound High School, and a 3 Camana Bay multi-assembly building. 4 5

¶ [314] A number of unsuccessful tenders were made. Mr. Chiazza listed 6 the Harquail Theatre refurbishment (for CI $2,400,000), the Park 7 Place project (for CI $8,690,000), a boxing gymnasium in George 8 Town (for 9 CI $1,500,000), a new vehicle licensing centre (for CI $2,068,000), 10 and the Car City facility (value not given). 11 12

¶ [315] Mr. Hurlstone also had certain personal projects he intended to 13 pursue. Morningside Plantation was a development of about 14 seventy-two condominium units. The financial projection shows a 15 total cost of CI $20,971,240 to build the project with at a net profit 16 of CI $5,840,760. 17 18

¶ [316] A second proposed development was the Belgravia project in the 19 prospect area. This was a large commercial development 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 172 of 226 comprising shops and offices for rent as well as condominium 1 suites. The land was owned indirectly by the Hurlstone brothers. It 2 was anticipated that the project would cost CI $28,755,000 to build 3 and produce a net projected profit of CI $12,495,000. 4 5

¶ [317] In mid 2007, John Hurlstone was approached by Frank Hall, a 6 prominent developer on Grand Cayman. Mr. Hall proposed that the 7 two organizations enter a partnership on an equal basis to develop 8 and sell some land owned by his group. The development was to 9 have twenty-two “elegant” three and four bedroom beachfront 10 residences with many associated amenities. The projected cost was 11 CI $55,450,000. This project is referred to as “Starfish Cay”. Mr. 12 Hurlstone says the net loss of profit to HL and himself was US 13 $11,875,000 with a further loss of opportunity for investment profit 14 to himself as a 50% investor in the joint venture. 15 16

¶ [318] A further development planned by HL and John Hurlstone was the 17 Elysium Condominium project. The proposal was to build thirty- 18 six “very large and luxurious condominium residences” to be 19 operated as a private spa resort. Many amenities would be included 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 173 of 226 within the development including two restaurants, a spa service, 1 tennis and squash courts, a gymnasium, and a private recording 2 studio. The proposal was that HL would design and build the 3 project and would own 25% of it in partnership with Renaissance 4 Technologies, a Florida developer. The projected financial 5 information anticipates that a net profit of some US $41,162,500 6 could have been earned by Mr. Hurlstone. When he disclosed to 7 his prospective partner the existence of the Mareva injunction and 8 the lawsuit, Renaissance Technologies said they were not prepared 9 to go ahead. 10 11

¶ [319] In December, 2008 Mr. Hurlstone was refused bank credit unless it 12 was fully secured because of past delinquency problems. He 13 admitted that he “forgot” to make payments for three to four 14 months on a previous loan facility before the Mareva injunction. 15 When asked if he had been refused other credit facilities as well, he 16 responded: “I would say yes”. 17 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 174 of 226 Expert Evidence on HL’s Loss of Profit 1 2

¶ [320] Mr. Stuart Sybersma gave expert opinion evidence on behalf of the 3 Hurlstone parties concerning loss of profit caused by the injunction. 4 He is a chartered accountant, a chartered insolvency and 5 restructuring professional and a certified fraud examiner. He is also 6 a partner of the firm of Deloitte and Touche in the Cayman Islands. 7 8

¶ [321] Mr. Theo Bullmore is a chartered accountant and a former senior 9 partner of KPMG in the Cayman Islands. He is also a fellow of the 10 Institute of Chartered Accountants in England and Wales. He 11 testified on behalf of Sagicor. 12 13

¶ [322] The ultimate conclusions of the two experts differ dramatically. 14 Mr. Sybersma calculates HL’s loss of profit at CI $11,563,440. Mr. 15 Bullmore puts it at CI $1,643, 474. 16 17 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 175 of 226 Agreement on Some Issues 1 2

¶ [323] Mssrs. Sybersma and Bullmore have agreed upon the following 3 points: 4 “2.1 Mr. Sybersma and Mr. Bullmore agree that an appropriate 5 methodology to calculate the losses suffered by HL as a result 6 of the Mareva Injunction is to estimate the revenues that HL 7 might have been expected to achieve in the absence of the 8 Injunction and to then calculate the resultant expected net profit 9 by applying to this estimated revenue an estimated net profit 10 margin percentage (“NPM”). 11 12 13 2.2 It is agreed that the financial periods during which such 14 losses were suffered and for which calculation of loss should be 15 performed are: 16 17 2.2.1 The 6 months ending December 2006; 18 2.2.2 The 12 months ending December 2007; 19 2.2.3 The 12 months ending December 2008; and 20 2.2.4 The 12 months ending December 2009. 21 (Together these periods are collectively referred to as the “Loss 22 Period”) 23 24 2.3 It is agreed that in order to estimate the revenues that 25 would have been achieved by HL in the Loss Period in the 26 absence of the Injunction, it is appropriate to measure the 27 revenues earned by HL in the period prior to the Loss Period 28 against an external benchmark of the construction industry in 29 the Cayman Islands and then to assume that the revenues of HL 30 would have changed in the Loss Period in proportion to 31 changes in that benchmark. 32 33 2.4 It is agreed that the estimated NPM is to be applied to the 34 estimated revenue for the Loss Period is 15%.” 35 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 176 of 226 1 They do not agree upon: 2 3  “The specific benchmark or statistical indicator that should be 4 used as the basis to estimate HL revenues for the Loss Period. 5 6  The base period (before the imposition of the Mareva 7 Injunction) that should be utilized in calculating the market 8 share of HL against the above benchmarks. 9 10  Whether any dilution of the above noted market share is 11 necessary taking into account new construction companies 12 entering the Cayman Islands market place after Hurricane 13 Ivan.” 14 15

¶ [324] Mr. Sybersma considers that the most appropriate benchmark to use 16 to estimate what HL revenue would have been in the loss period is 17 the dollar value of building permits issued. He does not consider 18 that any dilution of the market share is warranted under his 19 approach; Mr. Bullmore agrees with this last point. 20 21

¶ [325] Mr. Bullmore considers that the most appropriate benchmark to use 22 is the dollar value of construction material imports. He also feels 23 that there should be a 20% reduction in the estimated market share 24 to reflect the dilution of the market as a consequence of new 25 construction companies entering after Hurricane Ivan. Mr. 26 Bullmore bases his opinion on the estimated market share of HL 27 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 177 of 226 upon the company’s performance in the year ended June 30, 2004. 1 Mr. Sybersma takes into account the three year period ending June 2 30, 2006. Mr. Bullmore considers that the period following 3 Hurricane Ivan was not a typical one for the construction industry 4 and should not be used as a basis to extrapolate the revenues. 5 6

¶ [326] Mssrs. Sybersma and Bullmore agree that the loss suffered by 7 Robert Hurlstone by virtue of his lost salary is in the amount of CI 8 $576,922.50. Mr. Sybersma considers that an amount representing 9 the loss relating to the rental of construction equipment owned by 10 Robert Hurlstone should be added to this. Mr. Bullmore considers 11 that nothing should be added because Robert Hurlstone should have 12 mitigated the loss by renting out the equipment or taking alternate 13 employment. Mr. Sybersma is of the view that Mr. Hurlstone’s 14 activities from July 24, 2008 on amount to evidence of an attempt 15 to mitigate the loss. 16 17 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 178 of 226 Evidence of Mr. Sybersma 1 2

¶ [327] Mr. Sybersma has assumed that the financial periods ending June 3 2004, June 2005 and June 2006 were “normal operating years.” 4 Due to the lead time between tenders being submitted and the work 5 commencing, the fact that the injunction was in place for the last 6 four months of this period would not change the assumption. He 7 also assumed that the Mareva injunction would continue to affect 8 the company after it was lifted, the effect ending only on December 9 31, 2009. 10 11

¶ [328] As a statistical indicator of activity in the construction industry and 12 revenue available to the Hurlstones, Mr. Sybersma used the value 13 of building permits issued. This value more than doubled in 2005 14 as one would expect because of the need to repair hurricane 15 damage. Mr. Sybersma asserts that the revenue a company 16 generates in a particular period as a percentage of the total building 17 permits granted can be viewed as the company’s share of the 18 market. He adjusted the building permit figures to accord with the 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 179 of 226 fiscal period of HL. These adjusted figures and Mr. Sybersma’s 1 estimate of HL’s market share is: 2 3 TABLE D Hurlstone Ltd. – Revenue as percentage of CI Building Permit Value (Fiscal Period) 12 Mths to Jun 2004 CI $ 12 Mths to Jun 2005 12 Mths to June 2006 6 Mths to Dec 2006 12 Mths to Dec 2007 12 Mths to Dec 2008 Hurlstone Revenue 4,829,740 15,041,595 15,627,328 2,337,824 8,268,788 6,613,106 Building Permit Value 173,874,327 172,800,000 425,500,000 235,900,000 446,300,000 502,341,845 Hurlstone Market Share 2.78% 8.70% 3.67% 0.99% 1.85% 1.32% Source: ESO reports/Hurlstone Financials 4 5

¶ [329] There was a back log and a delay for issuing building permits for 6 some months after the passage of the hurricane. In many cases, 7 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 180 of 226 particularly with respect to private residences, construction and 1 repair work was done without the benefit of any building permit. In 2 some cases, no building permit is required for repairs to a private 3 residence. The result is that there was a significant increase in 4 construction activity after the hurricane without a corresponding 5 increase in the number of building permits granted. As a result, Mr. 6 Sybersma concedes that his market share calculation (8.70%) for 7 the twelve months ending June, 2005 is likely overstated. 8 However, for corresponding reasons, the market share for the 9 following year (3.57%) may be understated. For these reasons, Mr. 10 Sybersma calculated the average market share over the three year 11 period ending June, 2006. This was 4.60%. Mr. Sybersma 12 recognized the “potential” of the new market entrants to dilute 13 HL’s market share but discounted the impact of that because he has 14 “assumed the majority of new entrants were relatively smaller 15 companies that would not have competed on the larger scale 16 projects that a large construction company like Hurlstone would 17 do”. He concluded that HL’s market share would have ranged 18 between 3.67% and 4.60% had it not been for the Mareva 19 injunction. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 181 of 226 1

¶ [330] After normalizing the calculation of HL’s profit margin (for the 2 year ended June, 2005, in a manner accepted also by Mr. 3 Bullmore), Mr. Sybersma calculated the loss of profit as the 4 difference between the net income actually realized in the loss 5 years and the net income projected to have been realized. 6 7

¶ [331] Mr. Sybersma’s calculations do not include any allowance for 8 liquidated damages suffered in relation to the Cayman Falls project. 9 10

¶ [332] Mr. Sybersma said that the building permit indicator may actually 11 be an understatement of the market because of the existence of 12 change orders and work caused by overruns. He said he thinks the 13 Hurlstone organization was well positioned to participate in large 14 contracts and could have done, for example, the work on the high 15 schools which was done by TJI. He acknowledged that 16 performance bonds are now required more often than they were in 17 the past. He called 2005 the “stockpiling year” because the import 18 duty on construction materials had been waived for a period of 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 182 of 226 time. Such materials represent 20% to 30% of the total cost of a 1 construction project. 2 3

¶ [333] Mr. Sybersma estimated the loss of salary suffered by Robert 4 Hurlstone as a result of the injunction at CI $576,922.50. 5 6

¶ [334] After holding meetings with Mr. Bullmore, Mr. Sybersma filed a 7 second expert report. He said again that the value of building 8 permits issued is a “far more appropriate” benchmark than imported 9 construction material. In the sixteen reports published by the 10 Economics and Statistics Office of the Cayman Islands between 11 2002 and 2008, the statistical indicator used in the commentary 12 about the construction industry is consistently the value and number 13 of building permits issued. The construction material import 14 figures were not used once as an indicator. 15 16

¶ [335] Mr. Sybersma points out that construction materials only account 17 for a portion of the total costs of the industry. Other elements 18 include labour, administrative costs, pensions, margins, health 19 insurance and profit. These could account for more than 50% of 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 183 of 226 the total cost. He feels it is inappropriate to estimate the total size 1 of the market by reference to a statistic representing only a fraction 2 of the economic activity within it. Building permit values represent 3 the total projected contract value, not just the direct cost of 4 materials. 5 6 a. Mr. Sybersma acknowledged an element of over estimation in 7 the use of building permits because some permits are purchased 8 but not used. Given the cost of the permits, he thinks this will 9 be infrequent. Moreover, there are some projects which do not 10 require a building permit at all. 11 12 b. Mr. Sybersma objects to Mr. Bullmore’s use of a single one 13 year period as a base period. Hurricane Ivan had a profound 14 and ongoing impact and the higher level of activity caused by it 15 was sustained throughout the loss period. Mr. Sybersma points 16 to building permit values for this conclusion. The construction 17 material imports figures also show a marked increase in activity 18 after the hurricane. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 184 of 226 c. Mr. Sybersma objects to Mr. Bullmore’s opinion that a 20% 1 reduction in projected revenue should be applied to represent 2 market dilution. With reference to Tom Jones International 3 (“TJI”), a large company which entered the market just after the 4 hurricane, he says the theory that it would have diluted HL’s 5 market share is pure speculation. It is more likely that HL’s 6 reduced role in the market place provided the opportunity and 7 conditions for TJI to move in. Moreover, TJI subcontracted a 8 lot of work and HL could well have obtained subcontracts from 9 it. 10 11 d. Mr. Sybersma accepts that many smaller construction 12 companies entered the market after the hurricane. He says their 13 impact in the marketplace is already reflected in the building 14 permit figures for the years ended June 30, 2005 and 2006. 15 16 e. Mr. Sybersma considers that the 15% net profit margin should 17 be applied against the total projected revenue. The resulting 18 amount would represent the net profit that HL could have 19 expected to earn. The actual loss of profit would then be 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 185 of 226 determined by calculating the shortfall between this estimated 1 net profit and that actually achieved by HL in the loss period. 2 Further, Mr. Sybersma considers that the actual net profit 3 achieved by HL should be adjusted for unusual events such as 4 salary paid to the Hurlstone parties at levels in excess of normal 5 market rates. (Mr. Bullmore agrees that if the Court accepts 6 Mr. Sybersma’s approach this adjustment should occur.) 7 8 f. Mr. Bullmore considers that the 15% net profit margin should 9 be applied only against the difference between the projected 10 revenue and the actual revenue earned by HL in the loss period. 11 This approach does not acquire any adjustment for 12 “normalization”. Mr. Sybersma disagrees because in his view 13 “the net profit margin during the loss period was also affected 14 by the Mareva.” Mr. Bullmore says that HL should have been 15 capable of earning the normal 15% net profit margin during the 16 loss period by reducing its general overheads (i.e., selling, 17 general and administrative expenses). The primary factor for 18 the net profit margin was the “clear failure of HL to reduce its 19 S, G and A expenses in response to decreased revenue in the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 186 of 226 post Ivan boom years”. Mr. Sybersma responds that HL 1 experienced considerable and serious difficulties in operating 2 their business due to the injunction. He does not see how HL 3 could have reduced the S, G and A expenses significantly. 4 “Such a reduction would have been equivalent to closing 5 down”. 6 7 Evidence of Mr. Bullmore 8 9

¶ [336] Mr. Bullmore begins his opinion regarding the effect of the 10 injunction upon HL by stating that the project files which he has 11 reviewed for 2004, 2005 and 2006 show no project for which bank 12 financing was obtained or where a performance bond was required. 13 He questions why Mr. Sybersma has accepted, at least, implicitly, 14 that bank financing and performance bonds hindered the 15 performance of HL after the injunction was in place. 16 17

¶ [337] He also says that Mr. Sybersma’s methodology fails to take into 18 account any factors other than the injunction which may have 19 affected HL’s revenues. Mr. Bullmore says that other factors must 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 187 of 226 be considered: the effects of the hurricane, the entry of new 1 competitors into the construction industry and the likelihood that 2 HL lacked the capability to tender for larger projects. 3 4

¶ [338] Mr. Bullmore makes four objections to the use of building permits 5 as an indicator of activity in the market. He points out that projects 6 span two or three years and in the latter years there is no link 7 between the work done on the project and the building permits 8 granted that year. There is construction work for which no permit 9 is needed, which was of particular importance immediately after the 10 hurricane. Building permits are issued in cases where the 11 construction does not take place. Mr. Sybersma has assumed 12 implicitly that building permits are homogenous and that HL had an 13 equal chance of obtaining larger and smaller projects. However, in 14 the years reviewed by Mr. Bullmore, HL undertook no large, 15 complex projects. Mr. Bullmore agreed that neither benchmark is a 16 perfect correlation. He said a high percentage of Hurricane Ivan 17 work had been completed by 2006. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 188 of 226

¶ [339] Moreover, Mr. Sybersma’s own figures show the lack of a 1 correlation. The building permits figures for 2004 and 2005 were 2 virtually identical, yet HL’s revenues more than tripled from June 3 30, 2004 to June 30, 2005. This variability led Mr. Sybersma to 4 average the percentages he had calculated. 5 6

¶ [340] Mr. Bullmore says that the value of construction materials imported 7 more accurately reflects the size of the construction market in a 8 particular period. These were: 9 Year 2002 2003 2004 2005 2006 2007 Value of Construction Imports CI $7,900,000 CI $27,160,000 CI $66,500,000 CI $160,500,000 CI $91,100,000 CI $98,500,000 % Change N/A 244% 145% 141% -43% 8% 10 11

¶ [341] Mr. Bullmore’s construction material import statistics for 2008 are 12 an estimate; he postulated a 10% increase over 2007. For 2009, 13 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 189 of 226 Mr. Bullmore predicted that the figure would be 50% of his 2008 1 estimate. 2 3

¶ [342] Mr. Bullmore objects to Mr. Sybersma’s exclusion of the financial 4 performance of HL for the year ended June 30, 2003 from his 5 analysis. After certain accounting adjustments, the company lost 6 CI $2,170,664 in that fiscal period. This loss was sufficiently large 7 that on average over 2003 and 2004 HL was not profitable at all. In 8 Mr. Bullmore’s opinion, HL was insolvent as at June 30, 2004. 9 10

¶ [343] Mr. Bullmore estimates that 70% of the construction work carried 11 out in the Cayman Islands in 2005 and 2006 was hurricane 12 reconstruction work. Of that figure, he estimates that about CI 13 $1,000,000,000 worth of work was carried out by construction 14 companies. HL’s share of this reconstruction work was to the value 15 of CI $17,100,000 representing less than 2% of all the work carried 16 out. An important factor in his estimate is that no building permits 17 were required for repairs for private housing. The total damage to 18 housing has been estimated at CI $1,445,000 or 64% of the total 19 damage to buildings. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 190 of 226 1

¶ [344] In Mr. Bullmore’s opinion, the fiscal periods ending in June 2005 2 and June 2006 were abnormal because of the high demand for 3 construction work. He considered it necessary to assess the 4 normalized net profit by removing the impact of Hurricane Ivan 5 from HL’s operating result for these two periods. He used these 6 normalized revenue figures to determine HL’s market share. He 7 also excluded the years 2005 and 2006 from his analysis as he 8 considered them aberrations. 9 10

¶ [345] In the result, Mr. Bullmore determined that the normalized revenue 11 of HL in 2004 represented 6.2% of construction material imports 12 that year. The same percentage of construction material imports in 13 2007 would have given HL normalized revenue of CI $6,093,198. 14 For 2008, the figure would be CI $6,702,518. In fact, HL earned 15 considerably more than their estimated share in 2007 and just CI 16 $89,412 less than their calculated share for 2008. In 2009, HL 17 earned CI $501,259 less than its predicted market share. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 191 of 226

¶ [346] Overall, Mr. Bullmore says that HL made a normalized net profit 1 during the analyzed years of 7.30% and, as a consequence, it is his 2 opinion that the Mareva injunction had no effect on its ability to 3 earn income. 4 5

¶ [347] In his second report, Mr. Bullmore provided new calculations made 6 necessary by his agreement with Mr. Sybersma that it is reasonable 7 to assume a net profit margin prior to the Mareva injunction for HL 8 of 15%. He also considered the dilution of market share which 9 would have occurred because of the new entrants setting up 10 business in the Cayman Islands after the hurricane. He estimated 11 that HL would lose 20% of its market share for that reason. He 12 corrected a previous error and estimated that HL’s revenues for the 13 year ended June 30, 2004 represent 10.31% of the estimated 14 construction imports for that period. On this analysis, the results 15 were as follows: 16 17 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 192 of 226 Period July 1, 2006 to Dec. 31, 2006 January 31, 2007 to Dec. 31, 2007 January 1, 2008 to Dec. 31, 2008 Jan. 31, 2009 to Dec. 31, 2009 Estimated Revenue Share CI $3,756,964 CI $8,124,280 CI $8,936,708 CI $4,468,354 Reported Revenue CI $2,337,824 CI $8,268,788 CI $6,613,106 CI $2,850,000 1 2

¶ [348] The result is that a total of CI $5,216,588 in revenue was lost 3 because of the effects of the injunction and, at the agreed 4 normalized net profit margin of 15%, the estimated lost profit is CI 5 $782,488. 6 7

¶ [349] Further, Mr. Bullmore does not agree on how the NPM should be 8 applied. He says the primary factor was the failure of HL to reduce 9 its selling, general and administrative expenses in response to its 10 decreased revenue in the post hurricane boom years. He does 11 accept that the injunction would have had some effect and concedes 12 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 193 of 226 that it may have reduced the net profit margin by 5% for the period 1 December 31, 2008. He therefore adds 5% of the gross revenues 2 earned in this period to his damage calculation, in the amount of CI 3 $860,986. Ultimately, Mr. Bullmore supports an award of damages 4 in the amount of CI $1,643,474. 5 6

¶ [350] With respect to Robert Hurlstone, Mr. Bullmore accepts that his 7 total lost salary during the period of the injunction would have 8 amounted to CI $576,922.50. However, he says that Mr. Hurlstone 9 had potential weekly income from renting out his equipment of CI 10 $8,475 which, in the result, would have mitigated entirely his loss 11 of income. 12 13 Award to HL 14 15

¶ [351] The evidence establishes to my satisfaction that the Mareva 16 injunction was not only a significant contributing cause but the 17 predominant cause of the loss of market share suffered by HL after 18 its issuance. It restricted HL’s right to spend more than $5000 19 without Q&H’s approval. It created delay, which caused concern 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 194 of 226 among subcontractors and suppliers. ScotiaBank refused on one 1 occasion to honour HL’s cheques because of the injunction. In this 2 small community, the difficulty caused by the injunction became 3 common knowledge rapidly. I am satisfied that HL’s bankers were 4 unwilling to make advances to it which, before the injunction, they 5 likely would have made. 6 7

¶ [352] Both experts have had to rely (unavoidably) upon a number of 8 assumptions which may be questioned. The use of building permit 9 values as an indicator fails to account for permits purchased but not 10 used and projects for which no permit was necessary or simply not 11 obtained. Moreover, a permit is issued in a given year but many 12 projects take two or three years to complete. The adoption of 13 construction material imports fails to account for “labour only” 14 projects and represents only a portion of the entire value of the 15 market. The stockpiling of construction materials during the period 16 of time when the import duty waiver was in effect will have skewed 17 the figures. Mr. Bullmore’s import figures for 2008 and 2009 are 18 merely estimates. Mr. Sybersma was compelled to average HL’s 19 estimated market share for the periods ending in June, 2004, 2005 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 195 of 226 and 2006 to make sense of an anomalous market share figure 1 (8.70%) in his estimate for the 2005 period. Mr. Bullmore has 2 omitted HL’s actual performance in 2005 and 2006 entirely on the 3 ground that these results were skewed by the post-hurricane boom 4 in construction. Mr. Sybersma assumes that the net profit margin 5 during the loss period was adversely affected by the injunction to 6 the same degree as revenue. Mr. Bullmore accepts there was some 7 impact but also assumes a failure to mitigate during the loss period 8 by failing to reduce the SG&A expenses in line with the company’s 9 decreased activity. 10 11

¶ [353] I am satisfied that the value of building permits issued, while 12 imperfect, is a better indicator than the value of construction 13 material imports. The Economic & Statistics Office has always 14 used building permits as their own measure of construction activity. 15 I find that persuasive. I am also satisfied that the base period data 16 should be taken from three years of activity rather than one, 17 notwithstanding the distorting effect of the hurricane. As a result, I 18 take Mr. Sybersma’s estimate of lost profit - CI $11,563,440 – as 19 my starting point. However, the collective impact of the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 196 of 226 uncertainties mentioned above makes it reasonable for me to reduce 1 his final estimate of lost profit with a view to adopting a figure 2 closer to the estimate of Mr. Bullmore. 3 4

¶ [354] I accept that there has been a dilution of the market commencing 5 after the hurricane and increasing in the loss period. Not all of the 6 reduction in market share would have been preserved “but for” the 7 injunction; some would have been lost to increased competition. 8 Mr. Bullmore’s allowance for dilution of 20% was a generalized 9 estimate; there is no evidence which permits anything more precise. 10 I accept also that some reduction in the SG&A expenses to reflect 11 reduced activity would have been a reasonable step to take in 12 mitigation; the evidence does not permit any more specific 13 conclusion. During the loss period, permits were issued for a 14 number of larger projects, some of which were beyond the reach of 15 HL. That also should be taken into account. The report on the 16 Royal Watler tendering process likely had some effect on HL’s 17 ability to bid successfully. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 197 of 226

¶ [355] Mr. Sybersma’s conclusion is that HL would have earned revenue 1 as follows during the loss period: 2 6 months to Dec. 2006 $10,844,876 12 months to Dec. 2007 $20,522,054 12 months to Dec. 2008 $23,093,832 12 months to Dec. 2009 $17,320,374 3 These figures are well in excess of what HL earned during the 3 4 years preceding the effect of the injunction, which was: 5 6 12 months to June 2004 $4,829,740 12 months to June 2005 $15,041,595 12 months to June 2006 $15,627,328 7 The evidence does not satisfy me that the company would have 8 exceeded its past performance but for the issuance of the 9 injunction. To reflect that conclusion and the uncertainties referred 10 to above, I would reduce Mr. Sybersma’s final figure by 40%. I 11 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 198 of 226 find that HL suffered a loss of profit because of the injunction of 1 CI $6,938,064. 2 3 Damages for Loss of Opportunity 4 5

¶ [356] John Hurlstone gave evidence of four projects which he 6 characterized as opportunities which were lost to him personally 7 because of the Mareva injunction. HL was to act as contractor and 8 Mr. Hurlstone expected to be a major investor. All four were to be 9 larger projects than HL had ever undertaken in the past. Mr. 10 Hurlstone would have had to obtain financing in amounts 11 exceeding what lenders were prepared to provide to him in the past. 12 His evidence on all 4 projects was brief and conclusory. None of 13 these projects proceeded past the initial planning stage. In my 14 award of damages to HL for loss of profit and market share I have 15 assumed that it would have been working at full capacity during the 16 loss period, and so would have no real ability to undertake an 17 additional very large project. I find that Mr. Hurlstone has not 18 established any realistic possibility that any of these four projects 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 199 of 226 would have come to fruition, and award no damages under this 1 head. 2 3 Failure to Mitigate by Applying for Discharge 4 5

¶ [357] The Hurlstone parties sought and obtained some relatively minor 6 variations of the injunction in their favour. They did not at any 7 time seek to have the injunction reviewed by the Court and 8 discharged. Sagicor characterizes this omission as a failure to 9 mitigate damages. 10 11

¶ [358] The case for the applicants on the ex parte application was a simple 12 one on its face. The evidence showed that, in Mr. Purbrick’s 13 opinion, the work done on the reinstatement had a value less than 14 one-third the amount paid to the Hurlstones upon the 15 recommendation of Mr. Paterson. The apparent disparity was so 16 large as to invite an inference that the insurer had been defrauded. 17 Essentially, a good arguable case was established on Mr. Purbrick’s 18 opinion alone. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 200 of 226

¶ [359] To obtain a discharge of the injunction, the respondents would have 1 had to demonstrate on the balance of probabilities that Mr. 2 Purbrick’s opinion was, in substance, wrong. They consulted their 3 attorneys and were advised that expert evidence would be required 4 and that it was unlikely the Court could have come to a conclusion 5 about which expert opinion to prefer without observing the experts 6 under cross-examination. They were told that a hearing of that sort 7 was likely to be long and costly. This advice was given to the 8 Hurlstones by their attorneys shortly after the injunction was 9 obtained. It seems unduly pessimistic. The Hurlstones must have 10 known from an early stage that the cleanup cost had been excluded 11 from Mr. Purbrick’s calculations and that his labour rates were 12 unreasonably low. Nevertheless, I consider that they have 13 discharged their mitigation burden by taking legal advice as they 14 did. Commencing an application to set aside the injunction which 15 appeared (to them, at the time) to be a lengthy and costly 16 undertaking was not a reasonable measure they were bound to 17 pursue. It is not unreasonable for the subject of an injunction to 18 refrain from what promises to be a drawn out and costly legal 19 process after having been so advised by an attorney. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 201 of 226 1 Aggravated Damages 2 3  The duty of an applicant for an ex parte order is to make full 4 disclosure of all material facts, particularly facts which would 5 reveal infirmities or deficiencies in its own case. The 6 Hurlstones say that a number of material pieces of information 7 known to the applicants at the time of the injunction application 8 were deliberately concealed from the Court. As a result, they 9 say they are entitled to aggravated or exemplary damages. I 10 will deal with most of their allegations briefly. 11 12  They say that the Court should not have been told that Mr. Scott 13 met John Hurlstone on June 18, 2005 and requested an 14 accounting. It is now clear that such a meeting did not take 15 place on that date. I do not consider that that would have been 16 material to the Chief Justice’s decision. 17 18  The Hurlstones say the Court should not have been told that 19 they “walked off the site rather than give an accounting”. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 202 of 226 Whether they walked off the site or were locked out was, at that 1 stage, a point of controversy. Ultimately, I found they had been 2 locked out. Sagicor cannot be criticized for characterizing this 3 event in the way they understood it at the time. 4 5  The Hurlstones say that the Court should have been told that 6 Mr. Delessio had been in Sagicor’s office for no more than one 7 day before he told Mr. Harrigan to write the letter revoking Mr. 8 Paterson’s authority. This would have led to an inference that 9 Mr. Delessio had not had time to form an opinion on the value 10 of the work. In light of the conclusion in the Purbrick reports, 11 the opinion of Mr. Delessio about value was of little importance 12 on the application. 13 14  It is said that the Chief Justice should have been told that there 15 had been no dispute about the total cost of the work prior to Mr. 16 Delessio’s arrival. I consider that to be of little importance 17 given that the case was based upon expert evidence. The 18 application had to stand or fall on the basis of the reports. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 203 of 226  A complaint is made that the Chief Justice was not told that 1 Mssrs. Scott and Hambly had agreed to the proposed settlement 2 by Mr. Paterson. I consider their agreement to the proposed 3 settlement (which was given in complete reliance upon Mr. 4 Paterson’s representations) to have little evidentiary 5 significance in the face of the Purbrick reports. 6 7  The Hurlstones complain that the Court should have been told 8 that the allegation of fraud had been made as long ago as July, 9 2005 to police and to the Monetary Authority. They say this 10 was “highly material” but do not explain why. I consider the 11 point immaterial. 12 13  An additional complaint is that the Court was told that 14 negotiations for a settlement had continued until the end of 15 August, 2005. The Hurlstones say these negotiations were not 16 “meaningful”. The distinction is unimportant. 17 18 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 204 of 226  The Hurlstones say that the Court should have been told that 1 there was “no site review” by Mr. Delessio which prompted his 2 letter of June 16th. In reality, the reason for his letter was not of 3 any importance on the application. 4 5  There is a complaint that the affidavit of Mr. Scott which was 6 used on the application makes no mention of Mr. Hambly 7 vetting the costs and payments. Mr. Hambly would have relied 8 upon Mr. Paterson, who was both the loss adjuster and the 9 project manager. There is no reliable evidence that Mr. Hambly 10 carried out his own independent assessment of the loss. 11 12  A similar criticism is that Mr. Scott failed to mention the 13 meeting of June 9, 2005. Again, I do not consider that a 14 material omission. 15 16  The Chief Justice was told that Mr. Purbrick had experience of 17 “projects” in the Cayman Islands. In reality, he had substantial 18 experience with respect to one project – Ocean Club – and 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 205 of 226 some very limited contact with others. His experience was of 1 course material to the weighing of his opinion. Use of the word 2 “projects” is an exaggeration but I do not think it can be 3 characterized as a deliberate misstatement. 4 5  Mr. Purbrick met Mr. Ulrich several times on the job site and 6 obtained rate information from him. It is alleged that the Chief 7 Justice should have been informed of that. However, Mr. 8 Ulrich was an employee of BPL, the project manager, for a 9 short period of time and could be expected to have some 10 knowledge of appropriate rates. The fact that Mr. Purbrick 11 obtained some information from Mr. Ulrich would not, in the 12 Chief Justice’s mind, have weakened the case for the 13 applicants. 14 15  The Hurlstones complain that the Chief Justice was not told that 16 Mr. Purbrick used a lower rate for concrete than the one given 17 to him by Mr. Ulrich. Mr. Purbrick was an independent expert 18 and, from the point of view of the Chief Justice, would be 19 entitled to use whatever rate he considered appropriate. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 206 of 226 1  A number of other points are made about Mr. Purbrick and his 2 two reports. Many of them are debating points which could 3 usefully be put in cross-examination but I do not accept that 4 they are subject to a compulsory disclosure obligation on an ex 5 parte application. The duty of the applicant is to disclose facts 6 which are material to the application, not to air every possible 7 argument which might be mounted against the validity of some 8 part of the expert’s opinion. 9 10  On the other hand, there are three facts of considerable 11 significance which were not revealed. 12 13  First, the Chief Justice was not told that Mr. Purbrick was told 14 by Mr. Delessio that the clean-up had been done by a different 15 contractor and therefore had excluded this cost. That fact, of 16 course, was highly material and would have weakened Mr. 17 Purbrick’s opinion had it been disclosed. As I have found 18 earlier, Sagicor and Mr. Delessio knew by February, 2006 that 19 the Hurlstones had carried out the cleanup at a cost of some 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 207 of 226 $640,000 but Mr. Purbrick had omitted it from his report. They 1 allowed the Chief Justice to be misled on this material point. 2 3  Second, counsel did not tell the Chief Justice that Mr. Purbrick 4 had failed to make any verifying enquiries at all of the 5 Hurlstones or Mr. Paterson and had failed to obtain structural 6 drawings and other documentation. That fact was known to 7 Mr. Delessio, and hence to Sagicor, at the time of the 8 application. Indeed, instructions to this effect were given by 9 Mr. Delessio. If the Chief Justice had appreciated the atypical 10 methodology used by Mr. Purbrick his reports would have 11 seemed less convincing. 12 13  Third, there is evidence that Mr. Delessio told Mr. Dickson that 14 he knew Mr. Purbrick’s labour rates were “low” although not 15 unreasonable. By February, 2006, Mr. Delessio would have 16 examined Mr. Purbrick’s rates and would also have acquired an 17 intimate familiarity with the rates used by contractors on Grand 18 Cayman after the hurricane. They were not using rates as low 19 as those adopted by Mr. Purbrick. To allow the Purbrick 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 208 of 226 opinion to stand alone and unqualified without any warning 1 about the “low” labour rates was an act of material non- 2 disclosure. 3 4  These three factors satisfy me that the injunction could have 5 been set aside at a review hearing. They also justify an award 6 of aggravated damages to compensate the Hurlstone parties for 7 the highhanded and oppressive manner in which this injunction 8 was obtained. I award the sum of $50,000 to each of the 9 Hurlstone parties as aggravated damages. 10 11  Finally, the Hurlstones say that they are entitled to aggravated 12 or exemplary damages because of a “failure to prosecute the 13 action expeditiously.” The Chief Justice ordered that a Scott 14 Schedule be prepared. The initial Schedule was served in 15 February, 2008 with further Schedules delivered in June, 2008. 16 None of the parties to the litigation did substantial work on the 17 case until September, 2008. As a result of the inactivity, 18 Sagicor and WV had to file a notice of intention to proceed 19 before applying for directions. This desultory pace was 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 209 of 226 acquiesced in by the Hurlstone and Crawford parties. The 1 crucial disclosure of invoices by the Hurlstones which 2 convinced Sagicor to abandon its case was made only shortly 3 before trial. It could have been made much earlier. Robert 4 Hurlstone says he gave the documents to his attorney within 5 four months of being served with the Writ. The case came to 6 trial two years and ten months after the Writ was filed. At the 7 time, the case appeared to involve a number of factual issues 8 concerning the cost of construction which were complex in 9 their points of detail. I am not persuaded that Sagicor and WV 10 proceeded in such a dilatory fashion as to attract a further award 11 of aggravated or exemplary damages. 12 13 Damages: HGCL & Robert Hurlstone 14 15

¶ [360] Robert Hurlstone is a fifty-four year old Caymanian citizen. He has 16 a long history of experience in the construction industry in the 17 Cayman Islands. In 1982 Robert Hurlstone went into business with 18 his brother, John. They formed a construction company known as 19 Hurlstone Construction Ltd.; the two brothers owned all of the 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 210 of 226 shares in equal portions. John Hurlstone devoted his time to the 1 administrative duties of running the business while Robert 2 Hurlstone was in charge of the actual construction activities. The 3 company worked on a considerable number of projects on Grand 4 Cayman and was the builder of the first phase of Windsor Village 5 during 1989 and 1990. In 1997 Hurlstone Construction Ltd. was 6 placed in provisional liquidation. Robert Hurlstone formed HGCL 7 in the following year. He owns all of the shares in that entity. 8 When he formed his new company, Robert Hurlstone decided that 9 he no longer wished to be involved with major construction 10 projects; he would now concentrate on small to mid-sized projects. 11 12

¶ [361] Since its incorporation, HGCL has worked on phase three of the 13 Sunrise Town Homes, a development consisting of twenty-eight 14 two, three and four bedroom “high end” apartments; on phases one 15 and two of the Windsor Lakes Development, which consisted of 16 seventy-eight one and two bedroom medium priced apartments; and 17 a church on Little Cayman. The company has also done work on 18 various private homes. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 211 of 226

¶ [362] In 2003 Robert Hurlstone suffered a heart attack. As a result, he 1 decided to limit his work to “smaller manageable” projects and to 2 do just one project at a time. 3 4

¶ [363] Robert Hurlstone was prevented by the Mareva injunction from 5 spending more than CI $1,000 per week for personal purposes. He 6 had to notify Q&H before spending any amount above CI $250. 7 These limits were raised slightly by agreement later on. 8 9

¶ [364] HGCL had to obtain approval for payments made by it. One 10 payment by it in the amount of $25,000 to Robert Hurlstone was 11 not granted approval. This caused him a difficulty in meeting his 12 everyday expenses. 13 14

¶ [365] Robert Hurlstone has in the past earned income from three sources: 15 his salary from HGCL, fees generated from the hiring out of 16 equipment owned by him, and profits from investment in 17 development projects. He agrees that 2006 to 2008 was a busy time 18 in the construction business. He obtained no new construction 19 contracts although he made a few attempts to find work. He spoke 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 212 of 226 to architects and asked them to send him bid material. He did some 1 consulting work for his brother. He did not approach any large 2 contractors for subcontracting work. He did rent out some of his 3 equipment. 4 5

¶ [366] Mr. Wilbur Thompson is a director of Thompson Shipping Ltd. He 6 purchased a piece of land in Little Cayman with Robert Hurlstone 7 and began to discuss the development of it in 2005. The plan was 8 to build forty-eight apartments at a total cost of US $10,080,000. 9 The project was expected to yield a net profit to each man of about 10 US $2,760,000. HGCL was to carry out the construction work. 11 12

¶ [367] Mr. Thompson and Robert Hurlstone had discussions with various 13 government officials, including members of the planning board. 14 Plans were drawn up for the project. The development was 15 expected to begin around the middle of 2006 and to be completed 16 around the middle of 2008. The two men planned to sell 17 apartments before the development had been completed. Mr. 18 Thompson says they received a lot of interest in the project from 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 213 of 226 potential purchasers and he was confident that the units could be 1 sold. 2 3

¶ [368] The two men were equal partners and each was expected to provide 4 some of the initial construction cost. Around March 2006 Robert 5 Hurlstone said he could not obtain financing for his portion of that 6 cost. 7 8

¶ [369] Mr. Thompson was also planning another project on Little Cayman 9 in association with Robert Hurlstone and Dr. David Wolfe. Plans 10 for this project were well advanced by March, 2006. Plans and 11 financial projections had been drawn up. Again, significant interest 12 had been received from potential purchasers. The total cost of the 13 project (which was to build six apartments) was to be US 14 $4,300,000. Each of the three partners expected to earn a net profit 15 of US $900,000. Dr. Wolfe said the net profit to each partner 16 would be about $738,000. As with the previously mentioned 17 project, the partners expected to begin work in mid 2006 and 18 complete the work after about two years. The intention, again, was 19 to sell units before the construction was completed. The same 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 214 of 226 problem arose with respect to the initial construction costs. Robert 1 Hurlstone was unable to make a commitment to provide his share 2 of the financing because of the Mareva injunction which prevented 3 the banks from lending money to him. 4 5

¶ [370] In late March, 2006 Mr. Hurlstone asked his relationship manager 6 at ScotiaBank for a loan for the financing. Mr. Scott said that 7 because of the Mareva injunction the Bank would not provide any 8 assistance. Mr. Hurlstone assumed from this response that he 9 would get a similar answer at any other lending institution. Since 10 Mr. Thompson was not willing to finance the entirety of either 11 project, neither one went ahead. 12 13

¶ [371] With respect to the six unit development, Mr. Hurlstone said they 14 would have needed purchase commitments from three purchasers 15 together with deposits of 10% of the sale price. Even if Mr. 16 Hurlstone were to give up the profit he would ordinarily make on 17 the construction, that would not be equivalent to the financing he 18 was supposed to provide. 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 215 of 226

¶ [372] Mr. Thompson thinks they could have sold three units on Little 1 Cayman leaving the other three in inventory. There was never an 2 agreement on how many purchasers would be needed under 3 contract before the contract would proceed. He thinks that number 4 would be four. It was intended that what the purchasers paid would 5 service a loan for the building costs. He expected they would have 6 to borrow the entire building cost. The plan was to sell four units at 7 a time. Real estate agents were saying the units would be easy to 8 sell. 9 10

¶ [373] Mr. Purdom has said that the square foot cost estimated for the two 11 developments on Little Cayman (CI $175 dollars per square foot 12 for the forty-eight unit development and CI $250 dollars per square 13 foot for the six unit development) are fair and reasonable. He 14 agrees that the construction industry was very buoyant in the years 15 from 2005 to 2008. 16 17

¶ [374] Scotiabank did lend to loan Robert Hurlstone CI $225,000 after the 18 injunction as he put up security for it. He opened a cigar store on 19 Grand Cayman with the funds. 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 216 of 226 1

¶ [375] In July, 2008 Mr. Hurlstone succeeded in obtaining a contract for 2 the development of the Carib Sands project. The contract was in 3 the amount of CI $2,400,000. From this point on, he makes no 4 claim for loss of profit caused by the Mareva injunction. 5 6

¶ [376] HGCL has kept no business records so Mr. Sybersma has not 7 presented the sort of loss of market share analysis presented on 8 behalf of HL. 9 10

¶ [377] Mr. Hurlstone and HGCL were largely inactive from July, 2005 11 until July, 2008. The first 8 months of that period preceded the 12 injunction. The following evidence of Mr. Hurlstone under cross- 13 examination describes this period of time: 14 15 Q. Fine. So after you left the site, put it neutrally, at 16 Windsor Village -- 17 A. Yes, sir. 18 Q. -- you didn't, between that period, between June of that 19 year, and March of the following year, you did no 20 work? 21 A. No, sir. 22 Q. Why not? 23 A. I think it was largely because of these, these 24 proceedings. And the events before the actual 25 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 217 of 226 proceedings. In other words, the lock-out at Windsor 1 Village and all of the negative publicity. That had a 2 lot to do with it. That was the reason why I was trying 3 to get the two projects in Little Cayman, to create 4 work. 5 … 6 Q. What attempts did you make to find work? 7 A. What attempts did I make to find work? 8 Q. Yes. 9 A. Well, sir, I made a few different attempts. Normally, 10 as I explained before, I don't solicit work. I get my 11 work through referrals, but in this instance, when I 12 found out that I wasn't getting any referrals, I was not 13 able to pursue my own projects because of the Mareva. 14 I spoke to some architects that I knew, and I asked 15 them to send me any bids for any tenders, for any work 16 that they might have. So I made every reasonable 17 effort that I could to obtain work. Unfortunately I 18 didn't obtain any until the 18th of July in 2008, so that 19 was a little more than three years. And I attribute that 20 solely to the Windsor Village project, starting from the 21 lock-out in 2005, followed on by the Mareva 22 injunction. People here did not want to do business 23 with people that are thrown off of jobsites and accused 24 of fraud, and accused of stealing people's money. 25 Before that, I did not have that reputation, sir. And I 26 had been working here since 1977. 27 28 … 29 30 Q. Are you saying that you were unable, before then, to 31 get any work? 32 A. I'm saying that after I was locked out of the Windsor 33 Village site, there was a lot of accusations being put 34 against me, and I think that is the main reason why I 35 did not get any more work after that. 36 Q. It's an interesting thing you say that, because when you 37 went offsite, okay, you say you were locked out. 38 A. Yes, sir, I was locked out. 39 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 218 of 226 Q. And was that public knowledge that you were locked 1 out? 2 A. Yes, sir. 3 4 … 5 6 It seems from what you said yesterday that you only 7 made inquiries of about two individuals or two parties 8 to get work after the Mareva; is that right? 9 A. Could you repeat that? 10 Q. You only sought work from, I think, two organizations, 11 or individuals after the Mareva? 12 A. You mean for me personally or equipment? 13 Q. Your company. 14 A. No, sir. I think I said three. 15 Q. That was the extent of it? 16 A. Yes, sir. 17 18 19

¶ [378] I am unable to find that the injunction was a substantial cause of 20 this period of inactivity. It is more probable that the circumstances 21 in which the WV project was terminated combined with Mr. 22 Hurlstone’s predisposition to reducing his commitment to 23 construction work deprived him of the motivation to find new 24 work. For that reason, I make no award of damages to HGCL or to 25 Robert Hurlstone for general loss of profit or salary. 26 27

¶ [379] Mr. Hurlstone also gave evidence of two specific projects in which 28 he was planning to participate as contractor on Little Cayman. 29 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 219 of 226 These opportunities are still available to him so any loss of 1 opportunity he has suffered would be measured by the cost to him 2 of being deprived of the resulting profit for the time during which 3 the projects are delayed. 4 5

¶ [380] To pursue the projects, Mr. Hurlstone would have had to borrow 6 sums substantially in excess of any of his previous borrowings. 7 There is no reliable evidence from which I can infer that, but for the 8 Mareva injunction, these sums would have been advanced. He was 9 refused a loan at ScotiaBank in 2006; the reason given, according 10 to Mr. Hurlstone’s evidence, was the injunction. However, when 11 he sought to borrow a more modest sum ($225,000) to open a cigar 12 store the same Bank provided the funding. 13 14

¶ [381] There were indications in the evidence that the planning for the 15 projects was not far advanced. Dr. Wolfe seemed unclear on an 16 important aspect of the plan. He contradicted the evidence of Mr. 17 Hurlstone by saying that he did not expect HGCL to make a profit 18 on the construction: 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 220 of 226 Q. All right. But would the business have been profitable 1 business for Hurlstone General Contractors? 2 A. I'm confident it would have been profitable for both me 3 and Hurlstone General Contractors. 4 Q. What I'm trying to get at is the fact that, would Robert 5 Hurlstone, then, have made a profit not only from the 6 sales of the, of the buildings, but also from monies earned 7 by his company; is that right? 8 A. The profit along the way would have been marginal at 9 best. He would be paying, most of the money received 10 would have been paid to subcontractors, or supplies and 11 equipment that were necessary to complete the project. 12 We would anticipate the profit to be at the end when these 13 units were sold, and we would divide that profit. 14 15 … 16 17 Q. Would it have been a surprise to you to have learned that 18 Robert Hurlstone had been given a wage for the work, the 19 construction work that he did for Hurlstone General 20 Contractors if he carried out this project? Would it have 21 surprised you? 22 A. If he had been given money to -- 23 Q. Yes. 24 A. -- to construct this project? 25 Q. Yes. If he, himself, had worked on the project -- 26 A. Yes. 27 Q. -- and of course there would have been subcontractors. 28 Would you have been surprised if he had given himself a 29 wage for doing the work he was himself doing? 30 A. Absolutely, yes. 31 Q. You would have been surprised? 32 A. Yes, I would have been surprised. 33 (Evidence of Dr. Wolfe) 34 35 36 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 221 of 226

¶ [382] Overall, I am not satisfied that Robert Hurlstone has proved an 1 entitlement to damages for loss of the two opportunities to build 2 projects on Little Cayman. 3 4 Equipment Rental 5 6

¶ [383] Mr. Hurlstone did not advertise the availability of his equipment 7 during the period of the injunction and made only a minimal effort 8 to interest prospective renters. The evidence contains no 9 convincing explanation for the reason a customer who was minded 10 to rent a piece of equipment from Mr. Hurlstone or one of his 11 companies would be discouraged from doing so because of the 12 Mareva injunction. It did not prohibit transactions in the ordinary 13 course of business. I award no damages under this head. 14 15

¶ [384] There is one possible exception. Robert Hurlstone is claiming a 16 total rental for the containers provided to WV from 2nd December, 17 2005 to 1st December, 2008 in the amount of CI $128,250. He also 18 asks for interest on that amount. I see no mention of this claim in 19 the closing arguments so it may have become the subject of an 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 222 of 226 agreement. However, if it has not been paid I would award that 1 amount plus interest on it at the Court Rates. 2 3 General Damages: John & Robert Hurlstone and HGCL 4 5

¶ [385] General damages have been awarded in England pursuant to an 6 undertaking: Al-Rawas v. Pegasus Energy Ltd. and others [2009] 1 7 All ER 346 (QB). Since the injunction was obtained against John 8 and Robert Hurlstone personally, they are entitled to be 9 compensated in damages for all loss suffered by them in their 10 personal capacities. I am satisfied that the injunction caused 11 damage to each of their personal reputations which was more than 12 trivial and should be recognized. The lack of any apology to them 13 from Sagicor should be taken into account. I award to each of John 14 and Robert Hurlstone the additional sum of $35,000 by way of 15 general damages. I do not award any additional amount for 16 distress, hurt and humiliation as any such damage was no more than 17 trivial. 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 223 of 226

¶ [386] While I have found that HGCL has not proved an entitlement to 1 damages for loss of and profit or loss of opportunity, it is still 2 entitled to compensation by a general damages award for damage to 3 its business reputation. The evidence demonstrates that knowledge 4 of the injunction and the reason for its issuance was widespread 5 within the construction industry in the Cayman Islands. I award to 6 it the sum of $70,000 under this head. 7 8 Interest 9 10

¶ [387] HL is entitled to interest at the Court Rates on my award to it. If 11 there is disagreement over how the interest should be calculated the 12 parties are at liberty to apply. 13 14 Costs 15 16

¶ [388] The parties are at liberty to apply on the question of costs. 17 18 19 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 224 of 226 Draft & Final Versions of This Judgment 1 2

¶ [389] This judgment was prepared in draft and delivered to the parties 3 initially in that form. As a result of their comments, substantial 4 changes were incorporated into this final judgment. The result has 5 not changed. In making my changes, I have been guided by the 6 comments of the Court of Appeal in Robinson v. Fernsby & Scott- 7 Kilvert [2003] EWCA Civ. 1820. 8 9

¶ [390] There were two changes of major importance. First, the section on 10 the legal elements of abuse of process and malicious prosecution 11 has been expanded to address more fully the arguments of the 12 Crawford parties and their requested findings of fact. Second, the 13 witness statements of several prospective witnesses were presented 14 in evidence but the witnesses were never produced for cross- 15 examination. I understood initially that a certain order at a case 16 management conference meant that the statements would stand as 17 evidence in the trial. The parties did not have the same 18 understanding. I am now persuaded that my initial impression may 19 have been incorrect and that, in any event, it would be unfair to take 20 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 225 of 226 the evidence into consideration. All reference to it has been 1 omitted. 2 3 Summary 4 5

¶ [391] In summary, I award the following in damages: 6 1) to HL, the sum of CI $6,938,064 plus interest for loss of 7 profit and loss of market share; 8 2) to HGCL, the sum of CI $70,000 in general damages for 9 loss of business reputation; 10 3) to John Hurlstone, the sum of CI $35,000 in general 11 damages for loss of personal reputation and the sum of CI 12 $50,000 as aggravated damages; 13 4) to Robert Hurlstone, the sum of CI $35,000 in general 14 damages for loss of personal reputation and the sum of CI 15 $50,000 as aggravated damages. 16 17 18 19 Judgment – Sagicor General Insurance (Cayman) Limited et al v. Crawford Adjusters (Cayman) Limited and Hurlstone Limited et al v. Sagicor General Insurance (Cayman ) Limited et al Cause Nos. 78 of 2006 and 573 of 2008 14.02.11 Page 226 of 226

¶ [392] The liability is Sagicor’s alone as WV was not a party to the 1 Mareva injunction application. 2 3 Dated this 14th day of February, 2011 4 5 6 7 Henderson, J. 8 Judge of the Grand Court 9