Counterclaimants win Windsor case

Justice Alexander Henderson awarded Hurlstone Ltd. $791,716 in damages plus interest relating to loss of profits relating to the repudiation of a contract to repair the Windsor Village condominiums after Hurricane Ivan.

Hurlstone won a counterclaim against Sagicor General Insurance (Cayman) Ltd. and the proprietors of the Windsor Village strata plan. Justice Henderson dismissed the original claim last week after attorneys for the plaintiff’s announced they would not proceed with the case.

In addition to the damage award, Justice Henderson also ordered interest be paid on the damages at the court rate from 1 January, 2006, the day the project was scheduled for completion and the profits that would have been earned. With interest, the damages came to a little more than $943,000.

He made an order for costs on an indemnity basis up until the commencement of the trial and ordinary costs thereafter. Those costs are expected to amount to several million dollars, according to one of the attorneys involved in the case.

Hurlstone Ltd. owner John Hurlstone expressed his pleasure with the trial’s result.

‘The judge found against the plaintiffs in a case where they alleged fraud and conspiracy against a local company that has built its reputation over years,’ he said. ‘The effect of this action was to call into question everything we have spent 25 years to build up.’

Mr. Hurlstone said the claim had caused ‘debilitating damage’ to both his business and that of Hurlstone General Contractors Ltd, which is owned by his brother Robert and was also a defendant of the original claim. Both of the Hurlstones were named personally as defendants.

Other defendants in the original claim included Alastair Paterson, Bould Paterson Ltd. and Crawford Adjusters (Cayman) Ltd. The case against all of those defendants was also dismissed last week and their application for the awarding of costs was still pending pleadings.

John Hurlstone said there was still a significant unanswered question surrounding the case, namely why a reputable insurer, backed at the time by Cayman National Corporation, would make allegations of fraud and conspiracy against the defendants, maintain that position for almost three years and then abandon it on the eve of trial.

‘They must have known before now it was not right,’ Mr. Hurlstone said, vowing not to stop until he found out why the claim was brought.

The claim was originally made in February 2006 by Cayman General Insurance and the Windsor Village strata plan.

The Windsor Village strata was involved in the proceedings because of an issue regarding the construction of a non-insured seawall, but dropped that claim long ago. However, Sagicor subrogated the strata’s rights in pursuing the claim concerning the restoration work.

When the Hurlstones were first engaged, Cayman General was wholly owned subsidiary of Cayman National Corporation. However, Sagicor purchased a 51 per cent share in the company through a Jamaican subsidiary from Cayman National Corporation in November 2005. The company changed its name to Sagicor General Insurance (Cayman) Ltd. in September 2006.

At the time the writ of claim was filed in February 2006, Cayman National Corporation still owned a 24 per cent share in the insurance company. The Cayman Islands Government owned – and still owns – a 24 per cent share in Sagicor General, which it received as part of the settlement for its Hurricane Ivan claim.

The Hurlstones and their companies were represented in the counterclaim trial by QC Tom Lowe, who was instructed by the law firm Myers and Alberga. Mr. Paterson and the other defendants were represented by QC Michael Todd, who was instructed by attorney Graham Hampson.

One of the key points in the trial swung on which party, if any, repudiated the contract.

Attorney Hector Robinson of Mourant, who, along with attorney Simon Dixon, represented Sagicor General and the subrogated rights of the proprietors of the Windsor Village strata plan, argued that the Hurlstone Ltd. repudiated the contract when Hurlstone General Contractors abandoned the work site around 24 June 2005.

However, evidence given in written statements and orally during the trial indicated that Hurlstone General Contractors had not abandoned the site, but had reduced its workers there to a skeletal crew of about five people.

The Hurlstones acknowledged in testimony that at the time they were concerned about several aspects of the project, including the slowness of payments coming from the insurance company and the lack of completed specifications for the work they were supposed to do. John Hurlstone also admitted he was concerned about the financial stability of Cayman General Insurance.

‘Rumours were rife about Cayman General Insurance’s solvency.’

Mr. Hurlstone said his concerns about Cayman General Insurance increased from early 2005. He testified he was told by a director of Cayman National Corporation in April or May that Cayman General ‘was in a serious financial problem… and in fact was insolvent… and that I should make every effort to get paid immediately.’

No written contract existed between Hurlstone Ltd. and the Windsor Village strata and instead there was a verbal agreement to complete the restoration. However, a formal contract was expected to be signed by all parties at some point.

Neither John nor Robert Hurlston denied that the numbers of workers on the job site was reduced significantly between 24 June and 30 June.

John Hurlstone was desirous of getting the formal contract, which would agree on a final price among other things, in place as soon as possible, which he thought would facilitate and ensure payment for works done.

Even though it was John Hurlstone’s company that entered into the agreement with the Windsor Village strata, it was Robert Hurlstone’s company Cayman General Contractors that was doing the work. Robert Hurlstone testified that he had to go to Miami for medical treatment during the period between 24 and 30 June, which was another reason only a skeletal crew was left on site.

Hurricane Dennis was also approaching the Cayman Islands toward the end of the month, disrupting work as well, Robert Hurlstone said.

On 1 July, the Hurlstones were locked out of the site on the instructions of Strata President Patrick Harrigan with the knowledge of Frank Delessio of Cayman General. When some of the Hurlstone workers were found on site that day, Mr. Delessio instructed Alastair Paterson to have the Hurlstones remove them from the site.

Although the Hurlstone attorneys expected Mr. Delessio and Sagicor General President Danny Scott – who held the same position at Cayman General and was also an owner at Windsor Village – to testify,

Mr. Robinson announced that he would not be calling any witnesses to defend the counterclaim.

Mr. Robinson argued instead that the Hurlstones should only be entitled for payment on the work they had completed – payment for which they had already received – and not on profits for other works because no formal written contract existed.

Justice Henderson rejected Mr. Robinson’s argument because in the original claim, the plaintiffs had pleaded that there was a contract in place for the Hurlstones to complete the restoration of Windsor Village at a reasonable price.

In his oral judgement, Justice Henderson said the presence of Hurlstone workers on the site on 1 July was inconsistent with notion that the site had been abandoned and that by locking the Hurlstones off the site, the Windsor Village strata had manifested clearly their intention to repudiate their agreement with the Hurlstone Ltd.

Justice Henderson found the strata proprietors liable for breach of contract and Sagicor General liable for inducing the breach. He therefore ruled that Hurlstone Ltd. was entitled to the profits it would have made on the project, including the profits it would have made on owner upgrades on things like flooring, countertops and cabinetry.

The damages were calculating by determining how much the contractor that ultimately finished the restoration work was paid and multiplying it by 20 per cent, which covered the profits and company overheads. Mr. Henderson said the percentage asked for was reasonable.