Punitive Damages in Action

One of the most controversial remedies in private law is that of punitive (or exemplary) damages. According to Ernest Weinrib, the remedy is ‘encased in controversy’. Punitive damages are extra-compensatory damages the aim of which is to punish the defendant for his wrongful conduct and to deter him and others from acting similarly in the future.

Since Lord Devlin’s landmark speech in Rookes v Barnard [1964] AC 1129 (HL), the remedy has been confined to just three categories of case. Those are cases of oppressive, arbitrary or unconstitutional conduct by government servants acting in that capacity (Category 1), cases of conduct aimed at making a profit in excess of the compensation payable to the claimant (Category 2), and cases where statute authorises an award of punitive damages (Category 3). The award of punitive damages is particularly relevant (and of particular concern) to corporate defendants given the extension of the award to Category 2.

Unlike certain other common-law jurisdictions, where punitive damages have been extensively investigated from an empirical perspective (particularly the United States), no hard data exist regarding the remedy in the UK. A forthcoming article (James Goudkamp and Eleni Katsampouka, ‘An Empirical Study of Punitive Damages’ (2018) Oxford Journal of Legal Studies) remedies this shortcoming in our understanding regarding punitive damages.

Our sample extended to all cases in England, Wales and Northern Ireland in which punitive damages were sought that were decided between 2000 and 2015 that we could access electronically (Scotland does not recognise the remedy). 146 claims satisfied these criteria for inclusion. We focused on the period 2000–2015 because we are interested in the contemporary operation of the law of punitive damages. We also concentrated on first instance decisions because academic writings on punitive damages tend to focus on appellate decisions.

The study’s main findings are as follows. 

1.Punitive damages were awarded in 39.7 per cent of claims in our sample.

2.The average punitive damages award was £18,181. The median award was £7,630.

3.The success rate of punitive damages claims was much higher in ‘Category 2’ cases (54.7 per cent) than in ‘Category 1’ cases (18.3 per cent). Statistical analysis suggests that this difference is unlikely to be attributable to chance. This is an important finding as business defendants can only be sued in Category 2 cases.

4.Contrary to textbook gospel, punitive damages seem to be awarded very rarely in defamation cases. There was no successful claim for punitive damages in a defamation action in our sample (although this result should be read with caution as our sample of defamation claims was very small). By contrast, claims for punitive damages had a success rate of 55.2 per cent in economic torts cases in our sample. This group comprised claims in deceit, inducing breach of contract, conspiracy and breach of statutory duty as a result of competition law infringements. It is noteworthy that, in this group, the only type of case that attracted an award of punitive damages involved insurance fraud. 

5.Judges seem to be reluctant to award punitive damages against corporate defendants. Punitive damages were awarded against corporations in 30 per cent of the claims in our sample. By contrast, the success rate of punitive damages claims where the defendant was a natural person was much higher (67.9 per cent). Statistical analysis suggests that it is highly unlikely that that this difference is attributable to chance.

6.When punitive damages were awarded against corporations, the average and median awards (£35,337 and £35,224 respectively) were higher compared with awards against natural persons (average and median awards of £15,967 and £4,207 respectively). Again, statistical analysis suggests that this difference is unlikely to be down to chance. This finding (which has also been reported in studies from the US) suggests that the defendant’s wealth is relevant in setting the level of the punitive damages award. 

James Goudkamp is an Associate Professor in the Oxford Law Faculty and Fellow of Keble College.

Eleni Katsampouka is a DPhil candidate in the Oxford Law Faculty and a lecturer at Queen’s college.