Staged Car Crashes, Defendant Ordered to pay £18,000 in Exemplary Damages

Damages in tort are to compensate the victim for injury and financial loss.  Essentially to put the claimant in the same financial position but for the event complained of. However what if the award of compensation does not properly compensation the claimant or indeed if the conduct was deliberate, outrageous and targeted.  Is there any other way to compensate the Claimant for this ‘egregious conduct.’

The courts do have power under punitive or exemplary damages. Unlike compensatory damages, which aim to reimburse the victim for their losses, exemplary damages have a punitive purpose.

Such award for punitive or exemplary damages are quite rare but in highly unusual situations where the defendant conduct is deliberate and outrageous punitive damages may be considered.  A recent case below has now been handed down providing an analysis of when such damages can be awarded.

Staged Car Crashes and Exemplary Damages

In a recent legal case, reported in the Lawgazette, Tesco delivery driver named Reyhan Safi has been ordered to pay his former employer, Tesco, a total of £18,000 in exemplary damages. Safi was found to have been involved in a series of fraudulent accidents over a three-month period. This case uncovered a network of connected repair shops and storage sites in west London.

Her Honour Judge Baucher, presiding over the case (Sayahi & Anor v Tesco Stores Ltd & Anor), highlighted the significance of this fraud, describing it as of an “unprecedented scale” due to the wholesale nature of the conspiracy involved. The case involved five weeks of continuous litigation, encompassing 31 related matters and 60,000 documents.

Two other drivers were also implicated in the judgment for their involvement in staged accidents resulting in insurance claims. One driver even admitted to orchestrating crashes in five separate cases.

The court initially heard that two individuals had filed claims against Tesco following a 2019 collision with Safi’s delivery van. Tesco paid out substantial sum in interim payments and also credit hire of £75,000. However, Tesco counterclaimed, alleging that Safi intentionally collided with the claimant’s vehicle.

Tesco identified an additional 12 cases linked to this action and 20 cases not yet subject to litigation.

Tesco sought £15,000 in exemplary damages, but the judge awarded £18,000, taking into account the extent of the egregious conduct and the scope of the conspiracy.

Principles of Exemplary Damages

Exemplary damages are an exception to normal tortious principles and there award in respect of the ‘distillation of the principles’ and the law in cases were reviewed in Sayahi & Anor v Tesco Stores Ltd & Anor where the court referred to an earlier decision of AXA Insurance UK Plc v Financial Claims Solutions Ltd & Others [2018]that confirmed the concept of exemplary damages.  Exemplary damages are seen as an exceptional and unusual type of compensation awarded in specific cases. The judge emphasises the need to limit the circumstances in which exemplary damages can be granted.

However the Court made it clear that an award for exemplary damages must involves situations where the defendant’s actions were aimed at making a profit that could far exceed the compensation owed to the claimant. In such cases, exemplary damages may be awarded to deter and penalise this kind of cynical and outrageous conduct.

Cynical and Outrageous Conduct by the Defendant

The judge argues that this criterion was met in this case, as the Defendants sought to extract substantial sums from insurers through fraudulent claims. If successful, these claims would have led to large profits, far exceeding any compensatory damages payable.

The judge cites previous cases and legal opinions to support the idea that exemplary damages should not be overly restricted. Exemplary damages serve the purpose of punishing and deterring outrageous conduct by a defendant. In this specific case, the fraud was sophisticated and persistent, involving deceit, fraudulent documents, and abuse of the court process.

The judge concludes that this case is a classic example where exemplary damages are warranted. The amount of these damages should be principled and proportionate, given the need to deter and penalise such behaviour. In this instance, the judge decides that the awarded £20,000 in exemplary damages.

Summary of Exemplary Damages

Exemplary damages are a special form of compensation reserved for cases where the defendant’s actions are calculated to make a significant profit that exceeds any compensatory damages, and such damages are awarded to deter and punish such conduct. In this case, the judge awards £20,000 in exemplary damages to each of the three respondents due to their involvement in a fraudulent “cash for crash” scheme and in the recent case a sum of £18,000 for exemplary damages.