Kerry Underwood

EXEMPLARY DAMAGES: COURT OF APPEAL GUIDANCE

with 2 comments


In AXA Insurance UK plc v Financial Claims Solutions Ltd and others [2018] EWCA Civ 1330 (15 June 2018)

the Court of Appeal awarded exemplary damages of £20,000 each against the three defendants, who had faked road traffic accidents, created false documentation, and, in relation to the first defendant, conducted proceedings on the basis that it was a firm of solicitors, which it was not.

The defendants dishonestly manipulated the court process, including falsely stating that court documents had been served.

The defendants chose not to provide evidence as to their means and so it was appropriate to make a punitive award without reference to their ability to pay.

The Court of Appeal stressed that exemplary damages remained the exception to the rule, and said it was not appropriate to extend the scope of such awards beyond the three types of case recognised in

Rookes v Barnard [1964] AC 1129.

One of the categories identified in that case was where the defendant’s conduct was calculated to make a profit for the defendant which may exceed the compensation payable to the claimant, and that criterion was satisfied here.

The Court of Appeal gave guidance on the approach to be adopted in relation to this category.

The court should analyse the position from the point of view of when the tort was committed, when the wrongdoer did not know whether or not it would achieve the profit that it was seeking.

The court should not decline to make an order for exemplary damages simply because the wrongdoer’s profit could be fully recovered through an award of compensatory damages.

Such a policy would be inconsistent with the decision in

 

Ramzan v Brookwide [2011] EWCA Civ 985.

 

Actual or possible criminal proceedings, or contempt of court proceedings should not affect or reduce an award of exemplary damages.

 

The Court of Appeal approved the analysis in

 

Borders (UK) Ltd v Commissioner of Police of Metropolis [2005] EWCA Civ 197

 

that exemplary damages can be awarded to punish and deter outrageous conduct by the defendant.

Here the action was in the torts of deceit and unlawful means conspiracy.

The Trial Judge awarded the claimant compensatory damages of £24,954.31, but dismissed the claim for exemplary damages.

The Court of Appeal allowed the insurance company’s appeal against that ruling.

Here the fraudulent defendants stood to make a profit of £85,000, whereas the compensatory damages were only around £25,000, and this was the point which brought the case within one the categories in Rookes v Barnard [1964] AC 1129.

 

 

 

 

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Written by kerryunderwood

July 6, 2018 at 1:06 pm

Posted in Uncategorized

2 Responses

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  1. Hi Kerry, another excellent result for the insurers, and hopefully an additional deterrent to bent claims. However, your link to the case takes the reader to the Practical Law website, which is, of course, behind a paywall.

    Pro Bono

    July 6, 2018 at 1:31 pm

  2. Hi

    Thanks for your comment and thanks for bringing this to my attention – now sorted and link to case working 🙂
    Kerry

    kerryunderwood

    July 6, 2018 at 2:04 pm


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