AGGRAVATED, EXEMPLARY AND RESTITUTIONARY DAMAGES [1997] EWLC 247(4) (16 December 1997)

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4.1 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. (1)

1. AVAILABILITY

4.2 Under English law exemplary damages can only be awarded where the facts satisfy the categories test and the cause of action test. (2) Even if both tests are satisfied, the court has a discretion to refuse an award.

4.3 The categories test was enunciated by the House of Lords in Rookes v Barnard. (3) 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. (4) 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 plaintiffs mental distress caused by the defendants 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. (5) But this still left three categories of case, which were not susceptible to similar reclassification. In Lord Devlins view these should continue, exceptionally, to attract exemplary damages awards for torts. They were:

The categories test therefore entails that exemplary damages will not be available unless the case falls within one of the above three categories.

4.4 The cause of action test, which further restricts the availability of exemplary damages, was formulated more recently by the Court of Appeal in AB v South West Water Services Ltd. (6) The test requires that the causes of action for which exemplary damages are claimed are causes of action for which such damages had been awarded before Rookes v Barnard. (7) Accordingly, exemplary damages were held to be unavailable on the facts in AB v South West Water Services Ltd, for even if the categories test had been satisfied, the torts in question were not ones for which exemplary damages had been awarded before 1964. (8) Subsequent cases have accepted that this test forms part of English law. (9)

4.5 The application of these two tests by English courts clearly distinguishes English law from the common law of major Commonwealth jurisdictions. In place of the restrictive categories-based approach of Rookes v Barnard, Canadian, Australian and New Zealand authorities all apply a general test of availability, which, though formulated in a variety of colourful words and phrases, is essentially intended to catch any example of highly reprehensible civil wrongdoing. They have specifically considered, and specifically declined to follow, Rookes v Barnard in this respect. (10) And rather than limiting the availability of exemplary damages to causes of action for which they had been awarded before Rookes v Barnard, authorities have tended towards a position in which, with the possible exception of breach of contract, exemplary damages are available for any civil wrong. (11) Certainly the fact that exemplary damages were not awarded for a particular type of wrong before 1964 is not considered a good reason as such for refusing to award them for that wrong today.

(1) Lord Devlins three categories: the categories test

(a) Category 1: oppressive, arbitrary or unconstitutional action by servants of the government

4.6 In Broome v Cassell (12) it was made clear that servants of the government is to be widely construed. (13) Nevertheless, the tortfeasor must be exercising governmental power. In AB v South West Water Services Ltd (14) the defendant was a body set up under statute to supply water for profit. The Court of Appeal held that the defendant-body fell outside this category because in conducting its commercial operations it was not discharging governmental functions, (15) nor was it acting as an instrument or agent of the government. (16) The Court of Appeal also rejected the plaintiffs argument that, since the defendant was a body through which the United Kingdom performed its obligations under European Community law, and as such was an emanation of state for the purpose of enforcing Community directives in national courts, it therefore followed that it was exercising executive power. (17) Sir Thomas Bingham MR also found it unhelpful to inquire whether the defendant was a body against whose decisions judicial review was available.~(18)~

4.7 The terms oppressive, arbitrary or unconstitutional must be read disjunctively. (19) In Holden v Chief Constable of Lancashire (20) the plaintiff had been wrongfully arrested and detained for about twenty minutes by a police officer, but there was no allegation or any finding that the officer had acted oppressively or violently. The plaintiff appealed against the trial judges refusal to leave the question of an award of exemplary damages to the jury. He sought to argue that every case of unconstitutional action by a servant of the government necessarily fell within Lord Devlins first category. The Court of Appeal was unhappy with the width of this formulation. (21) Even so, it accepted that, in at least some cases, unconstitutional action that was neither oppressive nor arbitrary could give rise to an exemplary damages award. The plaintiffs appeal was therefore allowed and a new trial ordered.

4.8 The availability of exemplary damages under category 1 has played a significant role in buttressing civil liberties in claims for false imprisonment, assault and battery, and malicious prosecution, arising from police misconduct. (22) Until the decision in AB v South West Water Services Ltd, category 1 had also been held to be applicable to claims arising from race and sex discrimination by public employers. (23)

4.9 Where a tortfeasors conduct was calculated to make a profit which might well exceed the compensation payable to the plaintiff, compensatory damages are likely to be inadequate to deter the tortfeasor from committing the tort. As a result:

[e]xemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay.~(24)~

In other words, an exemplary damages award should be available to punish the wrongdoer for such conduct, by making it unprofitable so to act.

4.10 There are two initial questions. The first is, what is a profit? In Rookes v Barnard (25) Lord Devlin considered that this category extended beyond money-making in the "strict sense" to include cases where the defendant seeks to make any gain by committing the wrong.~(26)~

4.11 A second initial question is, what state of mind of the defendant constitutes the required element of calculation? It is clear that the fact that the wrongful conduct occurred in a business context is insufficient per se to bring the matter within category 2. (27) Rather, it must additionally be shown that the defendant made a decision to proceed with the conduct knowing it to be wrong, or reckless as to whether or not it was wrong, because the advantages of going ahead outweighed the risks involved. (28) However, category 2 "is not intended to be limited to the kind of mathematical calculations to be found on a balance sheet". (29)

4.12 These questions were recently considered by the Court of Appeal in John v Mirror Group Newspapers Ltd, (30) in an action for defamation brought against a newspaper publisher. It was said that:

[B]efore [exemplary] damages can be awarded the jury must be satisfied that the publisher had no genuine belief in the truth of what he published. The publisher must have suspected that the words were untrue and have deliberately refrained from taking obvious steps which, if taken, would have turned suspicion into certainty ... Secondly, the publisher must have acted in the hope or expectation of material gain. It is well established that a publisher need not be shown to have made any precise or arithmetical calculation. But his unlawful conduct must have been motivated by mercenary considerations, the belief that he would be better off financially if he violated the plaintiffs rights than if he did not, and mere publication of a newspaper for profit is not enough. (31)

4.13 Exemplary damages are in fact seldom sought in libel actions. This is for several reasons. First, it is difficult, in the context of defamation by the press, to prove that a defendant calculated that a particular libel was likely to boost sales of the publication. Secondly, a plaintiff pleading exemplary damages will bear the burden of such proof. This effectively reverses the burden of proof in defamation actions, so that there is a tactical disadvantage in seeking exemplary damages. Thirdly, practitioners may often perceive a punitive element in awards of (supposedly compensatory) aggravated damages by juries in defamation actions; they therefore feel that little is to be gained by claiming exemplary damages in addition. (32)

4.14 However, the effect of John v MGN Ltd (33) may be that exemplary damages will be more often sought in the future in defamation actions. In that case the Court of Appeal held for the first time that a jury should be referred to the scale of compensatory damages for pain, suffering and loss of amenity awarded for personal injury. (34) Potential plaintiffs will therefore be faced with the prospect of a reduced compensatory award, and so may well seek to supplement such awards by pleading exemplary damages in addition.

4.15 In the past, most cases in category 2 have related to wrongful evictions of tenants, typically in circumstances of harassment, (35) in order to free the property for more profitable use. (36) In contrast to defamation, however, this type of case has not attracted high levels of award. One reason may be that juries are not involved; another is that jurisdictional limits have until recently prevented county courts from making a total award in excess of £5,000. (37)

4.16 An important issue for the purposes of this paper is the difference between exemplary damages under category 2 and restitutionary damages: how far, if at all, are category 2 exemplary damages essentially restitutionary damages? There are at least three major differences which lead us to the view that the two forms of damages cannot be equated.

4.17 The first difference is that the focus of category 2 is on the wrongdoers improper motive: the calculation that he or she would profit from the wrong. In contrast, the focus of restitutionary damages is on the actual making of a profit. Thus, there is no objection in principle to an award of exemplary damages where the tortious conduct was calculated to yield a profit in excess of any likely compensation, but did not in fact produce any or any such profit. (38) This means that exemplary damages may be awarded even though restitutionary damages are unavailable.

4.18 The second difference is that exemplary damages may be awarded even though they exceed the amount of the gain made by the tortfeasor. The effective pursuit of punishment may require awards of exemplary damages to exceed the restitutionary measure: they are concerned with punishment and not simply with stripping away the fruits of the defendants wrongdoing. As Lord Diplock said in Broome v Cassell,

[T]o restrict the damages recoverable to the actual gain made by the defendant if it exceeded the loss caused to the plaintiff, would leave a defendant contemplating an unlawful act with the certainty that he had nothing to lose to balance against the chance that the plaintiff might never sue him or, if he did, might fail in the hazards of litigation. It is only if there is a prospect that the damages may exceed the defendants gain that the social purpose of this category is achieved - to teach a wrong-doer that tort does not pay.~(39)~

Even so it is not easy to identify actual cases where the quantum of exemplary damages clearly exceeded the measure of the defendants unjust enrichment. This may be because the quantification of exemplary damages is rarely a precise exercise: awards are often assessed by a jury; it is very rare for evidence of the tortfeasors profit to be adduced in court; and such profit may in any case be impossible to quantify.

4.19 A final difference is that many of the overriding principles which structure the discretion to award exemplary damages, and which govern their assessment, seem to be irrelevant to, and even inconsistent with, a remedy which is directed to the recovery of profits. (40)

4.20 It is helpful to emphasise at this stage that category 2 has been criticised on the ground that it is too narrow. The reason given is that those who commit torts intentionally and maliciously should not escape liability for exemplary damages merely because they were not motivated by the desire to profit from their wrong. The case where a defendant commits a tort, not for gain, but simply out of malice, was considered by Lord Reid in Broome v Cassell:

The reason for excluding such a case from [category 2] is simply that firmly established authority required us (41) to accept this category however little we might like it, but did not require us to go farther. If logic is to be preferred to the desirability of cutting down the scope for punitive damages to the greatest extent that will not conflict with established authority then this category must be widened. But as I have already said I would, logic or no logic, refuse to extend the right to inflict exemplary damages to any class of case which is not already clearly covered by authority. (42)

4.21 Parliament has rarely thought it necessary to authorise exemplary damages by a statutory provision. The only clear example is the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951, section 13(2), which expressly authorises the award of "exemplary damages". (43) In Rookes v Barnard (44) Lord Devlin specifically cited this provision as an example of express statutory authorisation. The other example, arguably, is in the field of the protection of copyright and related rights, where the remedy of "additional damages" is available for infringement of copyright, (45) design right (46) and performers property rights. (47) The correct analysis of additional damages has been, and remains, controversial. (48)

4.22 The controversy surrounding additional damages has hitherto arisen only in the context of claims for infringement of copyright. (49) In the two recent decisions of Cala Homes (South) Ltd v McAlpine Homes East Ltd (No 2) (50) and Redrow Homes Ltd v Bett Brothers plc, (51) Laddie J and the Court of Session (Inner House), reached opposite conclusions. (52) Reviewing, inter alia, the legislative history of section 97(2), Laddie J inclined to the view that additional damages were a form of financial relief which could be likened to exemplary damages. (53) The Court of Session held that they were aggravated damages. The predecessor to section 97(2), section 17(3) of the Copyright Act 1956, had not generally been thought in the case law to authorise exemplary damages. (54) Instead it was said to authorise awards of aggravated damages, (55) or compensation which would otherwise be irrecoverable under the ordinary rules about remoteness and proof of damage. (56) In contrast, the Whitford Committee, reporting in 1977, considered that section 17(3) gave the courts power to award exemplary damages, (57) and indeed, that the provision should be strengthened. (58)

4.23 Consistently with the apparent rarity of clear statutory authorisation of exemplary damages, it is of interest that, when the Protection from Eviction Act 1977 was amended by the Housing Act 1988, a new regime of restitutionary rather than exemplary damages was introduced in order to supplement the inadequate regime of compensatory damages then available to an unlawfully evicted tenant. (59)

(2) The cause of action test

(a) Wrongs which satisfy the cause of action test

4.24 Wrongs satisfying the cause of action test - because they are wrongs for which exemplary damages had been awarded before Rookes v Barnard - are malicious prosecution, false imprisonment, assault and battery, defamation, trespass to land or to goods, private nuisance, and tortious interference with business. (60) Where committed by servants of government, the torts of malicious prosecution, and assault and battery, have fallen within category 1. Where committed for gain, the torts of defamation, trespass to land or goods, private nuisance, and tortious interference with business, have fallen within category 2.

(b) Wrongs which fail the cause of action test

4.25 Wrongs failing the cause of action test - because they are wrongs for which there is no pre-Rookes v Barnard authority for an award of exemplary damages - include the tort of negligence, (61) public nuisance, (62) deceit, (63) patent infringement, (64) unlawful discrimination on grounds of sex, race or disability, (65) and wrongs consisting of breach of Community law which English law conceptualises as civil liability for breach of statutory duty. (66) Indeed, any wrong which arises under an Act coming into force after Rookes v Barnard must inevitably fail the cause of action test, so that exemplary damages will be unavailable unless they are expressly authorised by statutory provision. (67) And notwithstanding recent dicta, (68) it would seem that the tort of misfeasance in a public office also fails the cause of action test.

4.26 There is no clear authority as to whether exemplary damages are available where the defendant has committed an equitable wrong, such as breach of fiduciary duty or breach of confidence. Damages of any sort, as opposed to the equitable remedies of compensation or an account of profits, are unusual in equitable actions. (69) In the absence of any authority prior to AB v South West Water Services Ltd, (70) it would seem that it is not presently possible to recover exemplary damages for an equitable wrong.

4.27 There are some cases in which the courts have suggested that exemplary damages might be awarded under an undertaking in damages given by a plaintiff to the court as a condition of the granting of interlocutory relief. In Digital Equipment Corporation v Darkcrest (71) Falconer J suggested that if an injunction was obtained fraudulently or maliciously, the defendant might be awarded exemplary damages under the undertaking. And in Columbia Picture Industries Inc v Robinson (72) Scott J thought that solicitors executing an Anton Piller order would be officers of the court, and could come within category 1 if they acted in an oppressive or excessive manner. As shall be seen below, it is not entirely clear how the recovery of exemplary damages can be analysed as recovery pursuant to the undertaking - at least as that undertaking is conventionally viewed. (73) But in any case, undertakings in damages were not mentioned in Rookes v Barnard, and it would appear that the suggestions made in the two modern cases cannot stand in the light of AB v South West Water Services Ltd. (74)

4.28 Exemplary damages are clearly unavailable in a claim for breach of contract. The leading authority is Addis v Gramophone Co Ltd. (75) In that case the House of Lords refused to award any damages - including mental distress damages let alone exemplary damages - for the harsh and humiliating manner of the plaintiffs wrongful dismissal.

4.29 In addition to the cause of action and categories tests, the jury or judge retains an overriding discretion to refuse to award exemplary damages. (76) Thus, even if the plaintiff can show that the case falls within one of Lord Devlins three categories and that the wrong in question satisfies the cause of action test, it is still open for the court or jury to decide in its discretion that exemplary damages are inappropriate. (77) The exercise of this discretion in the case law has led to the identification of a number of factors which further limit the availability of exemplary damages; several of these factors may, alternatively, be relevant to the assessment of such awards. (78)

(a) The if, but only if test

4.31 Exemplary damages are available to a court if, but only if, the sum which it seeks to award as compensation is inadequate to punish the defendant for his outrageous conduct, to deter him and others from engaging in similar conduct, and to mark the courts disapproval of such conduct. Thus in Rookes v Barnard (79) Lord Devlin stated that, when assessing damages in a case in which exemplary damages are available, the jury should be directed that:

... if, but only if, the sum which they have in mind to award as compensation (which may, of course, be a sum aggravated by the way in which the defendant has behaved to the plaintiff) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it, then it can award some larger sum. (80)

The importance of this principle was further emphasised by the House of Lords in Broome v Cassell. (81)

4.32 The if, but only if test therefore entails that exemplary damages are a remedy of last resort and that they are, in one sense, a topping-up award. (82) It recognises that even awards of compensatory damages may have an incidental punitive effect, and that the need for an award of exemplary damages is correspondingly reduced where this is so. Thus the test makes the availability of exemplary damages conditional on compensatory awards being inadequate to achieve the ends of punishment, deterrence and disapproval. Such awards represent the balance between, on the one hand, any compensatory sum, and, on the other hand, the sum that the court considers to be appropriate to achieve those ends.

4.33 Major Commonwealth jurisdictions which have rejected the Rookes v Barnard categories test have nonetheless accepted and applied the if, but only if test. (83)

[T]he plaintiff cannot recover exemplary damages unless he is the victim of the punishable behaviour. The anomaly inherent in exemplary damages would become an absurdity if a plaintiff totally unaffected by some oppressive conduct which the jury wished to punish obtained a windfall in consequence. (84)

4.35 This proposition requires further explanation. It is presumably not making the obvious point that a person must have an independent cause of action, usually a tort, before he or she has any possible claim to exemplary damages. Rather it seems to refer to a case in which the defendants conduct constitutes a wrong against the plaintiff and a wrong against a third party, but it is only the wrong vis-à-vis the third party which constitutes the punishment-worthy behaviour. (85)

4.36 The defendants conduct may leave him or her vulnerable to criminal proceedings, or else to disciplinary proceedings by his or her employer or professional body. If such proceedings have been brought and concluded, against or in favour of the defendant, can the victim of the defendants wrongdoing still claim exemplary damages? If such proceedings have not yet been concluded, or are likely or merely possible when the victim claims exemplary damages, how (if at all) is the victims entitlement to claim exemplary damages affected?

(i) The relevance of criminal proceedings

4.37 The possibility that a defendant has been or will be punished by a criminal penalty poses the risk, if an exemplary damages award is also available, that the defendant will be punished twice for the same conduct.

4.38 Where an adverse criminal determination has already been made, and civil proceedings subsequently reach court, existing case law leaves a critical issue unclear. This is whether the existence of such a criminal determination automatically precludes an exemplary damages award, or, alternatively, will be merely one factor - however weighty - that is relevant to either the availability or assessment of an award. In other words, can a civil court award exemplary damages where it considers that the defendant has not been adequately punished by the criminal law?

4.39 In Archer v Brown (86) the punishment already exacted by the criminal courts was very arguably treated as sufficient alone to bar an exemplary award. Peter Pain J decided not to award exemplary damages against a defendant who had already been convicted and imprisoned in respect of a corresponding criminal offence. The proposition on which the judge relied, in the absence of authority, was a very broad one which did not raise any question as to the sufficiency of the criminal punishment. This was that a "man should not be punished twice for the same offence":

[W]hat seems to put the claim [to exemplary damages] out of court is the fact that exemplary damages are meant to punish and the defendant has been punished. Even if he wins his appeal he will have spent a considerable time in gaol. It is not surprising that there is no authority as to whether this provides a defence, since there is no direct authority as to whether exemplary damages can be given in deceit. I rest my decision on the basic principle that a man should not be punished twice for the same offence. Since he has undoubtedly been punished, I should not enrich the plaintiff by punishing the defendant again. (87)

4.40 Nevertheless, Archer v Brown is not an unassailable authority for the proposition that a court will refuse an award of exemplary damages whenever a defendant has already been punished by a criminal court for the conduct in question. In Archer v Brown the defendant had already spent a "considerable time" in prison, and would spend even more time in prison if an appeal against his sentence failed. Imprisonment is obviously a very severe form of punishment. Accordingly it is possible that Archer v Brown is consistent with the court having a discretion to refuse an award of exemplary damages, which Peter Pain J exercised in the circumstances, because, in view of the severity of the criminal punishment exacted, no further civil punishment was necessary or fair.

4.41 Another important decision is AB v South West Water Services Ltd. (88) The Court of Appeal gave as one, albeit secondary, reason for striking out the claim to an award of exemplary damages, the "conviction and fine" of the defendants. No reference was made to the size and sufficiency of the fine: the Court of Appeal appeared to be content that the defendant had been criminally punished. And because the proceedings were striking out proceedings, the court must have been convinced that it was a "clear and obvious" case, or one which was "doomed to fail". (89) If so, it is arguable that the court considered that there was no scope for argument about the sufficiency of the punishment that was exacted by the criminal law. The relevant passage proceeds as follows:

In the present case there is the further complication to which I have already referred of the conviction and fine of the defendants. These problems persuade me that there would be a serious risk of injustice to the defendants in this case if an award of exemplary damages were to be made against them. There is no injustice to the plaintiffs in refusing to permit such an award ... (90)

4.42 The risk of double punishment does not arise where the conduct in respect of which an exemplary damages award is sought is materially different from that for which the defendant has already been punished in criminal proceedings. Accordingly, there can be no objection to an exemplary damages award in such a case. (91) In Asghar v Ahmed (92) the conduct in respect of which exemplary damages were awarded occurred after the unlawful eviction in respect of which the defendants had been convicted. The Court of Appeal upheld the award, observing that the trial judge had expressly directed his mind to the fact that the defendant had been fined in the Crown Court for the eviction, and that:

... there was a great deal more to the outrageous conduct which followed the eviction which justified the judges finding that it was an absolutely outrageous example of persecution by a landlord of a tenant. (93)

4.43 Where both criminal and civil proceedings are brought, the criminal disposition will usually occur prior to the decision in the corresponding civil proceedings. A civil court has the discretion to stay proceedings if it appears that justice between the parties so requires. (94) This appears to enable a civil court, in an appropriate case, to suspend civil proceedings until the criminal proceedings have been concluded, or until such time as it is clear that they will end before the civil proceedings come to trial. It should therefore be unusual for a civil court to have to determine the availability or quantum of exemplary damages prior to the conclusion of criminal proceedings. If they do, the civil court would generally have to proceed on the basis that there will be no criminal conviction. But by analogy with the Court of Appeals approach to the relevance of disciplinary proceedings, it is arguable that a civil court might not do so, if:

there is clear evidence that such proceedings are intended to be taken in the event of liability being established and that there is at least a strong possibility of the proceedings succeeding. (95)

If the court awards exemplary damages, it will be for the criminal courts to determine the relevance of this in the event that the defendant is subsequently convicted of a criminal offence for the same conduct.

(ii) The relevance of disciplinary procedures or proceedings

4.44 Criminal and civil proceedings are not the only possible responses to wrongdoing; an obvious and important alternative is disciplinary proceedings. These may be conducted by the organisation by which the defendant is employed, or by the professional organisation of which the defendant is a member. How far does the fact that disciplinary proceedings have, or may be, brought affect a claim to exemplary damages?

4.45 In the recent case of Thompson v MPC (96) it was argued that the jury should be invited to take account of disciplinary procedures which are available against police officers, when considering whether the case is one which warrants the award of exemplary damages. (97) The Court of Appeal suggested that this would only be appropriate if two conditions were met:

... where there is clear evidence that such proceedings are intended to be taken in the event of liability being established and that there is at least a strong possibility of the proceedings succeeding. (98)

But even if, in these circumstances, the prospect of disciplinary proceedings is a consideration which may persuade a court to refuse to make any award of exemplary damages, whether it should be so persuaded should depend upon, in particular, the nature and efficacy of the disciplinary proceedings. (99)

4.46 No reported English case has considered the relevance of disciplinary proceedings which have been brought successfully prior to civil proceedings for exemplary damages. It is therefore unclear whether an English court would hold this to be an automatic and absolute bar to a subsequent award of exemplary damages for the same conduct, or would examine the nature and adequacy of the disciplinary sanction (if any) in order to decide whether, and to what extent, an additional award of exemplary damages is necessary to punish the defendant.

(d) Multiple plaintiffs

4.47 The existence of a class of plaintiffs may provide a reason for refusing to make any exemplary award at all. In AB v South West Water Services Ltd (100) the Court of Appeal considered that the large number of plaintiffs affected by the nuisance was an aspect of the case which made exemplary damages inappropriate. The underlying reason is that where there is a class of plaintiffs, practical problems arise with regard to the assessment and apportionment of exemplary damages. If existing actions have not been consolidated, or potential causes of action have not yet accrued, the court is faced with the question of how to assess exemplary damages if it is not aware of the full extent of the defendants wrongdoing or of how many other claims will be made, in other proceedings, for exemplary damages in respect of the defendants conduct. The court is also faced with the question of how to apportion the exemplary award between the plaintiffs and potential plaintiffs. These may, however, be regarded simply as raising problems of assessment, and not as problems which completely rule out exemplary damages awards in multiple plaintiff cases. (101)

(e) The plaintiffs conduct

4.48 The plaintiffs conduct may serve to exclude exemplary damages altogether. A good example is where the plaintiff provoked the wrongful action by his or her own conduct. (102) Or alternatively, as we shall see below, such conduct may be a reason for reducing any sum that is awarded. (103)

(f) The defendants good faith

4.49 The good faith of the defendant may be a reason which justifies a court refusing to make any exemplary damages award at all. Or alternatively, as we shall see below, it may be a reason for awarding a lower sum than would otherwise be awarded. (104)

4.50 It is a necessary precondition of category 2 cases that the defendant should have acted in the knowledge that, or reckless as to whether, what he or she was doing was wrongful. As a result, there is no scope for good faith as a factor relevant to the availability or the assessment of exemplary damages awards. In contrast, it would appear that the defendants behaviour in committing the wrong need not be exceptional in order to bring the case within category 1. (105) In Huckle v Money (106) the court refused to upset an award of £300 where the plaintiff had been kept in custody for about six hours, but the defendant "used him very civilly by treating him with beef-steaks and beer". It would appear, therefore, that the wrongful arrest by the defendant servant of government was thought sufficient in itself to justify an exemplary award.

4.51 On the other hand, it has been said in Holden v Chief Constable of Lancashire (107) that the absence of aggravating factors in the defendants conduct is relevant within category 1 in deciding "whether or not to award such damages, and, if so, how much". (108) The Court of Appeal considered this to be an important limitation on the otherwise overbroad proposition that any unconstitutional act by a servant of government made an exemplary damages award possible in law. Sir John Arnold P emphasised that:

... the circumstance that a case comes within a category does not make it follow as night the day that exemplary damages will be awarded. It merely leaves it open to the jury to award exemplary damages in such cases ... (109)

Accordingly, if the defendant acted on the basis of an honest or mistaken belief or in good faith, the jury or the court might exercise its discretion to decline to make an exemplary damages award. (110)

(4) The remedial requirements of European Community law

4.52 English courts have occasionally, albeit rarely, faced arguments that European Community law requires them to award exemplary or punitive damages for breaches of Community law which are actionable by individuals in national courts. (111) The traditional starting-point has been that in the absence of Community provision, the nature and extent of remedies which are available for such infringements are generally matters for national law to decide. (112) However, national courts and legislatures are not entirely free to award whatever remedies (if any) they wish. The European Court of Justice has laid down several general principles which national remedies are required to observe, which can significantly constrain (or sometimes even dictate) a national legal systems choice of remedies. (113) In particular, the national remedies available for breach of a Community law right must not be less favourable than those available for similar claims or causes of action founded on domestic law, and must secure effective protection for the Community law right.

4.53 The non-discrimination or comparability requirement was recently considered in relation to the remedy of exemplary damages by the Divisional Court in R v Secretary of State for Transport, ex parte Factortame Ltd (No 5). (114) In Brasserie du Pecheur SA v Germany (115) the European Court of Justice stated that an award of exemplary damages "cannot be ruled out" in a claim founded on Community law, "if such damages could be awarded pursuant to a similar claim or action founded on domestic law". In that case the ECJ was dealing with the principle of state liability for breach of Community law recognised in Francovich and Bonifaci v Italy. (116) In ex parte Factortame Ltd (No 5) the Divisional Court had to apply the ECJs ruling to this category of claim.

4.54 The Divisional Court indicated that the state liability claim was best understood as an action for breach of statutory duty. (117) It was apparently accepted that, under domestic law, exemplary damages could never be awarded for such a claim. (118) But did Community law require exemplary damages to be available? The applicants argument was that exemplary damages could be awarded for the tort of misfeasance in a public office; (119) that this is a "similar claim or action founded on domestic law"; that to refuse to award them for state liability claims would infringe the principle of non-discrimination; and that, as a result, exemplary damages had to be available as a matter of Community law. The Divisional Court rejected these arguments. Community law did not require exemplary damages to be available for the simple reason that the tort of misfeasance in a public office was not a similar claim or action. (120)

4.55 Arguments that Community law (the Equal Treatment Directive) requires exemplary damages to be available for unlawful discrimination on grounds of sex have been similarly unsuccessful. It is now reasonably clear that exemplary damages are not available, as a matter of domestic law, for unlawful discrimination on grounds of sex, contrary to the Sex Discrimination Act 1975, because such claims fail the cause of action test. (121) In Ministry of Defence v Meredith (122) the Employment Appeal Tribunal rejected the argument that exemplary damages nonetheless had to be available in this context as a matter of Community law. The decision of the European Court of Justice in Marshall v Southampton and South West Hampshire Health Authority (No 2) (123) that any "sanction" for unlawful discrimination had to have a "real deterrent effect" was held to require no more than that where (as in this country) a Member State had chosen to remedy unlawful discrimination by the award of compensation, that compensation had to be "full". (124) Nor were exemplary damages required by the principle of non-discrimination or comparability, as they are not available for the comparable domestic cause of action: the statutory tort of sex discrimination under the Sex Discrimination Act 1975. (125)

2. ASSESSMENT

4.56 The assessment of exemplary damages awards is essentially indeterminate and has also often been criticised for unpredictability and virtual uncontrollability. (126) One reason for the indeterminacy is the very large number of factors that are considered relevant to assessment, as well as the inherent subjectivity of some of those factors. Assessment requires a court to determine the culpability or punishment-worthiness of the defendants conduct, and according to Lord Devlin in Rookes v Barnard,

[e]verything which aggravates or mitigates the defendants conduct is relevant. (127)

4.57 Another, and probably more important reason for the indeterminacy, is the fact that exemplary damages awards are commonly assessed by juries. The reason is that some of the principal torts for which exemplary damages are available are those for which trial by jury is generally available under section 69(1) of the Supreme Court Act 1981: false imprisonment, malicious prosecution and defamation. Even a best view of jury assessment would point to the fact that jury awards are unreasoned, that, in the past, the extent of guidance which trial judges have been allowed to give has been very limited, and also that the extent of ex post facto appellate scrutiny has been sparing. And even judges who apparently favour jury assessment have been worried by the inconsistent amounts of exemplary damages awarded by different juries. Thus in Thompson v MPC Lord Woolf MR observed that:

We have ... been referred to a number of cases in which juries have made awards ... and the variations in the range of figures which are covered is striking. The variations disclose no logical pattern. These examples confirm our impression that a more structured approach to the guidance given to juries in these actions is now overdue. (128)

[The] objections to allowing juries to go beyond compensatory damages are overwhelming. To allow pure punishment in this way contravenes almost every principle which has been evolved for the protection of offenders. There is no definition of the offence, except that the conduct punished must be oppressive, high-handed, malicious, wanton or its like - terms far too vague to be admitted to any criminal code worthy of the name. There is no limit to the punishment except that it must not be unreasonable. The punishment is not inflicted by a judge who has experience and at least tries not to be influenced by emotion: it is inflicted by a jury without experience of law or punishment and often swayed by considerations which every judge would put out of his mind ... It is no excuse to say that we need not waste sympathy on people who behave outrageously. Are we wasting sympathy on vicious criminals when we insist on proper legal safeguards for them? The right to give punitive damages is so firmly embedded in our law that only Parliament can remove it. But I must say that I am surprised by the enthusiasm of Lord Devlins critics in supporting this form of palm-tree justice. (129)

4.58 Notwithstanding these forceful criticisms, some people may perceive that positive benefits flow from the indeterminacy of exemplary awards, at least in relation to category 2 cases. The argument is that it would only frustrate the underlying purpose of making awards in these cases if potential tortfeasors could undertake precisely the kind of cost-benefit analysis which category 2 is designed to thwart. The very unpredictability of exemplary awards prevents newspaper editors, for example, from calculating that the benefits of publishing a libel will outweigh the costs - for it is impossible to estimate what those costs might be.

4.59 In any event, despite the basic indeterminacy of awards of exemplary damages, it is possible to identify certain principles or factors which the courts have considered to be relevant to their assessment. These are:

4.60 Moreover, in a succession of recent cases, the Court of Appeal has departed from past practice, by permitting increasingly detailed guidance to be offered to juries by trial judges as to how they should reach an appropriate sum, and by exercising a closer degree of ex post facto control over excessive jury awards. (130) These crucial developments have been designed to meet understandable concerns about uncontrolled, unpredictable, inconsistent and potentially excessive jury awards.

4.61 Article 10(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms states that:

Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without public authority and regardless of frontiers.

The exercise of these freedoms ... may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society ... for the protection of the reputation or rights of others ...

4.62 At present, (131) the European Convention on Human Rights is not itself part of English domestic law; English courts thus have no power to enforce Convention rights directly. Nevertheless, in Rantzen v Mirror Group Newspapers Ltd (132) the Court of Appeal recognised that:

[w]here freedom of expression is at stake ... recent authorities lend support to the proposition that article 10 has a wider role (133) and can properly be regarded as an articulation of some of the principles underlying the common law. (134)

Thus it has been suggested that the legitimacy of any limitation on the right to freedom of expression under English domestic law is governed by principles which closely resemble those which are expressed in Article 10(2) of the Convention. In Attorney-General v Guardian Newspapers Ltd (No 2) (135) Lord Goff stated that:

I conceive it to be my duty, when I am free to do so, to interpret the law in accordance with the obligations of the Crown under this treaty. The exercise of the right to freedom of expression under article 10 may be subject to restrictions (as are prescribed by law and are necessary in a democratic society) in relation to certain prescribed matters, which include the interests of national security and preventing the disclosure of information received in confidence. It is established in the jurisprudence of the European Court of Human Rights that the word necessary in this context implies the existence of a pressing social need, and that interference with freedom of expression should be no more than is proportionate to the legitimate aim pursued. I have no reason to believe that English law, as applied in the courts, leads to any different conclusions. (165)

4.63 Accordingly, in two recent cases the Court of Appeal has considered the particular implications of these constraints on legitimate derogations from the right to freedom of expression for jury-assessed damages awards in defamation actions. The "almost limitless discretion" of the jury when it assesses damages in defamation cases, (137) as well as the excessive size of the awards which often result, have given rise to substantial judicial concern about how far this is consistent with due regard for the right to freedom of expression, and for the various constraints on legitimate derogations therefrom. As a direct result, in both cases the Court of Appeal found it necessary to modify previous approaches to jury-assessed damages awards.

[I]t seems to us that the grant of an almost limitless discretion to a jury fails to provide a satisfactory measurement for deciding what is necessary in a democratic society or justified by a pressing social need. (139)

Accordingly, in order to ensure that the restriction on freedom of expression constituted by defamation damages was legitimate, courts had to subject large awards of damages to "more searching scrutiny than [had] been customary in the past", and the barrier against appellate intervention in jury awards should be "lowered". (140) Appellate courts should thus be more ready to find a jury award "excessive", and so more often exercise their statutory power to substitute for that award a lower award of their own.

4.65 The lack of guidance which could be given to juries by trial judges on the assessment of damages also caused concern in Rantzen. Article 10(2) of the Convention requires that any restrictions on the exercise of the right to freedom of expression should be "prescribed by law". The European Court of Human Rights has held that:

a norm cannot be regarded as a law unless it is formulated with sufficient precision to enable the citizen to regulate his conduct. (141)

The unguided discretion of the jury to assess damages in actions for defamation arguably breached this requirement, and the Court of Appeal in Rantzen clearly considered that Article 10(2) did require that the jury should be given concrete guidance in assessing those damages. Only then would the restriction on freedom of expression - created by jury-assessed defamation awards - be prescribed by law. It was therefore held that trial judges could refer juries to previous awards made by the Court of Appeal in the exercise of its powers under section 8 of the Courts and Legal Services Act 1990 and Rules of the Supreme Court, Order 59, rule 11(4). (142) It is unclear how far this approach can also be applied to substitute exemplary damages awards; the matter was not expressly considered by the court. (143) No reference is, however, to be made to awards made by juries in previous cases: no norm or standard to which future reference could be made had been established by that category of awards, for they were themselves assessed with only minimal judicial guidance. (144)

4.66 In John v Mirror Group Newspapers Ltd (145) the Court of Appeal also elaborated a limitation, which it applied specifically to exemplary damages, with reference to Article 10 of the Convention. Exemplary damages are "analogous to a criminal penalty" so that:

... principle requires that an award of exemplary damages should never exceed the minimum sum necessary to meet the public purpose underlying such damages, that of punishing the defendant, showing that tort does not pay and deterring others. The same result is achieved by the application of article 10 ... (146)

4.67 The validity of these concerns about (non-)conformity with the Convention was confirmed by the decision of the European Court of Human Rights in Tolstoy Miloslavsky v United Kingdom, (147) which was heard before Rantzen reached the Court of Appeal. The Court held that an award of £1.5 million in compensatory damages, in conjunction with the lack of adequate judicial safeguards at trial and on appeal against disproportionately large awards at the relevant time, amounted to a violation of the defendants rights under Article 10. It is unclear how far the power of substitution of jury awards introduced by section 8 of the Courts and Legal Services Act 1990, (148) as well as the approach in Rantzen to the exercise of that power by the Court of Appeal, have rectified these deficiencies. If they have, then arguably even a substantial award of exemplary damages by a jury would not, per se, infringe Article 10, because of the potential for substitution on an appeal. However, the question of the legitimacy of exemplary damages awards as such - large or small - did not arise in Tolstoy, and the European Court of Human Rights was not called upon to consider whether they are "necessary in a democratic society ... for the protection of the reputation of others". (149)

4.68 In Rookes v Barnard (150) Lord Devlin emphasised that exemplary awards are governed by a principle of moderation or restraint. (151) This was essentially an exhortation to courts to award lower, rather than higher, awards. Commonwealth authorities have similarly emphasised the need for caution. (152) But it would appear that Lord Devlin was not wholly confident that the principle would sufficiently curb excessive awards:

It may even be that the House may find it necessary to ... place some arbitrary limit on awards of damages that are made by way of punishment. Exhortations to be moderate may not be enough.~(153)~

(3) Wealth of the defendant

4.69 When calculating the appropriate exemplary sum, it has been laid down that the court or jury should take into account the defendants capacity to pay. (154) It would seem that either party may give evidence of the defendants resources, but that in practice evidence of the defendants means is rarely, if ever, adduced.

4.70 Until the recent case of Thompson v MPC (155) it was unclear how this consideration should be applied in a vicarious liability case, where a plaintiff seeks to make an employer liable for the wrongful conduct of his employee. One possibility was that any sum which an employer is liable to pay as exemplary damages could be subject to deduction on account of the employees lack of means. Another, contrasting, possibility was that the means of the wrongdoing employee are irrelevant to the size of the sum which the employer is vicariously liable to pay.

4.71 In Thompson v MPC the Court of Appeal finally endorsed the second approach. It was said that where the action is brought against the chief police officer, and damages are paid on the basis of vicarious liability for the acts of his officers, (156)

it [is] ... wholly inappropriate to take into account the means of the individual officers except where the action is brought against the individual tortfeasor. (157)

There seems to be no good reason why this approach should not apply generally to vicarious liability to exemplary damages.

4.72 The Court of Appeal recognised that this approach might cause problems, in the event of the chief police officer seeking an indemnity or contribution from one or more of the individual wrongdoing officers. The fear is that those individuals could, indirectly, be made liable to pay a sum in excess of what they would have had to pay, directly, if they themselves had been sued. Lord Woolf MRs solution to this problem, if it ever was to arise, was through a sensitive use of the courts power to order contribution under sections 2(1) or 2(2) of the Civil Liability (Contribution) Act 1978. (158) That is, the court should exercise its power to order that:

... exemplary damages should not be reimbursed in full or at all if they are disproportionate to the officers means. (159)

(4) A windfall to the plaintiff, which may divert funds from public services

4.73 The theme underlying the two principles of moderation stated in John v MGN Ltd (160) and by Lord Devlin in Rookes v Barnard (161) is that restraint is necessary for reasons of fairness to defendants: inter alia, excessive awards might otherwise constitute an unjustifiable infringement of the defendants civil liberties; (162) they may constitute a greater punishment than would be likely to be incurred, if the conduct were criminal; (163) and they are a punishment imposed without the safeguards which the criminal law affords an offender. (164)

4.74 But there are other reasons for restraint, which have a rather different focus. One of these is that the plaintiff may receive too much. Exemplary damages awards are a windfall to a plaintiff, and, it would appear from the Court of Appeals decision in Thompson v MPC, (165) that a separate reason (228) for restraint is the concern to avoid giving a plaintiff too excessive a windfall. This consideration was stated as part of the guidance which the Court of Appeal formulated for use in jury-tried claims to exemplary damages; (167) however, it should be no less relevant where a judge, rather than a jury, decides what award is appropriate.

4.75 In Thompson v MPC (168) the windfall concern was expressed alongside another: that an award may be a windfall to the plaintiff at the general publics expense. Where a public service-provider is liable to pay exemplary damages out of its own funds, and the liability is not met by insurers, the money so paid will not be available to finance the publicly beneficial activities of that body. Thompson v MPC indicates that this is a reason for exercising restraint when determining the liability of, for example, a police authority to pay exemplary damages, in the event that the claim is not met by insurers. Thus a jury should be told that, inter alia:

... an award of exemplary damages is in effect a windfall for the plaintiff and, where damages will be payable out of police funds, the sum awarded may not be available to be expended by the police in a way which would benefit the public (this guidance would not be appropriate if the claim were to be met by insurers); (169)

4.76 This direction embodies a reason for restraint which should also be borne in mind by a judge, when he alone determines a defendants liability to exemplary damages.

4.77 In Broome v Cassell (171) the House of Lords held that where two or more joint tortfeasors are sued together, only one sum can be awarded by way of exemplary damages, and this sum is limited to what is necessary to punish the defendant who bears the least responsibility for the tort.~(172)~

4.78 This restriction aims to avoid the over-punishment which may occur owing to the operation of the doctrines of joint or joint and several liability. The risk is that a tortfeasor could be made liable to pay an award which was assessed with reference to the greater fault of another of the tortfeasors, and that the burden of such an award could not be transferred to those tortfeasors by a claim to contribution or to an indemnity. (173) In such a case the award of exemplary damages borne by the less culpable tortfeasor would inevitably exceed that which was proportional to his or her fault, and necessary to punish him or her for it.

4.79 This restriction does mean, however, that where no exemplary award is warranted by the conduct of one of the joint tortfeasors, no award can be made against any of the others, however culpable their conduct may have been. Plaintiffs can only avoid the risk of under-punishment of the latter if they are able to identify and to bring separate proceedings against the most culpable of the joint tortfeasors.

4.80 Commonwealth courts appear not to follow the English approach on this matter, and prefer instead to impose what can be called several liability for exemplary or punitive damages. (174) Separate awards of exemplary damages, for different amounts, may be made against each individual joint tortfeasor. Accordingly, if an award is justified by the conduct of only one of the joint tortfeasors, judgment for punitive damages will be entered against only that joint tortfeasor, and the sum awarded will be that which is appropriate to that joint tortfeasors conduct. Similarly, if an award is justified by the conduct of two or more joint tortfeasors, separate judgments for punitive damages will be entered against each of them, for such sums as are warranted by their personal conduct.

(6) Multiple plaintiffs

4.81 Very little attention has been paid by English and Commonwealth courts (175) to solving the difficult problems that are raised by multiple claimants to exemplary damages - in particular the potential for multiple punitive liability arising out of a single act or course of conduct. It has already been seen that on at least one occasion an English court considered these problems to be so serious as to constitute a valid reason for refusing to make any exemplary award at all. (176)

4.82 In Riches v News Group Newspapers Ltd (177) it was decided that, if two or more plaintiffs are to be awarded exemplary damages in joint proceedings against a single defendant, the court must determine a single sum of exemplary damages which is appropriate punishment for the defendants conduct. This sum should then be divided equally amongst the successful plaintiffs. Although the fact that the conduct affects more than one person may justify an increase in the punishment inflicted, the limiting factor on the award is the culpability of the defendants conduct.

4.83 The courts do not yet seem to have considered what should happen if one or more plaintiffs do not participate in the first case to be adjudicated; the joint proceedings in Riches look to have involved all potential multiple claimants. One possible view is that no further exemplary award is possible, and, further, that any plaintiffs who do not participate in the first such case to be adjudicated have no legal entitlement to share in any award that was made (a first past the post takes all rule).

(7) The plaintiffs conduct

4.84 The conduct of the plaintiff may be taken into account when deciding what sum to award as exemplary damages. (178) A judge is entitled to direct the jury to this effect. (179) The plaintiffs conduct is relevant, however, only if it was a cause of the offending behaviour. (180) Thus provocative conduct which results in a wrongful arrest may lead to a reduced award of exemplary damages. The reason is that such conduct will usually reduce the impropriety of the defendants reaction. (181) In contrast, the plaintiffs non co-operation with a complaints procedure is no ground for making a reduced award. (182)

(8) The defendants good faith

4.85 The absence of aggravating features is relevant to the quantum of an exemplary award under category 1, as well as to the question whether such an award should be made at all - as we have already seen. (183) Accordingly, a wrong committed in good faith or under an honest mistake may justify a reduced award of exemplary damages.

(9) Control and guidance of the jury

4.86 Where the trial is by jury, (184) awards of exemplary damages are assessed by the jury. The jury has traditionally been given little guidance as to how to reach an appropriate exemplary sum. (185) But in an effort to curb excessive jury damages awards, the Court of Appeal has increasingly moved away from this position, and has displayed a greater readiness to exercise control over jury assessment of damages in two distinct forms. The first is by is by intervening and substituting for the jury award an award of its own. The second is by permitting trial judges to give guidance to juries on the assessment of damages, compensatory and exemplary; such guidance may be formulated by the Court of Appeal, or derived from some other source. (186) These developments warrant close scrutiny.

(a) Appellate control of jury awards

4.87 The first set of developments concerns the extent of appellate court intervention in jury assessments. Prior to 1990 appellate court intervention was very limited, but this was to some extent justified by the limited powers of the appellate court. Such a court could only quash an excessive award, and could not substitute one of its own; it would then be left to yet another jury to determine the appropriate sum. (187) But this position was changed in 1990 by section 8(2) of the Courts and Legal Services Act 1990 and Rules of the Supreme Court, Order 59, rule 11(4). These provisions give the Court of Appeal the power to substitute its own award ("such sum as appears [to it] to be proper") for that of the jury, where it considers that the jurys award was "excessive".

4.88 These powers extend to both compensatory and exemplary damages awards; they also apply irrespective of the cause of action which founds the jury award. Thus in Rantzen v MGN Ltd (188) the Court of Appeal exercised this power to replace a jury award for defamation of £250,000 with an award of £110,000. In John v MGN Ltd (189) it substituted an exemplary damages award for defamation of £275,000 with an award of £50,000. And in Thompson v MPC (190) an exemplary damages award of £15,000 was substituted for an award of £200,000 made in respect of false imprisonment and assault. (191)

4.89 It is also apparent after Thompson v MPC (192) that the courts powers to intervene and substitute a damages award are to be given a uniform interpretation "across the board" - that is, irrespective of the cause of action in question. (193) This means that the very liberal interpretation which the powers were given in the context of the tort of defamation in Rantzen v MGN Ltd (194) applies equally to, for example, false imprisonment and malicious prosecution. (195) And this is so even though the principal justification for a liberal interpretation of section 8, and so for closer scrutiny of large awards, was one which has relevance to defamation actions only: that is, the need to have regard for the right to freedom of expression. (196) In future, therefore, the question for an appellate court appears to be whether the award was one which a "reasonable jury" would have thought necessary to punish the defendant and to deter him and others. (197)

(b) Guidance for juries

4.90 The second set of developments concerns the guidance of juries by trial judges. This has, in the past, been "extremely limited". (198) But there have been extensive developments in recent years. Guidance has increasingly been permitted, in a variety of forms, in relation to compensatory damages (for non-pecuniary loss) as well as exemplary damages:

· guideline compensatory damages brackets, which are consistent ory damages for the torts of malicious prosecution (206) and false imprisonment, (207) albeit subject to the caveat that:

circumstances can vary dramatically from case to case and ... these ... figures which we provide are not intended to be applied in a mechanistic manner. (208)

4.93 But however they are determined, the brackets endorsed in Thompson v MPC and John v MGN Ltd will be no more than guidelines: the jury should be told that everything depends on their assessment of the gravity of the injuries, that they are no more than guideline figures, and that it is for it alone to select an actual appropriate sum. It might be thought, however, that the existence of guidelines will facilitate ex post facto appellate control of jury awards. Even if the guideline brackets are not binding on a jury, they will represent figures which are perceived by the Court of Appeal or the trial judge to be proper in the general run of cases. It should therefore be easier to determine whether or not the sum awarded by the jury is excessive. (209)

4.94 Very much more important for this paper is the fact that in Thompson v MPC (210) the Court of Appeal formulated detailed guidance for juries assessing exemplary damages. It is sufficient to observe that it includes not only guiding principles, (211) but also approximate minimum and ceiling figures for use in actions against the police for false imprisonment and malicious prosecution. Thus,

[w]here exemplary damages are appropriate they are unlikely to be less than £5,000. Otherwise the case is probably not one which justifies an award of exemplary damages at all. In this class of action the conduct must be particularly deserving of condemnation for an award of as much as £25,000 to be justified and the figure of £50,000 should be regarded as the absolute maximum, involving directly officers of at least the rank of superintendent. (212)

4.95 It is not clear what the broader impact of Thompson v MPC will be. The guidance was expressly directed only at the torts of false imprisonment and malicious prosecution, and more particularly, to claims where those torts are committed by the police. It was an understandable response to the proliferation of actions against that category of defendant, which involved, where successful, ever-increasing sums of damages. But given this precedent, one might anticipate similar guidance being offered in the future, in categories of claim where similar pressures arise.

(iii)The relevance of substitute awards

4.96 A final possible source of guidance is appellate substitute (213) awards. At present it is not wholly clear how far this category of award can be utilised by a trial judge, in guiding juries.

4.97 Although reference to previous jury awards remains impermissible at present, it has been said that substitute awards made by the Court of Appeal under section 8(2) of the Courts and Legal Services Act 1990 and Rules of the Supreme Court, Order 59, rule 11(4), "stand on a different footing". (214) Those awards can be referred to juries. But Rantzen v MGN Ltd (215) only involved a compensatory award. Thus it is unclear how far the same reasoning also extends to substitute exemplary damages awards. One difficulty is that a substitute exemplary award cannot reliably be viewed in isolation as an indication of the sort of sum which a court has thought to be appropriate to punish a defendant. An exemplary award must necessarily represent the balance, on a particular set of facts, between the compensatory sum and the minimum sum necessary to punish the defendant; as a result, it cannot be considered independently of the compensatory sum. Nevertheless, it would be surprising if substitute exemplary awards, of the sort made by the Court of Appeal in John v MGN Ltd (216) or Thompson v MPC, (217) are not taken by practitioners at the very least to establish a benchmark for exemplary awards in the future.

4.98 However, section 8 substitute awards will only be truly useful as guidance if there is a substantial body of appellate decisions making them; (218) and if the approach in Thompson v MPC achieves its aims, that development will be much less likely. The reason is that Thompson-type guidance is designed to reduce the number of jury awards which are appealed against, by avoiding the risk of excessive jury awards. And if the number of appeals decline, so should the number of awards which are substituted on appeal. Lord Woolf MR observed:

To not provide juries with sufficient guidance to enable them to approach damages on similar lines to those which this court will adopt will mean that the number of occasions this court will be called on to intervene will be undesirably frequent. This will be disadvantageous to the parties because it will result in increased costs and uncertainty. It will also have adverse consequences for the reputation of the jury system. It could be instrumental in bringing about its demise. (219)

3. MISCELLANEOUS ISSUES

(1) Standard of proof

4.99 In John v MGN Ltd (220) the Court of Appeal stated that the standard of proof which applies to claims to exemplary damages is the civil and not the criminal standard. (221) Prima facie the civil standard is a different, lower standard: viz, proof on the balance of probabilities. However, it has long been apparent that, especially in cases involving allegations of criminal conduct in civil proceedings, clearer proof may be required before a court or jury is entitled to find that proof on the balance of probabilities has been established. (222) This might be regarded as an inherent and inevitable flexibility which exists whatever standard of proof is formally chosen. Cross & Tapper on Evidence states:

... there are no more than two standards of proof recognised by the law, though allowance must be made for the fact that some occurrences are antecedently more probable than others, and the consequences of some decisions are more serious than others ... For these reasons prosecutors on the more serious criminal charges or those carrying graver consequences, and plaintiffs in some civil cases, have higher hurdles to surmount than when they are making less serious allegations or those with more trivial consequences. (223)

4.100 In John v MGN Ltd Sir Thomas Bingham MR appeared to accept this sort of analysis:

But a jury should in our judgment be told that as the charge is grave, so should the proof be clear. An inference of reprehensible conduct and cynical calculation of mercenary advantage should not be lightly drawn. In the Manson case [1965] 1 WLR 1038, 1044G, Widgery J directed the jury that they could draw inferences from proved facts if those inferences were quite inescapable, and he repeatedly directed, at p 1045, that they should not draw an inference adverse to the publisher unless they were sure that it was the only inference to be drawn. (224)

And in the earlier decision in Treadaway v Chief Constable of the West Midlands, (225) McKinnon J expressly applied the approach in Hornal v Neuberger Products Ltd (226) to a claim to exemplary damages for assault and malicious prosecution. The jury was directed that:

... the more serious the allegation, the higher degree of probability required to prove it.

4.101 Major Commonwealth jurisdictions apply the civil standard of proof to claims to exemplary or punitive damages; the flexibility of this standard seems to have been recognised in those jurisdictions also. (227)

(2) Vicarious liability

4.102 Under the doctrine of vicarious liability, an employer is liable for wrongs (228) committed by its employees in the course of their employment. (229) Courts have proceeded on the basis that the doctrine applies to liability to exemplary damages, and in the same form as for a liability to compensatory damages. (230) But there is no reported English case which goes beyond mere assumption, and specifically considers the question whether, and if so how, the doctrine should apply.

4.103 In Racz v Home Office, (231) for example, the plaintiff brought an action in tort (232) against the Home Office alleging that he had suffered ill-treatment by prison officers whilst he was a remand prisoner. The question directly before the House of Lords was whether the Home Office could be vicariously liable for the acts of prison officers which amounted to misfeasance in a public office; it was held, reversing the Court of Appeal, that it could. In Racz the plaintiff claimed both compensatory damages and exemplary damages, and there was no suggestion in either the Court of Appeal or the House of Lords that the same doctrine of vicarious liability should not apply to each. Whether the Home Office was in fact vicariously liable to either award therefore depended on whether, at the time of the wrongful acts, the officers were engaged in a misguided and unauthorised method of performing authorised duties, or whether the unauthorised acts of the prison officers were so unconnected with their authorised duties as to be quite independent of, and outside, those duties.

4.104 Even though conduct giving rise to an exemplary damages award will generally be of a highly culpable nature, the courts rarely find that police officers were acting outside the course of their employment when they acted wrongfully. Vicarious liability is usual, not exceptional, in civil actions against the police. One case in which exemplary damages were awarded against a police officer, but the Chief Constable was not held vicariously liable to pay them, is Makanjuola v Metropolitan Police Commissioner. (233) In Makanjuola the plaintiff had submitted to a sexual assault by a police officer after he threatened that he would otherwise make a report which would lead to her deportation. Henry J held that the plaintiff could not hold the Metropolitan Police Commissioner vicariously liable for the policemans tort, since it was a course of conduct of his own and could not be regarded as merely an improper mode of doing something he was authorised to do. Thus the policeman himself was held liable in damages, including category 1 exemplary damages.

4.105 Notwithstanding that the doctrine of vicarious liability, in so far as it applies to a claim to exemplary damages, is of substantially the same scope as when it applies to a claim to compensatory damages, (234) there may be some differences between the two. In particular, it appears that the sum of exemplary damages to which a vicariously liable employer may be held liable may exceed that which an employee would have been liable to pay for his wrongdoing. The reason is that the former may not argue that his liability should be reduced on the basis of his employees lack of means, whereas this argument would clearly be open to the employee himself. (235)

(3) Survival of claims

(a) For the benefit of the victims estate

4.106 No claim for exemplary damages survives for the benefit of a deceased persons estate. (236) This rule is adopted in the great majority of major Commonwealth jurisdictions. (237)

4.107 Exemplary damages may be claimed from a deceased wrongdoers estate. (238) The same rule applies in major Commonwealth jurisdictions. (239)

4.108 It appears that it is contrary to public policy to allow an individual to enforce an insurance policy which indemnifies him or her against a fine or other punishment imposed for committing a criminal offence, at least where the offence involved deliberate misconduct. (240) Is an insurance policy insuring a person against civil liability for exemplary damages also contrary to public policy? The argument would be that to allow insurance would frustrate, or at least limit, any punitive or deterrent effect which such liability might have on the defendant. (241)

4.109 The leading case on this question, Lancashire County Council v Municipal Mutual Insurance Ltd, (242) suggests that it is not. In that case a local authority was vicariously liable to pay awards of exemplary damages for torts committed by its employees. The authority had an insurance policy which covered it for "all sums which the insured shall become legally liable to pay as compensation". The insurers were only prepared to pay the compensatory damages and disputed their liability in respect of the exemplary damages awarded. The local authority brought an action against the insurers.

4.110 At first instance Judge Michael Kershaw held that it was not per se contrary to public policy for a person to be indemnified by insurance against their liability for exemplary damages. This was upheld by the Court of Appeal, but on slightly different grounds. (243) Having held that the insurance policy did, on its proper construction, cover the awards of exemplary damages, the court decided that public policy did not require that the local authority should be prevented from insuring against the consequences of its vicarious liability. It was not necessary for Simon Brown LJ to go further to consider the position of a wrongdoer seeking indemnification against exemplary damages arising from his or her personal liability. However, the clear suggestion in Simon Brown LJs judgment is that the courts approach would be the same: insurance would be permitted even in relation to a personal liability to pay an exemplary damages award. (244)

4.111 Simon Brown LJ considered the argument that category 1 exemplary damages cases would involve conduct which would "almost inevitably be criminal", and that given the principle that a person "cannot insure ... against liability for committing a crime", insurance against conduct falling within category 1 should be contrary to public policy. (245) He responded:

For my part I unhesitatingly accept the principle that a person cannot insure against a liability consequent on the commission of a crime, whether of deliberate violence or otherwise - save in certain circumstances where, for example, compulsory insurance is required and enforceable even by the insured. I further recognise that in many cases where the question of liability for exemplary damages is likely to arise for consideration under this policy the police officer concerned will have acted criminally. Conspicuously this will be so in cases of assault ... (246)

... nothing either in the authorities or in logic to justify extending this principle of public policy so as to deny insurance cover to those whose sole liability is one which arises vicariously ... (247)

4.112 The decision and reasoning of Simon Brown LJ in this case suggest that the key distinction in the existing law may not be between personal and vicarious liability. Rather, it may lie between insurance against the personal or vicarious liability of defendants in circumstances where their conduct would amount to criminal conduct, and insurance against personal or vicarious liability for conduct not amounting to criminal conduct.

(5) Exemplary damages must be specifically pleaded

... must be specifically pleaded together with the facts on which the party pleading relies. (248)

4.114 Accordingly, the plaintiff, and only the plaintiff, must decide to seek an exemplary damages award; even if it would otherwise be appropriate to award exemplary damages, a court is not permitted to add one of its own motion.

(1)Cf Merest v Harvey (1814) 5 Taunt 442, 128 ER 761. The importance of this aspect has, arguably, diminished over time.

(2) However, where exemplary damages are expressly authorised by statute (category 3), there is no need to satisfy the cause of action test.

(6) [1993] QB 507. The test was formulated in the absence of authority to the contrary (or at least, after treating any opposing cases as having been decided per incuriam) and in reliance on dicta of Lords Hailsham and Diplock in Broome v Cassell [1972] AC 1027, 1076, 1130H-1131A, to the effect that Lord Devlins intention had been to restrict, and not to widen, the availability of exemplary damages.

(8) The torts considered by the Court of Appeal were public nuisance, negligence and breach of statutory duty (imposed by Part I of the Consumer Protection Act 1987 and the Water Act 1945).

(9) See, in particular, R v Secretary of State for Transport, ex p Factortame Ltd (No 5), The Times 11 September 1997 (QBD, Divisional Court), in which the court accepted that it was bound by AB v South West Water Services Ltd [1993] QB 507 to hold that English law imposed a cause of action test: the decision was a "decision of the Court of Appeal arrived at after a full consideration of the relevant authorities".

(10) For Canadian authority, see, in particular, Vorvis v Insurance Corporation of British Columbia (1989) 58 DLR (4th) (SCC). See generally, S M Waddams, The Law of Damages (2nd ed, 1991) ch 11. For Australian authority, see, in particular, Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 (HCA), affirmed in Australian Consolidated Press Ltd v Uren [1969] 1 AC 590 (PC). But some state legislatures (mainly New South Wales) have abolished claims to exemplary damages in specific types of case: motor accident and industrial injury claims (eg Motor Accident Act 1988 (NSW), s 81A; Workers Compensation Act 1987 (NSW), s 151R) and defamation (Defamation Act 1974 (NSW), s 46(3)(a)). See generally, M Tilbury, Civil Remedies (1990) vol 1, ch 5. For New Zealand authority, see, in particular, Taylor v Beere [1982] 1 NZLR 81. See generally, S Todd et al, The Law of Torts in New Zealand (2nd ed, 1997) pp 1129-1237.

(11) On Canada, see S M Waddams, The Law of Damages (2nd ed, 1991) paras 11.230-11.270. On Australia, see M Tilbury and H Luntz, "Punitive Damages in Australian Law" (1995) Loyola LA Intl & Comp LJ 769, 783-785; see also notes by M Tilbury in (1996) 4 Tort L Rev 167, 168, and (1997) 5 Tort L Rev 85, 87. On New Zealand, see S Todd et al, The Law of Torts in New Zealand (2nd ed, 1997) p 1233; see also A Beck, "Claiming Exemplary Damages" [December 1996] NZLJ 451. See further paras 5.50-5.53 (tort of negligence) and 5.54-5.56 (equitable wrongs) below.

(19)Huckle v Money (1763) 2 Wils KB 205, 95 ER 768; Broome v Cassell [1972] AC 1027, 1128H, 1134D-E; Holden v Chief Constable of Lancashire [1987] QB 380, 388C-D, 388H.

(21)Purchas LJ said (at 385F) that it seemed "an overbroad and simplistic approach", and Sir John Arnold P said (at 388H-389A) that he shared those misgivings.

(22) See generally on such claims R Clayton and H Tomlinson, Civil Actions Against the Police (2nd ed, 1992) and R Clayton and H Tomlinson, Police Actions (1997).

(23)Exemplary damages are no longer available for such torts because they fail the cause of action test. See para 4.25 below.

(24)Rookes v Barnard

(27) For example, if defamatory material appeared in a newspaper published for profit. See Broome v Cassell [1972] AC 1027, 1079B-C, 1101C-D, 1121D, 1133A.

(28)Broome v Cassell [1972] AC 1027, 1079C-E, 1088G-1089A, 1094C-E, 1101D-G, 1121D, 1130D-F.

(35)Such conduct also usually gives rise to an award of aggravated damages; see Part II above, and para 2.6.

(36)See Drane v Evangelou [1978] 1 WLR 455, which has led to many subsequent awards of exemplary damages in housing cases. In Broome v Cassell [1972] AC 1027, 1079E-F, Lord Hailsham indicated that the unlawful eviction of a tenant by harassment was a prime example of a case falling within category 2.

(38)In Archer v Brown [1985] 1 QB 401, 423F-G, Peter Pain J said that the fact that the defendant could not have profited from his wrong did not take him outside category 2, provided that he had weighed the risk of loss against the chance of getting away with his wrongdoing.

(40)These principles include, in particular, those relating to moderation and joint liability. See paras 4.68 and 4.77-4.80 below.

In any action for damages for conversion or other proceedings which lie by virtue of any such omission, failure or contravention, the court may take account of the conduct of the defendant with a view, if the court thinks fit, to awarding exemplary damages in respect of the wrong sustained by the plaintiff.

(44)[1964] AC 1129, 1225. Cf Lord Kilbrandon in Broome v Cassell [1972] AC 1027, 1133H-1134A, who regarded this as an example of the older usage of the term exemplary damages, which would now be considered to be aggravated damages.

(47)Copyright, Designs and Patents Act 1988, s 191J, as inserted by the Copyright and Related Rights Regulations 1996, SI 1996 No 2967.

(48) The statutory formulation of the remedy is identical in each case (s 97(2); s 191J; s 229(3)):

The court may in an action for infringement of [copyright or design right or performers property rights] having regard to all the circumstances, and in particular to -

For discussion of additional damages, see, in particular: Laddie, Prescott and Vitoria, The Modern Law of Copyright (2nd ed, 1995) vol 1, paras 24.30-24.31; Copinger & Skone James on Copyright (13th ed, 1991) paras 11.66-11.67; W Cornish, Intellectual Property (3rd ed, 1996) para 11.61.

(52)The question immediately before both courts was whether additional damages could only be claimed in addition to damages (as was held in Redrow Homes), or whether they could be claimed in addition to an account of profits also (as was held in Cala Homes). The proper characterisation of additional damages was a very important part in the reasoning of each court to their respective conclusions.

(53)[1996] FSR 36, 43. Cf also Brugger v Medicaid [1996] FSR 362 and ZYX Music Gmbh v King [1997] 2 All ER 129, 148g-149g, in which Hirst LJ found it inappropriate to express a view on whether exemplary damages could be awarded under s 97(2).

(54)The express statements are found in Broome v Cassell [1972] AC 1027, 1134A, per Lord Kilbrandon, and Beloff v Pressdram Ltd [1973] 1 All ER 241, 264j-266b, per Ungoed-Thomas J. The one clear authority to the contrary, which was reinterpreted as an aggravated damages case by Lord Devlin in Rookes v Barnard [1964] AC 1129, 1225, is Williams v Settle [1960] 1 WLR 1072.

(55)See, in particular, Beloff v Pressdram [1973] 1 All ER 241, 264j-266b, per Ungoed-Thomas J, and Broome v Cassell [1972] AC 1027, 1134A, per Lord Kilbrandon.

(56)Mondaress Ltd v Bourne & Hollingsworth Ltd [1981] FSR 118, 122, per Buckley LJ.

(57)Copyright and Designs Law (1977) Cmnd 6732, paras 697-705. The Report of the Copyright Committee (1952) Cmd 8662 (the Gregory Committee Report), on which the 1956 Act was apparently based, advocated the introduction of a power to award "something equivalent to exemplary damages in cases where the existing remedies give inadequate relief" (para 294). Although the distinction between aggravated damages and exemplary damages was only fully developed in Rookes v Barnard [1964] AC 1129, there is evidence that the Committee meant what it said: the title of the section in which additional damages are considered is "Extent of Penalties".

(58)Section 17(3) was limited by the condition that additional damages could not be awarded unless "effective relief" would not otherwise be available to the plaintiff. Section 97(2) does not limit the availability of additional damages in this way.

(60) See Aggravated, Exemplary and Restitutionary Damages (1993) Consultation Paper No 132, paras 3.57-3.64.

(61)See AB v South West Water Services Ltd [1993] QB 507, 523C-D, 528E-F, 530H. An unresolved question is whether torts which satisfy the cause of action test, but which are committed merely negligently, can give rise to exemplary damages: cf Barbara v Home Office 134 NLJ 888.

(62)This was one of the torts on which the claim to exemplary damages in AB v South West Water Services Ltd was based; the claim was struck out ([1993] QB 507, 523H, 528E-F, 531B). However, the Court of Appeal gave additional reasons why public nuisance ought not to give rise to exemplary damages: especially at 531B-E, per Sir Thomas Bingham MR.

(63)Broome v Cassell [1972] AC 1027, 1076C-F (per Lord Hailsham), 1130H-1131A (per Lord Diplock).

(65)The Sex Discrimination Act 1975, Race Relations Act 1976 and Disability Discrimination Act 1995, were obviously not enacted before 1964. Cf, in particular, Bradford City Metropolitan Council v Arora [1991] 2 QB 507, in which exemplary damages were awarded for sex and race discrimination, and no point was taken that such damages could be given because the statutory torts were created after 1964. In AB v South West Water Services Ltd [1993] QB 507 the Bradford case was treated as having been decided per incuriam. See now Deane v Ealing LBC [1993] ICR 329.

(66)This is the characterisation currently preferred by English courts of a liability to pay damages for breach of a directly effective provision of Community law (such as Article 86 EC), and a Member States liability to pay damages for breach of Community law (eg failure to implement a directive, or defective implementation of a directive) under the principles of state liability laid down by the European Court of Justice: see paras 4.52 and 5.66 below. See, in particular, R v Secretary of State for Transport, ex p Factortame Ltd (No 5), The Times 11 September 1997 (QBD, Divisional Court), which is discussed at paras 4.52-4.54 and 5.69 below.

(67) Accordingly, if and when the European Convention on Human Rights is incorporated into domestic law by an Act of Parliament, exemplary damages will not be available (in the absence of express statutory authorisation) for any wrong which the incorporating Act creates.

(68)See R v Secretary of State for Transport, ex p Factortame Ltd (No 5), The Times 11 September 1997, criticised in para 4.54, n 120 below.

(69) Cf the position in Commonwealth jurisdictions, discussed at para 5.54 below.

(71)[1984] Ch 512, 516G-H, citing Smith v Day (1882) 21 ChD 421, 428, per Brett LJ.

(75)[1909] AC 488. Addis remains good law on this point, notwithstanding that it has been disapproved in relation to its denial of damages for injury to reputation by the House of Lords in Mahmud v BCCI [1997] 3 WLR 95. See also Perera v Vandiyar [1953] 1 WLR 672 and Kenny v Preen [1963] 1 QB 499.

(76)Indeed, according to Lord Hailsham in Broome v Cassell [1972] AC 1027, 1060B, a punitive award, if it is ever permissible, must always be discretionary.

(77)See, for example, AB v South West Water Services Ltd [1993] QB 527B-E, 528E-F, 533F, in which the Court of Appeal identified two further grounds for striking out the plaintiffs claims (in addition to failure to satisfy the cause of action test and/or the categories test). The grounds are discussed at paras 4.37-4.43 and 4.47 below.

(81)[1972] AC 1027, 1060A-D, 1082A-B, 1089B-F, 1104D, 1116C, 1121G-1122A, 1126C-D. See, in particular, Lord Diplock (at 1126D):

... it is only if what the defendant deserves to pay as punishment exceeds what the plaintiff deserves to receive as compensation, that the plaintiff can also be awarded the amount in excess.

(82)Nevertheless, exemplary damages and compensatory damages can be (and generally are) itemised. This is apparent from John v MGN Ltd [1997] QB 586, 619C-D in which it was said that:

... it is only where the conditions for making an exemplary award are satisfied, and only when the sum awarded to the plaintiff as compensatory damages is not itself sufficient to punish the defendant, show that tort does not pay and deter others from acting similarly, that an award of exemplary damages should be added to the award of compensatory damages (emphasis added)

See also Thompson v MPC [1997] 3 WLR 403, in which the Court of Appeal recommended that awards of basic compensatory damages and aggravated compensatory damages should be itemised (at 417C-D), and clearly took the view that exemplary damages should be separately itemised also.

(85) See, for a similar view, S M Waddams, The Law of Damages (2nd ed, 1991) para 11.390.

(89)[1993] QB 507, 516C-E. See also Devonshire & Smith v Jenkins, noted at pp 31-32 of Arden & Partington on Quiet Enjoyment (3rd ed, 1990), in which the court declined to award exemplary damages on the grounds, inter alia, that the defendant already had to pay a fine for substantially the same deeds.

(94)See, in particular, section 49(3) of the Supreme Court Act 1981, which preserves the inherent jurisdiction of the Court of Appeal or the High Court to stay proceedings before it. For an example of a case considering the use of this jurisdiction where the concurrent existence of civil and criminal proceedings could produce some form of unfairness - though not the unfairness of double punishment - see Jefferson Ltd v Bhetcha [1979] 1 WLR 898 (civil proceedings eroding the defendants right of silence in criminal proceedings).

(99)The disciplinary body may, for example, have very potent sanctions, such as the power to strike the defendant off the list of persons legally permitted to practise a particular profession, which, if awarded, would very arguably make an (additional) exemplary damages award unnecessary or otherwise inappropriate. But it is possible that the sanctions available and/or awarded could be less potent.

(102)See, eg, Ewing v Vasquez 7 May 1985 (unreported, CA) (tenant being difficult to live with); Holden v Chief Constable of Lancashire [1987] QB 380, 388D-E (plaintiff acting suspiciously, leading to wrongful arrest).

(110)See, eg, Simper v MPC [1982] CLY 3124; Kay v James, 21 April 1989 (unreported, CA). Cf Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118, 135, 159.

(111) Those are breaches of directly effective provisions of Community law (such as Article 86 EC) and breaches of Community law by Member States which attract an obligation to pay compensation under the principles of state liability formulated in, in particular, C-6 & 9/90 Francovich and Bonifaci v Italy [1991] ECR I 5357 and C-46 & 48/93 Brasserie du Pecheur SA v Germany; R v Secretary of State for Transport, ex p Factortame Ltd [1996] QB 404.

(112) See, for example, C-33/76, Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer fur das Saarland [1976] ECR 1989.

(113) See generally C Lewis, Remedies and the Enforcement of European Community Law (1996) Chapter 5, contrasting the "traditional approach" of the European Court of Justice with the current approach.

(114)R v Secretary of State for Transport, ex p Factortame Ltd (No 5), The Times 11 September 1997.

(115)C-46 & 48/93 Brasserie du Pecheur SA v Germany; R v Secretary of State for Transport, ex p Factortame Ltd [1996] QB 404 (ECJ).

(117)R v Secretary of State for Transport, ex p Factortame Ltd (No 5), The Times 11 September 1997.

(119)This would almost certainly fall within category 1: see paras 4.3 and 4.6-4.7 above. Moreover, the Divisional Court appeared to decide that the cause of action test was satisfied, in the case of the tort of misfeasance in a public office, because the tort was known to the law pre-1964. That is obviously a necessary condition, but it should not be sufficient to satisfy the cause of action test, as conventionally viewed: see paras 4.4 and 4.25 above. The court should have gone on to ask whether there were authorities which had awarded exemplary damages for that tort pre-1964.

(120) The Divisional Court was extremely reluctant to conclude that Community law required punitive damages to be available for breaches of Community law. It observed that the United Kingdom was almost unique amongst Member States in recognising a civil remedy of punitive damages. If English law made that remedy available for breaches of Community law, the pursuit of "uniformity" in the remedies available for such breaches across the Community would be undermined.

(123) C-271/91 Marshall v Southampton and South West Hampshire Health Authority (No 2) [1994] QB 126 (ECJ).

(124) [1995] IRLR 539, 541, paras 18-19. See also Ministry of Defence v Cannock [1994] IRLR 509, 524, para 144.

(126)See, eg, Broome v Cassell [1972] AC 1027, 1087D-F, per Lord Reid; P Birks, Civil Wrongs: A New World (Butterworth Lectures 1990-91) pp 79-82.

(130)The most important of these are: Rantzen v MGN Ltd [1994] QB 670; John v MGN Ltd [1997] QB 586; Thompson v MPC [1997] 3 WLR 403.

(131) The Government has signalled its intention to incorporate the Convention into domestic law.

(133) It has long been accepted that the Convention could be used, in particular, for the purpose of resolving ambiguity in English primary or subordinate legislation, and that where there is an ambiguity the courts will presume that Parliament intended to legislate in conformity with the Convention and not in conflict with it.

(134) [1994] QB 670, 691C-D, per Neill LJ, referring to, inter alia: AG v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 283, per Lord Goff; Derbyshire County Council v Times Newspapers Ltd [1993] AC 534, 551, per Lord Keith, agreeing with Lord Goff in AG v Guardian Newspapers Ltd (No 2); R v Wells Street Stipendiary Magistrate, ex p Deakin [1980] AC 477.

(140) [1994] QB 670, 690G-H. According to the Court of Appeal, the question became: "Could a reasonable jury have thought that this award was necessary to compensate the plaintiff and to reestablish his reputation?". Previous formulations were higher. For example: "the damages are so excessive that no twelve men could reasonably have given them" (Praed v Graham (1889) 24 QBD 53, 55, per Lord Esher MR); "it is out of all proportion to the facts or such that twelve reasonable men could not have made such an award" (Lewis v Daily Telegraph Ltd [1963] 1 QB 340, 380, per Holroyd Pearce LJ).

(141) The Sunday Times v The United Kingdom (1979-80) 2 EHRR 245, 271, para 49.

(144) It is unclear whether this will change, even if the additional guidance which may be given to juries after John v MGN Ltd [1997] QB 586 (see para 4.91 below) succeeds in reducing, and increasing consistency between, jury awards for defamation: see John v MGN Ltd [1997] QB 586, 611H-612B, per Sir Thomas Bingham MR.

(152) See, for example, Donselaar v Donselaar [1982] 1 NZLR 97, 107, per Cooke J.

(153)Rookes v Barnard

(154) Rookes v Barnard [1964] AC 1129,1228, per Lord Devlin. Lord Devlin spoke of the "means of the parties", but presumably the means of the plaintiff can only exceptionally (if ever) be relevant: that is, where they affect the culpability of the defendants behaviour.

(158) Section 2(1) of the Civil Liability (Contribution) Act 1978 provides that the amount of contribution recoverable from any person:

... shall be such as may be found by the court to be just and equitable having regard to the extent of that persons responsibility for the damage in question ...

Section 2(2) provides that the court may order contribution amounting to a complete indemnity or exempt a person altogether from liability to make contribution.

(228)LR@SW TTTT"T'T)T.T3T8T= The guidance given in Thompson referred to the windfall and resources for public services concerns together. But the windfall concern should arguably be a reason for restraint where it alone applies - in particular, where the defendant has no role in delivering services to the public.

(170) See, for further consideration of the existing law and its defects, paras 5.186-5.192 below.

(172)Broome v Cassell

(173) See, in particular, the Civil Liability (Contribution) Act 1978. In Thompson v MPC [1997] 3 WLR 403 the Court of Appeal assumed that the Act can apply to a liability to pay exemplary damages (at 418F). See further paras 5.206-5.208 below.

(174) For the position in Canada, see the discussion in S M Waddams, The Law of Damages (2nd ed, 1990) paras 11.410-11.420 and Ontario Law Reform Commission, Report on Exemplary Damages (1991) pp 58-59, citing, inter alia, Townsview Properties Ltd v Sun Construction & Equipment Co Ltd (1974) 56 DLR (3rd) 330 (Ontario CA). For the position in Australia, see XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1984-5) 155 CLR 448 (HCA) and the discussion in M Tilbury, Civil Remedies (1990) vol 1, [5014]. For a similar view of the likely approach of New Zealand courts, see S Todd et al, The Law of Torts in New Zealand (2nd ed, 1997) p 1235.

(175) S M Waddams, The Law of Damages (2nd ed, 1991), para 11.430. Cf the position in the United States of America: see D B Dobbs, Law of Remedies (2nd ed, 1993) § 3.11(8), pp 336-341 and para 5.160, nn 177 and 178 below.

(176) See the discussion of AB v South West Water Services Ltd [1993] QB 507 at para 4.47 above.

(179)Bishop v MPC, The Times 5 December 1989. It is arguable that the Law Reform (Contributory Negligence) Act 1945 applies to such cases.

(182) In Thompson v MPC [1997] 3 WLR 403, 419B-C, the Court of Appeal opposed any reduction in the award of exemplary damages made to a plaintiff on the grounds of his or her refusal to co-operate in the police complaints procedure:

It is highly desirable that complainants should co-operate in disciplinary investigations but they are not legally obliged to do so. If they are not sufficiently public-spirited to do so, this cannot be held against them in law so as to reduce the amount payable when assessing the compensation to which they are entitled. Exemplary damages are awarded so as to punish the defendant. We have already referred to the circumstances in which the existence of disciplinary proceedings is relevant in determining whether to make any award of exemplary damages. If the jury decide an award is necessary then the amount is assessed on a consideration of the conduct for which the defendants are responsible which makes the award of exemplary damages appropriate. The plaintiffs conduct is here relevant only if it was a cause of the offending behaviour.

(183)Holden v Chief Constable of Lancashire [1987] QB 380, 388D-E. See paras 4.49-4.51 above.

(185)In John v MGN Ltd [1997] QB 586 Sir Thomas Bingham MR observed that "[t]he authorities give judges no help in directing juries on the quantum of exemplary damages" (at 619E). And more recently, in an extended consideration of the developing law on guidance to juries, Lord Woolf MR described the amount of guidance which could be given in the past as "extremely limited": Thompson v MPC [1997] 3 WLR 403, 409E.

(186) For example, the Judicial Studies Board, Guidelines for the Assessment of General Damages in Personal Injury Cases (3rd ed, 1996).

(187) See, in particular, Lord Reids criticisms in Broome v Cassell [1972] AC 1027, 1087E-F, which were cited by Lord Woolf MR in Thompson v MPC [1997] 3 WLR 403, 411C-D:

... [there is] no effective appeal against sentence. All that a reviewing court can do is to quash the jurys decision if it thinks the punishment awarded is more than any twelve reasonable men could award. The court cannot substitute its own award. The punishment must then be decided by another jury and if they too award heavy punishment the court is virtually powerless.

(191) The original award in the case of Mr Hsu comprised £20,000 compensatory damages and £200,000 exemplary damages. The Court of Appeal did not interfere with the award of compensatory damages, but it did substitute an award of £15,000 exemplary damages for the award of £200,000.

(193) Lord Woolf (at 413B) said that once section 8 of the Courts and Legal Services Act 1990 had been given an interpretation for the purposes of one category of cases, that interpretation had to apply across the board, for:

[i]t is difficult to see how the same words can have different meanings depending upon the type of action to which they are being applied.

(197) This can be inferred from Rantzen v MGN Ltd [1994] QB 670, 692H, in which Neill LJ stated that, the barrier against intervention in jury damages assessments by appellate courts having been lowered, the test (of when such intervention was permitted) became:

Could a reasonable jury have thought that this award was necessary to compensate the plaintiff and to re-establish his reputation?

(200)This was one of our provisional recommendations in Damages for Personal Injury: Non-Pecuniary Loss (1995) Consultation Paper No 140.

(205) [1997] QB 586. In Thompson v MPC [1997] 3 WLR 403, 416A-B, Lord Woolf noted that this was not what was proposed in the case of a defamation action in John v MGN Ltd [1997] QB 586, but suggested that submissions by counsel in the absence of the jury are likely to have advantages, for two reasons:

... because of the resemblance between the sum to be awarded in false imprisonment and ordinary personal injury cases, and because a greater number of precedents may be cited in this class of case than in a defamation action.

(211) Apart from well-established guidance such as the if, but only if test, two important new principles of restraint were stated by Lord Woolf MR. The first points out that, to the extent that aggravated damages have already been given, they will have compensated the plaintiff for the injury he has suffered due to the oppressive or insulting behaviour of the defendant, and in doing so, inflicted a measure of punishment - albeit incidentally - on the defendant ([1997] 3 WLR 403, 417G). This proposition really just reinforces what is implicit in the if, but only if test. The second states two important reasons for restraint: that is, that an award of exemplary is a windfall, and that where damages are payable out of police funds, the sum awarded may not be available to be expended (for example) by the police in a way which would benefit the public ([1997] 3 WLR 403, 417H). See paras 4.73-4.76 above.

(213) It seems that reference may be made, not just to awards which the Court of Appeal in fact substitutes for jury awards, but also to jury awards which are approved by the Court of Appeal: see John v MGN Ltd [1997] QB 586, 612C, per Sir Thomas Bingham MR, agreeing with the ruling in Rantzen v MGN Ltd [1994] QB 670 that "reference may be made to awards approved or made by the Court of Appeal" (emphasis added).

(218) For similar observations on the utility of substitute awards in defamation actions, see John v MGN Ltd [1997] QB 586, 612C-E, per Sir Thomas Bingham MR, observing that a framework of substitute awards will "not be established quickly" and that in the five years since the power had come into force, there had been only three cases in which the Court of Appeal had itself selected the appropriate level of award.

(222) See, in particular, Hornal v Neuberger Products Ltd [1957] 1 QB 247 (CA) and, in a different context, Khawaja v Secretary of State for the Home Department [1984] AC 74.

(225) The Times 25 October 1994, discussed by A Reed in "Exemplary Damages: A Persuasive Argument for their Retention as a Mechanism of Retributive Justice" (1996) 15 CJQ 130.

(227) See, for example, Backwell v AAA (1996) Aust Torts Reps 81-387, noted by M Tilbury, "Exemplary Damages for Medical Negligence" (1996) 4 Tort L Rev 167, 171.

(229) See, for example, Clerk & Lindsell on Torts (17th ed, 1995), para 5.20. This is a general principle of common law origin, but it is sometimes formulated (and extended or otherwise modified by) statute in specific instances. Statutory provisions apply the same concepts to the Crown. By virtue of s 2(1)(A) of the Crown Proceedings Act 1947, the Crown is vicariously liable for the torts of its servants (eg prison officers). In the case of the police, statutory provisions effectively treat the chief officer of a particular force as if he were the employer of the employee, for the purposes of the doctrine of vicarious liability. By virtue of s 88(1) of the Police Act 1996, the chief officer of a particular police force (in London, the Metropolitan Police Commissioner) is liable:

... in respect of torts committed by constables under his direction and control in the peformance or purported performance of their functions in like manner as a master is liable in respect of torts committed by his servants in the course of their employment.

Sections 42(1) and 86(1) of the Police Act 1997 now establish a similar liability for the Director General of the National Criminal Intelligence Service and the Director General of the National Crime Squad, respectively. Other examples of (modified) statutory formulations of the doctrine of vicarious liability can be found in the Sex Discrimination Act 1975, the Race Relations Act 1976 and the Disability Discrimination Act 1995.

(232) The torts alleged included assault and battery, false imprisonment, negligence and misfeasance in a public office.

(234) In particular, in that it applies essentially to torts committed in the course of employment of an employee.

(237) In Canada, seven jurisdictions specifically exclude punitive damages from their legislation on survival of actions, and one has reached that conclusion through interpretation: see S M Waddams, The Law of Damages (2nd ed, 1991) para 12.150. Similarly, every state jurisdiction in Australia, as well as New Zealand, has legislation modelled on the Law Reform (Miscellaneous Provisions) Act 1934 (UK), which specifically provides that claims to exemplary damages do not survive for the benefit of the victims estate: H Luntz, Assessment of Damages for Personal Injury & Death (3rd ed, 1990) para 9.1.13 (Australia); Re Chase [1989] 1 NZLR 325 and the Law Reform Act 1936 (NZ), s 3 (New Zealand).

(238) But a cause of action for defamation does not survive against or for the benefit of the estate of a deceased person: s 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934.

(239) In Canada, the cases appear to be divided: see S M Waddams, The Law of Damages (2nd ed, 1991) paras 11.440 and 12.150, citing Flame Bar-B-Q Ltd v Hoar (1979) 106 DLR (3rd) 438 (NBCA) (exemplary damages awarded against estate of wrongdoer) and Breitkreutz v Public Trustee (1978) 89 DLR (3rd) 442 (Alta SCTD) (exemplary damages refused). In Australia, every state jurisdiction has legislation providing for the survival of causes of action which is modelled on the Law Reform (Miscellaneous Provisions) Act 1934 (UK): H Luntz, Assessment of Damages for Personal Injury and Death (3rd ed, 1990) Ch 9, para 9.1.1. All provide that a claim to exemplary damages survives against the estate of the wrongdoer: para 9.1.13. In New Zealand, B v R (15 February 1996, HC Auckland, Morris J) held that exemplary damages may be awarded against the estate of the wrongdoer.

(240)See generally eg J Birds Modern Insurance Law (4th ed, 1997) pp 234-243; Chitty on Contracts (27th ed, 1994) para 39-019; M A Clarke, The Law of Insurance Contracts (2nd ed, 1994) ch 24, especially 24-4A. For unequivocal statements, see eg Lancashire CC v Municipal Mutual Insurance Ltd [1996] 3 WLR 493, 502B-G; Askey v Golden Wine Co [1948] 2 All ER 35, 38C-E.

(241)For a very clear and forceful expression of this argument, see Denning J in Askey v Golden Wine Co [1948] 2 All ER 35, 38C-E.

Where a plaintiff claims aggravated, exemplary or provisional damages, his particulars of claim shall contain a statement to that effect and shall state the facts on which he relies in support of his claim for such damages.

The Law Commission