Aggravated, Exemplary and Restitutionary ... - Law Commission

4. OUR CENTRAL REFORM PROPOSALS
(1) Expansion combined with important restrictions
1.40 We take the view, as we did in the Consultation Paper, 573
that if exemplary (or
‘punitive’) damages should be retained, their availability must be placed on a principled
footing. Of the two remaining options set out in the Supplementary Consultation
Paper, option 3 (the ‘Hybrid Model’) was expressly formulated as a pragmatic solution
that would restrict the general availability of exemplary damages while retaining them
in those circumstances where they seem to have a particularly important role to play.
1.41 We reject option 3 because it lacks the coherence which ought to be a major aim
of any reform of this area of the law. Adopting option 3 would mean that the law
would be tied to an approach that focuses on a defendant’s status, as a servant of
the government, rather than on the degree of culpability of his or her wrongful
conduct. As a result, it would leave gaps in the legal protection offered to
plaintiffs, without there being any convincing justification for the omission - for
there appears to be no sound reason why outrageously wrongful conduct should
not attract a punitive award even if it is not committed by a servant of the
government. For example, no punitive damages could be awarded for deliberate
discrimination or libel by a defendant that is not a servant of the government. For
these reasons, and also because it found favour with substantially fewer consultees
than did option 1 (the ‘Expansionist Model’), we reject option 3 (the ‘Hybrid
Model’).
1.42 We therefore favour the ‘Expansionist Model’. Punitive damages should be
available for any tort or equitable wrong which is committed with conduct which
evinces a deliberate and outrageous disregard of the plaintiff’s rights. Punitive
damages should not, however, be available for breaches of contract. We believe
that this model affords a principle of general application upon which to base the
availability of punitive damages. Such ‘expansion’ is consistent with the common
law relating to exemplary or punitive damages in major Commonwealth
jurisdictions, even after Rookes v Barnard. 574
1.43 But whilst we seek to expand the range of situations in which exemplary damages
can in principle be awarded, and thereby ensure that the law has a rational basis,
we are also anxious to ensure that exemplary damages are treated by the judiciary
as a ‘last resort’ remedy, and that there is consistency, ‘moderation’, and
proportionality, in the assessment of such damages. Accordingly, whilst we are
expanding the availability of exemplary damages, we are also imposing important
restrictions on their availability and quantum. We believe that ‘expansion
combined with important restrictions’ is a policy which can appeal to both
supporters, and critics, of exemplary damages.
572 See para 4.1 above.
573 Aggravated, Exemplary and Restitutionary Damages (1993) Consultation Paper No 132,
paras 6.8 and 8.7.
574 See para 4.5 above, para 5.46 below (general test of availability), and paras 5.49, 5.53 and
5.54 below (wrongs for which available).
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