Aggravated, Exemplary and Restitutionary ... - Law Commission

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... nothing either in the authorities or in logic to justify extending this principle of public policy so as to deny insurance cover to those whose sole liability is one which arises vicariously ... 543 1.196 The decision and reasoning of Simon Brown LJ in this case suggest that the key distinction in the existing law may not be between personal and vicarious liability. Rather, it may lie between insurance against the personal or vicarious liability of defendants in circumstances where their conduct would amount to criminal conduct, and insurance against personal or vicarious liability for conduct not amounting to criminal conduct. (5) Exemplary damages must be specifically pleaded 1.197 A claim for exemplary damages: ... must be specifically pleaded together with the facts on which the party pleading relies. 544 1.198 Accordingly, the plaintiff, and only the plaintiff, must decide to seek an exemplary damages award; even if it would otherwise be appropriate to award exemplary damages, a court is not permitted to add one of its own motion. 543 [1996] 3 WLR 493, 502H (emphasis added). 544 RSC, O 18, r 8(3). The County Court Rules (O 6, r 1B) provide that: Where a plaintiff claims aggravated, exemplary or provisional damages, his particulars of claim shall contain a statement to that effect and shall state the facts on which he relies in support of his claim for such damages. 92
PART V EXEMPLARY DAMAGES: REFORM 1. THE NEED FOR REFORM 1.1 The decision in Rookes v Barnard 545 was a compromise, being the furthest the House of Lords felt it could go within the confines of precedent in ridding the law of exemplary damages, which it regarded as anomalous. 546 The first two of Lord Devlin’s three categories are essentially historically-based and represent situations where exemplary damages had been awarded prior to Rookes v Barnard and where reclassification of the damages as compensatory aggravated damages was not thought possible. It is debatable whether Lord Devlin would have felt constrained from abolishing exemplary damages following the Practice Statement of 1966. 547 It is equally debatable whether his Lordship would have felt the need to formulate his second category had the notion of restitutionary damages been current in 1964. 548 1.2 The interpretation given to Rookes v Barnard 549 by the Court of Appeal in AB v South West Water Services Ltd, 550 limiting exemplary damages to wrongs in respect of which they had been held to be available before the decision in Rookes v Barnard, 551 has meant that the availability of exemplary damages is now yet further dictated by what are arguably the accidents of precedent, rather than sound principle. 1.3 Although it is not inconceivable that the House of Lords could reformulate the law in a way that is more satisfactory, it is surely correct that the present state of the law “cries aloud ... for Parliamentary intervention”. 552 The overwhelming majority of our consultees agreed that the current law is in an unsatisfactory state. One consultee spoke for many in stating that the “result of AB v South West Water Services Limited is intolerable in terms of justice, logic and certainty.” 553 1.4 We regard some reform of the present law to be essential in order to restore rationality. We have the opportunity to recommend reform, unconstrained, as the courts have been, by precedent. The very difficult question is what form the reform should take. In particular, should exemplary damages be abolished altogether? 545 [1964] AC 1129. 546 “These authorities convince me ... that your Lordships could not, without a complete disregard of precedent, and indeed of statute, now arrive at a determination that refused altogether to recognise the exemplary principle ...”: Rookes v Barnard [1964] AC 1129, 1225-1226, per Lord Devlin. 547 Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. 548 But see the discussion of whether category 2 is susceptible to restitutionary analysis at paras 4.16-4.20 above. 549 [1964] AC 1129. 550 [1993] QB 507. See paras 4.4 and 4.24-4.28 above. 551 [1964] AC 1129. 552 Riches v News Group Newspapers Ltd [1986] QB 256, 269C, per Stephenson LJ. 553 Professor Rogers. 93
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THE LAW COMMISSION Item 2 of the Si
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should emphasise at the outset that
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practitioners and academics) consid
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punitive damages should survive for
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and sued, he will, at worst, be mad
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‘exceptional’ 62 conduct or mot
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defendant or his legal advisers per
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an undertaking in damages which was
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likely adversely to affect him or h
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noting the concession by the respon
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Kralj, which was an “excruciating
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two of their lordships who gave jud
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such a restriction, unless one take
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(1) legislation should provide that
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1.3 Historically, a number of diffe
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nuisance 195 has also been recognis
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day market). At first instance, Pet
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equired to trigger an account of pr
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disgorgement to principals of bribe
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disgorge what he has saved by commi
Page 41 and 42: there is no consensus among comment
Page 43 and 44: (a) Restitutionary damages should b
Page 45 and 46: the purposes of the claim to restit
Page 47 and 48: account of profits and damages but
Page 49 and 50: area. The problem of ‘election of
Page 51 and 52: there is no such in-built limitatio
Page 53 and 54: PART IV EXEMPLARY DAMAGES: PRESENT
Page 55 and 56: that exemplary damages were not awa
Page 57 and 58: 1.96 These questions were recently
Page 59 and 60: to be irrelevant to, and even incon
Page 61 and 62: 1.107 Consistently with the apparen
Page 63 and 64: manner. As shall be seen below, it
Page 65 and 66: 1.117 Major Commonwealth jurisdicti
Page 67 and 68: In the present case there is the fu
Page 69 and 70: an aspect of the case which made ex
Page 71 and 72: 1.137 The ‘non-discrimination’
Page 73 and 74: We have ... been referred to a numb
Page 75 and 76: Thus it has been suggested that the
Page 77 and 78: underlying such damages, that of pu
Page 79 and 80: easons of fairness to defendants: i
Page 81 and 82: (6) Multiple plaintiffs 1.165 Very
Page 83 and 84: Legal Services Act 1990 and Rules o
Page 85 and 86: MR himself suggested figures to ass
Page 87 and 88: Thompson v MPC achieves its aims, t
Page 89 and 90: proceeded on the basis that the doc
Page 91: would be that to allow insurance wo
Page 95 and 96: 1.8 As regards the divide between t
Page 97 and 98: 3. THE CASE FOR AND AGAINST EXEMPLA
Page 99 and 100: (5) The criminal approach to vicari
Page 101 and 102: particularly unsatisfactory to rely
Page 103 and 104: 1.34 On the first interpretation an
Page 105 and 106: 4. OUR CENTRAL REFORM PROPOSALS (1)
Page 107 and 108: when applying this principle a cour
Page 109 and 110: indefensible position which the com
Page 111 and 112: ... the availability of exemplary d
Page 113 and 114: But these concepts are inadequate,
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Page 117 and 118: view that such an award would be co
Page 119 and 120: the promise. To award exemplary dam
Page 121 and 122: else should, actually constitute in
Page 123 and 124: awarded as damages (including exemp
Page 125 and 126: 1.88 The first argument is that it
Page 127 and 128: (2) the relationship between (on th
Page 129 and 130: was determined, the court could mak
Page 131 and 132: (iii) A ‘last resort’ remedy (2
Page 133 and 134: A discretionary or an absolute bar
Page 135 and 136: 1.117 We have therefore recommended
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Page 139 and 140: (24) our draft Bill should lay down
Page 141 and 142: 1.141 In our view, this is necessar
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the punitive damages award on the A
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to that remedy. 720 Yet this means
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(31) once punitive damages have bee
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e so where the defendant consents t
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1.183 We also think that any ‘adv
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liability’) which applies to any
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(c) Implications of the adoption of
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‘moderation’ and of ‘proporti
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conduct. 756 Although it has consis
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liable to pay a sum of money which
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1.224 The second difference is that
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award if they succeed in persuading
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approaches. 786 132, 787 Although i
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... [c]ontracts should only be held
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(ii) The problems of defining with
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the insured wrongdoer’s inability
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award to be covered by insurance, t
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punitive damages, no enactment shal
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one case, 831 and arguably done so
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common law to hold, if necessary, t
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PART VI SUMMARY OF RECOMMENDATIONS
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(19) the ‘cause of action’ test
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damages shall be permitted for that
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MICHAEL SAYERS, Secretary 11 Septem
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Nigel Ley Harvey McGregor QC Tim Ow
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APPENDIX C Persons and organisation
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Steve Hedley John Hodgson L Hoyano
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