Aggravated, Exemplary and Restitutionary ... - Law Commission

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available for common law and equitable wrongs alike. Secondly, it has traditionally been thought that an account of profits requires a very precise calculation of the relevant profits, with an actual account having to be drawn up, showing gains and losses, 295 whereas it has been accepted that often damages can be calculated in a rough and ready manner. In fact in recent years some judges have accepted that an account of profits need not be any more precisely calculated than damages. 296 This is to be welcomed but a replacement of the label ‘account of profits’ would be even better in severing the link with the needless and historically-based requirement of precision in calculation. 1.84 Some may consider that there are insuperable problems in abandoning longaccepted remedial labels. For example, it may be argued that an action for money had and received and an account of profits are ‘debt’ actions or liquidated claims, whereas ‘restitutionary damages’ implies an unliquidated claim. But any distinctions that do turn on whether a claim is for a debt or liquidated claim, or an unliquidated claim, are either irrational in the context of restitution for wrongs, or could equally well be applied to ‘restitutionary damages’ depending on whether the damages are for a certain sum or require assessment by the courts. More problematically it may be thought that the term ‘restitutionary damages’ means that the courts would lose the general discretion that they have to refuse to award the equitable remedy of an ‘account of profits’ - for example, on the grounds of the plaintiff’s ‘unclean hands’ or hardship to the defendant. While we accept that there are difficulties here, we do not regard them as insuperable. Equitable remedies share with common law remedies that they are awarded, or refused, in accordance with well-established rules and principles. Moreover, there are common law doctrines - such as those of illegality or public policy - which mirror in nature, if not in scope, the so-called ‘discretionary’ defences in equity. It may therefore be that a move to the single label ‘restitutionary damages’ would not involve any significant loss of judicial discretion to refuse the remedy. 295 See, eg, Price’s Patent Candle Co Ltd v Bauwen’s Patent Candle Co Ltd (1858) 4 K & J 727. 296 See, eg, My Kinda Town Ltd v Soll [1982] FSR 147, 159; Potton Ltd v Yorkclose Ltd [1990] FSR 11. 52
PART IV EXEMPLARY DAMAGES: PRESENT LAW 1.85 Exemplary damages are damages which are intended to punish the defendant. Without entering into an exhaustive examination of the aims of punishment, one can say that exemplary damages seek to effect retribution, as well as being concerned to deter the defendant from repeating the outrageously wrongful conduct and others from acting similarly, and to convey the disapproval of the jury or court. Exemplary damages may also serve as a satisfaction, and may assuage any urge for revenge felt by victims, thereby discouraging them from taking the law into their own hands. 297 1. AVAILABILITY 1.86 Under English law exemplary damages can only be awarded where the facts satisfy the categories test and the cause of action test. 298 Even if both tests are satisfied, the court has a discretion to refuse an award. 1.87 The categories test was enunciated by the House of Lords in Rookes v Barnard. 299 In the leading speech, Lord Devlin stated that exemplary damages were anomalous, for the reason that they confuse the civil and criminal functions of the law. 300 Even so, he considered himself to be constrained by precedent from abolishing them altogether, and so instead sought to restrict the extent of their availability. He did so by reclassifying some apparently punitive past awards as in fact compensatory - though what was being compensated was not pecuniary loss but the plaintiff’s mental distress caused by the defendant’s tort. These were ‘aggravated damages’, and Lord Devlin envisaged that they could do most, if not all, of the work done by exemplary damages awards; where they could not do so, the tort would generally be punishable as a crime. 301 But this still left three categories of case, which were not susceptible to similar reclassification. In Lord Devlin’s view these should continue, exceptionally, to attract exemplary damages awards for torts. They were: (1) oppressive, arbitrary or unconstitutional action by servants of the government; (2) wrongful conduct which has been calculated by the defendant to make a profit for himself which may well exceed the compensation payable to the plaintiff; and (3) where such an award is expressly authorised by statute. 297 Cf Merest v Harvey (1814) 5 Taunt 442, 128 ER 761. The importance of this aspect has, arguably, diminished over time. 298 However, where exemplary damages are expressly authorised by statute (category 3), there is no need to satisfy the cause of action test. 299 [1964] AC 1129. 300 [1964] AC 1129, 1221, 1226. 301 [1964] AC 1129, 1230. 53
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 and 26: such a restriction, unless one take
Page 27 and 28: (1) legislation should provide that
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
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Page 49 and 50: area. The problem of ‘election of
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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
Page 77 and 78: underlying such damages, that of pu
Page 79 and 80: easons of fairness to defendants: i
Page 81 and 82: (6) Multiple plaintiffs 1.165 Very
Page 83 and 84: Legal Services Act 1990 and Rules o
Page 85 and 86: MR himself suggested figures to ass
Page 87 and 88: Thompson v MPC achieves its aims, t
Page 89 and 90: proceeded on the basis that the doc
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Page 93 and 94: PART V EXEMPLARY DAMAGES: REFORM 1.
Page 95 and 96: 1.8 As regards the divide between t
Page 97 and 98: 3. THE CASE FOR AND AGAINST EXEMPLA
Page 99 and 100: (5) The criminal approach to vicari
Page 101 and 102: 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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