Punitive and exemplary damages (may interest police services)

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Few, if any organisations, ever give real thought that one day they may face in a court of law the fact that they could have to fund an award of compensation. This not only deals with the injury to the claimant at hand, but also awards the ‘claimant’ damages over and above their injury compensation. That is to say the actions of the defendant have been so serious that they attract an award for ‘punitive and exemplary damages’.

If few organisations consider the possibility of being in line to make such a payment, even fewer think to ask would I be insured for the costs of such an award?

Punitive and exemplary damages can be awarded where a finding is made by the court that the conduct of the defendant is arbitrary, oppressive or unconstitutional. This means that any case which contains an allegation of excessive force or assault, or the fabrication of evidence, could give rise to an award of exemplary damages. In fact, over the last 20 years or so in virtually every case of wrongful arrest, malicious prosecution and/or assault, punitive damages are claimed as a matter of course whether appropriate or not.

The circumstances in which it was appropriate to make an award of exemplary damages was recently before the court of appeal in the case of Rowlands v Merseyside Police. Having determined that the judge in the original trial was wrong in a case of an arrest for a minor breach of the peace to say that it was not appropriate to award exemplary damages went on to say, ‘I think that it is desirable as a matter of policy that the courts should be able to make punitive awards against those who are vicariously liable for the conduct of their subordinates’.

Also key to draw out within this discussion is that certain organisations, such as police services, face a far higher likelihood of receiving a claim for punitive and exemplary damages than other may. However, that is not for one moment to dilute the impact this could have on a local authority (abuse type cases spring to mind). Routine claim settlements include an element of this head of claim, although it is not broken down being part of the global general damages settlement. Where a claim reaches court, the breakdown of an award between conventional damages and punitive damages is usually provided in the judgement. It is the claims that are settled through negotiation where the difficulty in splitting damages arise.

The exposure for police authorities to this element of damages is all the greater compared to other public sector organisations. For example, an award for a broken arm injury sustained following a highways trip would be considerably less than an award for the same injury but sustained during an assault by police. In a serious case a claimant will certainly include a claim under the heading of exemplary and punitive damages and a court would be likely to make an award under this heading.

The insurance position is complicated. Some insurers seek to exclude punitive damages from the policy indemnity (even though the policy may not specify this). The problem is that some policy wordings refer to providing  an indemnity against ‘damages paid as compensation’. Although punitive damages are not compensatory in nature, (intending rather to punish or fine the wrongdoer) they are nevertheless paid to the claimant and therefore are likely to be deemed as compensatory and falling within the wording.

Many uninformed commentators think that in the UK such findings had not been made previously – a view which might have been possibly drawn from simply looking at the settlement figures of cases which only report on totals and do not break down the award into the various constituent areas. For this information they would need to review the case itself in detail.

It is in fact the case that awards for punitive and exemplary damages are more common than we may think and in hoping to demonstrate this would make the following observations:

  • Initially can you please refer to the All England Law Report covering the case of Thompson v Commissioner of the Police of the Metropolis; HSU v Commissioner of the Police of the Metropolis. This is a Court of Appeal decision and considered to be the ‘leading case in this field’. In two separate cases the issue arose as to the directions a judge should include in his summing up to assist a jury as to the appropriate amount of damages recoverable by a claimant in an action against the police for unlawful conduct.
  • In the first case, T was lawfully arrested in connection with a drink and driving offence. The police, however, used considerable and unnecessary force to place her in a cell, but contended that force was only used after T had refused to be searched. T was subsequently charged with assaulting an officer in the execution of his duty and was acquitted seven months later. Thereafter she commenced proceedings against the commissioner, claiming damages for false imprisonment and malicious prosecution. At the trial, the jury rejected the officers’ contentions and awarded T damages of £51,500, comprising £1,500 compensatory damages and £50,000 exemplary damages.
  • In the second case, H was physically assaulted and racially abused when he refused to allow three police officers to enter his house. He was arrested and detained for about 75 minutes, during which time his house was entered and some of his property removed. As a result of the incident, H, who had a predisposition to depression, suffered post-traumatic stress disorder. He subsequently commenced proceedings against the commissioner, claiming damages for wrongful arrest, false imprisonment and assault. The jury awarded H damages of £220,000, comprising £20,000 compensatory damages (including aggravated damages) and £200,000 exemplary damages. The commissioner appealed against the award of damages in each case.

Held

  • When assessing damages awarded to members of the public for unlawful conduct against them by the police, juries should in future be given guidance by the judge as to the amount of damages regarded as appropriate in personal injury cases for particular injuries, and the figure which he considered it would be appropriate to award in the circumstances. The awards made by judges in personal injury cases were directly relevant, since actions against the police could contain a personal injury element, and where a claim was based on loss of liberty or the damaging effect of malicious prosecution, compensation was awarded for something akin to pain and suffering. In the instant cases, the directions to the jury were sufficient within the existing guidelines to give them the assistance they required. In T’s case, the award of £1,500 was not proportionate to the damage which she had suffered in view of the unlawful conduct following her initial arrest, which had continued for seven months, and the court would accordingly substitute a figure of £20,000. In H’s case, the court would not interfere with the award, since the consequences for him had been more serious than they would otherwise have been because of his underlying condition.
  • Where there was evidence to support a claim for exemplary damages, the jury should be told that it was possible, in exceptional cases, to award damages to punish the defendant where there had been conduct (including oppressive or arbitrary behaviour) by police officers which deserved exceptional remedy. Such damages were unlikely to be less than £5,000 and might be as much as £25,000, with an absolute maximum of £50,000 in cases where officers of at least the rank of superintendent had been directly involved in the misconduct. In T’s case, the court would have awarded a sum of £25,000 as exemplary damages, making a total award of £45,000; the commissioner’s appeal against the total award of £51,500 would however be dismissed, since the jury retained a margin of appreciation such that the court would not intervene unless the difference as to amount had been greater. In H’s case, although there was unprovoked violence involving a number of officers, the incident was over in a matter of hours and there was already an award of aggravated damages which had to be taken into account; the court would therefore reduce the total damages awarded from £220,000 to £35,000 and would accordingly allow the commissioner’s appeal.

In line with our commentary so far on this matter we would also point out that:

  • From our experience it is clear that many organisations wish to avoid any publicity surrounding an award of punitive and exemplary damages. One of the best known cases involved a leading criminal case (The Bridgewater three) which collapsed and then led to the defendants bringing a legal action solely for punitive and exemplary damages with the case being settled out of court to avoid the publicity and likely higher costs.
  • What the leading case demonstrated is that this is often pleaded as a ‘Head of Claim’ by claimants (as they have a desire to make an ‘example’ of the organisation they are suing) and is invariably negotiated as part of the overall settlement. In many cases the value of claim for exemplary damages has the potential to be higher than the claim of compensatory damages. This has an obvious knock on effect when considering how to adequately reserve cases.
  • As part of the research for this piece we have asked a leading legal practitioner who handles sensitive cases for the judiciary how they would you approach a matter whereby punitive and exemplary damages were excluded from the policy coverage. They indicated it would make the negotiation very difficult as in theory they would need to deal with this head of claim as a separate settlement, which is clearly impractical. In larger cases one may need legal advice just to determine how much of the claim was compensation and how much was punitive and exemplary damages. Clearly where such damages are not excluded from policy does not pose such an issue, hence defence teams can just negotiate the settlement of a claim without such concerns.
  • A review of our current claims bank confirms that some of our police clients have claims presently where punitive and exemplary damages are being sought, indeed by way of an example one involves a double murder case!

In summary, what we would suggest is that whilst we accept that in the vast majority of cases punitive and exemplary damages are not a great concern, there are those cases, invariably high profile, where the coverage is crucial and to not have the benefit of policy coverage is not only a real issue of exposure for all insured’s (especially police authorities) but also makes the practical handling of a claim problematic for all concerned.

Note

The public liability covers placed through RMP have no such exclusion relating to punitive and exemplary damages and would be covered by the policy if an award was made as part of a settlement.

Phillip Farrar


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