Damages to Punish the Perpetrator – Conditions for Claiming of Exemplary Damages

The exact legal position of exemplary damages and the principle of law governing it pre-1964 was somehow unclear and ambiguous. 

This can be seen in the scholarly writing titled The Law of Damages by the late Professor Charles T. McCormick at page 278 stating:

“In England, where exemplary damages had their origin, it is still not entirely clear whether the accepted theory is that they are a distinct and strictly punitive element of the recovery, or they are merely a swollen or ‘ aggravated’ allowance of compensatory damages permitted in cases of outrage.”

The same can also be been in Lord Simonds’ 3rd edition of Halsbury’s Laws of England, vol 11 (1955) titled Damages at paragraph 391:

“Exemplary damages. Where the wounded feeling and injured pride C of a plaintiff, or the misconduct of a defendant, may be taken into consideration, the principle of restitutio in integrum no longer applies. Damages are then awarded not merely to recompense the plaintiff for the loss he has sustained by reason of the defendant’s wrongful act, but to punish the defendant in an exemplary manner, and vindicate the distinction between a willful and an innocent wrongdoer. Such damages are said to be ‘ at large,’ and, further, have been called exemplary, vindictive, penal, punitive, aggravated, or retributory”

The nature of exemplary damages had also caused confusions as was stated in Mayne and MacGregor on Damages, 12th ed. (1961) at paragraph 212:

“For indeed it cannot be said that English law has committed itself finally and fully to exemplary damages, and many of the above cases point to the rationale not of ” punishment of the defendant but of extra compensation for the plaintiff for the injury to his feelings and dignity. This is, of course, not exemplary damages at all. It is another head of non-pecuniary loss to the plaintiff.”

It was Lord Devlin who took the responsibility to separate the meaning of the expressions “aggravated” and “punitive” or “exemplary” in the case of Rookes v Barnard. 

The Case of Rookes v Barnard [1964] AC 1129

Lord Devlin in this case propounded two categories of circumstances where exemplary damages could be awarded:

• Oppressive, arbitrary or unconstitutional action by the servants of the government; and
• Cases where defendant’s conduct had been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff.

With regard to the first category of circumstance, Lord Devlin said:

“… servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service. It is true that there is something repugnant about a big man bullying a small man and, very likely, the bullying will be a source of humiliation that makes the case one for aggravated damages, but it is not, in my opinion, punishable by damages.”

For the second category, Lord Devlin stated that:

“Where a defendant with a cynical disregard for a plaintiff’s rights has calculated that the money to be made out of his wrongdoing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in which the defendant is seeking to gain at the expense of the plaintiff some object.”

In addition to the aforementioned categories, Lord Devlin also propounded three considerations to be taken into account when awards of exemplary damages are being considered:

• the plaintiff cannot recover exemplary damages unless he is the victim of the punishable behaviour;
• the power to award exemplary damages must be used with restraint; and
• the means of the parties are material in the assessment of exemplary damages.

Exemplary damages are to be awarded only if the compensatory award is inadequate to punish the defendant for his outrageous conduct as to mark their disapproval and as a means of deterrence. 

Where an award for exemplary damages was reviewed on appeal, the first consideration would be whether the “award can be justified as compensation and if it can, there is nothing further to be said. If it cannot, the court must consider whether or not the punishment is, in all the circumstances, excessive”.

The position in Rookes v Barnard has been discussed and strengthened in subsequent House of Lord cases. 

This is illustrated in the case of Broome v Cassell & Co Ltd [1971] 2 QB 354 (when the case was at the Court of Appeal) when the Court of Appeal tried to overturn the principle laid down in the case of Rookes v Barnard:

Lord Denning was of the opinion that the decision in Rookes v Barnard brought about great difficulties and stated:

“… difficulties presented by Rookes v. Barnard are so great that the judges should direct the juries in accordance with the law as it was understood before Rookes v. Barnard. Any attempt to follow Rookes v. Barnard is bound to lead to confusion.”;

the Court of Appeal was of the opinion that the position laid down in Rookes v Barnard “is all unworkable”; and

“the decision was clearly wrong and must be treated as delivered per incuriam”.

However, the opinion and decision by the Court of Appeal was overruled by the House of Lords in Cassell & Co Ltd v Broome [1972] AC 1027 when Lord Hailsham of St. Marylebone L.C. said that he “would find it impossible to return to the chaos which is euphemistically referred to by Phillimore L.J. [1971] 2 Q.B. 354, 399 as “the law as it was before Rookes v Barnard.””.

Malaysian Cases

The aforementioned principles laid down in the case of Rookes v Barnard which were further explained and affirmed in Cassell & Co Ltd had been applied in string of Malaysians cases.

The Court of Appeal in Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421 when discussed about exemplary damages, referred to another Court of Appeal case Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors and another appeal [2018] 1 MLJ 784 which stated that: 

“[33] The exemplary damages or punitive damages—the two terms now regarded as interchangeable—are additional damages awarded with reference to the conduct of the defendant, to signify disapproval, condemnation or denunciation of the defendant’s tortious act, and to punish the defendant. Exemplary damages may be awarded where the defendant has acted with vindictiveness or malice, or where he has acted with a ‘contumelious disregard’ for the right to the plaintiff. The primary purpose of an award of exemplary damages may be deterrent, or punitive and retributory, and the award may also have an important function in vindicating the rights of the plaintiff (see Rookes v Barnard [1964] 1 All ER 347; … Broome v Cassell & Co [1971] 2 QB 354 …)”

The Court of Appeal in Tradewinds Properties Sdn Bhd applied the categories of cases propounded in Rookes v Barnard and stated that:

“In claiming exemplary damages under the second category, the plaintiff must be able to prove that the defendants have made a profit for themselves.”

The Court of Appeal in Sambaga Valli also applied the 3 principles considerations in assessing the quantum of exemplary damages in the case.

It was also emphasised by the court that:

“… exemplary damages are not intended to compensate the plaintiff and are not recoverable as a matter of right. The amount of the exemplary damages award is left to the judge’s discretion and is determined by considering the character of the defendant’s misconduct, the nature and extension of the plaintiff’s injury and the means of the defendant. The quantum of exemplary damages to be awarded must be appropriate to the wrongdoing inflicted to the parties involved.”

In an earlier case of Khaw Cheng Poon & Ors v Khaw Cheng Bok & Ors and another appeal [2005] 6 MLJ 540, the counsel for the appellant argued that exemplary damages were only to be awarded in special circumstances which were contained in Lord Devlin’s speech in Rookes v Barnard. There could be no new categories of cases as the list by Lord Devlin had now been settled in the decision of the House of Lords in Cassell & Co Ltd. 

The Court of Appeal accepted the argument and set aside the award for exemplary damages. 

In a nutshell, generally, an order for exemplary damages will only be granted by the court if the circumstances of the case fall within the two categories as well as fulfilling the three considerations propounded in Rookes v Barnard.