Aggravated, Exemplary and Restitutionary ... - Law Commission

was determined, the court could make that higher award. Moreover, because
ceilings rather than ‘fixed awards’ are used, then even if the court feels itself to be
constrained by the ceiling, it remains able to reflect the varying culpability of the
defendant through an award which approaches, or falls some way short of, the
‘ceiling’. Nor can it be objected to the use of ‘ceilings’ that they in fact entail the
crude technique of ‘multiple damages’ which we have so firmly rejected. For the
‘multiple’ which was suggested in Thompson - three times compensatory damages -
did not entail that, thereafter, any exemplary award would have to equal three
times compensatory damages. Rather, the ‘multiple’ was being used to calculate a
guideline ceiling. The court is never compelled to award that multiple, but should
award a sum, which is usually less than that maximum, which is appropriate to the
culpability of the wrongdoer. The ‘ceiling’ sum would be awarded in the very
worst cases; cases falling short thereof would merit lesser sums.
(ii) A ‘last resort’ remedy (1): remedies ‘available’ to the court
1.99 In our view, punitive damages must be a ‘last resort’ remedy. This proposition has
several implications. The first, which we consider in this section, is that a court
should not award punitive damages unless it believes that the other remedies
which are available to it are inadequate to punish the defendant for his conduct,
and to deter him and others from similar conduct (what we call the ‘if, but only if’
test). 679
In effect we adopt, but adapt, the ‘if, but only if’ test which is currently
used at common law in order to determine whether exemplary damages should be
available. 680
All of the major Commonwealth jurisdictions appear to apply this
‘test’, 681
notwithstanding that they have otherwise refused to follow the decision in
Rookes v Barnard, 682
in which it was first formulated.
679 In this paragraph, and in the rest of this report, we use the phrase ‘punish and deter’ as a
shorthand for the aims of an award of punitive damages. Previous judicial formulations of
the ‘if, but only if’ test have referred, in addition, to ‘disapproval’ of the defendant’s
conduct. We agree that this is an important aim of punitive damages: see para 4.1 above.
However, it proved excessively difficult, and unnecessary, to draft a statutory provision
which could state the test in its wider form (referring to punishing the defendant, deterring
him and others, and expressing disapproval of his conduct). If a court considers that an
award of punitive damages is necessary to punish the defendant (or in addition) to deter
him and others from similar conduct, it will, by that award, necessarily also be expressing
‘disapproval’ of the defendant’s conduct.
680 See para 4.31-4.33 above.
681 The test forms part of Canadian law: see Hill v Church of Scientology of Toronto (1995) 126
DLR (4th) 129, 186 (SCC). It is also “reasonably clear” that the test forms part of
Australian law, after its endorsement in Backwell v AAA (1996) Aust Torts Reps 81-387
(Vic, CA) and Commonwealth v Murray (1988) Aust Torts Reps 80-207 (NSW, CA), and
the dicta of French J in Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251, 269 (FCA,
GD): M Tilbury, “Exemplary Damages in Medical Negligence” (1996) 4 Tort L Rev 167,
169-70. See also H Luntz, Assessment of Damages for Personal Injury and Death (3rd ed,
1990) para 1.7.9. Although it will often be difficult to apply the test in New Zealand,
because of the state compensation scheme, the test nevertheless forms part of the law in
that jurisdiction: see eg Aquaculture Corporation v New Zealand Green Mussel Co Ltd [1990]
3 NZLR 299, 301-302, per Cooke P, and Auckland City Council v Blundell [1986] 1 NZLR
732, 738, per Cooke P. The Ontario Law Reform Commission considered that the test was
“sound in principle”, but decided not to apply it for practical reasons: Report on Exemplary
Damages (1991) pp 53-54. The concern of the majority was that the test would not
constitute a significant limit on the availability of exemplary damages, because of the
availability of insurance against liability to pay compensation. If, in practice, most awards
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