Exemplary damages

11.25 The ALRC proposes that a court be given the discretion to award exemplary damages in exceptional circumstances.^[25] This head of damages focuses on the defendant’s conduct rather than the plaintiff’s loss. It may be appropriate where the defendant’s conduct was in outrageous and contumelious disregard of the plaintiff’s rights. An award of exemplary damages is intended to punish a defendant and deter similar conduct in the future.

11.26 The ALRC considers that the award of exemplary damages should only be made in exceptional circumstances or, in exceptional circumstances where the court is satisfied that the other damages or remedy awarded would not provide a sufficient deterrent against such conduct in the future. This later formulation would stress the arguably more valuable deterrent function of exemplary damages, rather than their punitive function.

11.27 The ALRC considers that a court should be able to make such an award, in exceptional circumstances, in an action under the proposed tort—particularly given that the tort proposed in this paper is confined to invasions of privacy that are both serious and intentional or reckless.^[26] An award for exemplary damages is considered separately to other heads of damages.^[27]

11.28 In Lamb v Cotogno^[28] the High Court quoted from Mayne & McGregor on Damages their oft-cited description of exemplary damages:

Such damages are variously called punitive damages, vindictive damages, exemplary damages, and even retributory damages. They can apply only where the conduct of the defendant merits punishment, which is only considered to be so where his conduct is wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like, or, as it is sometimes put, where he acts in contumelious disregard of the plaintiff’s rights.^[29]

11.29 Brennan J has said that an award of exemplary damages ‘is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff’s rights and to deter him from committing like conduct again’.^[30]

11.30 While compensatory damages may often be sufficient remedy for serious invasions of privacy, additional damages will sometimes be justified where the conduct of the defendant can be characterised as outrageous or contumelious. Posting on the internet so-called ‘revenge pornography’—intimate photographs or video of an ex-partner or ex-spouse without their consent—may be an example of an outrageous invasion of privacy.

11.31 Profits made from an invasion of privacy can be greater than the sum that is likely to be awarded to compensate the victim. Exemplary damages may help deter invasions of privacy that might otherwise be profitable for the defendant.

11.32 Furthermore, an award of exemplary damages may be more appropriate where a gain-based remedy is unavailable, such as in circumstances where a defendant had attempted to procure some financial gain from the intentional invasion of privacy but did not in fact make a profit.^[31]

11.33 Although exemplary damages are available in Australia at common law for a wide range of intentional torts,^[32] statute prevents the courts awarding exemplary damages in defamation claims.^[33] They are also not available for breach of equitable obligations such as breach of confidence,^[34] or in actions for breach of a contractual duty of confidence.^[35]

11.34 However, unlike in defamation cases, there would be no presumption of harm in privacy cases, under the tort proposed in this Discussion Paper, and there may well be cases, such as Kaye v Robertson,^[36] where the plaintiff may not be capable of suffering distress yet the circumstances of the invasion of privacy were outrageous and warrant exemplary damages to deter such conduct.

11.35 There is a legitimate concern that an award of exemplary damages provides a windfall to plaintiffs. Courts, however, are conscious of this concern and the High Court has ruled that awards of exemplary damages should be moderate.^[37]

11.36 In addition to determining whether the exceptional circumstances of the case call for an award of exemplary damages, the court will also consider whether the other damages already awarded against the defendant are sufficient to fulfil the retributive, punitive or deterrent purposes of exemplary damages. In NSW v Ibbett the High Court when dismissing the appeal, quoted the earlier judgment of Spigelman CJ who stated that it is necessary,

to determine both heads of compensatory damages before deciding whether or not the quantum is such that a further award is necessary to serve the objectives of punishment or deterrence or, if it be a separate purpose, condemnation.^[38]

11.37 Views of stakeholders, previous inquiries in Australia and recent inquiries in the United Kingdom show a range of views on this issue.

11.38 Witzleb has suggested that ‘exemplary damages should only be available as a last resort, i.e. where no other remedy would be a sufficient response to the wrong committed by the defendant’.^[39]

11.39 The NSWLRC^[40] recommended against allowing courts to award exemplary damages, noting the difficulty of reconciling exemplary damages with the purposes of the civil law. Analogous statutory actions such as defamation claims^[41] and negligence claims for personal injury,^[42] limit or exclude access to exemplary damages. The VLRC did not include exemplary damages in its recommendations.^[43]

11.40 While a number of stakeholders supported courts being able to award exemplary damages,^[44] often for similar reasons to those set out above, several stakeholders opposed the availability of an award of exemplary damages.^[45] The OAIC submitted that remedies for a privacy action should be directed at compensating a plaintiff, while exemplary damages are targeted at punishing a defendant.^[46] There is also some concern that if exemplary damages were available, this may stifle important and legitimate activities like investigative journalism, and as such may restrict freedom of expression.

11.41 The UK’s Leveson Inquiry recommended that courts be able to award exemplary or punitive damages for actions in breach of confidence, defamation and the tort of misuse of personal information.^[47] Similarly, the Joint Committee of the House of Lords and House of Commons on Privacy and Injunctions in 2012 recommended that courts be empowered to award exemplary damages in privacy cases, arguing that compensatory damages were too low to act as an effective deterrent.^[48] This recommendation led to the enactment of the Crime and Courts Act 2013 (UK), which provides for the award of exemplary damages against a defendant who is a news organisation in misuse of information cases.^[49]

11.42 Canadian privacy statutes also provide that courts may award punitive damages.^[50]