Aggravated, Exemplary and Restitutionary ... - Law Commission

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. 333
1.100 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.
1.101 The first difference is that the focus of category 2 is on the wrongdoer’s 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. 334
This means that exemplary damages
may be awarded even though restitutionary damages are unavailable.
1.102 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 defendant’s 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 defendant’s
gain that the social purpose of this category is achieved - to teach a
wrong-doer that tort does not pay. 335
Even so it is not easy to identify actual cases where the quantum of exemplary
damages clearly exceeded the measure of the defendant’s 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
tortfeasor’s profit to be adduced in court; and such profit may in any case be
impossible to quantify.
1.103 A final difference is that many of the overriding principles which structure the
discretion to award exemplary damages, and which govern their assessment, seem
333 See the County Courts Jurisdiction Order 1981, SI 1981 No 1123.
334 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.
335 [1972] AC 1027, 1130C-D.
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