Aggravated, Exemplary and Restitutionary ... - Law Commission

... the availability of exemplary damages should not be determined by
classification of the wrong as a common law tort or as a breach of an
equitable obligation ... 590
Indeed, we can see good reason for allowing punitive damages to be recovered
against, for example, the dishonest trustee who acts in breach of his fiduciary duty
or the person who dishonestly abuses another’s confidence. Thus if, as we
propose, punitive damages are awardable in respect of the (common law) tort of
deceit, it would be anomalous if analogously wrongful conduct could not also give
rise to an award, just because the cause of action originated in equity. Moreover,
‘deterrence’ is an aim that is not alien to courts of equity. For example, it is a clear
aim of the commonplace equitable remedy of an account of profits awarded for
breach of fiduciary duty or breach of confidence. 591
To the extent that such
remedies already achieve the aims of a punitive damages award in full or in part,
and intentionally or incidentally, this will be a legitimate reason for refusing to
make an award under the ‘last resort’ test, or for making a lower award than would
otherwise be necessary. 592
Finally, it is not an argument against making punitive
damages available by statute for equitable wrongs that damages for equitable
wrongs are not otherwise straightforwardly available. 593
1.56 By recommending that ‘equitable wrongs’ should be included in our proposed
legislation, it does of course become incumbent on us to clarify what we mean by
that phrase. Professor Birks argues that a wrong means:
conduct ... whose effect in creating legal consequences is attributable
to its being characterised as a breach of duty ... 594
A practical indicator of whether the law characterises particular conduct as
constituting such a breach of duty is that compensation must be an available
remedial measure for the conduct in question if loss is caused to the plaintiff by
that conduct. Applying this approach, the common law civil wrongs are torts and
590 S M Waddams, The Law of Damages (2nd ed, 1990) para 11.240, criticising an Ontario
Court of Appeal decision that exemplary damages should not be available for breach of
fiduciary duty, because the action was equitable, not tortious.
591 See paras 3.28-3.32 above.
592 The key argument put by the dissenting member of the Ontario Law Reform Commission
was that there was no need to provide a remedy of punitive damages for equitable wrongs
because, in particular, a wide range of equitable remedies already existed which could be
used, if necessary, to achieve the same ends as the ‘common law’ remedy of punitive
damages; there was therefore no need to add to this armoury by extending the ‘common
law’ concept of punitive damages. But Earl A Cherniak QC’s preferred solution was to
leave the issue to be considered on a case-by-case basis, “whereby it can be determined if
there is in fact a lacuna in the law such that there is a need to award punitive damages” (p
75). This case-by-case consideration of whether punitive damages are in fact required, or
whether other remedies already achieve their aims, is precisely what our ‘last resort’ test
achieves.
593 Lord Cairns’ Act of 1858 gave the Court of Chancery power to award damages in addition
to or in substitution for an injunction or specific performance, although it appears that the
court had a residual discretion to award damages prior to the Act, which it rarely exercised:
Hanbury and Martin, Modern Equity (15th ed, 1997) p 724. See now the Supreme Court
Act 1981, s 50.
594 P Birks, An Introduction to the Law of Restitution (revised ed, 1989) p 313.
111