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MRM ‘vindicated’ as Court of Appeal ruling overturned

The Privy Council has overturned the Bermuda Court of Appeal in a fraud case involving the MRM Group and self-made American building supplies billionaire Diane Hendricks.

The Bermuda Appeal Court had sided with Mrs Hendricks, her late husband Kenneth and their company American Patriot Insurance Agency, and overturned a judgment by Puisne Judge Geoffrey Bell, finding the appellants were victims of a huge commercial fraud.

But this week the Privy Council, in a strongly worded ruling, overturned the Bermuda Appeal Court and reinstated the original judgment of the trial judge, Mr Justice Bell.

Mrs Hendricks, worth $3.8 billion according to Forbes, is cofounder and chairman of ABC Supply.

President of MRM Group, David Ezekiel, commented: “I am delighted that sense has prevailed and the Court of Appeal’s ruling was overturned. I am particularly delighted that my colleagues, whose careers and reputations were so unfairly tarnished by the Bermuda Court of Appeal, have been entirely vindicated by the Privy Council. I am also pleased that the other stakeholders in the MRM Group will not be adversely impacted by the clearly unsupportable action brought against the company.”

The original court award, now reinstated by the Privy Council, allows MRM to recover the balances due to it under the reinsurance programme including legal costs and interest.

In a statement, MRM, which is in run-off, told

The Royal Gazette yesterday: “As reported earlier in 2011, whilst the trial judge had dismissed the claims of fraud brought by the Plaintiff Diana Hendricks against the MRM Group, the Bermuda Court of Appeal had overturned the findings of innocence and concluded that there had been a commercial fraud by the MRM Group and two of its officers during the renewal of a rent a captive reinsurance programme in 2000. Millions of dollars under the reinsurance contracts were at stake.

“The MRM Group appealed to the Privy Council (the Board), arguing that the Court of Appeal, who never saw or heard the actual witnesses, was wrong to have overturned the trial judge’s findings of innocence. The Privy Council yesterday allowed that appeal, reinstating the original findings of the trial judge.

“Lord Sumption, speaking on behalf of the Board, was highly critical of the Bermuda Court of Appeal’s reasoning and approach: “In the opinion of the Board, the material on which the Court of Appeal relied for their finding of fraud ... was wholly inadequate for that purpose, and their reasoning came nowhere near to justifying it.

“There are a number of other problems in Evans JA’s treatment of the evidence, but these points are more than enough to make the Court of Appeal’s finding of fraud untenable. It is regrettable that such a serious, indeed potentially career-destroying, finding should have been made ... on such an unsatisfactory basis.”

In addition to the issue of fraud, Mrs Hendricks had raised arguments contesting the contractual structure of the rent-a-captive programme itself. All those points were, however, abandoned by Mrs Hendricks shortly before the hearing before the Board, MRM noted.

The MRM Group was represented by QC Mark Howard and Paul Smith and Ben Adamson of Conyers Dill & Pearman. Mrs Hendricks was represented by QC Michael Todd and Andrew Martin of MJM Ltd.

In his ruling, Mr Bell had awarded MRM $3.4 million on its claim against Hendricks/AMPAT regarding the enforcement of a shareholder agreement that formed part of its programme aimed at insuring roofers and workers in the construction industry.

AMPAT had been a client in a rent-a-captive with the Mutual group.

Hendricks/AMPAT had accused MRM of mismanaging its programme by failing to cap AMPAT’s liability, as allegedly agreed.

The appellants had also accused Mutual of falsely inducing AMPAT to pay a $1 million premium for reinsurance coverage that was never subsequently ever purchased, something that AMPAT described as “bogus reinsurance”.

MRM, on the other hand, had claimed that AMPAT owed $3.4 million to cover losses suffered by the programme.

A full transcript of the judgment can be found at http://www.jcpc.gov.uk/news/latest-judgments.html

Court case overturned: Mrs Hendricks, worth $3.8 billion according to Forbes, is cofounder and chairman of America's ABC Supply.

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Published May 09, 2013 at 9:00 am (Updated May 08, 2013 at 6:34 pm)

MRM ‘vindicated’ as Court of Appeal ruling overturned

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