Aggravated, Exemplary and Restitutionary ... - Law Commission

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(1) what problems of assessment and proof, if any, might be raised by the abolition of aggravated damages; 180 (2) whether aggravated damages should be available in respect of all wrongs or only some; 181 and (3) whether the proposed abolition of aggravated damages and the adoption of a purely compensatory model would have to be carried out in conjunction with the reform of the law of exemplary damages, to ensure that any gaps are closed. 182 1.40 We consider that aggravated damages should be viewed as purely compensatory - a view supported by the majority of consultees. They are assessed with reference to what is necessary to compensate certain losses suffered by plaintiffs; they are not assessed with reference to what is necessary to punish a defendant for his or her conduct. To suggest otherwise would require an assumption that the law is starkly incoherent. Punishment has been a controversial aim of the civil law of damages, and exemplary damages, which are aimed to punish, are viewed as an exceptional remedy, the availability of which should be tightly constrained. We shall see in Part IV that the availability of the punitive remedy of exemplary damages has been strictly constrained by the ‘categories test’ and the ‘cause of action test’. We recommend in Part V that the availability of exemplary damages should be expanded, but at the same time, subjected to significant limitations. There can be no room within the law of damages, as it presently stands, or as we propose it should be, for another ‘punitive’ remedy (‘aggravated damages’) which is not subject to such limitations. 1.41 What follows from our acceptance that aggravated damages are compensatory? We are no longer persuaded that legislative abolition of ‘aggravated damages’ (and with it, the ‘exceptional conduct’ requirement) is desirable. This is because it may tend to limit the availability of damages for mental distress. It is not the case that losses which are compensated by an award of aggravated damages could always be compensated under another, already-recognised head of damages for a particular tort. Some losses may only be compensated once it is found that the defendant has acted in a particularly bad manner; abolishing aggravated damages would prevent recovery for such losses. Of course, this difficulty could be solved by legislation, which states and expands the circumstances in which mental distress damages should be recovered. But we do not consider that it would be sensible for us to attempt this course of action. On the contrary, we believe that, once one has clarified the role of aggravated damages, the availability of damages for mental distress should be left to incremental judicial development. 1.42 What we therefore propose is legislation which will clarify the true role of so-called aggravated damages, and at the same time, aim to sweep away the terminology of ‘aggravated damages’ which has been so misleading. Accordingly, we recommend that: 180 Ibid, paras 6.50-6.52 and 8.18. 181 Ibid, paras 6.53 and 8.18. 182 Ibid, paras 6.54 and 8.18. 26
(1) legislation should provide that so-called ‘aggravated damages’ may only be awarded to compensate a person for his or her mental distress; they must not be intended to punish the defendant for his conduct. (Draft Bill, clause 13) (2) wherever possible the label ‘damages for mental distress’ should be used instead of the misleading phrase ‘aggravated damages’. (Draft Bill, clause 13) (3) recommendations (1) and (2) are not intended to restrict the circumstances in which damages for mental distress are recoverable other than as ‘aggravated damages’ (for example, compensation for pain and suffering in personal injury cases or contractual damages for a ruined holiday). 1.43 This clarification will enable ‘aggravated damages’ to be seen for what they are: as part of the law on damages for mental distress. Once so seen, a more coherent perception, and therefore development, of damages for mental distress should be possible. By way of illustration of what we mean by “a more coherent perception, and ... development” of the law, take the present rule that aggravated damages are unavailable for the tort of negligence. We have suggested that one reason for this limitation may have been the misconception that aggravated damages are punitive in nature. By clarifying that aggravated damages are in fact compensatory, this reason for the limitation is revealed to be a false one. But courts may have other, sound reasons for imposing such a limitation; our legislative clarification is not intended to prevent courts from so holding in the future. 27
Page 1 and 2: THE LAW COMMISSION Item 2 of the Si
Page 3 and 4: should emphasise at the outset that
Page 5 and 6: practitioners and academics) consid
Page 7 and 8: punitive damages should survive for
Page 9 and 10: and sued, he will, at worst, be mad
Page 11 and 12: ‘exceptional’ 62 conduct or mot
Page 13 and 14: defendant or his legal advisers per
Page 15 and 16: an undertaking in damages which was
Page 17 and 18: likely adversely to affect him or h
Page 19 and 20: noting the concession by the respon
Page 21 and 22: Kralj, which was an “excruciating
Page 23 and 24: two of their lordships who gave jud
Page 25: such a restriction, unless one take
Page 29 and 30: 1.3 Historically, a number of diffe
Page 31 and 32: nuisance 195 has also been recognis
Page 33 and 34: day market). At first instance, Pet
Page 35 and 36: equired to trigger an account of pr
Page 37 and 38: disgorgement to principals of bribe
Page 39 and 40: disgorge what he has saved by commi
Page 41 and 42: there is no consensus among comment
Page 43 and 44: (a) Restitutionary damages should b
Page 45 and 46: the purposes of the claim to restit
Page 47 and 48: account of profits and damages but
Page 49 and 50: area. The problem of ‘election of
Page 51 and 52: there is no such in-built limitatio
Page 53 and 54: PART IV EXEMPLARY DAMAGES: PRESENT
Page 55 and 56: that exemplary damages were not awa
Page 57 and 58: 1.96 These questions were recently
Page 59 and 60: to be irrelevant to, and even incon
Page 61 and 62: 1.107 Consistently with the apparen
Page 63 and 64: manner. As shall be seen below, it
Page 65 and 66: 1.117 Major Commonwealth jurisdicti
Page 67 and 68: In the present case there is the fu
Page 69 and 70: an aspect of the case which made ex
Page 71 and 72: 1.137 The ‘non-discrimination’
Page 73 and 74: We have ... been referred to a numb
Page 75 and 76: 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
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4. OUR CENTRAL REFORM PROPOSALS (1)
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when applying this principle a cour
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indefensible position which the com
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... the availability of exemplary d
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But these concepts are inadequate,
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for a wrong which arises under an A
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view that such an award would be co
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the promise. To award exemplary dam
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else should, actually constitute in
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awarded as damages (including exemp
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1.88 The first argument is that it
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(2) the relationship between (on th
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was determined, the court could mak
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(iii) A ‘last resort’ remedy (2
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A discretionary or an absolute bar
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1.117 We have therefore recommended
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discrimination between, for example
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(24) our draft Bill should lay down
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1.141 In our view, this is necessar
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the punitive damages award on the A
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to that remedy. 720 Yet this means
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(31) once punitive damages have bee
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e so where the defendant consents t
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1.183 We also think that any ‘adv
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liability’) which applies to any
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(c) Implications of the adoption of
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‘moderation’ and of ‘proporti
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conduct. 756 Although it has consis
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liable to pay a sum of money which
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1.224 The second difference is that
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award if they succeed in persuading
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approaches. 786 132, 787 Although i
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... [c]ontracts should only be held
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(ii) The problems of defining with
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the insured wrongdoer’s inability
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award to be covered by insurance, t
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punitive damages, no enactment shal
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one case, 831 and arguably done so
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common law to hold, if necessary, t
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PART VI SUMMARY OF RECOMMENDATIONS
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(19) the ‘cause of action’ test
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damages shall be permitted for that
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MICHAEL SAYERS, Secretary 11 Septem
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Nigel Ley Harvey McGregor QC Tim Ow
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APPENDIX C Persons and organisation
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Steve Hedley John Hodgson L Hoyano
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197
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