Aggravated, Exemplary and Restitutionary ... - Law Commission

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statutory wrongs if an award would be consistent with the policy of the statute under which the wrong arises. 31 However, an award should be made only if the defendant’s conduct showed a deliberate and outrageous disregard of the plaintiff’s rights 32 and the other remedies awarded would be inadequate to punish the defendant for his conduct. 33 Furthermore, no award should usually be made, where the defendant has already been convicted of an offence involving the conduct which founds the claim to punitive damages. 34 And the court should be required to take into account any other sanctions which may have been imposed, when deciding whether punitive damages are necessary, and therefore available. 35 The court will retain a ‘safety-valve’ discretion to refuse punitive damages, where an award would otherwise be available under the above tests, if some exceptional factor exists which makes it proper in the circumstances to refuse an award. 36 1.21 The decision about how much to award as punitive damages, where they have been held to be available, should also always be for a judge, never a jury. 37 An award should not exceed the minimum necessary to punish the defendant for his conduct, and should be proportionate to the gravity of his wrongdoing. 38 The judge should also be guided by a non-exhaustive statutory list of relevant factors. 39 We anticipate that a body of precedent, judicial tariffs and/or guideline judgments would offer further guidance, in time. 40 If a defendant would not be able to pay an award which is assessed in this way without undue hardship, then the court should select a lower, appropriate sum. 41 1.22 Apart from these central recommendations, we make a number of additional ones. A claim to punitive damages should be specifically pleaded. 42 The standard of proof should remain the civil standard of proof on the balance of probabilities. 43 Liability to punitive damages should, in general, be ‘several’ only. 44 However, vicarious liability should apply 45 and insurance should be permitted. 46 A claim for 31 See paras 5.49-5.65, recommendation (19), and draft Bill, clause 3(3)-3(5), below. 32 See paras 5.46-5.48, recommendation (18), and draft Bill, clause 3(6), below. 33 See paras 5.99-5.102, recommendation (20), and draft Bill, clause 3(7), below. 34 See paras 5.103-5.115, recommendation (21)(a), and draft Bill, clause 4(1), below. 35 See paras 5.116-5.117, recommendation (21)(b), and draft Bill, clause 4(2), below. 36 See paras 5.118-5.119 below. 37 See paras 5.81-5.98, recommendation (17), and draft Bill, clause 2, below. 38 See paras 5.120-5.122, recommendations (22)(a) and (22)(b), and draft Bill, clause 5(1)(a) and 5(1)(b), below. 39 See paras 5.123-5.128, recommendation (23), and draft Bill, clause 5(2), below. 40 See, in particular, our reasoning at paras 5.91-5.98 below; see also paras 4.86-4.98 below. 41 See paras 5.135-5.141, recommendations (26)-(28), and draft Bill, clause 6, below. 42 See paras 5.133-5.134, recommendation (25), and draft Bill, clause 3(2), below. 43 See paras 5.231-5.233, recommendation (41), and draft Bill, clause 10, below. 44 See paras 5.186-5.203, recommendation (34), and draft Bill, clause 8(1), below. Cf paras 5.204-5.205. 45 See paras 5.209-5.230, recommendations (37)-(40), and draft Bill, clauses 8(2)(a) and 11 below. 6
punitive damages should survive for the benefit of the estate of the victim, 47 but not against the estate of the wrongdoer. 48 Where a defendant’s conduct constitutes wrongs against two or more persons (a ‘multiple plaintiff’ case) punitive damages should only be awarded to the first of those persons to claim them successfully, 49 and where they are so awarded, the court should ensure that the aggregate award does not constitute excessive punishment. 50 1.23 We should emphasise that, in our view, if the above package of reforms were accepted, the impact on the administration and funding of civil justice would not be significantly adverse. Successful claims should be rare if, as we propose, punitive damages are reserved for cases of seriously wrongful conduct which has not been dealt with adequately (or at all) by another means. The legislative scheme which we propose, coupled with case law interpretation, should provide a set of clear, and restrictive, principles governing when awards may be made. And the prospects of a substantial increase in litigation to obtain a new financial ‘windfall’ should be further reduced, if, as we would expect, judicial assessment of punitive damages would lead to moderate, as well as consistent and reasonably predictable, awards in the rare cases in which they were made. 4. SOME PRACTICAL EXAMPLES 1.24 It may prove helpful at this stage to provide some practical examples of situations in which, applying our proposals, punitive damages would be an available remedy (subject to there being no criminal conviction or adequate other remedy). These are, in other words, situations which illustrate the practical need for the last resort remedy of punitive damages. Examples (1)-(4) are all cases in which exemplary damages are probably currently available. Examples (5)-(10) are all cases in which exemplary damages could not be claimed under the present law. 51 (1) Police officers arrest and detain a man without grounds for suspecting that he has committed any offence. In the course of his arrest and detention, manifestly unnecessary and excessive force is used against him. The officers involved then fabricate evidence against the man. A prosecution is brought, but fails. The man claims damages for false imprisonment, assault and malicious prosecution. (2) A local newspaper publishes a sensationalist story, knowing it to be false, about a local school-teacher who had a sexual relationship with and caused to become pregnant a pupil under the age of consent. The newspaper does so in the expectation that the teacher will be unlikely to wish to sue for defamation, and that even if he does so, the general boost to the paper’s 46 See paras 5.234-5.273, recommendation (42), and draft Bill, clause 9(1), below. Cf also recommendation (43) and draft Bill, clause 9(2), below. 47 See paras 5.274-5.275, recommendation (44), and draft Bill, clause 14(1)-14(3), below. 48 See paras 5.276-5.278, recommendation (45), and draft Bill, clause 14(1) and 14(3), below. 49 See paras 5.159-5.185 (especially paras 5.162-5.167), recommendations (30) and (31), and draft Bill, clause 7(1) and 7(4), below. 50 See paras 5.168-5.171, recommendation (32), and draft Bill, clause 7(3), below. 51 See para 1.2 above and in particular paras 4.2-4.28, 4.47, below. 7
Page 1 and 2: THE LAW COMMISSION Item 2 of the Si
Page 3 and 4: should emphasise at the outset that
Page 5: practitioners and academics) consid
Page 9 and 10: and sued, he will, at worst, be mad
Page 11 and 12: ‘exceptional’ 62 conduct or mot
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Page 17 and 18: likely adversely to affect him or h
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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
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Page 39 and 40: disgorge what he has saved by commi
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Page 43 and 44: (a) Restitutionary damages should b
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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
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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
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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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