Court of Appeal finds underwriter suffering from Alzheimer’s disease liable for conspiracy to defraud insurers - Markel International Insurance Company Ltd v Higgins; QBE Insurance (Europe) Ltd & Amalfi Underwriting Ltd v Higgins [23.7.09]

Mr Higgins was, from 2004, a director of a company called Surety Guarantee Consultants Ltd (SGC), which he had formed with colleagues. SGC issued surety bonds and entered into binders with Markel and QBE Insurance (Europe) Ltd (QBE) in respect of the issue of such bonds. SGC produced regular bordereaux, which were intended to inform insurers of the bonds written and the premium accounted for in relation to each bond.

Some time later, it came to light that SGC had been issuing bonds which exceeded the limits authorised under the binders. The additional premiums relating to those exceeded limits were not included on the bordereaux, and some of the profits deriving from the excess premiums were transferred into the account of a separate company incorporated in the British Virgin Islands and registered in Jersey, in which Mr Higgins and his colleagues held interests. In addition, a colleague of Mr Higgins was found to have amended and replaced bond documents in SGC’s files before audits took place by both Markel and QBE. Markel and QBE brought proceedings against Mr Higgins, and his colleagues, for conspiracy to defraud and other related claims. At trial, it was revealed that Mr Higgins was suffering from either mild or moderate Alzheimer’s disease, and was likely to have been suffering at least the early stages of the disease at the time of the alleged fraudulent events.

First instance

At first instance, the court found that the changing of the bond documents had been done to hide the fact that secret profits were being obtained by issuing bonds that exceeded the binder limits. Although the court found that Mr Higgins was not personally implicated in these “bogus” bonds, after reviewing the facts and evidence presented (including medical evidence), it found that he was, nonetheless, dishonest and conspired with others to defraud the insurance companies. This decision was made notwithstanding the fact that the court expected the evidence presented by insurers to be all the stronger in a case where fraud was alleged, albeit that the burden of proof was still the civil burden, whereby a case had to be proven on the “balance of probabilities”.

Mr Higgins appealed against the findings; on the basis of fact, not law. The main question to be decided on appeal was whether the Judge at first instance had erred in his assessment of Mr Higgins’ honesty and if he had done so because he had failed to take proper account of his disability, both at the time of the events alleged and at trial.


The Court of Appeal held that the trial Judge had properly addressed his mind to the burden of proof and evaluated the evidence accordingly. The medical experts at trial had effectively said it was for the Judge to decide whether Mr Higgins had known what he had been doing and that the Judge could do so by testing the consistency of the evidence and taking into account Mr Higgins’ evidence, and that of others about him.

The Court of Appeal found that the evidence against Mr Higgins was “overwhelming”, and that although the Alzheimer’s disease may have given a legitimate defence of forgetfulness, it was impossible to say the Judge was wrong to find against him and decide that he was part of a conspiracy to defraud or dishonestly assisted in breach of fiduciary duty. Accordingly, the appeal was dismissed.


In this case, the Court of Appeal has re-stated the legal position as regards the burden of proof in cases involving allegations of fraud. The evidence required in such cases must be commensurate with the gravity of the allegations, albeit that the burden remains that the case has to be proven on the balance of probabilities.

This case, of course, turned very much on its own facts, as will all cases involving allegations of dishonesty.