Everything about Punitive Damages totally explained
Punitive damages (termed
exemplary damages in the
United Kingdom) are
damages not awarded in order to compensate the
plaintiff, but in order to reform or deter the
defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff.
Punitive damages are often awarded where
compensatory damages are deemed an inadequate remedy. The court may impose them to prevent under-compensation of plaintiffs, to allow redress for undetectable torts and taking some strain away from the criminal justice system. However, punitive damages awarded under court system that recognize them, may be difficult to enforce in jursidictions that don't recgonize them. Punitive damages awarded to one party in a US case would be difficult to get recognition for in a European court, where punitive damages are most likely to be considered to violate
ordre public
Because they usually compensate the plaintiff in excess of the plaintiff's provable injuries, punitive damages are awarded only in special cases, usually under
tort law, where the defendant's conduct was egregiously insidious. Punitive damages can't generally be awarded in
contract disputes.
National applications
United Kingdom and Commonwealth
In
England and
Wales, exemplary damages are limited to the circumstances set out by
Lord Patrick Devlin in the leading case of
Rookes v. Barnard. They are:
- Oppressive, arbitrary or unconstitutional actions by the servants of government.
- Where the defendant's conduct was 'calculated' to make a profit for himself.
- Where a statute expressly authorises the same.
Rookes v Barnard has been much criticised and hasn't been followed in
Canada or
Australia or by the
Privy Council.
Another case, that could arguably be seen as an example of punitive
damages, was that of
Attorney-General v Blake in which the defendant profited from publishing a
book detailing his work for
MI5. The details were very old and therefore didn't cause loss to the state. The publishing was however in
breach of the contract of employment (and incidently
criminally in breach of the
Official Secrets Act 1911). He was required to give an account of his profits gained from writing the book.
The
courts have been very reluctant to follow this approach, emphasising the materiality of the
criminal element required for these
damages to be considered.
In
New Zealand it was held in
Donselaar v. Donselaar [1982] 1 NZLR 97 and confirmed in
Auckland City Council v. Blundell [1986] 1 NZLR 732 that the existence of the
Accident Compensation Corporation didn't bar the available of exemplary damages.
United States
Punitive damages are a settled principle of common law in the
United States. They are a matter of state law, and thus differ in application from state to state. In many states, including
California and
Texas, punitive damages are determined based on
statute; elsewhere, they may be determined solely based on case law. Many state statutes are the result of
insurance industry
lobbying to impose "caps" on punitive damages; however, several state courts have struck down these statutory caps as unconstitutional.
Punitive damages are a focal point of the "
tort reform" debate in the United States, where numerous highly-publicized multi-million dollar verdicts have led to a fairly common perception that punitive damage awards tend to be excessive. However, statistical studies by law professors and the Department of Justice have found that punitive damages are only awarded in two percent of civil cases which go to trial, and that the median punitive damage award is between $38,000 and $50,000.
Further Information
Get more info on 'Punitive Damages'.
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