4 Things to Know About Exemplary Damages

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Table of Contents

• 1. What They Are
• 2. Purpose of Exemplary Damages
• 3. When Exemplary Damages are Awarded
• 4. Ability to Recover Exemplary Damages
• Key Takeaways
• Frequently Asked Questions

Damages are considered the key remedy for civil actions, with the purpose being to restore a plaintiff to the position they were in before they suffered from the loss in question. The court might award four main types of damages in a civil dispute. These include nominal, compensatory, aggravated and exemplary damages. Each of these types of damages serves a different purpose. The most common form of damages is compensatory, while exemplary damages are the rarest type of damages awarded.

To help you understand the different types of damages available, this article will take you through exemplary damages. This includes: 

• what they are;
• their purpose; 
• when the court awards them; and 
• the ability to recover them.

1. What They Are

Exemplary damages are one type of damages available for recovery in civil disputes. Sometimes referred to as punitive damages, these types of damages are the most rarely awarded damages in Australia. This is because the court awards exemplary damages with the purpose of punishing a defendant, which contrasts with the Australian courts’ emphasis on using the legal system to provide compensation.

In general, damages are used to compensate a party for a loss and should aim to put them in the position they would have been in, had the wrongdoing not occurred. This means that usually, the court should not award a party more damages than their actual loss. In fact, the court must be cautious when assessing damages to ensure there is not an element of punishment (a punitive element) to them.

2. Purpose of Exemplary Damages

The court awards exemplary damages as a form of punishment. Further, their purpose is to deter the defendant and the broader public from malicious behaviour or conduct. Typically, this applies where that conduct causes harm, warning them that such conduct will attract punishment. Generally speaking, this behaviour will include certain elements, such as: 

• malice; 
• abuse of power; 
• cruelty; or
• violence.

3. When Exemplary Damages are Awarded

Courts rarely award exemplary damages in Australia because they are a punishment by nature. Further, they are only awarded where it can be established that the defendant had engaged in intentional conduct showing an insolent or scornful disregard for another person’s rights. 

Generally speaking, exemplary damages will not be available for:

• defamation claims;
• breach of a contractual duty of confidence; or
• breach of equitable obligations (such as breach of confidence).

On the other hand, the types of actions that might result in an award for these damages include:

• invasion of privacy;
• property damage; or
• personal injury (in certain states);

It is important to note the ability to award exemplary damages differs from state to state. As an example, New South Wales, the Northern Territory, and Queensland prevent the recovery of exemplary damages for personal injury claims. Similarly, New South Wales and Victoria have abolished them from being awarded due to motor accidents.

4. Ability to Recover Exemplary Damages

It is rare to recover exemplary damages in Australia, attesting to the serious nature of the action that is being punished. The standard to recover these damages is quite high, as the court will only award them where there is an intentional component to the harm. Generally speaking, there should be a ‘conscious wrongdoing’ and disregard of another’s rights for exemplary damages to be awarded. The difficulty of recovering this type of damages means that they are rarely sought. 

Key Takeaways

There are four main types of damages that the court might award: 

• nominal damages;
• compensatory damages; 
• aggravated damages; and 
• exemplary damages. 

These variations of damages each serve a different purpose, with exemplary damages being a form of punishment or deterrent. Some key things to understand about exemplary damages include that they:

• are a means of punishment;
• act as a deterrent to both the defendant and the broader public;
• are rarely awarded due to their punitive nature;
• have different limitations state by state; and
• are only available for certain wrongs.

If you need assistance understanding exemplary damages, our experienced litigation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions