"The reports of my death are greatly exaggerated": Exemplary damages in Australia

Civil Trials Bench Book

12. Remedies and Costs
However, the Privacy Commissioner followed authority, holding that aggravated damages does fall within the scope of s 52 1 iii. He said the provision left open the question of whether the onus of proving that reasonable steps were not taken would impose at least an evidentiary burden on the defendant. Previous law reform inquiries made similar recommendations. The Gore guideposts are, nevertheless largely reflected in the considerations that courts and juries must take into account when doing so. If damages are awarded under the section, the assessment of non-economic loss must not include an element to compensate for loss of capacity to provide services to others: See Ch 13 for further discussion. Considerations to be addressed include:

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11. Remedies and Costs

State Farm Insurance declined offers to settle the legal proceedings — within the limits of the policy — and despite the advice of its own investigators, contested liability. State Farm Insurance assured the Campbells that 'their assets were safe, that [State Farm Insurance] would represent their interests, and that they did not need to procure separate counsel.

State Farm Insurance informed the Campbells that it would not cover the excess liability above the policy limit. It was suggested to the Campbells, by their insurer, that they may wish to sell their home. These events led to the Campbells retaining their own lawyers and filing proceedings in the Utah State Court against State Farm Insurance alleging bad faith, fraud and intentional infliction of emotional distress. The Utah Supreme Court, relying heavily upon: The Utah Supreme Court noted that the punitive damages award was not excessive when compared to various civil and criminal penalties State Farm Insurance could have faced for its nationwide practices.

The majority referred to the Supreme Court's earlier decision in BMW v Gore in which it identified three guideposts the Gore guideposts to be used when reviewing punitive damages, namely: In respect of the first Gore guidepost, the majority acknowledged that conduct by State Farm Insurance was reprehensible enough to warrant a punitive damages award, but was not convinced the State's objectives could not have been satisfied by a more modest punishment.

The Campbells argued that such evidence was used merely to demonstrate the motives of State Farm Insurance against its insured, but the majority held that in relying on such evidence, the Utah courts awarded punitive damages for conduct that bore no relation to the Campbell's harm. Further, the majority stated that States cannot punish a defendant for conduct that may have been lawful where it occurred, or impose punitive damages to punish a defendant for unlawful acts outside its jurisdiction.

The reprehensibility of conduct by State Farm was therefore restricted by the majority to the conduct that harmed the Campbells. The second Gore guidepost requires the measure of punishment to be both reasonable and proportionate to the amount of harm suffered by the plaintiff and to the general damages awarded. The majority did not identify concrete constitutional limits on the ratio of harm suffered to the punitive damages award, but did state that in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process.

This means that punitive damages awards should be, at most, no greater than nine times the amount of compensatory damages awards.

However, the majority were reluctant to make single-digit ratios a rigid benchmark, citing that ratios greater than 9: Nonetheless, it appears that a presumption may be had against awards with larger ratios. In light of the harm suffered by the Campbells, the majority criticised the proportionality of the punitive damages award to the compensatory damages award as the Campbells had suffered only minor economic losses and a year and a half of emotional distress arising from an economic transaction and not from some physical assault or trauma.

Citing the Restatement Second of Torts, the majority agreed that in many cases compensatory damages often include an amount for emotional distress caused by the defendant's conduct.

It refused to speculate about the broad fraudulent scheme drawn from evidence of out-of-state and dissimilar conduct and held that such an analysis was insufficient to justify the punitive damages award. The minority opinion The minority comprised Justices Scalia, Thomas and Ginsburg, who each delivered separate dissenting judgments.

The minority were of the opinion that the US Constitution does not impose limits on the size of punitive damages awards, and were critical of the authorities relied upon by the majority to justify their foray into 'territory traditionally within the States' domain'.

They accepted the Campbell's argument that their experience with State Farm Insurance exemplified and reflected an overarching underpayment scheme, which caused repeated misconduct of the sort that injured them, and treated the evidence of out-of-state conduct as probative and demonstrative of the deliberateness and culpability of action by State Farm Insurance.

It was therefore concluded that a clear nexus existed between these actions and the harm suffered by the Campbells. The Australian position in relation to punitive damages It is not possible to discern any pattern in the quantum of awards of punitive or exemplary damages in Australia other than that they have never been as inflated as their American counterparts, tending to run at the higher end into the hundreds of thousands rather than into the millions of dollars.

Exemplary damages are awarded only in circumstances where the defendant has acted in 'contumelious disregard' of the rights of the plaintiff, and with the social purpose of teaching a wrongdoer that 'tort does not pay'.

They may also serve to assuage any urge for revenge felt by the victims. It is closely analogous to actions like assault and false imprisonment, and other forms of trespass which are actionable per se. The courts deciding actions for invasion of privacy are likely to draw on the principles of damages as developed by the courts in these torts.

But the purpose of an action for trespass to land is not merely to compensate the plaintiff for damage to the land. That action also serves the purpose of vindicating the plaintiff's right to the exclusive use and occupation of his or her land. The appellant is entitled to have his right of property vindicated by a substantial award of damages If the occupier of property has a right not to be unlawfully invaded, then However, each aim does not need to be separately compensated.

To decide this matter would require a detailed analysis of the new and developing privacy rights and their interaction with defamation. It is not clear to me why, as a matter of principle, damage to reputation of this sort should not be within the sort of thing that privacy rights should protect against.

This accords with the purpose of a privacy action:. For instance, damages in trespass cases involving assault, battery and false imprisonment commonly include a component for injury to feelings or mental distress caused by the tort, as do cases of malicious prosecution and defamation. Nor may they experience an injury that is either physical or amounting to a psychological disorder. It is the emotional damage or loss to their dignity and the hurt and loss of trust caused by the privacy breach that is their greatest concern and one that in our view often necessitates an award of damages to compensate for this loss.

An award limited to compensating material loss will therefore often be insufficient to counteract the wrong. Effective redress requires that the plaintiff can also claim compensation for intangible losses, such as injury to feelings. Courts will be likely to look at damages awarded in comparable cases for other torts.

What can be achieved by a monetary award in the circumstances is limited. Any award must be proportionate and avoid the appearance of arbitrariness. Analysis of the cases Recommendation 12—2 The Act should set out the following non-exhaustive list of factors that a court may consider when determining the amount of damages:. This is a non-exhaustive list. It is intended to guide a court when determining the assessment of damages.

It will be for the court to decide whether particular factors are relevant. For instance, s 38 of the Defamation Act NSW sets out mitigating factors for a court to consider when assessing damages, including whether the defendant has made an apology to the plaintiff or has published a correction of the defamatory matter.

While there was no separate award of aggravated damages in Mosley for instance, aggravating conduct was relevant to the assessment of the award of general damages. As Lord Reid said, in the context of defamation, in Cassell v Broome:. He may have behaved in a highhanded, malicious, insulting or oppressive manner in committing the tort or he or his counsel may at the trial have aggravated the injury by what they there said.

Where a plaintiff has pursued alternative dispute resolution ADR or some other complaints mechanism prior to undertaking legal proceedings under the new privacy tort, a court should consider any compensation or other remedy obtained when assessing damages. These may result in the payment of compensation or an award of damages. Advocates for persons experiencing domestic violence were concerned by the inclusion of this factor in the list of mitigating and aggravating factors.

The ALRC also agrees that failure by a plaintiff to engage with a defendant who shows a willingness to settle a dispute prior to legal proceedings should only be used against a plaintiff in an award of damages, where it would be reasonable to do so in the circumstances. Under state apportionment legislation, a court may reduce an award of damages in certain claims to the extent that the plaintiff was at fault, [59] but only where the defence of contributory negligence would have been a complete defence at common law.

Contributory negligence is not a defence at common law to intentional torts and the apportionment legislation therefore does not apply to such claims. However, as Eady J pointed out in Mosley,. On the other hand, the extent to which his own conduct has contributed to the nature and scale of the distress might be a relevant factor on causation. Has he, for example, put himself in a predicament by his own choice which contributed to his distress and loss of dignity?

However, it will be a matter for the court whether this should be considered in a particular case. Recommendation 12—3 The Act should provide that the court may not award a separate sum as aggravated damages.

The NSWLRC explained that aggravating circumstances would already form some part of an assessment for general damages, stating:. Recommendation 12—4 The Act should provide that a court may award exemplary damages in exceptional circumstances. The deterrent function of exemplary damages is arguably more valuable than the punitive function.

The aim of awarding exemplary damages to deter similar conduct by others in the future has been recognised by Australian courts.

Damages, aggravated damages