This essay has been submitted by a law student. This is not an example of the work written by our professional essay writers.
‘Exemplary damages' also known as punitive damages are damages which are intended to punish the defendant and seek to effect retribution, as well as being concerned to deter the defendant from repeating the outrageously wrongful conduct and others from acting similarly, and to convey the disapproval of the jury or court .In the England and Wales, to successfully claim exemplary damages, the' categories test' supplied by the Rookes v Barnard and the ‘cause of action test' outlined in AB v South West Water Services Ltd should be satisfied. However the court still has discretion to refuse an award even though the criteria have been met in both tests. The award of punitive damages to plaintiffs has been over recent years; a subject of much controversy in the legal profession community since the dynamics involved in the course of proceedings and potential awards sometimes confuse legal practitioners. Some believe that punitive damages justify its existence by providing the remedies for some legal needs which otherwise would have been impossible whereas others would disagree on the fact that punishment should only be acceptable under criminal law. This report investigates both and proposes reforms needed.
Firstly, many people who are in favour of the existence of exemplary damages argue that an exemplary damage which is a civil punishment differs from criminal punishment in two distinctive ways:
In civil law, punishment is sought and enforced by individual victims of wrongdoing whereas criminal punishment is sought by or on behalf of the state even in the event that an individual is filing for a private case.
Unlike criminal punishment, exemplary damages does not carry a stigma and is viewed by society as a ‘less serious' punishment.
Secondly, proponents of exemplary damages advocate that defendants can unjustly enrich themselves at the expense of the victim situation . Although they recognise that compensatory damages will cover for the plaintiff's losses, they also believe that a form of punishment should be available to deter the defendant and others from similar conduct in the future. Sometimes, the defendant can also be favoured if he happened to be an insured defendant. If the defendant is insured under a compulsory insurance scheme in respect of negligent conduct, it is the insurer, not the defendant, who pays the exemplary damages. This shifting of the burden of payment thus has minimal deterrent effect upon the actual wrongdoer.
This function is duly satisfied by exemplary damages. Many opponents of exemplary damages disagree on this principle on the basis that a plaintiff can profit from a windfall. However Lord Diplock further backed this approach and famously stated in Broome V Cassell & Co Ltd that tort wrongdoers would be the one who would benefit in the event of an outrageous tort committed and believed that if there were to be a profit involved, then better that it goes to the plaintiff who is prepared to be financially exposed and file a case.
Thirdly, people arguing for the existence of Exemplary damages would really confuse the law if merged within criminal punishment since exemplary damages serve as a method to inflict punishment to a defendant although he has not been provided in a civil trial with the usual protections or safeguards of the criminal law (for example, higher standard of proof, the right against self-incrimination, and the right to silence). It is therefore conceded that t penal sanctions, in the form of exemplary damages, should continue to exist so as to satisfy its primary function of punishing and deterring wrongdoers which would otherwise fail in criminal proceedings.
However the other side of the coins demonstrates different facts:
One strong point which has been advocated against exemplary damages is that they contain several elements including punishment, deterrence and condemnation which also overlap with criminal law making it sometimes hard to draw the line between the tortuous and criminal aspect of a case. In a way, exemplary damages serve as a limited function of punishment and deterrence of wrongdoers and only lack criminal safeguards such as having a smaller burden of proof, right to remain silent to compete with criminal proceedings thus questioning both functions of each sections of law.
The monetary punishment for the anti social behaviour should be payable to the state and not to the individual plaintiff as this would leave the latter with an underserved windfall as seen in Riches v News Group Newspapers Ltd . Due to the fact that exemplary damages are always awarded in addition to compensatory money, it follows that an attractive financial reward is potentially available. For this reason it is generally agreed that exemplary damages encourage litigiousness. In most cases, the wealth of the defendant will provide for the enrichment and the law provides the means of tapping it.
Moreover, opponents of exemplary damages deem them to be excessively punitive as not only it can sometimes bankrupt a defendant since they are awarded in conjunction with compensatory damages thus making it greater than necessary in order to punish the wrongdoer as compensatory damages on its own covers a plaintiff's pecuniary losses. The damages paid can be even more excessive if it involves multiple plaintiffs who have been wronged by the same culprit considering that compensatory damages involved covering each plaintiff's losses.
Another argument brought forward by people who duly opposes exemplary damages is that they are convinced that since there are no set guidelines about how much financial punishment should be imposed on a defendant and it remains entirely at the discretion of the judge or jury to award the ‘fine' there exist the possibility of violating defendants' rights in the process of law by allowing such judges or juries to exercise their discretion out of hatred, dislike or fear of the defendant.
Our central recommendations are that:
the ‘cause of action' and ‘categories' tests should be replaced with a general principled test of availability, but that that expansion of liability should be subject to major limitations.
A judge (and never a jury) should award exemplary damages (or as we prefer to call them, ‘punitive damages') for any tort or equitable wrong, as well as for statutory wrongs if an award would be consistent with the policy of the statute under which the wrong arises. However, an award should be made only if the defendant's conduct showed a deliberate and outrageous disregard of the plaintiff's rights and the other remedies awarded would be inadequate to punish the defendant for his conduct. Furthermore, no award should usually be made, where the defendant has already been convicted of an offence involving the conduct which founds the claim to punitive damages And the court should be required to take into account any other sanctions which may have been imposed, when deciding whether punitive damages are necessary, and therefore available.
The decision about how much to award as punitive damages, where they have been held to be available, should also always be for a judge, never a jury. An award should not exceed the minimum necessary to punish the defendant for his conduct, and should be proportionate to the gravity of his wrongdoing. The judge should also be guided by a non-exhaustive statutory list of relevant factors. We anticipate that a body of precedent, judicial tariffs and/or guideline judgments would offer further guidance, in time. If a defendant would not be able to pay an award which is assessed in this way without undue hardship, then the court should select a lower, appropriate sum.
Apart from these central recommendations, we make a number of additional ones. A claim to punitive damages should be specifically pleaded. The standard of proof should remain the civil standard of proof on the balance of probabilities. Liability to punitive damages should, in general, be ‘several' only. However, vicarious liability should apply45 and insurance should be permitted. A claim for punitive damages should survive for the benefit of the estate of the victim, but not against the estate of the wrongdoer. Where a defendant's conduct constitutes wrongs against two or more persons (a ‘multiple plaintiff' case) punitive damages should only be awarded to the first of those persons to claim them successfully, and where they are so awarded, the court should ensure that the aggregate award does not constitute excessive punishment.
We should emphasise that, in our view, if the above package of reforms were accepted, the impact on the administration and funding of civil justice would not be significantly adverse. Successful claims should be rare if, as we propose, punitive damages are reserved for cases of seriously wrongful conduct which has not been dealt with adequately (or at all) by another means. The legislative scheme which we propose, coupled with case law interpretation, should provide a set of clear, and restrictive, principles governing when awards may be made. And the prospects of a substantial increase in litigation to obtain a new financial ‘windfall' should be further reduced, if, as we would expect, judicial assessment of punitive damages would lead to moderate, as well as consistent and reasonably predictable, awards in the rare cases in which they were made.
McGregor on damages (London Sweet & Maxwell 15th edition 1988 at pg 266-268)