The law on damages is almost entirely judge made. There is very little statutory law which is of relevance. Accordingly, the principles are found in various cases. The principles on which damages are assessed and awarded have evolved over time.
In civil claims, damages which are monetary compensation for loss or injury are the principal remedy. The law does not punish breaches of civil obligations. If it is not economic to pursue breach of a civil obligation, then legal action and a judgment may be taken in vain. Indeed, the claimant may be penalised in costs.
In some cases, the law does not grant compensation because there has been no measurable financial loss. This is economically justifiable, as civil law seeks to compensate, and but not to punish. In many cases, the defendant will not have the means to the pay damages and costs. An order compelling a course of action will be awarded in place of damages, merely because the defendant does not have the means to pay.
The basic principle of damages, namely that of putting the claimant in the position in which he would have been, but for the breach of contract or wrong, may be readily stated, its application to particular facts may be far from self-evident.
Bases of Compensation I
In general terms, the extent of compensation available for civil wrongs is significantly greater than for breach of contract. There are significant limitations on the types of loss for which compensation may be obtained, even in a claim based on tort / civil wrongs. In contract law, the extent of recovery is narrower and is limited to loss that arises the natural course of events.
Damages for breach of expectation seek to compensate the claimant with what he would have obtained if the contract had been performed Expectation loss the most common measure of damages.
Damages for reliance loss are secondary. They are granted where it is difficult to anticipate what profit if any would have been achieved if the contract had been performed. Damages for reliance loss seeks to compensate for expenditure incurred in reliance on there being a valid contract.
A restitutionary basis of claim is designed to reverse an unjust enrichment. It may be awarded where the other party has unfairly made a profit, by reason of his own wrongdoing.
Basis for Compensation II
Traditionally, the courts did not award compensation for mental distress, loss or enjoyment or displeasure.
Exemplary or punitive damages are only available in highly exceptional cases.
Although the above bases or types of loss are usually mutually exclusive, in some cases there may be different elements of loss, which may be the subject of separate compensation.
In some cases, a claimant may be entitled to compensation both for wasted expenditure and for future loss.The court will seek to avoid compensating twice for the same loss or overcompensating.
Double compensation will not be allowed. If, for example, capital expenditure would have earned future profits, the court will seek to ensure that compensation is not awarded for both the capital expenditure wasted and the loss of profit incurred, at least to the extent that there is double counting..
No Economic Loss I
It is a fundamental principle that the breach of contract must cause the loss. If the contract is inherently unprofitable, there may be no loss and no compensation may be allowed. Otherwise, wasteful expenditure would be encouraged. Damages for costs or wasted expenditure incurred in reliance on the contract’s performance may be awarded, where it is difficult to prove that there would have been an actual profit (which is thereby lost).
If the profit is difficult to prove or speculative, compensation for wasted expenditure may be available. If however, the defendant can show that the contract was inherently unprofitable, there may be no compensation. If the claimant can show that his loss would have been less than what would otherwise have been, but for the breach, he may be able to recover compensation for the increased loss, arising by virtue of the breach.
If anything over and above ordinary compensatory damages are claimed, then this should be pleaded in order to give fair notice to the defendant. For much the same reason, that aggravated, restitutionary or exemplary damages should be specifically pleaded.
Loss of profits for deprivation of goods, which are not readily replaceable are limited to the period of wrongful deprivation.
No Economic Loss II
The courts have increasingly recognised and awarded damages for the cost of cure of defective work.. The claimant may be unable to show a measurable financial loss, but may nonetheless be entitled to compensation so that he enjoys the full value of what he has contracted for.
Where a job is partly completed only, the measure of damages is usually the cost of completion. The cost should not be out of proportionate to the benefit. Where for example, a house is built smaller than specified, the cost of rectification may be enormous and disproportionate.
Provided that the house is basically compliant, the awards may be made for the loss of benefit or amenity The awarding of a compensation for the full cost of a of a house which is essentially sound, would be contrary to common sense.
Compensation may be allowable for mental distress in the case of torts /civil wrongs.
Traditionally, contract law did not look favourably on compensating a loss of this type, as it is incapable of measurement in economic terms. Contract law deals with impersonal and commercial relationships, such as for the sale and purchase of goods and the supply of services. Parties were expected to have the requisite fortitude of mind to withstand mental distress.
There was a fear that to allow claims of mental distress in commercial contracts, would “open floodgates”. Mental distress is easy to allege, but difficult to prove or disprove.
Where in the exceptional cases when punitive or exemplary damages may be awarded, the compensation may reflect the high handed or humiliating manner in which the wrongdoing was done or where malicious intent or bad faith is involved.. Where the very purpose of the contract is to enhance reputation (such as for advertising or publicity), breach of contract which damages to reputation will be allowed.
Traditionally the rules against recovery for mental distress and humiliation were applied to employment contracts. The courts were reluctant to allow compensation for the manner of dismissal. Dismissals in breach of contract were measured in the same way as contract claims generally.
The modern relationship of employment emphasises the implied duty of trust and confidence. Modern cases regularly allow compensation for damage to reputation and humiliation in exceptional circumstances, where the manner of dismissal adversely affects the employee in his future employment prospects. This may occur, for example, in the case of false acquisitions of wrongdoing.
Contracts for Leisure, Peace etc.
The courts award damages for mental distress, in certain types of contract, where the breach goes against the very essence of what is to be provided. Damages are obviously appropriate where the contract itself is for the provision of leisure services, such as a package holiday.
Compensation for disappointment, stress and inconvenience has been permitted in cases brought against tour operators where holidays have fallen severely short, of what might reasonably have been expected. Minor disappointments would not be enough. The disruption and inconvenience must be significant.
A covenant in relation to land commonly provides for the maintenance of the peaceful use and enjoyment of adjoining land owned by the covenantee. Leases usually contain an express or implied term by the landlord that the tenant is to have the quiet enjoyment of the property free from interference by the landlord or persons making claims in consequence of the landlord’s default. Damages for the loss caused by breach of the quiet enjoyment covenant, cover the interference with peace and mental distress which thereby arises, as this is expressly what is to be provided.
However, outside of cases where of their nature, such benefits are to be provided, the traditional position prevails. Compensation for psychological distress, upset and stress is not allowed. The courts may extend over time the types of circumstances and cases, in which compensation for mental distress.
Mental Distress in Irish Cases
The Irish courts have been relatively willing to allow a head or category of compensation for stress and anxiety, in a number of circumstances, including employment and domestic building contract cases. Where there have been serious defects in residential accommodation, compensation has been awarded for inconvenience where remedial works have been required. Even in commercial agreements, exceptionally a high handed breach may lead to awards of compensation for anxiety and distress thereby occasioned.
The availability of damages for mental distress may be rationalised on the basis of foreseeability of loss. In the cases of some kinds of contract, mental suffering, anxiety and distress is foreseeable and predictable such.
The Irish courts have been willing to allow compensation such damages for distress in relation to dismissal. Where there has been no fair procedure, some cases have allowed compensation for the distress arising from a breach of a constitutional right.
The modern courts have regard to the fact that the modern employment, the relationship of trust and confidence has a far greater significance than what’s formerly so. Therefore stigmatising dismissals, breach of contract and implied terms of procedures may attract compensations for mental distress.
Restitutionary damages seek to unwind unjust enrichment. They may be awarded in cases of breach of contract separate from the principles applicable to restitution itself.
Restitutionary damages may, for example, be granted where a party deliberately breached the contract with the intention of making an unjust and unfair gaim. In this case, he may be liable to pay damages notwithstanding they exceed the claimant’s financial loss.
Restitutionary damages are not generally available. They may be awarded in a number of more exceptional cases. Where a person breaches the contract in bad faith, the court in assessing damages may look at loss suffered and also at the profit or unjustly obtained gain.
An account of profits it commonly granted under statutory powers in relation to the breach of intellectual property rights. In the case of trustees or fiduciaries who have committed a wrong restitutionary damages may be allowed by way of an account of profits.
Exemplary damages or punitive damages are broadly the same things. They may be awarded where the court shows its displeasure at the defendants’ actions.
The issue arises in the context of unconstitutional action. Where the state action is undertaken in an unconstitutional manner, there are aggravating circumstances, exemplary damages.
Contemptuous damages refer to damages awarded where a claimant wins what his behaviour is so disproved by the court but nominal damages only are granted. They have been sometimes awarded in defamation cases, there has been a technical defamation, but where the jury has concluded that the defendant’s reputation.is such that it does not merit substantial compensation.