Aggravated, Exemplary and Restitutionary ... - Law Commission

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abdominal region, cumulatively breaking P’s ribs. In case B, D1 kicks P in the same region, breaking P’s ribs, but D2 kicks P in the head, putting him into a coma. In case A, D1 and D2 are joint and several tortfeasors; in case B, they are not. No objection can surely be raised to two punitive awards being made and received in case B, but on the view expressed above, 746 objections will be raised to the plaintiff receiving two awards in case A. Yet the only factual distinction between cases A and B is an immaterial one as far as punishment (as opposed to compensation) is concerned: namely, that D1 and D2 have independently acted to cause the same (case A) or different damage (case B) to the plaintiff. In cases A and B alike, two very grave wrongdoers require punishment for the deliberate and outrageous disregard of the plaintiff’s rights which each has respectively shown. 1.200 The absence of any sound basis for the initial objection that several liability will leave a plaintiff with an unjustified windfall can be further appreciated if one compares the scenarios outlined above with a different situation, in which it will be uncontroversial that two awards should be made and received by the plaintiff: that is, where the independent acts of D1 and D2 occur a significant time apart from each other. (ii) The impact of our ‘last resort’ approach 1.201 The ‘last resort’ nature of the punitive award (whereby an award is permitted only where any other remedy or remedies which the judge is minded to award will be insufficient to punish and deter) means, in particular, that the size of a punitive award will vary as the size of the compensatory award varies. Thus, if the compensatory award is small, a higher punitive award may be necessary in order effectively to punish and deter. 1.202 The source of the complication here is that joint or joint and several liability must continue to operate in respect of the compensatory part of any award. As a result, the size of such award could fluctuate substantially, depending upon whether the defendant was able, or unable, to obtain contribution from the other wrongdoers. This poses a risk of over or under-punishment of defendants. The problem is that the court, in deciding whether to make an award, and if so, at what level, must inevitably make some assumption about the defendant’s chances of obtaining contribution. If the court makes an award on the basis of an erroneous assumption that the defendant will get contribution, then the defendant will be punished and deterred to a greater extent than the court thought to be both necessary and proportional to the outrageousness of his conduct. For having underestimated the ultimate size of the compensatory award, the court will have assessed the punitive award at too high a level. 1.203 However, we anticipate that, if there was any doubt about the matter, a court would assess a punitive award on the basis that the defendant will be liable for the whole of the compensatory award (that is, irrespective of the availability of contribution). Under-punishment and under-deterrence are less undesirable than leaving a defendant over-punished and over-deterred. The core principles of 746 See para 5.198 above. 156
‘moderation’ and of ‘proportionality’, which are each a vital part of the law’s protection of the rights of wrongdoers, require this. (iii) Exceptions to the general principle of several liability to punitive damages: vicarious liability and partnerships 1.204 We consider that two exceptions are required to the principle that liability to punitive damages should be ‘several’, rather than joint or joint and several. The first is the doctrine of vicarious liability. The second is the liability of partners for wrongs of their co-partners. We therefore recommend that: (35) recommendation (34) (‘several liability’, rather than joint or joint and several liability shall apply to punitive damages) is without prejudice to: (a) our recommendation that vicarious liability to pay punitive damages should be retained; (Draft Bill, clause 8(2)(a)) (b) the liability of a partner for the wrongs of his co-partner. (Draft Bill, clause 8(2)(b)) We explain the exception for vicarious liability below, 747 but it is convenient at this point to explain the exception for the liability of partners for co-partners. 1.205 Partners are jointly and severally liable to any persons who are not themselves partners for the wrongs committed by any partner acting in the ordinary course of the business of the ‘firm’ or with the authority of his co-partners. 748 That liability is expressed to include a liability for “penalties” imposed as a result of the wrongful conduct. 749 Prima facie section 10 of the Partnership Act 1890 also makes partners jointly and severally liable to pay punitive damages in respect of the wrong of a copartner. We have been unable to discover any case in which partners have been held to be so liable, or in which the point is even discussed. But we do consider that this could properly occur. Accordingly, our proposal that any liability to punitive damages should be several (rather than joint, or joint and several) is subject to the qualification that it should not affect the (joint and several) liability of ‘innocent’ partners to pay punitive damages in respect of the wrongs of a copartner. (iv) The right to contribution under the Civil Liability (Contribution) Act 1978 1.206 The Civil Liability (Contribution) Act 1978 provides that any person who is “liable in respect of any damage” suffered by another may recover contribution 747 See paras 5.209-5.230 below. 748 Section 10 of the Partnership Act 1890 provides: Where by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act. 749 Partnership Act 1890, s 10. 157
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THE LAW COMMISSION Item 2 of the Si
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should emphasise at the outset that
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practitioners and academics) consid
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punitive damages should survive for
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and sued, he will, at worst, be mad
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‘exceptional’ 62 conduct or mot
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defendant or his legal advisers per
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an undertaking in damages which was
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likely adversely to affect him or h
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noting the concession by the respon
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Kralj, which was an “excruciating
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two of their lordships who gave jud
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such a restriction, unless one take
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(1) legislation should provide that
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1.3 Historically, a number of diffe
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nuisance 195 has also been recognis
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day market). At first instance, Pet
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equired to trigger an account of pr
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disgorgement to principals of bribe
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disgorge what he has saved by commi
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there is no consensus among comment
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(a) Restitutionary damages should b
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the purposes of the claim to restit
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account of profits and damages but
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area. The problem of ‘election of
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there is no such in-built limitatio
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PART IV EXEMPLARY DAMAGES: PRESENT
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that exemplary damages were not awa
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1.96 These questions were recently
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to be irrelevant to, and even incon
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1.107 Consistently with the apparen
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manner. As shall be seen below, it
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1.117 Major Commonwealth jurisdicti
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In the present case there is the fu
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an aspect of the case which made ex
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1.137 The ‘non-discrimination’
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We have ... been referred to a numb
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Thus it has been suggested that the
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underlying such damages, that of pu
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easons of fairness to defendants: i
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(6) Multiple plaintiffs 1.165 Very
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Legal Services Act 1990 and Rules o
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MR himself suggested figures to ass
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Thompson v MPC achieves its aims, t
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proceeded on the basis that the doc
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would be that to allow insurance wo
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PART V EXEMPLARY DAMAGES: REFORM 1.
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1.8 As regards the divide between t
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3. THE CASE FOR AND AGAINST EXEMPLA
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(5) The criminal approach to vicari
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particularly unsatisfactory to rely
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1.34 On the first interpretation an
Page 105 and 106: 4. OUR CENTRAL REFORM PROPOSALS (1)
Page 107 and 108: when applying this principle a cour
Page 109 and 110: indefensible position which the com
Page 111 and 112: ... the availability of exemplary d
Page 113 and 114: But these concepts are inadequate,
Page 115 and 116: for a wrong which arises under an A
Page 117 and 118: view that such an award would be co
Page 119 and 120: the promise. To award exemplary dam
Page 121 and 122: else should, actually constitute in
Page 123 and 124: awarded as damages (including exemp
Page 125 and 126: 1.88 The first argument is that it
Page 127 and 128: (2) the relationship between (on th
Page 129 and 130: was determined, the court could mak
Page 131 and 132: (iii) A ‘last resort’ remedy (2
Page 133 and 134: A discretionary or an absolute bar
Page 135 and 136: 1.117 We have therefore recommended
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Page 139 and 140: (24) our draft Bill should lay down
Page 141 and 142: 1.141 In our view, this is necessar
Page 143 and 144: the punitive damages award on the A
Page 145 and 146: to that remedy. 720 Yet this means
Page 147 and 148: (31) once punitive damages have bee
Page 149 and 150: e so where the defendant consents t
Page 151 and 152: 1.183 We also think that any ‘adv
Page 153 and 154: liability’) which applies to any
Page 155: (c) Implications of the adoption of
Page 159 and 160: conduct. 756 Although it has consis
Page 161 and 162: liable to pay a sum of money which
Page 163 and 164: 1.224 The second difference is that
Page 165 and 166: award if they succeed in persuading
Page 167 and 168: approaches. 786 132, 787 Although i
Page 169 and 170: ... [c]ontracts should only be held
Page 171 and 172: (ii) The problems of defining with
Page 173 and 174: the insured wrongdoer’s inability
Page 175 and 176: award to be covered by insurance, t
Page 177 and 178: punitive damages, no enactment shal
Page 179 and 180: one case, 831 and arguably done so
Page 181 and 182: common law to hold, if necessary, t
Page 183 and 184: PART VI SUMMARY OF RECOMMENDATIONS
Page 185 and 186: (19) the ‘cause of action’ test
Page 187 and 188: damages shall be permitted for that
Page 189 and 190: MICHAEL SAYERS, Secretary 11 Septem
Page 191 and 192: Nigel Ley Harvey McGregor QC Tim Ow
Page 193 and 194: APPENDIX C Persons and organisation
Page 195 and 196: Steve Hedley John Hodgson L Hoyano
Page 197: 197
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