The Leveson Report is a careful compromise designed to protect both freedom of expression and privacy. Lord Justice Leveson accepted the arguments of the press that a system of statutory regulation should not be imposed on them. He offered them the almost unique privilege of self-regulation – subject only to oversight of the regulator by Ofcom or a “recognition commissioner”. He suggested a number of incentives to encourage publishers to join the new regulatory body. One of the most important concerns exemplary damages.
In the House of Lords Debate on the Leveson Report on 11 January 2013, Lib Dem peer Lord Lester described exemplary damages as a “potentially draconian remedy” and suggests that the Leveson proposal would be “wrong in principle and a violation of free speech“. These remarks were picked up in the “Guardian”. Lord Lester’s argument, and a number of others advanced against the Leveson exemplary damages recommendations are misconceived. Exemplary damages are well established in England and in many other legal systems as a remedy which is designed to punish and deter outrageous conduct. There is no objection of principle to their use in supporting voluntary press regulation.
Nature of Exemplary Damages and the Recommendation
Exemplary damages are a special category of damages which is designed to punish the defendant and to vindicate the strength of the law (see Rookes v Barnard  AC 1129 at 1221). Their purpose is to deter the defendant from repeating the outrageously wrongful conduct and others from acting similarly and to convey the disapproval of the court. They are, at present, confined to three categories of case: oppressive, arbitrary or unconstitutional action by servants of the government, cases in which the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the claimant and cases where they are specifically provided for by statute (for example, under section 97 of the Copyright, Designs and Patents Act 1988).
Lord Justice Leveson recommends that,
The Report of the Law Commission on Aggravated, Exemplary and Restitutionary Damages should be adopted in relation to its recommendations that legislation should provide that … (b) exemplary damages should be retained (although re-titled as punitive damages). (Recommendation 71)
“Exemplary damages (whether so described or renamed as punitive damages) should be available for actions for breach of privacy, breach of confidence and similar media torts, as well as for libel and slander. The application to a defendant of any relevant system of regulation of standards enforcement which is contained in or recognised by statute and good internal governance in relation to the sourcing of stories should be relevant to the decisions reached in relation to such damages”. (Recommendation 72)
The 1997 Law Commission Report to which Lord Justice Leveson refers recommended that exemplary damages should be retained as part of English law and should be awarded where, in committing a wrong, the defendant ‘deliberately and outrageously disregarded the claimant’s rights‘ (Leveson Report J, para 5.10, p.1511).
It should be noted that although Lord Justice Leveson views exemplary damages as providing an incentive to media organisations to subscribe to a voluntary self-regulator, his reasons for recommending their extension and clarification are more general:
“the basic principle is straightforward. The commercial benefit from publishing material obtained in breach of right to privacy or confidence is likely greatly to exceed the basic award of damages … and constitutes no real deterrent” Leveson Report J, para 5.12, p.1512).
In other words, exemplary damages are intended to be “punitive and draconian” – their purposes to deter the media from outrageous disregard of rights for commercial profit. This, it might be thought, is an entirely proper objective.
Lord Lester’s Arguments
In his speech in the House of Lords debate, Lord Lester mentions the fact that in November 1999, the then Labour Government rejected the Law Commission proposals on exemplary damages on the grounds that:
“The purpose of the civil law on damages is to provide compensation for loss, and not to punish. The function of exemplary damages is more appropriate to the criminal law, and their availability in civil proceedings blurs the distinctions between the civil and criminal law. The Government does not intend any further statutory extension of their availability.”
This hardly took the debate further as it was the very point which had been carefully considered by the Law Commission (see Report, para 5.21) and rejected on the grounds that “civil punishment” could be adequately distinguished from criminal punishment (see para 5.25). The Law Commission’s view (not dealt with by the Government) was that there were good policy arguments in favour of exemplary damages based on (see para 5.27).
(1) the deterrent effect of such damages, providing a means to protect victims of wrongdoing;
(2) abolishing exemplary damages would lead to a gap where a defendant deliberately committed a wrong in order to make money, yet one cannot identify the particular profit that has been made from the wrong.
(3) the criminal law and criminal process do not work perfectly and civil punishment can go some way towards making up for their defects.
(4) the fact that common law judges have long found exemplary damages to be useful.
Exemplary damages are a well established feature of other common law systems such as the United States, Canada, Australia and New Zealand. In none of these jurisdictions have awards of exemplary damages, in appropriate cases, been held to violate the right to freedom of expression. Punitive damages can, for example, be awarded in defamation cases in the United States.
While it is true that, over the past 50 years, some judges have expressed the strong view that exemplary damages are an anomaly which should no longer form part of the civil law, the balance of opinion has been to the opposite effect. For example, in the most recent House of Lords case where the matter was extensively discussed. Kuddus v Chief Constable ( 2 AC 122), the highly respected senior Law Lord, Lord Nicholls said
“From time to time cases do arise where awards of compensatory damages are perceived as inadequate to achieve a just result between the parties. The nature of the defendant’s conduct calls for a further response from the courts. On occasion conscious wrongdoing by a defendant is so outrageous, his disregard of the plaintiff’s rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour. Without an award of exemplary damages, justice will not have been done. Exemplary damages, as a remedy of last resort, fill what otherwise would be a regrettable lacuna” .
But the substance of Lord Lester’s objection depends on the judgment of Mr Justice Eady in the case of Mosley v News Group Newspapers ( EWHC 1777 (QB)). In that case, Mr Justice Eady rejected the argument that exemplary damages were available for misuse of private information – on the technical ground that this claim was not a tort and to allow the claim would be to extend the availability of exemplary damages into a new area. Mr Justice Eady’s conclusion was
“exemplary damages are not admissible in a claim for infringement of privacy, since there is no existing authority (whether statutory or at common law) to justify such an extension and, indeed, it would fail the tests of necessity and proportionality” 
The case contains no detailed discussion of this “necessity and proportionality” point. However one of the crucial matters Mr Justice Eady took into account was the fact that Parliament had not legislated to extend exemplary damages to all claims (as the Law Commission and Lord Justice Leveson recommend). This can hardly be relied on to support an argument against legislation.
Exemplary damages are already available in media cases – in claims in defamation, malicious falsehood and harassment. It has not been suggested in the case law that the availability of exemplary damages in such cases violates Article 10. The court will, of course, always have to consider whether the award is necessary and proportionate in the circumstances of the individual case.
Exemplary damages do not breach human rights
There is no substance in the argument that exemplary damages are somehow incompatible with the European Convention on Human Rights. It is true that the Court of Human Rights has made it clear on many occasions that it “does not, as a matter of practice, make aggravated or exemplary damages awards” (see, Wainwright v United Kingdom Judgment of 26 September 2006 ). However, this does not mean that there is a principled objection to the award of such damages by national courts. Exemplary damages are available in the United Kingdom, Ireland and Cyprus and have been mentioned in a number of decisions of the Court without adverse comment. There is no Strasbourg case which has said that, in principle, exemplary damages should not be available whether in general or in Article 10 cases in particular.
A further argument which has been advanced against the use of exemplary damages as proposed by the Leveson Report rests on the point that, under the proposal, membership of a voluntary self-regulatory body would be taken into account when deciding whether or not to make an award of exemplary damages. It has been suggested that this would be discriminatory: it would be discrimination against non-members on the ground of “other status” contrary to Article 14 of the European Convention on Human Rights. There are a number of problems with this argument. I will mention three.
First, in order to establish a “difference in treatment” under Article 14 it must be shown that the claimant has been treated differently and less favourably from another who is similarly situated. Lord Justice Leveson’s recommendation is simply that membership of a self-regulatory body is something to be taken into account when deciding whether exemplary damages should be awarded: membership does not automatically mean that no damages would be payable and non-membership does not automatically mean that damages would be payable. It all depends on the nature and quality of the wrongdoing. As publisher who has taken conscientious steps to ensure that a claimant’s rights were not broken by having its own code and internal governance mechanisms would be in no worse position than one which had achieved the same result by subscribing to a the rules of a voluntary regulator. In other words, there is no “difference in treatment” of the relevant kind.
This is the answer to the “Private Eye” point which has sometimes been made. A publisher such as “Private Eye” which, for own reasons refuses to join a regulator will face the risk of an award of exemplary damages if its conduct in publishing defamatory or private information involved a “deliberate and outrageous disregard” of the claimant’s rights. A similar award could be made against a regulated publication which was guilty of similar misconduct. In both cases, the court would look at the extent to which the publisher had in place proper mechanisms to avoid this kind of publication. Subscribing to a voluntary regulatory body would be a relevant factor here – but would not be decisive. If, however, the publisher had already been disciplined or fined by the self-regulator this would probably mean that no exemplary damages would be awarded. The Court will look at all the circumstances, the nature and quality of the misconduct and the nature of any punishment already imposed.
Second, membership of a self-regulatory body may not be a “prohibited ground” of discrimination under Article 14 of the Convention. This prohibits discrimination on grounds such as race, sex, religion of nationality. There is also a general category of “other status” but the Court has made it clear that this must be some kind of “personal characteristic” such as marital status or military rank. It is not clear whether “membership of a self-regulatory body” would count as a “status”.
Third, in any event, even if there was a difference in treatment and membership of a self regulatory body is regarded as “other status” under Article 14, discrimination can be “justified”. It must be for a legitimate aim and is proportionate to that aim. The use of exemplary damages in the way suggested in the Leveson Report has the aim of promoting the protection of the rights of victims of press misconduct – a legitimate aim. The measure is designed to encourage membership of a voluntary self-regulator which will protect those rights. The liability to pay exemplary damages is not automatic but depends on all the circumstances, including in particular, the quality of the misconduct. Awards of exemplary can only be made in amounts which are necessary and proportionate to deter and punish press misconduct. As a result, there is a strong argument that if there is discrimination it would be “proportionate” to the legitimate aim.
In short, the arguments against Lord Justice Leveson’s proposal concerning exemplary damages are misconceived. His proposals are intended to provide a more effective deterrent to outrageous invasion of rights by the media. The commercial benefits of false or invasive stories about well known individuals can be very substantial and deliberate breaches of rights will not be deterred by small awards of damages against media wrongdoers.
In addition, exemplary damages can provide an incentive to membership of a voluntary self-regulator by making exemplary damages available to punish outrageous press misconduct. If the voluntary self-regulator is effective – as the press have made it clear they intend it to be – then examples of such misconduct by subscribers to the regulator should be very rare indeed. If the new system of regulation is effective – covering all significant publishers as Lord Justice Leveson indicates it should (Recommendation 23) then it will rarely, if ever, be necessary for the courts to make awards of exemplary damages in the future.
Hugh Tomlinson QC is an editor of Inforrm and the Chair of Hacked Off, the campaign for a free and accountable media.