Business Law: Rob Adam on malicious prosecution in the civil courts

Rob Adam of Ashton KCJ

Rob Adam of Ashton KCJ - Credit: Archant

A decision of the Supreme Court has overturned a key principle of litigation in the civil courts that has existed since the last Elizabethan age.

There had been a long-established principle restricting action for malicious prosecution in civil proceedings to a narrow number of cases but this was overturned by the decision in the case of Crawford Adjusters v Sajicor General Insurance (Cayman) Limited.

The facts of the case related to works undertaken in Grand Cayman following a hurricane. An insurance company agreed to pay for repairs on a development site and these were overseen by a local surveyor. The insurance company then sent in a loss adjuster to review the costs of the work.

It transpired that there was a long history of animosity between the loss adjuster and the surveyor. The loss adjuster decided to use this opportunity to, quite literally, drive the local surveyor out of business.

He did so by alleging overcharging and fraud by the surveyor, and supported that accusation by concealing important information about the project.

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The insurer issued proceedings for the “fraud”, with ruinous consequences for the surveyor. However, the concealment by the loss adjuster was eventually revealed and the surveyor pursued the loss adjustor for the loss of his business.

The court was faced with a difficult decision. If it was to provide a remedy for the wronged surveyor, the claim for malicious prosecution had to succeed. The court decided to do just that, but in so doing, has the court opened the floodgates for claims for malicious prosecution? In order to succeed on a claim, a claimant will need to show that they have been subjected to proceedings where the allegations were baseless and made with malice.

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There are several examples where the principle may be applied, perhaps disciplinary cases pursued without merit to discredit the responding party. The principle might also be used by insurers when facing fraudulent claims, or possibly flowing out of libel actions or even boundary disputes.

There won’t necessarily be a vast numbers of claims for malicious prosecution but parties now have a big stick with which to hit back if forced to defend malicious actions.

: : Rob Adam is a partner and head of dispute resolution at Ashton KCJ.

This article is for general information purposes only and does not constitute legal or other professional advice. We would advise you to seek professional advice before acting on this information.

Ashton KCJ is authorised and regulated by the Solicitors Regulation Authority (Recognised Body number 45826).

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