Commercial Litigation FAQ

Exemplary (punitive) damages are damages which are intended to punish the defendant. Exemplary damages are awarded on the basis of public policy for conduct which the court believes that the community at large would find distressing or upsetting. The purpose of exemplary damages is to punish the wrongdoer and deter others from similar conduct.

In deciding whether to award exemplary damages, the Court has a wide discretion. The court will look at:
1.the means of the defendant (an award should be able to be 'felt' by the defendant);
2.Whether or not the applicant in any way provoked the defendant's conduct; and
3.the extent of any punishment that has already been inflicted on the defendant.

In working out how much exemplary damages to award the following factors are relevant:
1.The Court should display restraint when assessing the amount of the damages;
2.The Court should be always be aware of the danger of an excessive award of damages
3.Exemplary damages should only be awarded if the court believes that compensative damages awarded do not contain a sufficient element of punitive damages.
 

Rookes v Barnard  [1964] UKHL 1; [1964] AC 1129.
This is the primary English case relating to exemplary damages.

In Rookes v Barnard it was held that exemplary damages could be awarded only in three kinds of cases:
- oppressive, arbitrary or unconstitutional acts by government servants;
- where the defendant's conduct had been calculated to make a profit which might well exceed the compensation payable to the plaintiff; and
- where expressly authorised by statute. 

Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118
FACTS: The appellant, a Federal Minister brought an action against John Fairfax Pty Ltd for defamation in relation to an article published by them in the Sun herald.
HELD: Exemplary damages must always be based upon something more substantial than a jury's mere disapproval of the conduct of a defendant. Exemplary damages can apply only where the conduct of the defendant merits punishment, which is only considered to be so where his or her conduct is wanton, where it discloses fraud, malice, violence, cruelty, insolence or the like, or,  where he or she acts in complete disregard of the plaintiff's rights." The High Court disagreed with the limitations placed on the awarding of exemplary damaged in Rookes v Barnard (above)

Gray v Motor Accident Commission [1998] HCA 70; 196 CLR 1; 158 ALR 485; 73 ALJR 45 (17 November 1998)
FACTS: The appellant was seriously injured when he was struck by a motor car driven at him deliberately. The driver was convicted of causing grievous bodily harm with intent to cause grievous bodily harm and was sentenced to seven years' imprisonment.
The appellant commenced an action against the driver claiming damages for personal injury. The action was framed as a claim for damages for negligence.
The trial judge assessed the appellant's damages at $72,206 comprising $15,000 for past economic loss, $30,000 for future economic loss, $18,190 for what is called in s 35A of the Wrongs Act 1936 (SA) "non-economic loss" and $9,016 for special damages. The trial judge made no award of exemplary damages. He held that because the driver had already been punished in the criminal court, it was not appropriate to award exemplary damages.
HELD: Appeal allowed.. Damages may be recovered whatever the subjective intention of the tortfeasor if, objectively, the conduct involved was high-handed, calling for judicial condemnation addressed not only to the tortfeasor but to the world.
 

Aggravated damages are awarded to compensate the applicant for suffering caused by non-financial losses. They are measured by the applicant's suffering. The Court looks at the such things as the applicant’s pain, anguish, grief, humiliation, wounded pride, damaged self-confidence or self-esteem, loss of faith in friends or colleagues, and similar matters. To be awarded aggravated damages the suffering of the applicant needs to be caused by the conduct of the defendant.

When assessing whether or not to award aggravated damages the following principles apply:
1.The distress suffered by the applicant must be significant in depth, or duration, or both.
2.The distress must represent a significant influence on the plaintiff's life
3.There must be actual evidence of aggravation of the applicant’s distress
4.No one rule as to damages can be adopted to fit every case - as the circumstances differ, so must the rule.
5.The defendant’s behaviour must go beyond mere negligence. The defendant’s behaviour must be “wanton, reckless or outrageous”.

CASES:

Carson v John Fairfax & Sons Ltd & Slee [1993] HCA 31; (1993) 178 CLR 44 (16 June 1993)
FACTS: The Appellant commenced proceedings seeking damages for defamation following an article written in the Sydney Morning Herald. The initial trial was a jury trial.
HELD: Appeal dismissed but the Court held that it is of the utmost importance that juries should be instructed that any award of aggravated damages must be confined to what is truly compensation for the relevant harm and must not include any element of punitive damages. The trial judge must give a clear and firm instruction to the jury that, in considering the plaintiff's claim, the damages must not exceed the amount appropriate to compensate the plaintiff for any relevant harm he or she has suffered.

Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1
FACTS:The defendant entered the property of the appellant to serve a summons. As he drove away, the appellant grabbed on to the front of the defendants car. The defendant kept driving and the appellant eventually fell off, suffering broken ankles and other injuries..
HELD:Appeal dismissed. The court distinguished between aggravated and exemplary damages, saying aggravated damages are compensatory in nature, being awarded for injury to the plaintiff's feelings caused by insult, humiliation and the like. Exemplary damages go beyond compensation and are awarded as a punishment to the guilty, to deter from any such proceeding for the future, and as a proof of the detestation of the jury to the action itself.