The Unique History of Punitive Damages in England: The "Ugly Duckling" of Common Law

In my previous column, I wrote about the current state of punitive damages in the U.S. We saw that, in U.S. practice, most awards result from jury decisions, and punitive damages are commonly awarded. However, in England, damages are determined by judges and courts, and exemplary damages (the English term for punitive damages) are awarded only in limited circumstances, as defined by precedent. In fact, unlike in the United States and other common law jurisdictions, in England punitive damages are viewed with suspicion by the courts as a kind of anomalous remedy in private law, insofar as punishment does not fall within this branch of the legal system. This understanding is so deeply rooted that it is not even challenged in legal scholarship. To a civil law scholar from Brazil or another civil law jurisdiction, such a claim may seem surprising, given that we tend to view the common law as a unified whole when, in reality, the specific characteristics of each jurisdiction are strikingly distinct.

Gradually, since 1760, English law has permitted that, in exceptional situations, in addition to compensatory damages, a judgment may award punitive damages to sanction outrageous conduct in which the wrongdoer demonstrates profound contempt for the victim. Unlike compensatory damages, punitive damages are not intended to remedy harm but rather to deter reprehensible conduct. Since 1964, the power to award punitive damages (or exemplary damages) has been restricted in England. As Lord Bingham observed in Watkins v. Secretary of State for the Home Department, the policy is simply to discourage judges from awarding them.1 A general limitation was established in the so-called “categories test,” set forth by the House of Lords in the famous case of Rookes v. Barnard.2 In that case, Lord Devlin described punitive damages as “an anomaly in the law of England”3 due to their retributive nature, which led to the decision to confine punitive damages to three categories, thereby delineating the boundaries of an exceptional remedy, fundamentally distinct from other forms of compensation, insofar as exemplary damages “confuse the civil and criminal functions of the law.”4

The characterization of punitive damages as an aberration has been corroborated since the Rookes decision. Allan Beever observed that there is almost a universal consensus that punitive damages “are anomalous.”5 Although this mantra has been occasionally refuted6, the fact remains that there has not yet been a decisive challenge to this orthodox position regarding the aversion to punitive damages, despite the fact that it seems evident that this remedy does not hold a monopoly on civil penalties in civil liability. On the contrary, the treatment of exemplary damages as a sort of intruder in private law ultimately leads to their subsumption under other forms of compensation, almost as if in an attempt to eliminate them entirely.7 As the Law Commission stated: “the modern boundaries of the remedy of exemplary damages have been shaped by the courts on the assumption that they are an anomalous civil remedy”8. This state of affairs continues to the present day. In a recent decision in Axa Insurance UK Plc v. Financial Claims Solutions Ltd., Flaux LJ once again observed that punitive damages “are anomalous . . . it would . . . be inappropriate to extend the circumstances in which they can be awarded.”9.

In fact, regarding the applicability of punitive damages in England, the Rookes precedent10 is decisive. This test precludes their award unless the claim falls into one of these three categories: (1) involving oppressive, arbitrary, or unconstitutional conduct committed by a government official acting in that capacity; (2) where the defendant anticipated that he could profit from his wrongful act after paying compensatory damages; and (3) where a statute provides that punitive damages shall be awarded. Unless the specific case falls under one of the three highlighted categories, punitive damages will not be awarded, regardless of the severity of the defendant’s conduct.

There are several conditions for the first category. One limitation is the requirement that the defendant be a holder of public authority. Thus, the mere fact that a public official acted in an oppressive manner will not bring a case within the first category. However, the case will not fall under the first category simply because the defendant was vested with public authority. It is essential that the defendant have exercised public authority when committing the tort. For example, a public official who conducts commercial operations rather than performing governmental functions cannot be held liable for punitive damages under the first category.11 Moving on to the second category, it covers only cases involving a “cynical calculation of mercenary gain” on the part of the defendant. Therefore, it is insufficient that the wrongdoing was committed solely in a business context12. The third category hardly extends the power to award punitive damages, since English law rarely authorizes courts to do so. Punitive damages may be awarded under the law in only a handful of eclectic circumstances, including for violations of certain environmental conventions,13 for the misappropriation of military property14, and for certain torts committed by defendants through the press.15

In addition to the three categories mentioned above, plaintiffs16 must overcome no fewer than six hurdles to obtain punitive damages. Moreover, even if these hurdles are cleared, the award of punitive damages is not mandatory for the judge but is solely a matter of discretion.

First, it must be demonstrated that the defendant’s conduct was sufficiently reprehensible to warrant a punitive award. Nevertheless, there is no precise test for satisfying this requirement. Case law provides a “whole gamut of dyslogistic judicial epithets”17 that offer guidance on the type of exceptional conduct warranting a punitive response. These epithets range from “high-handed,” “outrageous,” “egregious,” “exceptional,” “insulting,” “cynical,” “flagrant,” “appalling,” and “contumelious.”

Second, the plaintiff must satisfy the “if, but only if” test, allowing for the award of punitive damages only when compensatory damages alone are insufficient to punish and deter.18 This restriction is set forth in Lord Nicholls’s obiter dictum in Kuddus v. Chief Constable of Leicestershire Constabulary, in which he stated that punitive damages serve as a “remedy of last resort.”19 This is a significant limitation on the power to award punitive damages, one that is frequently emphasized in English courts. In the recent case of Mohidin v. Commissioner of Police of the Metropolis,20 Gilbart J refused to award punitive damages for assault and wrongful arrest, even though there was evidence of oppressive conduct (Rookes’ Category 1), since an award of compensatory damages would already constitute an adequate punishment for the defendant.

Third, there are restrictions that apply when the tort involves multiple victims. Even when one of the victims has a clear “cause of action” against the defendant, unless all other victims are present before the judge, the claim for damages will be dismissed because, under such circumstances, it will not be possible to determine the justification for a generalized punishment.21

Fourth, conversely, other limitations arise when there are multiple defendants. When the plaintiff sues multiple defendants who are jointly and severally liable for the same tort, punitive damages apply only if there is a need to punish all of them and this need has not been satisfied by the award of compensatory damages.22

Fifth, the fact that the defendant has been administratively or criminally sanctioned for the same tort will preclude the award of punitive damages23. This is a prohibition similar to the “double jeopardy” principle in U.S. law.24

Sixth, it must also be determined whether the claim constitutes a “cause of action” in which punitive damages are permissible. This restriction predates the leading case Rookes and has been known as the “pre-1964 test” or “cause of action test,” preventing the award of punitive damages in claims such as fraud, abuse of power by public officials, and disturbance of public order. Even though, in the no less important Kuddus case,25 the House of Lords mitigated these restrictions, punitive damages are still subject to a series of limitations. Thus, they cannot be awarded in cases involving breach of contract,26 in relation to equitable wrongs, or based on the Human Rights Act 1998,27 as well as the Consumer Protection Act 1987. There is serious disagreement as to whether punitive damages can be awarded for the tort of “negligence,” perhaps due to the perception that merely negligent conduct is insufficient to warrant a punitive response.28

The restrictions discussed so far concern the circumstances under which punitive damages are awarded. However, the limitations do not apply solely to the availability of the remedy, but also to its extent. In Rookes, Lord Devlin urged that awards of punitive damages be moderate, threatening to impose a cap on damages if the exhortation proved insufficient; this did not become official because the courts followed the principle of moderation, that is, the award must be set at the minimum necessary to satisfy the public purposes underlying this remedy, namely, punishment and deterrence. According to an empirical analysis across all parts of the UK—between 2000 and 2015—of all electronically accessible cases in which punitive damages were claimed (excluding Scotland, which does not recognize the remedy), the average amount of punitive damages awards is £18,181.29. This figure is relatively modest when compared to those in other common law jurisdictions.30 Therefore, the assessment of the authority to award punitive damages occurs twice: first, in connection with the decision to award them, and again, in relation to their quantification.

In addition to the principle of moderation, at least three additional rules limit the amount of punitive damages. First, when the court determines that multiple defendants must pay damages, the amount must reflect the punishment reserved for the least culpable among them, regardless of whether one or more of them acted in a far more reprehensible manner.31 This rule expresses a preference for insufficient punishment rather than excessive punishment. Second, in cases involving police misconduct, awards are confined to predetermined limits.32 Third, when assessing punitive damages, the judge may consider the plaintiff’s incitement as a mitigating factor in determining the amount.33

From all that has been said, a clear contrast can be observed between the regime of punitive damages in England and other common law jurisdictions. Three observations demonstrate that the English system is far more restrained in its application of this remedy than in other parts of the Commonwealth (which excludes the U.S. from this assessment).

First, the so-called “categories test” has been rejected in other Commonwealth jurisdictions, which is significant because this test represents the most stringent constraint on the judiciary’s authority to award punitive damages. The elimination of this restriction has important practical implications, allowing the award of punitive damages for a wide range of reprehensible conduct that could never be sanctioned in England.34 Second, in other jurisdictions, restrictions based on “cause of action” do not apply. While in England punitive damages apply only in the context of tort liability, in Canada they also apply in the context of equitable wrongs and, under certain circumstances, for breach of contract.35 Third, the quantification of punitive damages in other countries is broader than in England. The largest award recorded in the UK was in Rees v. Commissioner of Police for the Metropolis,36 in the amount of £150,000. The situation in Australia is radically different. A recent study on the quantification of punitive damages in that country found average awards of around A$105,059,37 (nearly triple the English average), with the largest award reaching A$4,167,202,38—an amount several times greater than that awarded in the aforementioned Rees case.

Such distinctions indicate that common law jurisdictions themselves are quite heterogeneous. Notably, there is a profound structural distinction between English law and American law. This difference is so pronounced that, while it makes sense to speak of an Anglo-American tradition in a historical sense, any suggestion of an “Anglo-American law” is mistaken.

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1. [2006] UKHL 17, [2006] 2 AC 395 [26].
2. [1964] AC 1129.
3. ibid, 1221. Lord Devlin also referred in 1227 to “an anomaly inherent in exemplary damages.”
4. ibid, 1221.
5. A. Beever, 'The Structure of Aggravated and Exemplary Damages' (2003) 23 OJLS 87, 109 n 91.
6. N. J. McBride, “Punitive Damages” in P. Birks (ed.), Wrongs and Remedies in the Twenty-First Century (Oxford: Clarendon Press, 1996) 194–195 (rejecting the proposition that punitive damages are anomalous on the grounds that it is a “conclusion masquerading as an argument”); P. Cane, The Anatomy of Tort Law (Oxford: Hart Publishing, 1997) 116–119 (arguing that various types of damages serve a retributive purpose).
7. For example, E. Weinrib, The Idea of Private Law (Oxford: OUP, 2012) 135 n. 25 (noting that punitive damages are sometimes disguised as restitutionary damages) and R. Stevens, Torts and Rights (Oxford: OUP, 2007) 87 (seeking to characterize punitive damages as “substitutive damages”).
8. Law Commission, Aggravated, Exemplary and Restitutionary Damages Law Com No 247 (1997) 1.
9. [2018] EWCA Civ 1330, [2019] RTR 1 at [25].
10. In A v Bottrill [2002] UKPC 44, [2003] 1 AC 449 at [41], Lord Nicholls referred to English law regarding punitive damages as “toiling in the chains of Rookes v Barnard.”
11. AB v South West Water Services Ltd [1993] QB 507.
12. '[T]he mere fact that a tort . is committed in the course of a business carried on for profit is not sufficient to bring a case within the second category': Broome v Cassell & Co Ltd n 8 above, 1079 per Lord Hailsham LC.
13. High Speed Rail (London - West Midlands) Act 2017, s 51(10).
14. Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951, s 13(2).
15. Crime and Courts Act 2013, s 34.
16. Plaintiffs must be alive. Punitive damages cannot be claimed on behalf of the estate or the deceased victim: Law Reform (Miscellaneous Provisions) Act 1934, § 1(2)(a).
17. Broome v Cassell & Co Ltd n 8 above, 1129 per Lord Diplock.
18. Rookes v Barnard, per Lord Devlin.
19. n 1 above at [63].
20. [2015] EWHC 2740 (QB).
21. R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12, [2012] 1 AC 245 at [167].
22. Broome v. Cassell & Co. Ltd. As Lord Reid put it, “[i]f any one of the defendants does not deserve punishment or if the compensatory damages are in themselves sufficient punishment for any one of the defendants, then they must not make any addition to the compensatory damages.”
23. In an important discussion on prior punishment, see McBride, 188–191.
24. The Double Jeopardy Clause is found in the 5th Amendment to the U.S. Constitution, prohibiting any person from being prosecuted twice for the same crime: “No person shall . . . be subject for the same offense to be twice put in jeopardy of life or limb.” In short, the same set of facts cannot give rise to the imposition of disproportionate sanctions in different proceedings: criminal, administrative, and civil.
25. Kuddus v. Chief Constable of Leicestershire Constabulary. Lord Slynn observed that this 'encourage[d] a tedious trawl through the ancient authority' in order to determine if punitive damages were available in a given case thus 'committ[ing] the law to an irrational position in which the result depend[ed] not on principle but upon the accidents of litigation (or even law reporting) before 1964 .'
26. Addis v Gramophone Co Ltd [1909] AC 488.
27. Anufrijeva v Southwark LBC [2003].
28. In this regard, James Edelman argues that ‘[i]t would not usually be expected that actions in negligence would lead to exemplary damages . since the necessary mental element is not present; and it is thought that this would be true even of gross negligence’: J. Edelman, McGregor on Damages (London: Sweet & Maxwell, 20th ed., 2017).
29. J. Goudkamp and E. Katsampouka, 'An Empirical Study of Punitive Damages' (2018) 38 OJLS 90, 104 n 91.
30. Thompson v. Commissioner of Police of the Metropolis is a case that illustrates the courts’ adherence to the principle of moderation. The Court of Appeal reduced the award of £200,000 in punitive damages to £15,000. Lord Woolf MR argued that punitive damages “should be no more than is required” to serve their purpose of “marking . . . disapproval” of the defendant’s conduct. This is a clear reflection of the “if, but only if” test, which limits the applicability of punitive damages.
31. Broome v Cassell & Co Ltd.
32. In Thompson, Lord Woolf MR stated that: '[i]n this class of action, the conduct must be particularly deserving of condemnation for an award of as much as £25,000 to be justified, and the figure of £50,000 should be regarded as the absolute maximum, involving directly officers of at least the rank of superintendent'.
33. For example, see Bishop v. Metropolitan Police Commissioner [1990] 1 LS Gaz R 30.
34. Vanessa Wilcox observes that: “If exemplary damages are to remain, if they are to continue to further punishment, deterrence and reprobation, if logic is to prevail, then the scope of the categories test should be clarified”. Punitive Damages in England, p. 7, in Punitive Damages: Common Law and Civil Law Perspectives. H. Koziol, V. Wilcox (eds.). Springer Wien/New York (2009).
35. Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 SCR 595. We also illustrate this with the case Royal Bank of Canada v. Got Associates Electric, in which the Supreme Court of Canada upheld exemplary damages in a situation where an insurer contested a fire insurance claim in bad faith, alleging that the family had set fire to their own home, even though the local fire chief, the insurer’s own investigating expert, and its initial expert had all stated that there was no evidence of arson. (1999) Supreme Court Reports (S.C.R.) 408.
36. [2019] EWHC 2339 (QB).
37. F. Maher, An Empirical Study of Exemplary Damages in Australia (2019) 43 MULR 694, 711.
38. Deckers Outdoor Corporation Inc v Farley (No 5) [2009] FCA 1298, (2009) 262 ALR 53.