■ contemptuous

■ nominal

■ aggravated

■ exemplary.

Contemptuous damages

The award of contemptuous damages, often the value of the smallest coin in the realm, marks the fact that

■ the claimant has established that a right has been infringed;

■ in the court’s view the action should never have been brought.

The latter may be because of the actual circumstances of the case, for example where a ‘one off ’ trespass to land has occurred but was no more than a limited incursion causing no actual damage. The court may also use contemptuous damages to mark its belief that morally at least, although not legally, the claimant ‘got what they deserved’. Such awards are not uncommon in libel actions.

One consequence of contemptuous damages is that the claimant may find that the award of costs is affected. Although an order is usually made in favour of the successful party, the judge has a discretion to order that both sides bear their own costs or even to order the claimant to pay the costs of both sides.

Nominal damages

Where nominal damages are awarded the claimant’s right has been infringed but little damage has occurred. The judge will be satisfied that the claimant has acted reasonably in bringing the case. Such awards are not unusual in cases where the tort is actionable per se such as trespass or where the remedy of choice is an injunction or a declaration. In the recent case of Ms B v An NHS Trust [2002] EWHC 429 (Fam) the declaration sought by the claimant was granted and a nominal sum awarded for damages for the trespass to her person. In that case the claimant also received full costs but it should be remembered that the judge may exercise discretion whether or not to award costs and may decline to do so.

Aggravated damages

Aggravated damages are awarded to compensate the claimant for injury to feelings and distress which have been increased by the defendant’s bad motive or wilful behaviour.

The Court of Appeal gave an explanation of the circumstances in which aggravated damages should be awarded in the case of Thompson v Metropolitan Police Commissioner [1997] 2 All ER 762. Explaining that aggravated damages are awarded in addition to the basic figure which would usually be the sum for general damages, Lord Woolf MR said:

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‘Such damages can be awarded where there are aggravating features about the case which would result in the [claimant] not receiving sufficient compensation for the injury suffered … Aggravating features can include humiliating circumstances … or any conduct of those responsible … which shows that they had behaved in a high-handed, insulting, malicious or oppressive manner.’

As the award is basically for hurt feelings, it would be inappropriate for a company to receive such an award – a company has no feelings to be hurt!

Exemplary damages

The purpose of exemplary damages is twofold:

(i) to punish the defendant; and

(ii) to deter others from similar behaviour.

At first sight, the difference between exemplary and aggravated damages is not clear. In both cases, the disapproval of the defendant’s action is seen to merit an additional award based largely on the view taken of the defendant’s behaviour. The distinction is drawn between behaviour which adds to the claimant’s hurt feelings (aggravated damages) and behaviour which deserves punishment even if the additional hurt to the claimant is minimal.

The availability of exemplary damages

The modern approach dates from a case in 1964.

CASE EXAMPLE

Rookes v Barnard [1964] AC 1129

The case involved an industrial dispute at Heathrow Airport. The claimant was an employee who had left the union which operated an informal closed shop agreement with the employers, British Overseas Airways Corporation. The defendant was an unpaid union official and as a result of union action, the employers were told that unless the claimant was dismissed there would be a strike. The claimant was dismissed and brought a civil action against the defendant and others for conspiracy. The claimant succeeded in his action. The important point for discussion here was whether he could be awarded exemplary damages.

Lord Devlin explained the distinction between compensatory damages and exemplary damages. The former, including aggravated damages, are intended to compensate the claimant for loss suffered. The latter are awarded to mark disapproval of the defendant’s conduct and to deter others from similar behaviour. Lord Devlin concluded that there are two categories of cases where an award of exemplary damages could be appropriate:

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(i) ‘oppressive, arbitrary or unconstitutional action by the servants of the government’;

(ii) ‘those [cases] where the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the [claimant]’.

The judge noted that a third category of case existed where ‘exemplary damages are expressly authorised by statute’.

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‘certain categories of cases in which an award of exemplary damages can serve a useful purpose in vindicating the strength of the law … and thus admitting into the civil law a principle which ought logically to belong to the criminal’.

When it is remembered that the general purpose of damages in civil law is to provide compensation rather than to punish a defendant, the basis for this view is clear. However, what about those cases where the criminal law provides no remedy but the conduct of the defendant is in the eyes of many people deserving of punishment? It is in this area that the issue of exemplary damages becomes of particular importance and, at the same time, particularly controversial. The courts have struggled with the problem and have shown reluctance to allow any extension of the categories for which exemplary damages can be awarded.

In Broome v Cassell & Co Ltd [1972] AC 1027 it was held that the categories of torts for which exemplary damages could be awarded was limited to those cases where such an award had been possible prior to 1964 (the ‘cause of action approach’). This view, although the subject of academic argument and criticism, has been reconsidered by the House of Lords in Kuddus v Chief Constable of Leicestershire [2002] UKHL 29.

CASE EXAMPLE

Kuddus v Chief Constable of Leicestershire [2002] UKHL 29

The claimant had come back to his flat to find that many items were missing. The police officer attending the scene said that the matter would be investigated but two months later forged the claimant’s signature on a statement withdrawing the complaint of theft. The claimant brought an action for misfeasance in a public office against the defendant as the employer of the police officer. The issue for the courts was whether the actions of the police officer could be the basis of an award of exemplary damages.

In considering its judgment, the members of the House of Lords bore in mind the report of the Law Commission which in 1997 recommended that the availability of exemplary damages should extend to all torts regardless of whether such categories had been recognised prior to 1964 (‘Report on aggravated, exemplary and restitutional damages’, Law Com. No. 247, 1997). Discussing this issue, and supporting the view of the Law Commission, Lord Mackay said:

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‘The issue is determined by whether the factual situation is covered by either of Lord Devlin’s formulations.’

Rejecting the ‘cause of action’ approach taken in Broome v Cassell, Lord Nicholls said that it represented:

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‘an arbitrary and irrational restriction on the availability of exemplary damages’.

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‘On occasion conscious wrongdoing by a defendant is so outrageous, his disregard of the [claimant’s] rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour. Without an award of exemplary damages, justice will not have been done.’

The present position

Accepting as one must, that the position is now that explained by the House of Lords in Kuddus v Chief Constable of Leicestershire, it is informative to consider examples of those cases where the courts have considered the issue of exemplary damages in those circumstances suggested by Lord Devlin in Rookes v Barnard.

In the case of oppressive, arbitrary or unconscionable action by servants of the government it is clear that there can be a punitive remedy for blatant abuse of power by civil servants or other agents of the government. An example of this is found in the following case.

CASE EXAMPLE

Huckle v Money [1763] 2 Wils 205

The defendant was detained pursuant to a search warrant for no more than six hours, during which time he was given ‘beefsteaks and beer’. Notwithstanding this good treatment, the court held that the fact that the warrant was issued to obtain evidence:

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‘is worse than the Spanish inquisition … it is a more daring public attack upon the liberty of the subject’.

The purpose of the category seems to be to ensure that executive powers are not exercised in an abusive way. Police officers are not strictly servants of the government but their actions are covered by these rules. Actions by publicly owned corporate bodies are only covered if the body is exercising an executive function. In AB v South West Water Services Ltd [1993] 1 All ER 609 it was held that a publicly owned monopoly supplier of water did not exercise executive functions and was not covered.

Lord Devlin’s second category is intended to catch behaviour by the defendant which shows:

(i) cynical self-interest in calculating that profit will exceed any compensation to which the claimant may be entitled; and

(ii) knowledge that the action is against the law or a blatant disregard of whether the action is or is not lawful.

Mere carelessness by the defendant will not suffice. No precise definition of what will suffice can be given but it seems that the courts are looking for some evidence of deliberate, calculated action. It is clear that there is no need to show that the defendant made any precise calculation.

(i) a general calculation that publication would aid sales of the newspaper; and

(ii) any negotiated settlement or even any award of damages would be less than the profit from the increased sales was enough.

2. multiplying this figure by the number of years such loss is likely to continue.

The net annual loss is usually gross wages less tax, social security contributions, pension contributions and any other deductions which would have been made from gross income. At first sight this looks simple but how many people can be certain of what the future holds? Opportunity may knock, enabling the claimant to increase earnings, or unemployment may strike, causing a drastic reduction. A claimant may argue that the injury has resulted in the loss of a chance of fame and/or fortune. In such cases, the court will make as realistic assessment as possible of the chances of the claimant actually achieving the goal. This happened in the following case example.

CASE EXAMPLE

Doyle v Wallace [1998] PIQR Q146

The claimant was unable to work following a car accident. She had been planning to qualify as a drama teacher but, if she was not successful, to work as a clerk. As it was too early to say on the basis of her studies to that date whether or not she would have qualified, the court assessed her chances of qualifying at 50 per cent and her net future income at halfway between what she would have earned as a clerk and the higher pay she could have expected as a teacher.

Once the net annual loss has been calculated it would seem a simple calculation to multiply this figure by the relevant number of years throughout which it might have been earned. The courts will, however, take account of what have been described as ‘the normal vicissitudes of life’, for example, that the claimant might not have worked until retirement age.

Even after these figures have been assessed, it is not simple to calculate the lump sum payable. The court needs to decide what capital sum must be invested to produce an annual income of the right amount. This takes into account the fact that interest will accrue on the investment and the fact that the claimant will be expected to use part of the capital to supplement the income. A major problem is caused by inflation, which can fluctuate widely over a long period of time with the result that the return on the invested income can be seriously affected. The courts use actuarial tables (the Ogden Tables) prepared by insurance experts as well as guidance issued by the Lord Chancellor (presumably now by the Department of Constitutional Affairs) as to the likely rate of return on investments. By the Damages (Personal Injury) Order 2001 (SI 2001 No. 2301) the rate is presently set at 2.5 per cent. The courts do not have to follow the guidance, the Damages Act 1996 s1 granting discretion to depart from it where appropriate.

Deductions

It is a basic principle that a person should not be compensated from more than one source for the same injury. There are exceptions for certain social security benefits and for some other sources of compensation.

The result of this complex legislation is that the claimant will receive full compensation although some of it may come from social security benefits which are then paid back to the State by the defendants or their insurers.

Other sources of compensation. Sums paid by way of sickness benefit by an employer are taken into account but not a disability pension paid by an employer, insurance payouts from personal accident cover taken out by the claimant or payments made on a charitable basis. This obviously means that the claimant does in fact ‘profit’ in the sense that income is increased.

The approach has been criticised by the Law Commission (‘Damages for personal injury: collateral benefits’, Consultation Paper 147, 1997) but continues to be used by the courts. The reasoning seems to be that to do otherwise would:

(i) discourage employers from making proper arrangements for their employees;

(ii) discourage people from obtaining sensible insurance cover;

(iii) be an unreasonable rebuff to those seeking to act benevolently in response to another’s misfortune;

(iv)