Punitive Damages

I am personally familiar (but no longer involved) with an insurance claim where the policyholder was a pub owner who lived over the premises. One awful night, shortly after the owner retired to bed, it was burned to the ground. Luckily no-one was physically harmed.

The fire was caused by a cigarette butt which, still smouldering, came into contact with combustible refuse, which was not removed from the premises. (This happened before the "smoking ban").

Expert advice received says that the evidence is strongly suggestive of an accident. If the owner could be said to be responsible, it was more likely to have been through carelessness. As a means of deliberately starting a fire, the method was not one with great prospects of being successful.

Notwithstanding this, the insurance company not only refused to pay out for the loss, it accused the policyholder of deliberately starting the fire. There were other possible grounds for refusing to pay, and it was reasonable for the insurer to be suspicious, given that the pub business was not doing that well financially, but this was a very serious accusation with devastating consequences for a man already "on his knees".

I doubt if the accusation will be formally pleaded if the case is litigated, as the lawyers could face disciplinary action for putting their names to it in the absence of evidence, but the main damage is already done, and I hope that the insurers will be held to account for it.

The above thoughts were prompted by reading of a case with a similar set of circumstances in my native Ontario .(Hat-tip once again to Michael Thomas of Harper Grey, Vancouver).In that case, the insurer's unsupported accusation resulted in an award of additional punitive damages to the policyholder.

Unlike many Canadian and U.S. jurisdictions, awards of punitive damages are quite rare in Ireland, but may be given a boost by the Supreme Court's dicta in Frank Shortt's case. The court (per Murray C.J. and Hardiman J.) in the course of their judgments explaining a dramatic increase of the award of damages to Mr Shortt, surveyed the jurisdiction to award such damages in Ireland.

I recommend that you read the judgments in the Shortt case: you will benefit doubly if you are one of those deluded people who wants to give more and more power to the State in general and to the police in particular.