Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
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... the availability of exemplary damages should not be determined by<br />
classification of the wrong as a common law tort or as a breach of an<br />
equitable obligation ... 590<br />
Indeed, we can see good reason for allowing punitive damages to be recovered<br />
against, for example, the dishonest trustee who acts in breach of his fiduciary duty<br />
or the person who dishonestly abuses another’s confidence. Thus if, as we<br />
propose, punitive damages are awardable in respect of the (common law) tort of<br />
deceit, it would be anomalous if analogously wrongful conduct could not also give<br />
rise to an award, just because the cause of action originated in equity. Moreover,<br />
‘deterrence’ is an aim that is not alien to courts of equity. For example, it is a clear<br />
aim of the commonplace equitable remedy of an account of profits awarded for<br />
breach of fiduciary duty or breach of confidence. 591<br />
To the extent that such<br />
remedies already achieve the aims of a punitive damages award in full or in part,<br />
<strong>and</strong> intentionally or incidentally, this will be a legitimate reason for refusing to<br />
make an award under the ‘last resort’ test, or for making a lower award than would<br />
otherwise be necessary. 592<br />
Finally, it is not an argument against making punitive<br />
damages available by statute for equitable wrongs that damages for equitable<br />
wrongs are not otherwise straightforwardly available. 593<br />
1.56 By recommending that ‘equitable wrongs’ should be included in our proposed<br />
legislation, it does of course become incumbent on us to clarify what we mean by<br />
that phrase. Professor Birks argues that a wrong means:<br />
conduct ... whose effect in creating legal consequences is attributable<br />
to its being characterised as a breach of duty ... 594<br />
A practical indicator of whether the law characterises particular conduct as<br />
constituting such a breach of duty is that compensation must be an available<br />
remedial measure for the conduct in question if loss is caused to the plaintiff by<br />
that conduct. Applying this approach, the common law civil wrongs are torts <strong>and</strong><br />
590 S M Waddams, The <strong>Law</strong> of Damages (2nd ed, 1990) para 11.240, criticising an Ontario<br />
Court of Appeal decision that exemplary damages should not be available for breach of<br />
fiduciary duty, because the action was equitable, not tortious.<br />
591 See paras 3.28-3.32 above.<br />
592 The key argument put by the dissenting member of the Ontario <strong>Law</strong> Reform <strong>Commission</strong><br />
was that there was no need to provide a remedy of punitive damages for equitable wrongs<br />
because, in particular, a wide range of equitable remedies already existed which could be<br />
used, if necessary, to achieve the same ends as the ‘common law’ remedy of punitive<br />
damages; there was therefore no need to add to this armoury by extending the ‘common<br />
law’ concept of punitive damages. But Earl A Cherniak QC’s preferred solution was to<br />
leave the issue to be considered on a case-by-case basis, “whereby it can be determined if<br />
there is in fact a lacuna in the law such that there is a need to award punitive damages” (p<br />
75). This case-by-case consideration of whether punitive damages are in fact required, or<br />
whether other remedies already achieve their aims, is precisely what our ‘last resort’ test<br />
achieves.<br />
593 Lord Cairns’ Act of 1858 gave the Court of Chancery power to award damages in addition<br />
to or in substitution for an injunction or specific performance, although it appears that the<br />
court had a residual discretion to award damages prior to the Act, which it rarely exercised:<br />
Hanbury <strong>and</strong> Martin, Modern Equity (15th ed, 1997) p 724. See now the Supreme Court<br />
Act 1981, s 50.<br />
594 P Birks, An Introduction to the <strong>Law</strong> of Restitution (revised ed, 1989) p 313.<br />
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