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Marcus Grant (instructed by Gemma Wilkinson of Keoghs LLP) appeared for Direct Line Insurance in a tort of deceit action against 29 Defendants, all of whom had intimated or facilitated claims arising from nine separate fictitious accidents in an attempt to defraud the insurer.
Each Defendant used one of the accident management companies linked to one or more of the addresses: 44-46 Victoria Road, EN4 9PF, 162B Ballards Lane, N2 8EN and 41 Leicester Road, EN5 5EW namely: (Accident Claims Experts, B&T Recovery Limited, Celebrity Car Hire, UK Crystal Car Hire). The 29th Defendant was a Director of Accident Claims Experts.
Direct Line paid out some damages to three of the Defendants which it reclaimed, it expended money investigating the claims and sought recovery by way of damages for its in-house overhead costs in doing so. It also claimed an award of exemplary damages to punish the Defendants and to act as a deterrent to other prospective fraudsters considering involving themselves in a crash for cash scam. The Court acceded to all three heads of claim.
The claim for exemplary damages was unusual because it is an exceptional order that is out of the norm in tort claims. The Court was satisfied that the tort of deceit was proven in each of the cases, that the facts satisfied the second limb of Lord Devlin’s threshold test for recovery of exemplary damages in Rookes v Barnard  AC 1129 (namely: ‘where the defendant’s conduct has been calculated to make a profit for himself’) and Lord Nicholl’s test in Kuddus v Chief Constable of Leicestershire  2 AC 122 (namely: ‘conduct which was an outrageous disregard to the Claimant’s rights’). The Court considered that an award of exemplary damages of £2,500 per Defendant (one Defendant participated in two of the fictitious accidents), equivalent to the sum that each might spend on a second hand car, was an appropriate level to create a deterrent. In addition to awarding the other heads of damages claimed, the Court also awarded the Claimant c. £82,000 of costs on an indemnity basis.
Direct Line v Akramzadeh & 29 Others. A copy of the Judgment will soon become available on Lawtel.