AN EMPIRICAL STUDY OF EXEMPLARY DAMAGES IN AUSTRALIA.

• Date: 01 December 2019
• Author: Maher, Felicity

I Introduction II Legal Principles Governing Exemplary Damages in Australia III Statutory Intervention IV Methodology A Scope B Case Searches C Coding the Cases D Limitations E Statistical Analysis V Results A Overall 1 Across All Jurisdictions 2 Jurisdiction by Jurisdiction B Cause of Action Category C Defendant Category D Defendant Subcategory E Other Types of Damages 1 Aggravated Damages 2 Compensatory Damages VI Analysis A Results Standing Alone 1 Rate at Which Exemplary Damages Are Claimed and Awarded 2 Amount of Exemplary Damages Awarded 3 Cause of Action 4 Defendant 5 Police 6 Other Types of Damages 7 Multiple Parties and Causes of Action B Results in Comparison with the UK Study VII Conclusion VIII Appendix: Key Legislative Provisions Limiting or Excluding the Availability of Exemplary Damages A Claims Surviving for the Benefit of the Estate after the Death of the Plaintiff B Defamation C Personal Injury: General D Personal Injury: Motor Vehicle E Personal Injury: Workers' Compensation F Police I INTRODUCTION

Exemplary damages are a controversial--perhaps the most controversial--private law remedy. Exceptionally, their primary functions are punishment and deterrence. (1) Various objections are commonly made against exemplary damages. It is said that punishment is and should be the exclusive province of the criminal law, that civil law does not provide adequate safeguards to defendants in the imposition of punishment, that exemplary damages provide a windfall to the plaintiff, and that they encourage litigiousness. (2) Courts and commentators frequently express concern about the overuse of exemplary damages and excessive awards. They repeatedly emphasise that exemplary damages are rare and should be awarded only exceptionally, (3) and that in making awards of exemplary damages, courts should exercise restraint and moderation. (4) Moreover, in Australia, both federal and state and territory parliaments have legislated to limit or exclude the availability of exemplary damages in certain circumstances. (5)

This statutory intervention prompted the authors of a recent empirical study of exemplary damages in the United Kingdom ('UK Study') to suggest that 'since approximately 2001, the award of punitive damages has been rendered effectively extinct in Australia'. (6) The UK Study was the first of its kind in that jurisdiction, or elsewhere in the common law world. (7) In Australia, there has been no empirical study of exemplary damages, nor even a report by a law reform body. (8) This is despite repeated calls for such a study. (9)

Inspired by the UK Study, and especially its suggestion about the Australian position, this article comprises an empirical study of exemplary damages in Australia. It largely adopts the methodology of the UK Study but, as will be discussed later, (10) also differs in some significant respects. Like the UK Study, the main questions considered by this study concern the number of claims for exemplary damages in Australia, the rate of success in those claims, the amount of exemplary damages awards and how these vary across different jurisdictions within Australia, and different categories of cause of action and defendant. The study also examines whether there is any relationship between exemplary damages and aggravated and compensatory damages. More generally, the study asks whether the frequently expressed concerns about exemplary damages are warranted, and whether there is a sound basis for either the existing statutory intervention in this field, or any future legislative reform.

As will be seen, the main conclusion of the study is that exemplary damages are alive and well in Australia. Indeed, they are in more robust health here than in the UK. In particular, over the period of the study, exemplary damages were sought in 253 claims and awarded at an overall success rate of just less than 50%. The mean award was just over $105,000. By far the greatest number of claims were brought in New South Wales. Exemplary damages were most often awarded where the claim included both interference with the person and interference with property. The greatest awards were also made in interference with property claims. More successful claims were made against public bodies than any other category of defendant; of these claims, more than three quarters were made against police. Finally, exemplary damages tend to go hand in hand with aggravated damages and, when assessing exemplary damages, courts take into account the amount of any compensatory damages.

Part II of this article sets out a brief summary of the legal principles governing exemplary damages in Australia. Part III summarises the key legislative provisions limiting or excluding the availability of exemplary damages in this country. Part IV describes the methodology adopted for the empirical study and how it differs from that of the UK Study. Part V sets out the results of the study. Finally, Part VI analyses the results, considering what they tell us about exemplary damages in Australia standing alone, and in comparison with the UK.

II LEGAL PRINCIPLES GOVERNING EXEMPLARY DAMAGES IN AUSTRALIA

The long history of exemplary damages in English common law has been described in detail by various commentators. (11) In Australia, common law exemplary damages were first considered by the High Court in 1920. Whitfeld v De Lauret & Co Ltd ('Whitfeld') (12) recognised the availability of the remedy and laid down a test for its award: where the defendant has undertaken 'conscious wrongdoing in contumelious disregard of another's rights'. (13) The next major development was in 1966, when the High Court in Uren v John Fairfax & Sons Pty Ltd ('Uren') (14) decided that English law's restrictive approach to exemplary damages, originating from the decision in Rookes v Barnard ('Rookes'), (15) did not apply in Australia. (16) In Rookes, the House of Lords was invited to abolish exemplary damages in England. Given the long history of the remedy, their Lordships declined to do so, instead confining the scope of exemplary damages to the minimum possible within the limits of authority Most previous cases of 'exemplary damages' were reclassified as really awarding aggravated damages. As for the rest, the House of Lords identified only three categories of case in which exemplary damages were available--one statutory and two common law. The two common law categories were: (i) where there were 'oppressive, arbitrary or unconstitutional acts by servants of the government'; and (ii) where the defendant cynically calculated that the profit to be made by their conduct might well 'exceed the compensation payable to the plaintiff'. (17) In Rookes, the House of Lords also emphasised that, in assessing exemplary damages, the watchword was moderation. (18)

In Australia, a claim for exemplary damages need not fall within a Rookes category. Provided the test first stated in Whitfeld is satisfied, exemplary damages may be available in answer to any cause of action. (19) The so-called 'cause of action test'--also applied (for a time) in England (20)--was never adopted in Australia. That test required that for exemplary damages to be available, the cause of action relied upon must be one for which exemplary damages were available before Rookes. (21)

Since Uren, claims for exemplary damages have been before the High Court on several occasions. It has been suggested that the modern tendency in Australia is to 'embrace, or at least to concede' exemplary damages. (22) The Whitfeld test continues to be applied. (23) The position today is that, subject to statutory intervention, exemplary damages are available in principle for any type of claim, including unintentional torts such as negligence. (24) Apart from statute, the only real exceptions are claims for breach of contract (25) and equitable wrongdoing. (26) Exemplary damages may be available even where the defendant is not the wrongdoer, but (for example) the wrongdoer's insurer, (27) or vicariously liable employer. (28) This is on the basis that, although the punishment and deterrence functions of exemplary damages might not be achieved in such a case, other functions of the remedy will be, including preventing plaintiffs from taking revenge. (29) Exemplary damages will not be available, however, where substantial punishment has been imposed on the defendant by the criminal law. (30) In the assessment of exemplary damages, all relevant aggravating and mitigating factors are taken into account, (31) and the court will also consider the means of the defendant. (32) There is 'no necessary proportionality' between exemplary and compensatory damages. (33) But like English courts, Australian courts must exercise moderation in assessing exemplary damages. (34)

III STATUTORY INTERVENTION

There has been significant statutory intervention in Australia limiting or excluding the availability of exemplary damages in certain circumstances. The earliest legislation dates from the 1930s. But the activity was concentrated around the late 1980s and the 2000s. The table annexed to this article summarises the key legislative provisions. (35)

The earliest provisions concern the survival of claims. Adopting 1934 legislation in the UK, (36) enactments from 1935 in Tasmania (37) and other jurisdictions in the years that followed (38) provided that where a cause of action survives for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate do not include exemplary damages.

Thereafter, and especially during the late 1980s and the 2000s, statutory intervention occurred in three main areas: defamation, personal injury (generally, and arising from motor vehicle accidents and in the workplace), and the liability of the state for the tortious conduct of police. There was, however, no legislation considering the availability of exemplary damages generally. This may be a function of the fact that no...