In Mutual Holdings (Bermuda) Ltd and others v Hendricks and others [2013] UKPC 13, the Privy Council determined that the Court of Appeal of Bermuda was unjustified in making a finding of fraud and overturning the decision of the trial judge.  


The respondents, Mr and Mrs Hendricks, owned and controlled an insurance broker, AMPAT, that established an insurance product called ‘Roofers’ Advantage’ which covered roofing contractors against workers’ compensation, automobile and general liability.  

Between 1997 and 2001, the Hendricks and AMPAT participated in a packaged ‘rent-a-captive’ scheme devised and managed by the MRM Group. The case at first instance concerned negotiations that took place in the year 2000 for the renewal of the programme for a fourth year. In 2002, two former employees of the MRM Group, Mr Bossard and Mr Agnew, approached the Hendricks and AMPAT and alleged that the fourth year renewal had been procured by fraud. Both former employees offered to give evidence in support of these allegations.  

In the court proceedings the allegations made by Mr and Mrs Hendricks and AMPAT were that the appellants had proposed (i) to induce the Hendricks to buy additional reinsurance, for which they would in due course be charged up to US$1 million, (ii) to renew the programme for a fourth year and (iii) to amend the programme documents so as to place on the Hendricks an obligation to meet all liability in excess of an ‘Aggregate Attachment Point’ up to the limits of the direct policies. These allegations were denied by MRM.  

The trial  

At trial, Mr Justice Bell reviewed the evidence and rejected the allegations of fraud against MRM. The main reason for this was that Bell J did not regard Mr Bossard and Mr Agnew as reliable witnesses and did not believe the critical parts of their evidence. Bell J also found that Mr Bossard’s offer to provide evidence was conditional on being paid a substantial sum.  

Court of Appeal of Bermuda  

The Court of Appeal of Bermuda overturned the judgment made by Bell J, holding that he should have accepted the evidence of Mr Bossard and Mr Agnew. The Court of Appeal concluded that Bell J’s findings about what happened at a crucial informal meeting were “incomplete” and went on to accept the evidence of Mr Bossard and Mr Agnew and to rule that a fraudulent conspiracy had taken place.  

The MRM Group appealed to the Privy Council.  

Privy Council  

The Privy Council set aside the order of the Court of Appeal and restored the judgment of the trial judge.  

Lord Sumption gave a judgment that was highly critical of the Court of Appeal’s approach. He held that the material upon which the Court of Appeal relied for its findings of fraud was “wholly inadequate for that purpose, and their reasoning came nowhere near to justifying it”. The Court of Appeal failed to address Bell J’s criticisms of the witnesses and provided insufficient reasons for accepting the evidence. The Privy Council agreed with Bell J’s considerations that the evidence of Mr Bossard and Mr Agnew should be treated with “great reserve”. Lord Sumption referred to an observation of Lord Hoffmann’s in Biogen Inc v Medeva Plc [1997] RPC 1, 45 that “the need for appellate caution in reversing the judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy”. He went on to state that an appellate court is “rarely justified in overturning a finding of fact by a trial judge which turns on the credibility of a witness”. This is especially the case where fraud is alleged to have taken place at an informal, undocumented meeting a number of years ago.


This case is a reminder that parties can only expect appellate courts to overturn findings of fact by the first instance judge in the rarest of circumstances. It also emphasises again the high burden of proof which courts will require in cases where fraud is alleged.